Q4 2023 Chevron Corp Earnings Call

Good morning, My name is Katie and I will be your.

Katie: Good morning. My name is Katie, and I will be your conference facilitator today. Welcome to Chevron's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Katie: Conference facilitator today welcome to Chevron's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. After the Speakers' remarks, there will be a question and answer session and instructions will be given at that time, if anyone should require assistance during the conference call. Please press Star and then zero on your touch.

Katie: After the speaker's remarks, there will be a question and answer session, and instructions will be given at that time. If anyone should require assistance during the conference call, please press star and then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I will now turn the conference call over to the General Manager of Investor Relations of Chevron Corporation, Mr. Jake Spearing. Please go ahead.

Katie: Telephone as a reminder, this conference call is being recorded.

Katie: I will now turn the conference call over to the General manager of Investor Relations of Chevron Corporation, Mr. Jake Spearing. Please go ahead.

Katie: Welcome to Chevron's fourth quarter 2023 earnings conference call and webcast I'm, Jake Spearing General manager of Investor Relations, our chairman and CEO, Mike Wirth, and CFO, Pierre Braver or on the call with me today.

Jake Spearing: Welcome to Chevron's fourth quarter 2023 earnings conference call and webcast. I'm Jake Spearing, General Manager, Investor Relations. Our Chairman and CEO, Mike Wirth, and CFO Pierre Breber are on the call with me today. We will refer to the slides and prepare remarks that will be available on Chevron's website. Before we begin... Please be reminded that this presentation contains estimates, projections, and other forward-looking statements. Reconciliation of non-GATT measures can be found in the appendix to this presentation.

Katie: We will refer to the slides and prepared remarks that are available on chevron's website.

Katie: Before we begin.

Katie: Please be reminded that this presentation contains estimates projections and other forward looking statements.

Katie: A reconciliation of non-GAAP measures can be found in the appendix to this presentation.

Jake Spearing: Please review the cautionary statement on slide. Now I will turn it over to Mike. Thanks, Jake.

Katie: Please review the cautionary statement on slide two now.

Now I will turn it over to Mike.

Michael K. Wirth: Thanks, Jake and thank you everyone for joining us today.

Michael K. Wirth: And thank you, everyone, for joining us today. Chevron delivered another year of solid results in 2023. During a time of geopolitical turmoil and economic uncertainty, our objective remained unchanged, safely deliver higher returns and lower risk. Our clear and consistent approach resulted in an adjusted ROCE of 14% and enabled a record $26 billion in cash returned to shareholders, while growing production to a company record. We also successfully integrated PDC Energy and announced the HES acquisition.

Michael K. Wirth: <unk> delivered another year of solid results in 2023.

Michael K. Wirth: During a time of geopolitical turmoil and economic uncertainty our objective remains unchanged safely deliver higher returns and lower carbon.

Michael K. Wirth: Our clear and consistent approach resulted in an adjusted <unk>, 14% and enabled a record $26 billion in cash returned to shareholders.

Michael K. Wirth: While growing production to a company record.

We also successfully integrated PDC energy and announced the Hess acquisition.

Michael K. Wirth: We're now focused on the FTC second request and expect to file the draft S-4 later this quarter, with closing anticipated around the middle of the year. And we continue to take action on lowering the carbon intensity of our operations and growing lower carbon business, advancing foundational projects in both hydrogen and carbon capture.

Michael K. Wirth: We're now focused on the FTC second request they expect to file the draft S. Four later this quarter with closing anticipated around the middle of the year.

Michael K. Wirth: And we continue to take action in lowering the carbon intensity of our operations and growing lower carbon businesses.

Michael K. Wirth: Advancing foundational projects in both hydrogen and carbon capture.

Michael K. Wirth: Over the past five year commodity cycle with prices high low and everywhere in between Chevron led the peer group and what we believe are the most important measures that create value.

Michael K. Wirth: Over the past five-year commodity cycle, with prices high, low, and everywhere in between, Chevron led the peer group in what we believe are the most important measures that create value. We were the most capital efficient, while managing unit costs well below inflation and many peers. Capital and cost discipline always matter in a commodity business.

Michael K. Wirth: We were the most capital efficient, while managing unit costs, well below inflation and many peers.

Michael K. Wirth: Capital and cost discipline always matter in a commodity business.

Michael K. Wirth: Combining this discipline with our focused portfolio of advantaged assets, Chevron is able to lead the peer group in returning cash to shareholders. Our five-year dividend growth rate was greater than the S&P 500 and more than double our nearest peer. Surplus cash has been returned to our shareholders in each of the past five years through share buybacks.

Michael K. Wirth: Combining this discipline with our focused a focused portfolio of advantaged assets Chevron was able to lead the peer group and returning cash to shareholders.

Michael K. Wirth: Our five year dividend growth rate was greater than the S&P 500, and more than double our nearest peer.

Michael K. Wirth: Surplus cash was returned to our shareholders in each of the past five years through share buybacks.

Michael K. Wirth: Our track record is proven, and we intend to continue growing value for our shareholders in any environment. In the Permian, we delivered on our full-year production guidance and set a quarterly record of 867,000 barrels of oil equivalent per day while building our duck inventory in the fourth quarter. Looking to the year ahead, our program is back and loaded as we plan to continue to build our duck inventory before adding an additional completion crew in the second half of the year. As a result, we expect production in the first half of the year to be down from the fourth quarter by about 2 to 4 percent before climbing toward a 2024 exit rate of around 900,000 barrels per day. Chevron is a clear leader in permanent financial returns with our unique royalty advantage and strong execution across a diverse portfolio. We have strong momentum and expect to achieve 1 million barrels of oil equivalent per day in 2025. At TCO, we're making progress towards the first phase of WPMP FGP startup. This slide shows how the project fits within the overall field and facility. The field, currently flowing at high pressure, continues to keep the existing plants full.

Michael K. Wirth: Our track record is proven and we intend to continue growing value for our shareholders in any environment.

Michael K. Wirth: In the Permian, we delivered on our full year production guidance and set a quarterly record of 867000 barrels of oil equivalent per day.

Michael K. Wirth: While building our DUC inventory in the fourth quarter.

Michael K. Wirth: Looking to the year ahead, our program is backend loaded as we plan to continue to build our DUC inventory before adding an additional completion crew in the second half of the year.

Michael K. Wirth: As a result, we expect production in the first half of the year to be down from the fourth quarter by about 2% to 4% before climbing toward a 2024 exit rate around 900000 barrels per day.

Michael K. Wirth: Chevron is a clear leader in Permian financial returns with our unique royalty advantage and strong execution across our diverse portfolio.

Michael K. Wirth: We have strong momentum and expect to achieve 1 million barrels of oil equivalent per day in 2025.

Michael K. Wirth: At <unk>, we're making progress towards the first phase of W. P. M. P F <unk> startup.

This slide shows how the project fits within the overall field and facilities.

Michael K. Wirth: The field currently flowing at high pressure continues to keep the existing plants for.

