The paragraph details Chevron's Third Quarter 2024 Earnings Conference Call. It introduces the conference hosts, Justin and Jake Spiering, and highlights the presence of Chairman and CEO Mike Wirth and CFO Eimear Bonner. The presentation includes estimates and forward-looking statements, with a cautionary note about non-GAAP measures. Mike Wirth discusses Chevron's strong financial and operational outcomes, record shareholder returns, and project milestones. Production increased by 7% from the previous year, setting a third-quarter record. Chevron started the high-pressure anchor project and began water injection at specific fields, with plans to boost Gulf of Mexico production to 300,000 barrels per day by 2026.

The company has expanded its CO2 storage portfolio by acquiring over two million acres offshore Western Australia and has completed a merger with Hess after the FTC's review. It has sold assets for portfolio optimization and celebrated the first anniversary of its merger with PDC Energia. The merger has exceeded synergy expectations and generated over $1 billion in free cash flow. Operational improvements include enhancing Jurn's well performance and maintaining a significant inventory with low breakeven costs. Production is expected to remain steady at 400,000 barrels per day through the decade, with low carbon intensity in Colorado operations. Progress continues at TCO, with pressure boost facilities online, optimizing production, and preparing for further capacity expansion.

The paragraph discusses the company's ongoing activities and financial performance. It mentions the progress in complex commissioning activities leading to a 2025 startup and the divestment of non-core assets in Canada, Alaska, and Congo, expecting $8 billion in proceeds. Offers for Canadian assets were compelling. Eimear Bonner reports third-quarter earnings of $4.5 billion, with cash flow improvements despite lower oil prices and a net debt ratio under 12%. Share repurchases reached $4.7 billion. Adjusted earnings were down from the previous quarter due to various factors, including lower oil prices, but some areas such as downstream earnings experienced growth. Adjusted earnings decreased by $1.2 billion compared to the same quarter last year.

Adjusted upstream earnings remained stable, with lower liquids realizations and higher depreciation nearly offset by higher liftings and timing effects. Adjusted downstream earnings fell due to reduced refining margins. Other areas saw declines mainly from interest expenses. Third-quarter oil production increased by 75,000 barrels per day, driven by strong production in the Permian, especially New Mexico assets, with overall yearly growth expected at the high end of 4% to 7%. The company emphasizes managing costs below inflation and integrating acquisitions effectively. Outstanding performance was achieved in 2024 by standardizing maintenance, enhancing online facility days, and lowering unit costs. Anticipating future volume growth, the company aims for $2 to $3 billion in cost reductions by 2026 through portfolio optimization, technology, and global centers. Looking ahead, fourth-quarter upstream operations will face downtime, affecting both US and international activities, with divestments impacting production by 45,000 barrels per day. Downstream will see increased maintenance at El Segundo and Pasadena, including a Pasadena refinery shutdown for light tight oil expansion.

In the fifth paragraph of the article, it's anticipated that affiliate dividends for the quarter will be around $1 billion, and share repurchases in the fourth quarter are expected to remain between $4 billion and $4.75 billion. Proceeds from asset sales are projected to be about $8 billion before taxes. The prepared remarks from Jake Spiering end, and the session opens up for questions. The operator instructs participants on how to enter the queue for questions. Jean Ann Salisbury from Bank of America raises a question about the TCO startup and testing, seeking clarity on when investors might consider the startup largely de-risked. Michael Wirth responds positively about the progress and outlines that they have consistently met expected milestones, indicating a stable commissioning and startup process.

The paragraph discusses the ongoing commissioning work at a project site, emphasizing the importance of ensuring reliability and preparing for a safe startup in the first quarter. Despite complexities, everything is progressing positively. Eimear Bonner shares insights from a recent visit to Tengiz, highlighting a milestone achieved—the transition to feeding production trains via a pressure boost facility, enhancing reliability. The team also explored the operations center, noting the use of advanced digital tools for optimizing production and ensuring safety. This illustrates the project's commitment to meticulous planning and leveraging technology for improved operations.

