The paragraph is an introduction to Chevron's Fourth Quarter 2024 Earnings Conference Call. The meeting is facilitated by Katie, with participation from Chevron's top executives, including CEO Mike Wirth and CFO Eimear Bonner. Jake Spiering, Head of Investor Relations, highlights that Chevron had a strong year in 2024, achieving record production, particularly in the Permian, and completing important projects and integrations such as the start-ups in the Gulf of America and the full integration of PDC Energy. The company has also optimized its portfolio through asset sales, swaps, and milestones like first oil at the TCO future growth project.

The paragraph highlights Chevron's financial activities and achievements over a recent period. The company returned a record $27 billion to shareholders through dividends and buybacks, and over the past two years, reduced its outstanding share count by 10% through $30 billion in repurchases. Chevron advanced its new energies business, selling over 20 million barrels of bio-based diesel and implementing projects to cut carbon emissions significantly. Financial results for the fourth quarter included earnings of $3.2 billion, with adjusted earnings of $3.6 billion, but featured special charges and foreign currency gains. Full-year capital expenses were aligned with the company's budget, and Chevron maintained a strong financial position with an adjusted return on capital employed of 10.5%. Comparatively, adjusted earnings were lower than the previous quarter due to various operational factors. Chevron efficiently managed capital, grew production by 7%, generated $8 billion from asset sales, increased dividends, repurchased 5% of its shares, and maintained a net debt ratio of 10%, thereby creating significant value for shareholders.

The paragraph outlines Chevron's commitment to capital discipline and shareholder returns, highlighting a recent 5% dividend increase and a strong history of dividends and share buybacks. The company focuses on funding only competitive projects, maintaining a healthy balance sheet, and delivering growth with less capital compared to peers. Over the past three years, they returned $75 billion to shareholders. Chevron aims for significant free cash flow growth by 2025-2026, plans to complete the Hess transaction, and advance in renewable energy while continuing cost and capital discipline. An upcoming Investor Day will further outline their long-term outlook.

The company anticipates adding $10 billion in annual free cash flow by 2026, driven by growth in upstream assets and increased production from projects like FGP and TCO. In the Gulf of Mexico and Permian regions, additional growth is expected from new projects and improved operational efficiency. Efforts to reduce structural costs by $2-3 billion aim to enhance returns across the portfolio, including Downstream and Chemicals. The recent milestone of first oil from FGP is a step towards reaching full production of 1 million barrels per day in the coming months. At $70 Brent, Chevron expects $5 billion in free cash flow by 2025 and $6 billion by 2026. The company is committed to continuing its collaboration with Kazakhstan and achieving high production rates, capitalizing on efficiencies to set record Permian production.

The company has significantly improved its production efficiency, achieving high output with fewer rigs by optimizing drilling designs and utilizing advanced technologies. It plans to reach one million barrels of oil equivalent per day by 2025, focusing on sustainable cash flow and leveraging its advantageous Permian portfolio. The company is also expanding operations globally, with new projects in the Gulf of America, Western Australia, West Africa, and the Eastern Mediterranean. These include increased production capacities, asset swaps to enhance LNG plant operations, and ongoing low-cost development projects, all contributing to long-term growth and value.

The paragraph discusses Chevron's focus on enhancing its Downstream and Chemicals businesses by completing competitive projects and expanding value chains. Recent expansions at the Pasadena refinery and petrochemical projects in the U.S. and Qatar are advancing and expected to drive cash flow growth beyond 2026. Chevron is also developing its New Energies business with renewable fuel projects like the Geismar renewable diesel expansion and Bunge joint venture. The company is preparing to launch the ACES green hydrogen project in Utah, one of the world's largest, with significant electrolyzer capacity. In carbon capture and storage, Chevron is progressing on projects such as Bayou Bend and CO2 capture from the Pascagoula refinery. Additionally, Chevron announced plans to develop power solutions for U.S. data centers, aiming to seize growth opportunities and generate competitive returns.

The paragraph discusses a company's strategic approach to its natural gas business and future investments. It highlights their experience in generating reliable power and efforts to reduce greenhouse gas emissions. The company has reserved natural gas turbines from GE Vernova, with deliveries starting in late 2026, and is working on site selection and engineering. They emphasize capital discipline in a cyclical commodity market, maintaining a CapEx budget of $14-16 billion. As investment in the Permian and Gulf of America decreases, capital will shift to other areas for growth. They aim to reduce costs by $2-3 billion by 2026 through asset sales, technology solutions, and operational efficiencies. The company achieved record oil production and projects a 6% annual growth rate through 2026, with significant growth expected in the latter half of 2025 as key projects come online.