Michael K. Wirth: In fact 2023 net production was the highest since 2020.

Michael K. Wirth: In fact, 2023 net production was the highest since 2020. We've completed a lot of project scope that is already operational. TCO is producing from the new well. The upgraded and new utilities, gathering system, control center, and power distribution system are all currently in operation.

Michael K. Wirth: We've completed a lot of project scope that is already operational.

<unk> is producing from the new wells.

Michael K. Wirth: The upgraded and new utilities gathering system control Center and power distribution system are all currently in operation.

Michael K. Wirth: For WPMP, we're focused on starting up major equipment, including gas turbine generators, pumps, and compressors. We expect to hand over to operations the first pressure boost compressor in March for final dynamic commissioning. Once we have PVF compression on line, WPMP startup is expected to begin in the second quarter when the first metering station is converted to low pressure, which will enable increased flow rates.

Michael K. Wirth: For <unk>, we're focused on starting up major equipment, including gas turbine generators pumps and compressors.

Michael K. Wirth: We expect to handover to operations the first pressure boost compressor in March for final dynamic commissioning.

Michael K. Wirth: Once we have PBF compression online W.

Michael K. Wirth: <unk> startup is expected to begin in the second quarter. When the first metering station is converted to low pressure, which will enable increased flow rates.

Michael K. Wirth: Low pressure production streams going back to existing process units will be driven by the pressure boost compression.

Michael K. Wirth: Low pressure production streams going back to existing process units will be driven by pressure boost compression. At the same time, production for metering stations not yet converted will continue to flow in the high-pressure, We expect metering station conversions through the remainder of the year as additional pressure boost compressors start up, keeping the existing plants full around the planned KTL and SGI turnaround. For FGP, we're focused on starting up additional gas turbine generators and compressors, along with multiple processing units. The sour gas injection facilities have already been handed over to operations for final commission.

Michael K. Wirth: At the same time production for metering stations not yet converted will continue to flow in the high pressure system.

Michael K. Wirth: We expect metering station conversions through the remainder of the year as additional pressure boost compressors startup keeping the existing plants full around planned QTL and SGI turnarounds.

For FTP, we're focused on starting up additional gas turbine generators in compressors, along with multiple processing units.

Michael K. Wirth: Sara gas injection facilities have already been handed over to operations for final commissioning.

Pierre R. Breber: FGP startup is expected in the first half of next year when incremental production enabled by field conversion to low pressure will be processed in the new 3GP facility. Since last quarter, two boilers came online, and two gas turbine generators have delivered. We've seen improvement in work scope delivery and have been working through additional discoveries. We'll continue to update you on progress and remain focused on key milestones to deliver a safe and reliable startup. With that, I'll turn it over to Pierre to discuss the finale. Thanks, Mike. We reported fourth quarter earnings of $2.3 billion, or $1.22 per share. Adjusted earnings were $6.5 billion, or $3.45 per share. Included in the quarter were $3.7 billion in charges pre-announced in January. Foreign currency charges amounted to almost $480 million.

FTP startup is expected in the first half of next year when incremental production enabled by field conversion to low pressure will be processed in the new <unk> facility.

Michael K. Wirth: Since last quarter, two brothers came online and to gas turbine generators of delivered power.

Michael K. Wirth: We've seen improvement in work scope delivery and have been working through additional discovery items.

Michael K. Wirth: We will continue to update you on progress at <unk>.

Michael K. Wirth: Main focus on key milestones to deliver safe and reliable startup.

Michael K. Wirth: With that I will turn it over to Pierre to discuss the financials. Thanks, Mike We reported fourth quarter earnings of $2 3 billion or $1 22 per share.

Pierre R. Breber: Adjusted earnings were $6 5 billion or $3 45 per share.

Pierre R. Breber: Included in the quarter were $3 7 billion in charges pre announced in January.

Pierre R. Breber: Foreign currency charges were almost $480 million.

Pierre R. Breber: Our 2023, Capex included $650 million of inorganic acquisitions and around $450 million invested in legacy PDC assets post closing.

Pierre R. Breber: Our 2023 CapEx included $650 million of inorganic acquisitions and around $450 million invested in legacy PDC assets post-closure. Excluding these items, CAPEX was about 5% above budget after 3 consecutive years below. Share repurchases match the third quarter. Our balance sheet remains strong, ending the year with a net debt ratio comfortably in the single digits. Turning to the quarter, adjusted earnings were higher than last quarter by roughly $730 million. Adjusted upstream earnings improved due to higher lifting, in line with record quarterly production, and favorable timing effects. Adjusted downstream earnings decreased on lower refining margins, partially offset by a favorable swing in timing. All other benefited from lower corporate taxes and employees. For the full year, adjusted earnings decreased nearly $12 billion compared to the prior year. Adjusted upstream earnings decreased primarily due to lower prices.

Pierre R. Breber: Excluding these items Capex was about 5% of our budget after three consecutive years below.

Pierre R. Breber: Share repurchases matched the third quarter.

Our balance sheet remains strong ending the year with a net debt ratio comfortably in the single digits.

Pierre R. Breber: Turning to the quarter adjusted earnings were higher than last quarter by roughly $730 million.

Pierre R. Breber: Adjusted upstream earnings improved due to higher lifting in line with record quarterly production.

Pierre R. Breber: And favorable timing effects.

Pierre R. Breber: Adjusted downstream earnings decreased on lower refining margins, partially offset by a favorable swing in timing effects.

Pierre R. Breber: All other benefited from lower corporate taxes and employee costs.

Pierre R. Breber: For the full year adjusted earnings decreased nearly $12 billion compared to the prior year.

Pierre R. Breber: Adjusted upstream earnings decreased primarily due to lower prices.

Pierre R. Breber: Adjusted downstream earnings were lower largely due to declining refining margins.

Pierre R. Breber: Adjusted downstream earnings were lower, largely due to declining refining margins. However, other segment earnings improved on lower employee costs and higher interest income. Solid financial performance enabled Chevron to deliver, again, on all four of its financial priorities. We announce an 8% increase in our dividends, reflecting our confidence in expected future free cash flow growth. We maintain capital discipline in both traditional and new energy. We reduced debt by over $4 billion, including all debt assumed in the PDC acquisition, and we repurchased about 5% of our shares.

Pierre R. Breber: On the segment earnings improved on lower employee costs and higher interest income.

Pierre R. Breber: Solid financial performance enabled chevron to deliver again on all four of its financial priorities.

Pierre R. Breber: We announced an 8% increase in our dividend, reflecting our confidence in expected future free cash flow growth.

Pierre R. Breber: We maintained capital discipline in both traditional and new energies.

Pierre R. Breber: We reduced debt by over $4 billion.

Including all debt assumed in the PTC acquisition.

Pierre R. Breber: And we repurchased about 5% of our shares outstanding.

Pierre R. Breber: Last year, we produce more oil and gas and in any other year in the Companys history, including a record number of LNG cargoes out of Australia.