The paragraph discusses a visit to a third-generation site where a significant amount of new equipment is being commissioned. The team is praised for their diligence in conducting performance testing and commissioning in an organized manner. Additionally, an injection facility is being designed to reinject produced gas back into the reservoir for pressure management, and successful injection testing is underway. The visit left a positive impression due to the team's work, progress, and careful planning for a safe and reliable startup in early 2025. The conversation then shifts to a question from Neil Mehta of Goldman Sachs about the Permian operations, specifically in New Mexico, where strong performance is noted, though data transparency lags compared to Texas, highlighting robust new well performance in the Delaware Basin.

In the third quarter, there has been strong performance in new wells, particularly in the second Bone Spring, Texas side, Delaware, and Wolf Camp A regions, with wells exceeding expectations. Enhanced reliability and proactive maintenance efforts are driving sustained production, with efficiency gains in completions, coordination, and logistics. As production approaches a million barrels a day next year, the focus will shift from growth to maximizing free cash flow, leading to reduced capital expenditure. The company plans to provide more guidance in future calls, highlighting improved efficiency and productivity, and aiming for stronger free cash flow moving forward.

In this paragraph, Doug Leggett from Wolfe Research raises a question regarding the negative impact of the Hess deal on the company's stock performance despite a strong operating quarter. He inquires why the company hasn't closed the deal given their confidence in the legal position. Michael Wirth acknowledges that uncertainties related to Hess have affected share performance, along with other operational challenges, but emphasizes that they are improving. He explains that the deal structure with Hess requires arbitration to be concluded before closing, and they are confident in a successful resolution. Integration planning for the acquisition is progressing well.

The paragraph discusses the company's strategic decision to sell its Canadian assets, including its non-operating position in the Athabasca Oil Sands Project (AOSP) and the Kaybob Duvernay assets. The rationale behind the sale is that AOSP was not considered a core asset due to its 20% non-operating status, and although the Duvernay assets are robust, they face competition from the company's other shale and tight portfolio. An attractive offer for both assets prompted the sale, aligning with the company's strategy to focus on more strategic, core resources, despite the initial intention not to market AOSP.

The paragraph discusses the current state and strategy of a company involved in the Canadian oil sands. It mentions that the valuations of Canadian producers have improved, allowing the company to make transactions at favorable values. The company has been patient in its approach, avoiding selling assets at discounted values, and is focused on adding quality, long-duration assets to its portfolio. However, they are open to divesting assets if they hold more value for others. They aim to improve asset value through technology and continuously reassess their portfolio to maintain high value. Additionally, Eimear Bonner explains a cost savings program aimed at reducing costs while achieving business growth, with disciplined cost management being a longstanding practice. The company plans to achieve $2 to $3 billion in cost savings through asset sales and structural savings, focusing on both upstream and downstream operations.

The program focuses on controlling costs and expects to achieve run rate reductions by 2026, with full benefits by 2027, based on a 2024 baseline. The reductions will primarily come from portfolio actions, like asset sales in Canada, Alaska, and the Congo, which will directly reduce costs and overheads. Additionally, improvement initiatives across the organization, utilizing technology solutions like drones, robotics, and digital twins, aim to optimize operations. Another key initiative is the creation of a global capability center in India to streamline workflows. The program entails a $2 billion plan involving ready or almost ready divestments and cost-cutting measures and an additional $1 billion target from initiatives still in development.

The paragraph features a discussion between Devin McDermott from Morgan Stanley and Michael Wirth regarding the company's financial strategy, specifically focusing on balance sheet management and shareholder returns amidst volatile commodity markets. Despite a slight increase in net debt due to robust share buybacks, the company remains below its long-term debt targets and anticipates cash inflow from asset sales and other operations. Michael Wirth emphasizes that, given the cyclical nature of the industry, such volatility is expected and that the company is prepared for it. He reassures that the share repurchase program's run rate remains unchanged at $17.5 billion, and the recent figures are slightly above the program's midpoint.

