The paragraph is a transcript from Chevron's First Quarter 2025 Earnings Conference Call. The operator, Katie, introduces the call, directing participants to a question-and-answer session following the speakers' remarks. Jake Spiering, Chevron's Head of Investor Relations, mentions that the presentation includes forward-looking statements and non-GAAP measures. Mike Wirth, the Chairman and CEO, highlights Chevron's strong performance this quarter, including project start-ups, asset divestitures, and strategic actions like acquiring nearly 5% of Hess's shares. Chevron has consistently rewarded shareholders, returning over $5 billion each quarter for 12 quarters, with $6.9 billion returned in the first quarter through dividends and buybacks. Wirth emphasizes the importance of cost and capital discipline amidst macroeconomic uncertainty.

The paragraph discusses Chevron's financial and operational strategies, highlighting a $2 billion reduction in CapEx budgets for 2025 and targeting $2-3 billion in structural cost savings by next year. Chevron is positioned to navigate commodity cycles and anticipates increased cash flow and project contributions, including a loan repayment from TCO and production increases in the Gulf of America and Pasadena refinery. Chevron is also expanding its portfolio with new exploration acres and ventures in power solutions. Leadership changes were announced to improve efficiency. Financially, Chevron reported first-quarter earnings of $3.5 billion ($2 per share) and adjusted earnings of $3.8 billion ($2.18 per share), including $175 million in special items.

In the quarter, Chevron experienced a decrease in earnings due to foreign currency effects, though legal and tax charges were partially offset by fair value measurements of Hess shares. Organic CapEx was the lowest in two years at $3.5 billion, with inorganic CapEx at $400 million invested in Power Solutions. Operating cash flow reached $7.6 billion, excluding working capital tied to Canadian asset tax payments, with a projected $1 billion working capital unwind expected. Chevron issued $5.5 billion in new long-term debt. The company anticipates that purchasing Hess shares will reduce Chevron's outstanding shares by approximately $16 million. Adjusted earnings rose by $200 million, mainly through improved downstream margins, while upstream earnings remained steady. Chevron's production was stable, with plans to increase activity in the Permian. The company maintains financial consistency and plans for significant free cash flow growth by 2026, aiming for a sustained production increase in the Permian and highlighting its strong dividend and resilient portfolio.

The paragraph discusses a company's capital program, emphasizing its flexibility and focus on short-cycle assets and deepwater projects by 2025. The company's net debt ratio is strong at 14%, below its target range. It has consistently repurchased shares over the years and maintained its $20 billion annual buyback guidance despite market conditions. Share repurchases are expected to be $2.5 billion to $3 billion in the second quarter. Jake Spiering concludes the prepared remarks, noting additional guidance is available online. During a Q&A session, Neil Mehta from Goldman Sachs inquires about Mike Wirth's recent visit to Kazakhstan, specifically regarding the successful startup and future growth of a project there. Mike Wirth expresses satisfaction with the project's progress and achievement of nameplate capacity in less than 30 days.

The paragraph discusses the successful execution of a project due to extensive testing, leveraging experienced personnel and procedures from previous projects, and the leadership of seasoned operators. The company is conducting performance testing under real conditions and optimizing processes. A recent trip to Kazakhstan involved discussions with President Tokayev on past partnerships and future investments, aiming to extend concessions beyond 2033. The speaker expresses optimism about these negotiations despite their complexity. A separate discussion follows with Jean Ann Salisbury from Bank of America, where Mike Wirth discusses their strong position in the California refining market amid competitor refinery closures, highlighting their two refineries' scale and complexity.

The paragraph discusses challenges related to investing in California due to state policies, which are increasing consumer costs and potentially tightening fuel supply. The speaker criticizes state involvement in operational matters, predicting that such central planning is ineffective. The speaker also addresses a financial query from Biraj Borkhataria regarding the company's strategy to slow down buybacks, noting the importance of balancing buybacks with maintaining a strong balance sheet to support countercyclical opportunities, while reaffirming that the primary financial priority is to grow the dividend.

The company has consistently increased its capital investments for 38 years, with a 5% increase earlier this year. It has been disciplined with capital expenditures, reducing organic and affiliate capital by $1 billion each while maintaining a strong balance sheet with a 14% net debt to AA credit rating. Share buybacks have been conducted in 18 of the last 22 years, including during financial crises, with guidance set between $10 billion and $20 billion based on market conditions. In recent years, they've been buying back shares at a historically high rate with 2022 to 2024 being the peak years. The company aims to maintain a 20% to 25% net debt ratio through economic cycles and is confident in its management approach.

