The operator introduces the conference call and turns it over to the General Manager of Investor Relations. The CEO and CFO are also present on the call. Chevron had a strong second quarter with increased production and consistent shareholder returns. They have also invested in new growth opportunities in traditional and new energies.

The merger with Hess was successful and the companies are expected to combine in the third quarter. The arbitration panel for the Stabroek JOA has set a hearing for next year. ExxonMobil is confident in the outcome and is committed to the merger. In the Gulf of Mexico, they are focused on delivering high cash-margin, low carbon intensity production growth. They have multiple projects coming online and expect production to grow to 300,000 barrels a day by 2026. In the Permian, they are seeing improved base business performance and are utilizing new technologies to reduce costs and improve efficiency. In the Delaware Basin, well performance is improving and in the Midland Basin, they expect better results in the second half of the year.

Chevron expects to see a 15% increase in production for the full year, with fourth quarter production averaging around 940,000 barrels per day. The FGP project is on track to start up in the first half of 2025, with key equipment being brought online and milestones being completed. The quarter's earnings were impacted by operational and other factors, but the company remains confident in its ability to deliver long-term growth. Second quarter earnings were $4.4 billion, or $2.43 per share, with adjusted earnings of $4.7 billion, or $2.55 per share. The company's balance sheet remains strong, with a net debt ratio of 10.7%, and cash flow of nearly $9 billion.

In the second quarter, the company experienced lower working capital and adjusted earnings, mainly due to tax payments and higher inventories. They also returned $6 billion to shareholders through dividends and share repurchases. Upstream earnings were down due to lower liftings and higher exploration expenses, while Downstream earnings were impacted by lower margins and timing effects. Overall, adjusted earnings were down $1.1 billion compared to the previous year. Production was up 11% due to acquisitions and growth in the Permian Basin. In the third quarter, there will be heavy maintenance and turnarounds at Upstream and refinery assets, as well as a one-time payment related to discontinued operations. Affiliate dividends are expected to be around $1 billion and dividends from TCO are expected to continue after the project in Kazakhstan is completed.

Chevron announced that they are moving their headquarters from San Ramon to Houston to improve collaboration and engagement. They also announced the retirements of three executives and expressed condolences for the passing of former Chairman and CEO Ken Derr. The company is now ready to take questions, with a limit of one per person. The first question was about the progress of the TCO project during the summer productivity period.

Michael K. Wirth discusses the progress of the Future Growth Project (FGP) and Tengizchevroil (TCO) in Kazakhstan. He mentions that work is being planned and executed efficiently, resulting in strong progress. Three pressure boost facilities are already operational and the fourth one will be soon. The WPMP is also operating reliably. Wirth is confident about the team's performance and expects the project to maintain strong production for a long time. He also mentions that more FGP equipment and systems will be ready for operation later this quarter. However, the team will not compromise safety or reliability for the sake of schedule. Wirth also addresses the investor debate around the concession extension, stating that the focus is currently on getting the project up and running.

The concession exploration for TCO is a complex project that is almost a decade away. It is important to ensure a safe and reliable start-up, as the field is one of the world's deepest producing supergiant oil fields. Chevron will be discussing a potential extension with the government of Kazakhstan, but it must create value for both the country and Chevron shareholders. The company is currently focused on project execution and delivering FGP. The period of limbo around Hess is not ideal, but Chevron is committed to the transaction and will not pursue other significant portfolio developments at this time. The company is making progress with the shareholder vote and the FTC, and there is a timeline for the arbitration process.

The speaker discusses the company's focus on cost efficiency and capital discipline, mentioning that year-to-date and Q2 unit operating expenses have decreased by 5%. They also mention specific actions being taken to reduce energy usage and emissions, such as electrifying rigs and implementing energy efficiency projects at refineries. The potential for further cost efficiency gains is mentioned, but not quantified.

The company is working on optimizing supplier contracts and implementing a minimum functional objective approach to operations and maintenance activities at key assets. They are confident in finding new ways to increase efficiencies and reduce unit cost. They plan to use technology, such as data technology, to achieve this. They are focused on costs and will continue to discuss this in the future. The company is complying with any production targets or requirements imposed by countries they operate in, but have not received any indication of curtailments from the Republic of Kazakhstan related to OPEC+.

The speaker discusses the variability in production among different producers and their close relationship with the Republic. They also mention their intent to produce at full capacity for their facility in order to maximize revenue for both the Republic and Chevron. The speaker then addresses a question about the delayed arbitration and suggests a possible compromise that could cut the timeline short.

Wirth responds to a question from Doug about the ongoing arbitration process between Hess and Chevron in the Stabroek block. He states that they have previously tried to find a resolution that accommodates everyone's interests, but now they are in the arbitration process. Wirth also discusses the strong performance of the Permian and the increase in fourth quarter outlook, attributing it to new completion techniques and strong production in the Delaware basin. He mentions that 80% of their program is in the Delaware and overall production in the basin is up from last year.