The paragraph discusses a discussion during a Chevron presentation where Jake Spiering concludes the prepared remarks and opens the floor for questions, with the operator inviting Biraj Borkhataria from RBC to ask the first question. Biraj congratulates the company on the FGP project coming online and inquires about underlying cash flow excluding working capital, noting a discrepancy with their model. Eimear Bonner responds, explaining that cash flow was impacted by non-recurring and accounting items, particularly highlighting a $1.5 billion tax charge related to the Canadian asset sale, which affects cash flow figures when working capital is excluded.

The paragraph covers a financial update where a company experienced a $2.5 billion impact on cash flow during the quarter due to a combination of special items, affiliate distributions, and unique commercial activities. These factors included two major $500 million headwinds and other impacts, which differ in terms of earnings and cash flow adjustments. In a subsequent question-and-answer segment, Paul Cheng from Scotiabank inquires about the company's longer-term opportunities, specifically mentioning discoveries in Nigeria and Angola. Mike Wirth responds by acknowledging the current focus on providing detailed forecasts for the next two years to enhance confidence in their projected free cash flow growth.

The paragraph discusses ongoing and future projects expected to enhance free cash flow growth beyond 2026. Key developments include significant initiatives in the Eastern Mediterranean, major chemical projects, and promising prospects in Argentina contingent on political and economic stability. The text also highlights potential opportunities in West Africa, including recent discoveries and seismic work in Angola, along with significant resource positions in the Venezuelan Partition Zone. Closing the Hess deal is mentioned as a move to further strengthen the company's position.

The paragraph discusses the company's strategic approach to growth and investment opportunities. It highlights their exploration portfolio in regions like West Africa, South America, the U.S. Gulf, and the Eastern Mediterranean, emphasizing their technology and large resource base to sustain growth. The company reports recent high growth rates and projects a 6% compound annual growth rate for the upcoming years, although they do not expect it to persist indefinitely. They plan to focus on selecting the best investment opportunities through a disciplined capital budget. Additionally, in response to a question about their power business and a recent announcement with GE Vernova, it points out that the company intends to leverage its expertise in power generation to support lower carbon energy solutions, emphasizing its experience in operating large-scale power assets.

The paragraph discusses the company's strategic focus on leveraging its substantial natural gas resources and LNG diversification to support power investments for premium customers, rather than engaging in merchant power sales. They highlight the high demand for reliable, large-scale power solutions, referencing partnerships with hyperscalers and the use of GE Vernova turbines. The emphasis is on meeting increased power demand without overburdening the existing grid infrastructure, thus avoiding higher consumer costs, creating jobs, and supporting America's energy abundance to ensure leadership in AI and other sectors.

In the paragraph, Doug Leggate from Wolfe Research asks about the updated projections for 2027 compared to those provided in February 2023, including aspects like debt payback and developments in Tengiz. Mike Wirth and Eimear Bonner respond, indicating that the guidance for 2027 remains aligned with previous estimates despite changes such as the acquisition of PDC and divestment of Canadian assets. They note factors influencing these projections include changes in price assumptions and anticipated growth from projects like CP-10, Eastern Med brine feed projects, and potentials in Argentina and power generation.

The paragraph discusses a company's ongoing efforts to achieve $2 billion to $3 billion in structural cost reductions while derisking previous projects and planning to provide a 2027 outlook later in the year. Mike Wirth emphasizes the importance of safely ramping up operations in Kazakhstan, mentioning the stable early performance of a world-class asset and the complexity of renegotiating concessions to benefit all parties involved. The paragraph then transitions to a conversation with Devin McDermott from Morgan Stanley, who inquires about how recent U.S. energy-related executive orders might impact the company's oil and gas operations, particularly in the Gulf, and its new energy opportunities amidst recent developments.

In the paragraph, Mike Wirth discusses the evolving conversation around energy, highlighting a shift towards a more balanced approach that considers economic prosperity, energy security, and environmental protection. He welcomes this change, noting the recognition of oil and gas as crucial components of the energy mix. He appreciates the administration's intent to utilize American energy resources for economic and security benefits while also ensuring environmental protection. Wirth anticipates upcoming actions that will likely include increased access to energy resources, regular lease sales, and bipartisan support for permit reform, benefiting various industries in the U.S.