The paragraph discusses a financial strategy and macroeconomic factors affecting the business. Eimear Bonner highlights a strong position in cash generation with plans for significant free cash flow growth, supported by major project start-ups and cost reduction programs, even at lower prices. Doug Leggate from Wolfe Research asks about macroeconomic concerns, specifically the impact of Venezuela's production and Kazakhstan's overproduction on OPEC+ decisions. He inquires about any changes in operations in Venezuela and whether there was any discussion of production curtailment during a meeting with the President to meet quotas.

The paragraph discusses the situation involving Venezuelan oil exports amid sanctions from OFAC, impacting payments for oil liftings to the U.S., resulting in a halt in those shipments. Venezuelan oil continues to flow to other markets, primarily China, with recent discussions between Venezuelan and Chinese officials about further sales. The current U.S. license for trading in Venezuelan oil expires on May 27, and discussions are ongoing about its potential extension. Additionally, the paragraph touches on OPEC+ matters, highlighting that there were no specific discussions regarding OPEC+ targets or Kazakhstan, with the focus instead on a significant project startup and future planning. The production at TCO is highly valued by the government and is critical for their fiscal stability, and it hasn't been subject to output curtailment historically. The paragraph ends with the operator introducing the next question from Lloyd Byrne with Jefferies.

In the paragraph, Mike Wirth discusses the progress of oil production projects in the Gulf of Mexico, specifically focusing on the Ballymore and Anchor projects. He highlights that Ballymore currently has two of its three wells online, with each capable of producing 25,000 barrels a day. The third well is expected to come online later this year, contributing to a total of 75,000 barrels a day. The project has been completed on time and within budget and features some of the highest temperature wells seen in the region. Wirth also mentions the Anchor project, which has two wells online, with plans for two more to start this year and additional ones coming in 2026 and 2027. He notes that while weather poses a potential risk, both projects are progressing smoothly with all necessary resources in place.

In the discussion, Mike Wirth highlights the improvement in performance observed in the Delaware Basin, particularly the second Bone Spring in New Mexico, which exceeded expectations. He mentions that 80% of the previous year's development program was focused on this area, and the expectation is that the 2025 type curves will resemble the successful results seen previously. Looking ahead, 85% of the program for 2025 remains concentrated in the Delaware Basin. Wirth also addresses investor queries about the gas oil ratio, indicating a stable oil cut percentage of 43% to 45% expected to persist through the decade. Additionally, more production on performance (POP) operations are anticipated in New Mexico, leading to larger, more productive wells. Overall, he expresses optimism about the Permian's performance and outlook.

The paragraph features a conversation between Paul and Mike Wirth about a gas project in the Eastern Mediterranean. Mike Wirth expresses excitement about the portfolio inherited from Noble Energy, especially in offshore Egypt, and discusses an agreed field development plan for the Aphrodite project. The initial development plan involves producing about 800 million cubic feet of gas per day in Cypriot waters, which will be transported to Egypt to meet growing demand. They are currently in pre-FEED activities, working towards competitive returns, and preparing for possible FID. Stephen Richardson from Evercore ISI then asks Mike Wirth about his thoughts on CPChem's significant investments amid a downturn in the olefins market.

In the paragraph, Mike Wirth discusses the long-term prospects of the Chemicals business, highlighting recent market challenges due to new capacity additions. He expresses confidence in the business, citing a 25-year successful history with CPChem, which has a strong feedstock position in the U.S. Gulf Coast and the Middle East. Wirth also notes ongoing projects in Qatar and Texas set to be operational by late 2026 or early 2027. He mentions Chevron's interest in acquiring the other half of CPChem at a fair value. Additionally, Wirth addresses a question about Chevron's unique assets in the Permian, stating that there haven't been any significant pullbacks from partners on the non-operated and royalty side.

The paragraph discusses a company's production and financial outlook. Three-fourths of their production comes from large mega-cap companies in core basin areas with low breakevens. They have a line of sight to most AFEs (Authorization for Expenditure) and many POPs (Point of Production) in their NOJV (Non-Operated Joint Venture), with high confidence in production continuation. They have significant exposure in the Permian, allowing them to monitor other operators. On the financial side, an inquiry from Lucas Hermann reveals that the expected equity or dividend contribution is now $2 billion, up from an earlier guidance of $1 billion, due to changes in TCO (Tengizchevroil) depreciation and updates in CPChem (Chevron Phillips Chemical) margin outlook.

In the paragraph, Mike Wirth discusses Chevron's resilience in the face of potentially lower oil prices. He highlights two key factors: the company's portfolio now includes a larger percentage of assets with low decline rates, such as large LNG projects and efficient investments in unconventional resources, allowing for stable and growing production with less capital expenditure. Additionally, Chevron has significant flexibility in its capital budget, having already reduced it by $1 billion from the previous year, and maintains the lowest capital expenditure as a percentage of cash from operations in the industry.