Pierre R. Breber: Last year, we produced more oil and gas than in any other year in the company's history, including a record number of LNG cargoes out of Australia. We expect 2024 production to be higher again by four to seven percent. Our plans include production growth in the DJ basin with a full year of legacy PDC operations and continued organic growth in the Permian. Our guidance this year includes an estimated impact from asset sales as we further high-grade our portfolio. Looking ahead, our first quarter downtime estimate includes around 20,000 barrels of oil equivalent per day associated with January's cold weather in North America. Earnings estimates from refinery turnarounds are mostly driven by Pascagoula. Share repurchases in the quarter will continue to be restricted under SEC regulations.

Pierre R. Breber: We expect 2024 production to be higher again by 4% to 7%.

Our plans include production growth in the DJ basin with a full year of legacy PDC operations and continued organic growth in the Permian.

Pierre R. Breber: Our guidance. This year includes an estimated impact from asset sales as we further high grade our portfolio.

Pierre R. Breber: Looking ahead, our first quarter downtime estimate includes around 20000 barrels of oil equivalent per day associated with January as cold weather in North America.

Pierre R. Breber: Earnings estimates from our refinery turnarounds are mostly driven by Pascagoula.

Pierre R. Breber: Share repurchases in the quarter will continue to be restricted under SEC regulations.

Pierre R. Breber: Depending on commodity prices and margins affiliate dividends are estimated around $4 billion.

Pierre R. Breber: Depending on commodity prices and margins, affiliate dividends are estimated around $4 billion, roughly flat with last year. We do not expect significant affiliate dividends in the first quarter. The difference between affiliate earnings and dividends is expected to decrease in the second half of the year after TCO's startup of WPMB. Our CAPEX guidance range is unchanged from the December budget announcement.

Pierre R. Breber: Roughly flat with last year.

We do not expect significant affiliate dividends in the first quarter.

The difference between affiliate earnings in dividends is expected to decrease in the second half of the year after tcl startup of <unk>.

Pierre R. Breber: Our capex guidance range is unchanged from the December budget announcements.

Michael K. Wirth: In prior years, our CapEx rate in the first half of the year was about 20% lower than in the second half. Our price sensitivities have increased at higher production levels. About 20% of the Brent sensitivity relates to oil-linked LNG sales, and less than 10% relates to North America natural gas liquids.

Pierre R. Breber: In prior years, our capex rate in the first half of the year was about 20% lower than the second half.

Our price sensitivities of increase at higher production levels.

Pierre R. Breber: About 20% of the Brent sensitivity relates to oil linked LNG sales and less than 10% relates to North America natural gas liquids back to you Mike.

Michael K. Wirth: Back to you, Mike. In closing, our priorities are clear: safely execute with X, maintain capital and cost dis, and Return Cash to Shareholders. We're excited about the pending Hess acquisition, which will further strengthen Chevron. I also want to personally thank Pierre for his invaluable contributions over his 35-year career with us. He's been an exceptional strategic partner to me and an outstanding leader. Helping guide Chevron to create significant value for shareholders. I wish him all the best in his retirement.

Michael K. Wirth: In closing our priorities are clear safely.

Pierre R. Breber: Safely execute with excellence.

Pierre R. Breber: <unk> capital and cost discipline and return cash to shareholders.

Pierre R. Breber: We're excited about the pending Hess acquisition, which will further strengthen chevron.

Pierre R. Breber: I also want to personally thank Pierre for his invaluable contributions over his 35 year career with our company.

Pierre R. Breber: We had an exceptional strategic partner to me and an outstanding leader helping.

Pierre R. Breber: Helping guide chevron to create significant value for shareholders.

Pierre R. Breber: I wish him all the best in his retirement.

Katie: And I'll hand it off to... That concludes our prepared remarks. We are now ready to take your questions. We ask that you limit yourself to just one question. We will do our best to get all of your questions answered. Katie, please open the line.

And I'll hand, it off to Jacob.

Jacob: That concludes our prepared remarks, we are now ready to take your questions.

Jacob: We ask that you limit yourself to just one question.

Jacob: We will do our best to get all of your questions answered.

Jacob: Katie Please open the line.

Katie: Thank you if you have a question at this time. Please press star one on your Touchtone telephone to allow for questions from more participants we ask that you limit yourself to one question. If your question has been answered or you wish to remove yourself from the queue. Please press star two if.

Katie: Thank you. If you have a question at this time, please press star 1 on your touchtone telephone. To allow for questions from more participants, we ask that you limit yourself to one question. If your question has been answered or you wish to remove yourself from the queue, please press star 2. If you are listening on a speakerphone, we ask you to lift your handset before asking your question to provide optimum sound quality.

Katie: Listen you're on a speaker phone, we ask you lift your handset before asking your question to provide the optimum sound quality again, if you have a question. Please press star one on your Touchtone telephone.

Biraj Borkhataria: Again, if you have a question, please press star 1 on your touchtone telephone. Our first question comes from Biraj Borkhataria with RBC. Hi, thanks for taking my question, and firstly, Pierre, congrats on a great career and all the best for retirement, and thanks for all the help over the recent years. I feel compelled to ask you a question on buybacks because it's your last time, but I'll try and resist. So the question's on the Permian.

RBC: Our first question comes from <unk> <unk> with RBC.

Hi, Thanks for taking my question Firstly.

Speaker Change: Congrats on a great career and all the best for retirement.

Speaker Change: Thank you Laura as all the help over recent years.

Speaker Change: Thanks.

Speaker Change: I feel compelled to ask you a question on buybacks because it's your last time, but I'll try and resist the questions on the Permian.

You had a very strong production number in Q4 client inflection from what.

Michael K. Wirth: You had a very strong production number in Q4, quite an inflection from what we've seen in the last few quarters. And I was interested in particular the comment on, you know, that volume growth alongside building the duck inventory. So presumably, the non-op side was a nice contribution in Q4. So could you just give some clarity on the bridge sort of between 3Q and 4Q? Because the market has been concerned about you hitting the number of the lease for this year, most recently.

Speaker Change: What we've seen last few quarters and I was interested in particular has a comment on that.

Volume growth alongside building the DUC inventory, so I presume you the non op side was a nice contribution in Q4. So could you just give some clarity on the bridge sort of.

Speaker Change: <unk> two <unk> because the market has been concerned about you hitting the numbers at least for this year.

Michael K. Wirth: Thank you. Sure, so. You know, in the third quarter, non-op was a little light, but in the fourth quarter, it came back.

Speaker Change: Most recently thank you.

Sure so.

Speaker Change: In the third quarter non op was a little light.

Speaker Change: But in the fourth quarter. It came back it didnt end of the year not up in royalty are right, where we guided to from the beginning of the year so through the through year.

Michael K. Wirth: It didn't end the year; non-op and royalty are right where we guided to from the beginning of the year. So, you know, through the year, the quarterly ups and downs on some of these things can create some, some questions, but it came in right as we guided to it in, in the mid-teens. You know, the story in the fourth quarter was really strong execution.

Speaker Change: Quarterly ups and downs on some of these things.