Chevron's improved performance in multiple areas of their business has been driven by proactive maintenance efforts, artificial lift optimization, and the implementation of triple-frac, which has reduced costs and increased cycle time. The company has also seen strong well performance in the Delaware basin, but some first-half wells in the Midland basin have been below expectations. Chevron is continuously learning and improving their development plans in the basin, and they have confidence in delivering strong returns and performance in the future. In the Gulf of Mexico, the company is focusing on developing the first 20,000 PSI project.

The company has experienced challenges in adapting to new, higher pressure regimes in the industry. This has required the use of bigger and heavier equipment, as well as tighter tolerances and extensive technology qualification. The company has worked closely with suppliers to develop specialized equipment and has demonstrated strong partnerships to successfully deliver the first 20ks subsea development. The company's Chief Financial Officer, who was previously the Chief Technology Officer, highlights the importance of bringing together the best engineers, suppliers, and technology to overcome these challenges.

The speaker discusses the extensive testing and quality control that took place before their project went to the field. They mention delivering subsea equipment, developing a drilling rig, and using proprietary technology to optimize the development. The question then shifts to a strategy question about Chevron's priorities for use of cash, considering the TCO start up, Permian production growth, and rising production in the Gulf of Mexico, which are expected to lead to an increase in free cash flow in 2025 and beyond.

Eimear P. Bonner discusses Chevron's financial priorities for the optimal use of cash, which include growing the dividend, investing in profitable growth, maintaining a strong balance sheet, and returning surplus cash to shareholders through buybacks. The company plans to continue its track record of growing the dividend and maintain leadership in capital efficiency. They also aim to modestly relever over time and take a multi-year view of buybacks considering commodity prices.

The speaker discusses their experience with the company's financial priorities and how they have been successful. They also mention the recent turnaround activity in the downstream sector and the impact on margins. Overall, they see decent product demand and economic growth globally, but also note the increase in refining capacity and inventories. They expect margins to revert towards mid cycle in the near future.

The speaker discusses the challenges of transitioning to renewable fuels and the impact of policy on their market. They mention the importance of having a capital efficient investment philosophy and the benefits of having access to affordable and reliable feedstock. They also mention their upcoming projects to increase competitiveness in the market. They acknowledge that the margin business can be tough, with periods of low margins and competitive capacity under pressure, but they are committed to the long-term success of the business.

The speaker discusses the company's commitment to renewable fuels and their focus on efficiency and value in optimizing this business. They then address a question about their exploration portfolio and express excitement about various regions, including the Gulf of Mexico and the Eastern Mediterranean. They mention plans for drilling in Namibia and potential consolidation in the region.

Chevron has a strong presence in West Africa, particularly in Nigeria, Angola, Equatorial Guinea, and Namibia. They have an upcoming well in the Orange Basin and are interested in acquiring more acreage in the Walvis Basin. The company is focused on three ways of bringing in resources: exploration, acquisition, and technology. They are closely monitoring the situation in Venezuela and prioritizing the safety of their employees and the integrity of their assets. They have been a positive presence in Venezuela for many years.

Chevron conducts its business in Venezuela in compliance with both their laws and the laws of the U.S. They have seen positive results since the issuance of a recent general license, including increased production and repayment of debt. The company remains apolitical in Venezuela and focuses on developing the economy and creating jobs. They do not take sides in politics and work with the government in power. In terms of OFS costs, Chevron has seen inflation pressures easing, but this can vary across different geographies and between onshore and offshore operations.

The speaker discusses the current state of the onshore and offshore oil industry, noting a softening of pressure in the onshore market and increased activity in the offshore market. They also mention their contracting approach, which helps buffer against price fluctuations. They mention their involvement in exploration in Uruguay and the potential for success based on analogs in the region.

The company is exploring theories and evidence in Brazil and Suriname to understand the prospectivity of the Eastern Coast of South America. They are intrigued by the potential in these areas and are expanding into more frontier regions. In terms of the Permian, the company is seeing strong contributions from royalty and non-operated production. The efficiency improvements have led to a pull forward of activity, with more lateral feet of wells being completed and more consumables being used.

The paragraph discusses how the easing of pressure on costs has allowed the company to manage their capital and balance out activity. The company expects to stay within their budget and maintain production levels. The downtime in May and June was due to unplanned events at Gorgon and Wheatstone, but repairs were executed safely and efficiently. The Gorgon asset turnaround is currently underway and is going well.

The speaker expects the planned duration for the current quarter to be shorter than expected, even with some downtime. They also anticipate meeting production goals for their Australia assets by the end of the year. The speaker thanks everyone for their participation and concludes the call.

This summary was generated with AI and may contain some inaccuracies.