The paragraph discusses the company's flexibility in managing its capital, with a significant portion of its investments in short-cycle shale projects or projects nearing completion. This provides them with the ability to adjust their capital expenditures as needed, as demonstrated in 2020 when they reduced their capital budget from $20 million to $12 million. The paragraph also highlights the company's strategy in the Gulf of America, focusing on infill and staged developments to extend the life of their projects, and maintaining a strong exploration portfolio, with most opportunities within tieback range of existing hubs.

The paragraph discusses Ballymore as a strategic focus area for developing economically viable brownfield projects rather than new greenfield developments. The exploration portfolio is promising, with recent discoveries and optimism about future exploration programs. Development costs have significantly decreased from high levels a decade ago to low-teens, thanks to improved facility design and construction standardization. The company boasts a highly competitive portfolio with the lowest upstream breakeven in the industry, bolstered by deepwater development success. The section also includes an acknowledgment of a question from Betty Jiang about progress and spending on Power Ventures, highlighting increased AI power demand and inflationary pressures.

The paragraph discusses the company's active engagement with potential customers and strong demand for their turbines. They are narrowing down potential sites and moving towards engineering and EPC options. The company aims to make a final investment decision (FID) before the year ends, emphasizing the importance of speed to market while remaining disciplined in handling cost pressures. They have secured turbine pricing but must monitor market demand, tariffs, and other factors to ensure competitive returns. The company is pleased with its first-mover position and notes significant interest and activity. The paragraph concludes with the operator introducing Devin McDermott from Morgan Stanley, who acknowledges prior comments on capital program flexibility.

In this paragraph, Mike Wirth and Eimear Bonner discuss their company's preparedness to navigate potential fluctuations in the oil market. Despite the possibility of softer oil prices, they do not foresee immediate adjustments to capital or short-cycle investments, such as those in the Permian. They emphasize that the company is well-prepared for various market scenarios due to its strong balance sheet, low upstream breakeven, and multiple operational levers. Eimear Bonner highlights the company's robust financial position, with a 14% net debt and an AA credit rating, underscoring their ability to manage through market cycles effectively.

The paragraph discusses a company's recent cost reduction and capital discipline initiatives, positioning them well for the future. They are monitoring leading indicators and are prepared to act if needed. John Royall from JPMorgan inquires about the expansion at the Pasadena facility and its integration with the Gulf Coast system, particularly regarding synergies with Pascagoula. Mike Wirth responds that the project is complete and operational, with crude feed reaching full capacity and optimized plant operations underway. The expansion allows increased crude processing capacity, enhancing product supply to Gulf Coast customers and better integrating production with the Texas market.

The paragraph discusses the synergies and benefits of coordinating operations between two facilities, specifically Pascagoula, to enhance flexibility and margin capture on the Gulf Coast. It highlights the ability to transfer materials between facilities for upgrading or storage during turnarounds, supported by U.S.-flagged shipping. Additionally, during an investor call, Jason Gabelman from TD Cowen inquires about the company's buyback guidance and its oscillation within the range provided. CEO Mike Wirth explains that the company avoids setting a specific formula or percentage for buybacks to maintain steadiness through market cycles and mitigate investor uncertainty, emphasizing the consistency of their approach introduced over two years ago.

The paragraph discusses the company's consistent financial guidance and strategic response to changing market conditions over the years. It highlights their strong financial performance, particularly noting the significant increase in share repurchases post-COVID, compared to pre-2008 financial crisis levels. Specifically, the company has recently set a repurchase range of $10 billion to $20 billion annually, compared to a maximum of $8 billion before. The recent quarterly guidance of $2.5 billion to $3 billion is consistent with this range, despite lower prices than previous years. Additionally, the company emphasizes its commitment to a strong share buyback program and a dividend that is growing faster than its S&P 500 peers. The paragraph concludes with a segue to a final question from Bob Brackett of Bernstein Research.

In the article paragraph, Mike Wirth addresses a question about the impact of tariffs on CapEx or projects, stating that Chevron is closely monitoring the situation and taking measures to mitigate the effects. He notes that their direct exposure is limited as energy is mostly exempt from tariffs and that most of their spending is on services rather than goods. Of the goods purchased, a significant portion is sourced locally or regionally, particularly in the U.S., which minimizes impact. Wirth estimates a potential 1% cost increase for shale wells but believes the impact is manageable. Chevron has been proactive in engaging with suppliers and sourcing from multiple locations to prepare for tariff changes.

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