Speaker Change: It can create some some questions but.

Speaker Change: It came in right as we guided to it.

Speaker Change: In the mid teens.

Speaker Change: The story of the fourth quarter was really strong execution, we had more pumps. We are because we had faster drilling and faster cycle time on completions, we had a shorter.

Michael K. Wirth: We had more pops because we had faster drilling and faster cycle time on completions. We had a shorter cycle time from frack to pop. So all of those increased. And as you noted, we did continue to build our duck inventory because drilling performance was so strong. A couple other things, pops in the fourth quarter were weighted towards New Mexico.

Cycle time from Frac to pop.

Speaker Change: So all of those increase and as you noted we did continue to build our DUC inventory because drilling performance was so strong.

Speaker Change: Other things Pops in the fourth quarter were weighted towards new Mexico, we had guided towards activity that would lead to more pops in new Mexico in the second half of the year.

Michael K. Wirth: We were guided towards activity that would lead to more pops in New Mexico in the second half of the year. Those wells are more productive, kind of on average than the rest of the portfolio, so that flows through.

Speaker Change: Those wells are more productive.

Speaker Change: And then kind of on average than the rest of the portfolio. So that that flows through and then the final thing that I would point to is we had higher reliability youll recall in the third quarter, we talked a little bit about some midstream constraints and other things that.

Michael K. Wirth: And then the final thing that I would point to is we had higher reliability. You'll recall in the third quarter we talked a little bit about some midstream constraints and other things that weren't related to completions or pops or anything else, but they were constraints on flow. We had fewer frack hits.

Speaker Change: That weren't related to completions or pops or anything.

Speaker Change: Anything else, but there were constraints on flow, we had fewer frac hits, we had fewer scheduled delays weather downtime and midstream issues.

Michael K. Wirth: We had fewer scheduled delays, weather downtime, and midstream issues in the quarter. So all of that contributed to the strong performance there in the fourth quarter. And we ended the year right on our guidance. Thank you very much.

Speaker Change: Issues in the quarter. So all of that contributed to the strong performance there in the fourth quarter and we ended the year right on our guidance.

Speaker Change: Thank you very much. Thank you well thank you.

Neil Mehta: Thank you. We'll go next to Neil Mehta, Wirth Goldman. Yeah, thank you so much, Pierre. You're going out in style, and thanks for all the great insights and wisdom.

Speaker Change: We'll go next to Neil Mehta with Goldman Sachs.

Neil Mehta: Yes. Thank you so much Pierre <unk> gone out of style and thanks for for all the great insights and wisdom over the years.

Pierre R. Breber: Thanks Neil. My question is on slide 6, the TCO update. It sounds like the schedule and the cost guidance that was provided in November is still on track, but for us non-engineers, maybe Mikey can kind of walk us through the schematic and help us understand what boxes are the critical path issues that we should be focusing on. Yeah, so you're right, Neil. The schedule and cost guidance is unchanged. I apologize for a more complex slide than we usually put out in front of you.

Neil Mehta: Thanks Neil.

Neil Mehta: My question is on slide six the Tcl update.

Neil Mehta: It sounds like the schedule of the sand cost guidance that was provided in November is still on track, but for us non engineers maybe.

Speaker Change: He can kind of walk us through the schematic and help us understand what these boxes are the critical path issues that we should be focused on.

Speaker Change: Yeah, So you're right Neil the schedule.

Speaker Change: <unk> cost guidance is unchanged I apologize for a more complex slide then we usually put out in front of you, but we want to be as transparent as we can and help people understand.

Michael K. Wirth: But we want to be as transparent as we can and help people understand what's going on there in the field. You know, last quarter, we talked about our action plan, and we're seeing improved productivity, we've shifted scope amongst contractors, and we've added more engineering support in the field. And as we move through this, you know, we're encountering discovery work; as we expected, we found some around piping stress and alignment that we're working on right now. The key thing to think about here is, first of all, there's a lot of stuff that's up and running; all the new wells are producing right now, all this infrastructure in terms of utility and power distribution control centers is up and running. And as we and so that's keeping the plants full.

Speaker Change: What's going on there at the field.

Speaker Change: Last quarter, we talked about our action plan and we're seeing improved productivity, we shifted scope amongst contractors, we've added more engineering support in the field.

Speaker Change: And as we move through this we're encountering discovery work as we expected we've found somewhere around piping stressing alignment that we're working on right now.

Speaker Change: The key thing to think about here is first of all there's a lot of stuff that's up and running all the new wells are producing right now all of this infrastructure in terms of utility and power distribution control center is up and running and as we.

Speaker Change: So thats keeping the plants full and we saw really strong performance last year I mentioned the strongest in.

Michael K. Wirth: And we saw really strong performance last year; I mentioned the strongest in, you know, in four years and the fourth strongest in the history of the field. So we're seeing good deliverability out of the new wells, which is the key thing for production this year is keeping those plants full while we begin to convert the field from pushing into a high-pressure plant to lower back pressure on the field, which improves deliverability from the wells and allows us to extend the life of the field and get up to a million barrels a day. So, when we begin converting these metering stations, and there are 21 of them, we will then take production from a metering station now that is producing under low pressure, and we'll boost that back up to get it into the existing plant.

Speaker Change: Four years and the fourth strongest in the history of the field. So we're seeing good deliverability out of the new wells, which is the key thing for production. This year is keeping those plants full while we begin to convert the field.

Speaker Change: From pushing into a high pressure plant.

Speaker Change: Two lower back pressure on the field, which improves deliverability from the wells and allows us to to extend the life of the field and get up to a million barrels a day so.

Speaker Change: When we begin converting these metering stations and there are 21 of them.

Speaker Change: We will then take production from metering station now that is producing under low pressure and will.

Speaker Change: Boost that back up to get it into the existing plant as we get more and more of those converted more of these pressure boost compressors online we will get the whole field now producing against the lower back pressure, which gives us a lot of excess well capacity.

Michael K. Wirth: As we get more and more of those converted, and more of these pressure boost compressors online, we'll get the whole field now producing against the lower back pressure, which gives us a lot of excess well capacity, and it ensures that we are going to keep the plant full. And as we then bring on the new process equipment, we start to route that low-pressure production into a plant that will run at lower pressures.

And it ensures that we are going to keep the plant full and as we then bring on the new process equipment. We start to route that low pressure production into a plant that will run at lower pressure.

Michael K. Wirth: And so that's really kind of the high-level description of what we're trying to convey there, and we've got a legend that shows you certain things are going to begin, start happening in various quarters. For FGP, we're focused on commissioning the major equipment there that will allow us to bring up the plant that will take us to a million barrels a day, and we're transferring learnings from compressors, pumps, and other things that we're working on now, walking down all the critical substations. And we'll continue to provide updates on the key milestones. We're talking about a couple of gas turbine generators online.

Speaker Change: And so that's really the kind of the high level description of what we're trying to convey there and we've got a legend that shows you a certain things are going to begin startup in various quarters.

Speaker Change: For FTP, we're focused on commissioning the major equipment, there that will allow us to bring up.