The paragraph discusses a company's involvement in Venezuela and their focus on compliance, safety, and environmental protection amid existing sanctions. It also highlights their achievements in the Permian Basin, noting strong performance and growth in oil production, surpassing 1 million barrels per day in December, with continued growth anticipated for 2025, despite reduced capital investments.

The paragraph discusses the company's strategy of focusing on generating free cash flow rather than purely growing production. It outlines the company's current production levels, including 1 million barrels a day from various assets like the DJ Basin and Bakken, and highlights the potential for technology improvements to increase recoveries and extend production plateaus. The company aims to maintain production with low capital investment, using the assets as strong cash generators. The Permian asset's royalty advantage is noted as an additional financial benefit. Overall, the focus is on sustainable, profitable operations rather than sheer growth.

The paragraph is a discussion during a Q&A session where Jason Gabelman from TD Cowen asks about the TCO distribution and its impact on future financial guidance. He inquires if the increased figures for 2025 and 2026 are due to a higher price deck and notes an increase in operating expenses from 2022 to 2023, questioning if this rise is considered in the free cash flow guidance. Eimear Bonner responds, explaining that the free cash flow inflection is due to the project's completion and reduced affiliate CapEx, leading to an increase in free cash flow for 2025 and 2026. The focus will also be on optimizing operational OpEx as production stabilizes at a new base level, contributing to the improved cash flow. Mike Wirth then indicates the session will continue with the next question from Alastair Syme with Citi, who inquires about Bolivia.

In the paragraph, Mike Wirth discusses the learning experience from their first exploration well in new basins, the Orange and Walvis basins. While they didn't find oil and gas, they gained valuable geological insights that will inform future exploration. He mentions that despite not finding hydrocarbons, they are still interested in the area due to the existing petroleum system and the efficient and cost-effective drilling process. The operator then transitions to the next question from Barclays' Betty Jiang, who wants to discuss the Power venture.

In the paragraph, Mike Wirth from Chevron discusses their capital commitment related to securing high-demand turbine spots for a new venture. While he refrains from providing specific details due to confidentiality, he mentions that they have made payments to secure slot reservations. The project will be funded through partners and investors, and more details will be shared later. Chevron hasn't changed its CapEx guidance and plans to develop competitive opportunities within its portfolio, emphasizing capital efficiency and early positioning in the market for gas turbine generators, which are experiencing price increases. The operator then shifts to another question about Chevron's developments in the Gulf of Mexico, noting the progress of projects expected online by 2025 and 2026.

The paragraph features a conversation with Mike Wirth, discussing the positive performance of wells in the basin, specifically mentioning two wells online at Anchor, with plans for a third in the second quarter and more in the coming years. The operations have successfully managed a challenging pressure and temperature regime, exceeding reservoir performance expectations. Wirth notes the potential for the Gulf of America as a long-term, productive basin, highlighting their significant lease holdings and advancements in cost reduction and technology. The paragraph concludes with a switch to a question from John Royall of JPMorgan about operations in the Eastern Mediterranean, noting political improvements and ongoing project growth in that region.

The paragraph discusses Chevron's operational updates in a region experiencing reduced tensions, impacting projects at Tamar and Leviathan. These projects are on track to be completed by the end of the year or early 2026, with a pipeline vessel set to resume work early this year. A Leviathan expansion is in progress, expected to significantly increase production by the end of the decade. Despite regional instability, production is projected to rise by 25% over the next two years and up to 50% by 2030. In response to a question from Jean Ann Salisbury of Bank of America about the ramp and debottlenecking potential at FGP, Mike Wirth notes that operations have been stable in the early stages, despite being complex.

The paragraph discusses the positive early performance of a plant with stable operations and strong production levels that have met or exceeded expectations. The operations team plans to gradually increase production to ensure continued stability and reliability, especially given the high H2S concentrations. They maintain exclusion zones and anticipate methodically raising production to full capacity. The speaker indicates any start-up issues have been normal and expresses optimism about future performance. Debottlenecking is a future consideration, and more updates will follow in the next quarterly call. The speaker also addresses a question from Lucas Hermann regarding the monetization of the Wheatstone project, clarifying whether it refers to resource monetization or the facility's capital monetization, and also mentions considerations about returns on the power business.