The paragraph outlines the company's financial priorities and track record. Their main goals include sustaining and increasing dividends, reinvesting in organic projects, maintaining a strong balance sheet with a AA credit rating and low net debt (below 12%), and returning excess cash to shareholders through share repurchases. The company has consistently bought back shares for 17 out of the last 21 years, despite various challenges such as financial crises and a pandemic. The emphasis is on maintaining a conservative financial position to ensure shareholder distributions and navigate market volatility. Eimear Bonner highlights the importance of a strong balance sheet in creating value and managing volatility.

The paragraph discusses the company's financial strategy and recent divestiture activities. The company feels under-leveraged but expects net debt to decrease in the short term due to asset sale proceeds, and is confident in its long-term, through-cycle balance sheet approach. Lloyd Byrne from Jefferies praises the company's M&A team's progress on divestitures and inquiries about the AOSP sale's impact on long-term goals and DJ operations. Michael Wirth explains that AOSP was sold to the most logical buyer after long-term discussions, labeling it opportunistic but valuable. He also highlights the successful integration and synergy achievements in the DJ operations, which align with the company's long-standing record of exceeding synergy commitments.

The paragraph discusses a company's strategic approach to managing acquired assets and regulatory relationships. The company aims to provide high confidence targets and is satisfied with its asset performance. They've learned from acquisitions, noting advancements like reduced carbon footprints, gas lift, and new laterals. The team effectively navigates permitting processes and maintains a positive relationship with Colorado regulators, supporting long-term development plans. The company is now a major player in the DJ Basin, producing 400,000 barrels a day, despite having no presence there three years ago. However, acquiring more positions is not a priority; instead, they focus on maximizing asset value. After this discussion, Betty Jing from Barclays asks about advancements in the Gulf of Mexico, mentioning the Anchor project.

In the paragraph, Michael Wirth discusses how advancements in technology, including the development of the Anchor project with 20,000 psi technology, are expanding resource opportunities for Chevron in the Gulf of Mexico. These advancements, including high-pressure and high-temperature capabilities and the use of ocean bottom node seismic and AI tools, allow for improved exploration and resource development. About 20% of Chevron's exploration portfolio will benefit from these technologies, enabling more effective identification and production of resources in the Gulf.

The paragraph discusses the ongoing importance and development opportunities in the Gulf of Mexico, emphasizing the use of existing infrastructure for nearer field developments. It suggests that the region's potential is far from over, citing Vallemore as an example of successful tied-back developments. Following this, a dialogue occurs between an operator and Paul Cheng from Scotiabank, who praises the successful production turnarounds at Tengiz and Gorgon. Michael Wirth attributes this success to improved processes that ensure reliable operations, not just a one-time achievement. Eimear Bonner is invited to elaborate on these turnaround executions.

The paragraph discusses efforts to improve performance in complex facility turnarounds, such as those in refining and upstream assets. Key strategies include rigorous scope management to determine necessary maintenance work, utilization of digital tools for planning and executing tasks, and detailed benchmarking down to the equipment level to identify efficiency improvements. Additionally, the organization benefits from experienced personnel specializing in turnaround operations.

The paragraph discusses efforts to improve performance and efficiency by sharing resources and lessons across different operations, such as TCO and Gorgon, and between refining and upstream processes. This approach has led to significant improvements, including nine successful turnarounds this year, with most achieving industry-level performances. Michael Wirth highlights specific successes, such as a 14% improvement in Gorgon's train two turnaround duration and a 23% improvement in TCO's KTL one turnaround. Several refineries also experienced up to 50% cost reductions compared to previous turnarounds. When questioned about the impact of relocating operations from California to Texas, Wirth assures that the transition is well-planned and not seen as a threat to cost reductions.

The paragraph discusses the strategic approach of a global company to migrating work across different technology platforms and locations, moving away from a simplistic "lift and shift" model. The company aims to plan this transition carefully and reduce risks while focusing on innovation and cost efficiency. The conversation then shifts to a query about future capital expenditures (CapEx) in light of recent business developments, such as the startup of the Tengiz project and Gulf assets, and the focus on generating free cash and net present value (NPV) in the Permian region. The current CapEx spend is estimated to be around $18 to $18.5 billion.