The plants that will take us to a million barrels a day and we're transferring learnings from compressors pumps and other things that we're working on now walking down all the critical Substations and will continue to provide a.

Speaker Change: <unk> on the key milestones here, we're talking about a couple of gas turbine generators online first quarter as inlet separator is ready for operational Commission that suite fluids as we prepared for sour production and then as I said in the second quarter, we began the PBF startup and metering station conversions. So it's all it's all on <unk>.

Michael K. Wirth: The first quarter, the inlet separator is ready for operation, and we'll commission that on sweet fluids as we prepare for sour production. And then, as I said, in the second quarter, we begin the PVF startup and metering station conversions. So it's all on track with our guidance, and we will continue to provide you with detail as we move forward each quarter on specific milestones and progress. This was really helpful, Mike. Thank you so much.

With our guidance and we will continue to provide you detail as we move forward each quarter on specific milestones and.

Speaker Change: And progress.

Speaker Change: That's really helpful. Mike. Thank you so much.

Speaker Change: You bet.

Doug Leggate: You bet. We'll go next to Doug Leggate with Bank of America. Oh, thank you. Good morning, Pierre.

Speaker Change: We'll go next to Doug Leggate with Bank of America.

Oh. Thank you good morning, Pierre and I have to offer my congrats as well on.

Doug Leggate: I have to offer my congratulations as well. And with the quarter today, thanks for making us on the sell side look smart. A nice way to go out.

Doug Leggate: With the quarter today, thanks for making that was in the sell side look smart.

Doug Leggate: A nice way to go out.

Doug Leggate: So best wishes in retirement.

Michael K. Wirth: The best wishes in retirement. Thank you, Dan. My question, Mike, is I guess it's got parts A and B, so apologies to Jake on that, but it's kind of around disposals. Our understanding from the HES side is that despite the fact that you haven't filed the S4 yet, you haven't got the FTC yet, and I realize those processes are ongoing, but the integration planning is still going ahead full steam. And I'm just curious if you can offer any color on how that process has evolved as it relates specifically to portfolio high grading. The absence of Malaysia in your go forward plan, for example; it seems to me the $15 billion number might have a lot of upside. So any color you can offer on that topic is fine.

Speaker Change: Thank you Doug.

Speaker Change: My question Mike.

Speaker Change: Mike is I guess is going to be so apologies to Jake on that but it is kind of a run disposals, our understanding from the Hess side.

Speaker Change: Despite the fact that you haven't filed the S. Four yet you haven't got the FTC, yet and I realize they are those processes are ongoing but.

Speaker Change: The integration.

Planning is still going ahead full steam and I'm just curious if you can offer any color.

Speaker Change: And how that process has evolved as it relates specifically to portfolio high grading the absence of Malaysia and your go forward plan. For example, it seems to me that to $16 billion number might have a lot of upside. So any color you can offer on that topic. Please.

Speaker Change: Yeah, Doug, it's really premature for us to.

Michael K. Wirth: Yeah, you know, Doug, it's really premature for us to, you know, comment on that until the transaction closes. Hess has a pretty tight portfolio of assets that are performing well. And we really need to close the deal, have access to all the data, and reoptimize all of our views of portfolio investments and update our new plan. So I don't want to speculate on any assets. And look, we've got some of our own assets that we do have out in the public domain already. You may have seen reports on K-Bob DuVernay on Congo.

Speaker Change: To comment on that until the transaction closes.

Speaker Change: Hess has a pretty tight portfolio of assets that are performing well.

Speaker Change: We really need to close the deal have access to all the data.

Speaker Change: And re optimize all of our views of portfolio investments and.

Speaker Change: And update our new plan and so I don't want to speculate on any assets.

Speaker Change: And.

Speaker Change: Look we've got some of our own assets that we do have out in the public domain already.

Speaker Change: You may have seen reports on K, Bob Duvernay on the Congo.

Josh Silverstein: So you know, there are some divestments that we have signaled out of the Chevron portfolio. And I think as you see the, you know, the divestments unfold over the next few years because we will have more assets in the portfolio that come from legacy Chevron. That is likely to be a greater contributor, I would guess, to the overall ten to fifteen billion dollar number than things that come in through this transaction. But I can't comment on Malaysia or any other particular asset until we get past the, There are a lot of options. Thanks so much, Mike, for the answer. Thank you, Doug. We'll go next to Josh Silverstein with UBS. Thanks. Good morning, guys.

Speaker Change: So there are some some divestments that we have signaled out of the Chevron portfolio and I think as you as you see the.

Speaker Change: The divestments unfold over the next few years.

Speaker Change: Because we will have more assets in the portfolio that come from legacy Chevron that is likely to be a greater contributor I would guess to the overall, 10% to $15 billion number than things that come in through this transaction, but I can't comment on Malaysia, or any other particular asset until we get past the close.

A lot of options. Thanks, so much thanks for the answer.

Speaker Change: Thank you Doug.

Speaker Change: We'll go next to Josh Silverstein with UBS.

Josh Silverstein: Hey, Thanks, Good morning, guys going back to the Permian, you're stepping up the Capex. This year to about 5 billion versus 4 billion last year to help you deliver that year over year growth.

Josh Silverstein: Going back to the Permian, you're stepping up the CapEx this year to about $5 billion versus $4 billion last year to help you deliver the year-over-year growth. As you continue to ramp towards the million VOE per day target, what's needed from a CapEx standpoint to deliver this growth? Can you stay closer to the $5 billion range, or does that step up towards $6 billion in 2025 because you have an accelerating pace to hit that? Yeah, no. I appreciate the question, Josh.

Josh Silverstein: As you continue to ramp towards the million Boe per day target what's needed from a capex standpoint to deliver this growth can you stay closer to the $5 billion range or does that step up towards 6 billion in 2025, because you have an accelerating pace to hit that.

Speaker Change: Yes no.

Speaker Change: <unk> the question Josh.

Michael K. Wirth: You know, we're starting this year with 12 rigs and three frack crews. I mentioned we'll add a fourth frack crew around the middle of the year. But at the same time, we're becoming more efficient; we need fewer rigs to drill the planned lateral feet that we've got out in front of us. And so, as we close in on a million barrels a day, we're at the capital level that I think is going to be required to get us there. And then the really nice thing about this is, when you're trying to hold the plateau, as opposed to grow from seven to eight to 900 to up to a billion, a million a day, you actually can pull capital spending down because you're offsetting decline. You're And so, you know, inflation has moderated. And, and that has been a challenge.

Speaker Change: Starting this year with 12 rigs and three Frac crews I mentioned will add a fourth frac crew around the middle of the year, but at the same time, we're becoming more efficient we need fewer rigs to drill the planned lateral feet.

Speaker Change: We've got out in front of us and so as we as we close in on.

Speaker Change: Millions of barrels a day were at the capital level that I think is going to be required to get us there and then they're really nice thing about this is.

Speaker Change: When you are trying to hold the plateau as opposed to grow from seven to eight to 900 to a $1 1 million a day.