The paragraph discusses strategies for managing resources and investments in the Wheatstone and Gorgon projects, as well as potential dealings with the Carnarvon Basin. The company plans to monetize resources over time and is acquiring Woodside's interest while relinquishing some of its own interests. The focus is on optimizing resources economically for Australia and customers. They are not planning to sell their position to a pension fund. The company aims to manage volatility in its oil and gas, refining, and marketing businesses by establishing power purchase agreements (PPAs) and leveraging its natural gas production and commercial capability. The goal is to handle volatility in a way that aligns with their approach to other business areas.

In the paragraph, Mike Wirth discusses strategies to improve leverage during recovery periods, particularly in a business context with margin pressures. He highlights the importance of innovation and flexibility in feedstocks, operating reliability, cost structure, and product optimization. He emphasizes the need to stay proactive in both favorable and challenging market conditions. A specific example he gives is the increased capacity to process light oil at their Pasadena refinery, which allows for better integration with upstream production and reduces reliance on external suppliers. He also mentions optimizing operations between the Pasadena and Pascagoula refineries during various market conditions as a capital-efficient way to enhance flexibility and control margins.

The conversation involves Mike Wirth and Paul Sankey discussing the potential for adjusting capital expenditures (CapEx) and corporate actions. Paul inquires about the possibility of Chevron reaching the lower end of its 14% to 16% CapEx range and the rationale behind reducing upstream CapEx after testing. He also questions the impact of underinvestment in refining and considers the potential for large-scale deals, as opposed to shrinking operations. Paul touches on the company's involvement in AI gas-fired power and how this affects CapEx decisions under Trump's guidance. Mike responds by emphasizing discipline in spending, noting past CapEx positions, and highlighting efficient growth in the Permian with fewer rigs compared to previous plans.

The paragraph discusses a company's focus on becoming more capital efficient while continuing to grow, citing past growth rates and the need to deliver energy with lower capital investments. It mentions a potential interest in downstream or chemicals segments if suitable opportunities arise, emphasizing the importance of not overpaying and meeting specific criteria such as scale, flexibility, and efficient operation. The paragraph also highlights the role of AI in their portfolio, noting that AI investments must be manageable, deliver competitive returns, and be prioritized alongside other ongoing investments. The company aims to fund only the best investments as part of its strategic planning.

The paragraph discusses a $2 billion to $3 billion structural cost reduction plan across all business segments, focusing on three main areas: asset sales, changes in work processes, and technology. Asset sales, such as those in Canada, are expected to yield some savings by 2025. The company is also working on standardizing and centralizing tasks to impact both upstream and downstream segments. Lastly, the use of technology, including robotics, drones, digital twins, and AI, is highlighted as an exciting area that will contribute to cost savings. Savings are expected to be more pronounced in 2025 and 2026.

The paragraph discusses the financial and informational advantages the company gains from its significant mineral rights position in the Permian Basin, where it is involved in one out of every five wells. The company's CEO, Mike Wirth, highlights that they receive insights not only from their joint venture partners but also through observing the activities of five major industry players. These companies are maintaining disciplined strategies focused on productivity and efficiency improvements rather than reverting to past practices of prioritizing growth over returns. Wirth emphasizes that this balanced, return-oriented approach appears to be a continuing trend among operators, though other companies should be consulted for their specific strategies.

In this paragraph, Neal Dingmann from Truist asks Mike Wirth about the recent weak performance in the downstream segment, noting a decrease compared to previous quarters and questioning whether it was due to increased turnarounds or macroeconomic pressures. Mike Wirth responds by acknowledging the weak fourth quarter, attributing it to lower margins, turnaround impacts, inventory accounting effects, and impairments, creating a challenging situation. He emphasizes that these issues are not indicative of a structural deterioration in the business. Additionally, Geoff Jay from Daniel Energy Partners asks about the business climate in Argentina, particularly following changes in its political landscape, but the paragraph ends before Mike Wirth responds to this query.

The paragraph discusses Chevron's positive outlook on its operations in the Vaca Muerta region of Argentina, highlighting strong positions in both Loma Campana and El Trapial. The geological prospects are promising, with encouraging recent developments, particularly in the north. Additionally, the political and economic climate in Argentina is improving under President Milei, with reduced inflation, a stabilized banking system, and movement towards lifting capital controls. Chevron is considering further investments, including a potential midstream pipeline project for exports. They are cautiously optimistic about the durability of these reforms and will continue to monitor the situation. The paragraph concludes the fourth quarter 2024 earnings conference call.

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