The paragraph discusses the capital expenditure (CapEx) trends and strategies of a company, highlighting three main points. First, the company has shifted to more predictable and evenly distributed CapEx patterns due to the nature of its projects, moving away from previously uneven spending. Second, compared to a decade ago, the company's CapEx has significantly decreased from $40 billion to around $18.5 billion, despite increased production and cash generation, achieving greater capital efficiency. Finally, the company remains committed to further optimizing and enhancing its capital efficiency.

The paragraph discusses the company's capital expenditure (CapEx) and investment strategy. It mentions that while maintaining a larger portfolio requires capital, the company's near-term affiliate CapEx will decrease as their project in Kazakhstan concludes. Although they are currently finalizing their 2025 business plan and cannot provide specific guidance, they aim to remain disciplined with a CapEx guidance range of $14 to $16 billion. If this range changes significantly, they will communicate the reasons and implications. Eimear Bonner adds that they are focused on projects with growing free cash flow as they complete. Additional details will be provided in their fourth-quarter call. The paragraph concludes with a transition to a question from John Royall about the company’s downstream operations in California.

In this paragraph, Michael Wirth discusses the impact of California's recent policies on the gasoline market. He criticizes the state's move to involve bureaucracy in turnaround planning and inventory management, arguing that it will likely increase gasoline prices rather than lower them. Wirth compares the situation to other socialist states where central planning has failed, suggesting that such policies discourage investment and constrain supply, leading to higher prices. Despite having operated in California for over a century with competitive refineries and strong customer relationships, Wirth expresses skepticism about justifying new investments in the state due to these policies. He indicates that the company will continue to meet customer needs and evaluate alternatives as necessary.

In the paragraph, Roger Read from Wells Fargo asks Michael Wirth about the global LNG market outlook, specifically focusing on the supply-demand balance in 2025 and Chevron's contract versus spot market exposure. Michael Wirth responds by noting that while LNG demand is growing, current healthy inventories in Europe and the US suggest that 2025 will not likely experience a particularly tight market. Additionally, upcoming supply from Qatar and the US will contribute to this. Chevron's LNG portfolio is mostly long-term contracted (over 80%), primarily on oil-indexed pricing with sales mainly to North Asia, and has less than 20% spot market exposure, mostly from West Africa.

The paragraph discusses the current state and future outlook of the chemicals business, focusing on the polyethylene chain margins which have improved due to short-term supply disruptions. The market has been oversupplied, particularly affecting the olefin chains in Asia. However, margins are expected to improve over time. The company has upcoming projects in the US and the Middle East, anticipated to launch after the market trough. There's an interplay between olefin margins and crude oil prices, particularly affecting competition between naphtha and ethane crackers in different regions. The company's chemical ventures like CP Chem and GS Caltex are noted for being well-managed amidst these market cycles.

The paragraph discusses the status of expansion efforts in the Eastern Mediterranean, focusing on the Tamar and Leviathan projects. Michael Wirth emphasizes the priority of ensuring the safety of employees and assets amidst regional uncertainties. Current expansion activities at both Tamar and Leviathan have seen some setbacks due to the demobilization of a pipeline vessel, but the projects are still expected to be completed late next year. Short-term expansions aim to increase production at Leviathan by 200 million cubic feet per day to reach 1.4 BCF and at Tamar from 1.1 to 1.6 billion cubic feet per day. A larger expansion at Leviathan is also in progress, with completion anticipated towards the end of the decade.

In the paragraph, it is discussed that production at Leviathan was temporarily reduced due to regional risks, but supply commitments are still being met despite ongoing conflict. Alastair Syme from Citi inquired about the operational dynamics in the Permian Basin, specifically regarding non-operated and royalty positions. Michael Wirth from Chevron responded, indicating a uniform development approach rather than a two-speed system across the company's business components, with strong growth noted this year. The discussion concluded with thanks and the closing of Chevron's Third Quarter 2024 Earnings Conference Call.

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