Speaker Change: You actually can pull capital spending down because youre offsetting decline youre, not trying to offset decline and and grow by significant chunks each year and so.

Speaker Change: Inflation has moderated and that has been a challenge.

Michael K. Wirth: We've talked about some of the things we're moving water around a little bit more, but that's embedded in our plan now going forward. So I would not anticipate that we're going to have to go towards, you know, towards $6 billion in order to get there. And, you know, as we get closer to each year, we'll give you an updated guide to it. But, you know, when we plateau production, capital spending and capital discipline really matter. I just want to emphasize this. We intend to live within our capital means and be really tight on capital.

We've talked about some of the things, we're moving water around a little bit more but that's embedded in our plan now going forward. So.

Speaker Change: I would not anticipate that we're going to have to go towards towards $6 billion in order to get there.

As we as we get to each year, we'll give you an updated guide on it but.

Speaker Change: You know when we plateau production capital spending and capital discipline really matters. So I just wanted to emphasis.

Speaker Change: We intend to live within our capital means and and be really tight on capital and that applies to the Permian along with every other asset.

Michael K. Wirth: And that applies to the Permian, along with every other asset. Great, I appreciate that. We'll go next to Paul Cheng with Scotia. Thank you.

Speaker Change: Great appreciate that.

Speaker Change: We'll go next to Paul Cheng with Scotiabank.

Paul Y. Cheng: Alright, Thank you and first want to congratulate Pierre and thank you for the year to actually all over the past couple of decades that all the help I appreciate it.

Paul Y. Cheng: And first, I want to congratulate Pierre and thank you for all the years, actually, over the past couple of decades, all the help. We really appreciate it. Thanks, Paul.

Paul Y. Cheng: Thanks, Paul My and Pierre I think Lee when you when you first become the hero I think one focus is that.

Michael K. Wirth: Mike and Pierre, I think when you first became the CEO, I think one focus for you was that course method for you, and that over the last several years, there's been a lot of acquisition and change in portfolio. So it's very difficult for us from the outside to see where your core structure is compared to, let's say, before the pandemic in 2019. Is there any way that you can help us in terms of what your structural course base is for you today compared to, say, a number of years ago, especially during the early part of the pandemic? You guys did have a restructuring effort. Thank you. Yeah, Paul, I don't have all that stuff right on the top of my head to go back to 2019. It's a fair request.

Paul Y. Cheng: Cost matters for you.

And that proved out the last April yet, that's a normal acquisition and changing portfolio. So it's very difficult for us from the outside to see.

Paul Y. Cheng: Wednesday or cost structure compare to let's say before the pandemic in 2019.

Paul Y. Cheng: Any ways that you can help us in terms of what is the structural cost.

Paul Y. Cheng: This backlog year to date comparing to say.

Paul Y. Cheng: Yes, it go, especially doing the pump the pandemic you guys did have a restructuring at ball.

Thank you.

Speaker Change: Yeah, Paul I don't have all that stuff right on the top of my head to go back to 2019.

Speaker Change: It's a fair.

Paul Y. Cheng: It's a fair request.

Michael K. Wirth: But look, I think we showed a chart here over the last several years that our unit costs are relatively flat. In fact, I think we're number two on that chart. We don't break out each of the competitors.

Paul Y. Cheng: But look I think we showed a chart in here over the last several years that our unit costs are relatively flat in fact, I think we're number two on that chart, we don't break out each.

Paul Y. Cheng: Each of the competitors.

Paul Y. Cheng: Our our unit Opex last year was about <unk> 80, a barrel, which is about 5% lower than the year before and we still have you know outstand.

Michael K. Wirth: Our unit OPEX last year was about $1,580 a barrel, which is about 5% lower than the year before. And we still have outstanding unit OPEX reduction targets going out to 2026 at mid-cycle. We've had some inflation along the way, but you're right, we took a lot of costs out of the business in 2020 and 2021. So as we bring together Hess, and this gets a little bit to the question that Doug was asking as well, we will come out with an update to investors that talks about the portfolio, and updates guidance on all the metrics that matter. And I assure you that I have not changed my view on cost control.

Paul Y. Cheng: Outstanding unit Opex reduction targets going out to 2026 at.

At mid cycle, we've had some inflation along the way, but you're right. We took a lot of cost out of the business in 2020 and 2021.

Paul Y. Cheng: As we bring together Hess and this gets a little bit to the question that Doug was asking as well.

Paul Y. Cheng: We will come out with.

Paul Y. Cheng: And updates to investors.

Paul Y. Cheng: That talks about the portfolio update guidance on all the metrics that matter.

Paul Y. Cheng: And I assure you that I have not changed my view.

Paul Y. Cheng: Cost control.

Michael K. Wirth: Excuse me, cost control always matters, and Capital Discipline Always Matters. So we will update you on those numbers specifically, Paul. Okay, we're good.

Paul Y. Cheng: Excuse me cost control always matters.

Paul Y. Cheng: And capital discipline always matters.

Paul Y. Cheng: So we.

Speaker Change: We will we will update you on those numbers specifically Paul.

Speaker Change: Okay.

Sam Margolin: Thank you. We'll go next to Sam Margolin with Wolf Research. Hi, good morning.

Speaker Change: Okay.

Speaker Change: We'll go next to Sam Margolin with Wolfe Research.

Sam Margolin: Hi, good morning, Thanks for taking the question and thanks for everything peer maybe this one.

Sam Margolin: Thanks for taking the question. And, you know, thanks for everything, Pierre. Maybe this one... will be an easy or a hard one for you, depending on.

We'll be easy or hard one for you depending on.

Sam Margolin: Depending on what you were planning for it but it's about it's a follow up on Tcl and.

Pierre R. Breber: It's a follow-up on TCO and Kazakhstan and the affiliate dividend guidance. And what's interesting about it is that it's flat year over year with a commodity assumption that may be a little bit lower than the prior year. And you know, within affiliates, there's also some LNG exposure, which isn't as strong as it was last year, you know, X, X TCO.

Sam Margolin: In Kazakhstan, and the affiliate dividend.

Sam Margolin: And what's interesting about it is that it's flat year over year with a commodity assumption that maybe a little bit lower than the prior year and within affiliates Theres also some.

Sam Margolin: LNG exposure, which isn't as strong as it was last year X X T C L.

Pierre R. Breber: And so I guess the question is, like, you know, you've given this really robust technical update on Tengiz and where we stand. But are we already at a point where TCO is sustaining a level of dividends that's a little bit more stable than it was kind of at the peak of the construction process or the installation process? And we're at We're sort of in a progression to this pro forma, you know, very stable cash flow profile from TCO. Or is that just the number? Am I reading too much into that? and Philly Cotton Summer.

And so I guess the question is like.

Sam Margolin: You've given this really robust technical update on tengiz, and where we stand but are we already at a point where T. C. O is sustaining a level of dividends that is a little bit more stable.

Sam Margolin: Then it was kind of at the peak of the construction process or the or the installation process.

Sam Margolin: And we're at we're sort of in a progression to this pro forma.

Sam Margolin: Very stable cash flow profile from Tcl or is that is that number but am I reading too much into that.

Speaker Change: Triton's number thank you.

Thanks Sam.

Pierre R. Breber: Thanks, Sam. Absolutely, TCO dividends are on a higher trajectory just because capital has wound down. And as we've said, when we get the incremental production from FGP, it goes even higher. There are some puts and takes.

Speaker Change: Absolutely Tcl dividends are on a higher trajectory just because capital is wound down and as we said when we get the incremental production from FTP. It goes even higher there are some puts and takes so we talked last year that tcl at held some surplus cash and released that.

Pierre R. Breber: So we talked last year that TCO had held some surplus cash and released that last year. This year, they're going to have to build some cash as they head into debt payments, which, as you recall, we co-lent, so we'll be receiving that. So there are some, you know, there'll be some timing variations, but your point around the trajectory is absolutely right because CapEx is winding down. So this has been largely self-funded as an affiliate company.

Speaker Change: <unk>.

Speaker Change: Last year this year, they're going to have to build some cash as they head into debt payments, which as you recall, we collect so we will be receiving that so there are some there'll be some timing variation, but your point around the trajectory is absolutely right because capex is winding down. So this has been largely self funded as an affiliate company.

Pierre R. Breber: As CapEx goes down, there's more cash available. It does depend on commodity price assumptions. You're right; LNG is in there, and also PetCam.

Speaker Change: As Capex goes down there's more cash available it does depend on commodity price assumptions.

Speaker Change: LNG is in there and also pet Chem and so those are the major drivers a little bit of refining are the major drivers of our affiliate dividends. So it's a it's a roughly flat with the prior year, we'll update that as we go along during the year, but absolutely Tcl, we've been investing in that project for eight years.

Pierre R. Breber: And so those are the major drivers, a little bit of refining, are the major drivers of our affiliate dividends. So it's, it's roughly flat with the prior year. We'll update that as we go along during the year. But absolutely, TCO, we've been investing in that project for eight years. It's going to generate a lot of cash when it comes on next. Thank you so much. And maybe, Sam, just one more point.

Speaker Change: It's going to generate a lot of cash when it comes on next year.

Speaker Change: Thank you so much and maybe Sam just one more point in which youre going to see too is because it is tricky as an affiliate that that that line. That's affiliate earnings less dividends, that's going to flip.

Nitin Kumar: And what you're going to see, too, is because it's tricky as an affiliate, that line that's affiliate earnings, less dividend, that's going to flip, you know, and until you see it, it'll be hard for everyone to model it. But what has historically been a line where affiliate earnings are higher than dividends, you will see that flip in time as we pull out more cash out of TCO, in particular from the earnings than the book earnings. Thank you. We'll go next to Nitin Kumar with Mizuho. Hi, good morning, everyone.

Speaker Change: Until you'll see it'll be hard for everyone to model it but what has been historically align where affiliate earnings are higher than dividends.

Speaker Change: We'll see that flip in time as we pull out more cash.

Out of Tcl in particular, then the earnings than the book earnings are.

Speaker Change: Thank you.

Mizuko Kumar: Well then we will go next to <unk> Kumar with Mizuho.

Mizuko Kumar: Hi, good morning, everyone and thanks for take my question.

Nitin Kumar: And thanks for taking my question. So it's a part A and part B type of question, but really on the Permian. Mike, in your slides, you highlight that optimized well spacing and maybe coring up where you were drilling in 2023 helped the well productivity. At the end of the day, you had talked about some technologies. And I'm just curious, were any of the improvements you saw in 23 related to those?

So part of in part because of a question, but really on the Permian.

Ankur Kumar: Mike in your slides you highlight that.

Optimize well spacing and.

Ankur Kumar: Maybe coring up where you were drilling in 2023 health the well productivity as.

At the Analyst day, you had talked about some technologies and I'm. Just curious were any of the improvements you saw in <unk> related to those and then part B very quickly.

Michael K. Wirth: And then part B very quickly is, you know, you're growing almost 200,000 barrels from here until in the next two years. Last quarter, you had some infrastructure issues. What are you doing to get ahead of those infrastructure issues so they don't resurface over that planned period?

Youre growing almost 200000 barrels from here until in the next two years last quarter, you had some infrastructure issues.

Ankur Kumar: Are you doing to get ahead of those infrastructure issues of their own resurface over that time period.

Michael K. Wirth: Yeah, and what I would say on technology, I reference the fact that we're drilling more feet out of the same rig fleet, and we're improving on completions. And so there are a lot of small things that are contributing to the performance that we're seeing right now. The improved recovery technologies are in various stages of being piloted out in the field.

Ankur Kumar: Yes.

Ankur Kumar: I would say on.

Technology I referenced the fact that we're drilling more feet out of the same rig fleet, we're improving on completions and so there are a lot of small things that are contributing to the performance that we're seeing right now.

Ankur Kumar: <unk>.

Ankur Kumar: Improved recovery technologies are in various stages of being piloted out in the field and so to the extent some of those pilots are in the production they contribute but I would say it's at the margin.

Michael K. Wirth: And so to the extent some of those pilots are in production, they contribute, but I would say it's at the margin. Because we're gathering field data to look at changes in, you know, completion and fracture techniques, using gas injection and gas lift in different ways, using some different chemicals to improve flow. So as we get those into large-scale deployment, we'll start to talk about that, and we'll help you understand how they're contributing. But I would say right now that it's more on the drilling and completions cycle time side that we're seeing some of these improvements. And so there's more to come.

Ankur Kumar: Because we are gathering field data to look at changes in.

Ankur Kumar: Completion and fracture.

Techniques.

Using gas injection and gas lift in different ways.

Ankur Kumar: Using some different chemicals to to improve flow so.

Ankur Kumar: As we get those into large scale deployment will start to talk about that and we will help you understand how they are contributing but I would say right now it's more on the drilling and completions.

Ankur Kumar: Cycle time side that we're seeing some of these improvements and so there is there is more to come.

Michael K. Wirth: On midstream infrastructure, some of the issues that we've talked about before can be weather-related, they can be related to some regulatory issues, they can be related to a particular gas processing plant or gathering or offtake pipeline system. We're working on all of those because your point is well made that as a large producing asset at that scale, we need really, really reliable performance downstream of the wells. And we have no constraints on takeaway capacity from the basin.

Our midstream infrastructure.

Some of the issues that we've talked about before it can be that can be weather related they can be related to some regulatory items. They can be related to particular gas processing plant or gathering or offtake pipeline system. We're working all of those because your point is well made as a large producing asset.

Ankur Kumar: At that scale, we need really really reliable performance downstream of the wells and we have no constraints on takeaway capacity out of the basin. So we're well positioned not just for 'twenty, four but into 25% and 26 with ultimate takeaway capacity to access the market, but we do have a.

Michael K. Wirth: So we're well positioned, not just for 24, but into 25 and 26, with ultimate takeaway capacity to access the market. But we do have a lot of pipes, pumps, tanks, and other things between the field and the market, and those things need to perform. And, And that is a high priority for our operations team in the field. As I mentioned, fourth quarter performance was very strong. And, and they're on this, and it's a very high priority. We saw a little bit of weather in January, which Pierre guided to that'll have a modest impact, but we're confident that we've got a line of sight on all the operational priorities in order to ensure that that market access isn't. Thanks, Mike. We'll go next to Devin McDermott with Morgan Stanley. Hey, thanks for taking my question. And Pierre, I want to echo the congratulations. Thanks for all the help over the years. I wanted to circle back to TCO.

Ankur Kumar: A lot of Pi.

Ankur Kumar: Pipes pumps tanks, and other things between the field and the markets and those things need to perform and and that is a high priority for our operations team in the field as I mentioned fourth quarter performance was very strong and and they're on this and it's a very high priority. We saw a little bit of weather in January which Pierre guided to that will have.

Ankur Kumar: A modest impact but.

Ankur Kumar: We're confident that we've got.

Ankur Kumar: Line of sight on all the operational.

Ankur Kumar: Priorities in order to ensure that that market access isn't constrained.

Speaker Change: Thanks, Mike.

Speaker Change: We'll go next to Devin Mcdermott with Morgan Stanley.

Devin Mcdermott: Hey, Thanks for taking my question and Pierre I want to Echo the congrats thanks for all the help over the years.

Devin Mcdermott: Thanks for that I wanted to circle back to Tcl and Mike I think last quarter. When you provided the updated guidance on timeline one of the things that you noted was workforce productivity and I was wondering if you could comment on some of the changes that you've implemented to improve labor productivity.

Devin J. McDermott: And Mike, I think last quarter when you provided the updated guidance on the timeline, one of the things that you noted was workforce productivity. And I was wondering if you could comment on some of the changes that you've implemented to improve labor productivity over the past several months and how it's progressing versus plan. And in your comments, you mentioned improved scope of work in the context of FGP. I'm not sure if that's related to labor or something else. But if you could elaborate on that comment as well, that'd be great.

Over the past several months, how it's progressing versus planned and in your comments you mentioned improved scope of work in the context of FTP I'm not sure if that's related to labor or something else, but if you could elaborate on that comment as well that'd be great. Thanks.

Michael K. Wirth: Thanks. Yeah, so, you know, we have multiple contractors working on commissioning and startup. And so this involves everything from walking systems down to ensure that they've been properly inspected, that, you know, what we refer to as punch list items have been identified, which is work that still needs to be completed by contractors. And then you get into the loop checks and equipment runs and all the work to bring pieces of equipment up into service.

Speaker Change: Yeah. So we have multiple contractors working on commissioning and startup and so this is everything from walking systems down to ensure that they have been properly inspected.

Speaker Change: We refer to as Punchless items have been identified which.

His work that still needs to be completed by contractors and then you get into the loop checks and equipment runs and all the work to bring pieces of equipment up into service. So.

Michael K. Wirth: So we've got a number of contractors working on this. We've moved scope from contractors that have had lower productivity to those that have exhibited higher productivity. We've brought in additional resources to beef up the overall capacity. And on the resources or the contractors that have had lower productivity, we've worked with them to understand where the constraints are in the bottlenecks.

Speaker Change: So we've got a number of contractors working on this we've moved scope from contractors that have had lower productivity to those that have exhibited higher productivity. We've brought in additional resources to.

Speaker Change: Two to beef up the overall capacity and the resources or the contractors that had lower productivity. We've worked with them to understand where are the constraints and the bottlenecks and and we've seen one who had a productivity factor as we measure it that was down in the four range previously is up above seven now.

Michael K. Wirth: And we've seen one who had a productivity factor, as we measure it, that was down in the kind of 0.4 range previously, is up above 0.7 now. And we're targeting to get that up again by a similar quantum. So there's a lot of work on the ground to be sure we get the right people working on the right things, so we have enough contract resources there that we're also bringing in technical resources as we discover items that need more technical solutions. And that can include company people or vendor people.

Speaker Change: We're targeting to get that up again by a similar quantum so.

Speaker Change: So theres a lot of work on the ground to be sure we get the right people working on the right things that we have enough contract resources. There that we're also bringing technical resources as we discover items that need more technical solutions and that can include company people or vendor people and and we're out much further ahead.

Michael K. Wirth: And we're out much further ahead. Last quarter or the quarter before, the walk-downs and other identification of issues were a few short weeks ahead of the crews that were actually doing this work. We're several weeks now, you know, seven, eight, or more weeks out ahead of the teams that are doing the work. So you have a much better ability to plan and execute the work in a much more efficient manner because you've got some time to put the work packs together, get the permits done, be sure that you've got all the right tools, equipment, et cetera.

Speaker Change: Last quarter or the quarter before.

Speaker Change: The walk downs and other identification of issues was a few short weeks ahead of the crews that we're actually doing this work. We're several weeks now seven to eight or more weeks out ahead of the teams that are doing the work. So you got a much better ability to plan and execute the work in a much more efficient manner, because <unk> got some time to put the work package together get the permitting done.

Speaker Change: Sure that <unk> got all the right tools equipment et cetera. So.

Michael K. Wirth: So it's a great big project, Devin. It's the largest brownfield project and the most complex brownfield project I've seen in my life. And we're seeing good improvements in terms of the on the ground performance out of our team and out of all the contractor teams that are working on it. Great, thanks.

Speaker Change: It's a great Big project Devin, it's the largest brownfield project and most complex brownfield project I've seen in my life.

Speaker Change: And where we're seeing good improvements in terms of the underground performance out of our team and out of all the contractor teams that are working on this.

Speaker Change: Great. Thanks.

Jason Gabelman: We'll take our next question from Jason Gabelman with TD Cowen. Yeah. Hey, I just want to echo everyone's comments. Pierre, it's been great working with you and good luck in retirement.

We'll take our next question from Jason <unk> with TD Cowen.

Jason: Yeah, Hey, just want to echo everyone's comments, it's been great working with you and good luck in retirement.

Jason: Thank you Jason.

Jason Gabelman: Um, I wanted to go back to the Permian Basin, and I appreciate the type curve data that you provided on the back of the slide deck. It's a bit difficult to reconcile with the data, with the type curves you provided, particularly for the Delaware at 2023 Capital Markets Day, when you forecasted a large improvement in productivity. Can you just talk about whether your type curves, particularly in the Delaware Basin, ended up in line with where you anticipated them being, as shown in that Capital Markets Day type curve? Thanks.

Jason: I wanted to go.

Jason: I'll go back to the Permian Basin and I appreciate the type curve.

Jason: Now that you've provided in the back of the slide deck.

Jason: Difficult to reconcile with the data with the type curves you provided particularly for the Delaware at the 2023 capital markets day, when you forecasted.

Jason: A large improvement in productivity.

Jason: Can you just talk about if you're.

Jason: Type curves, particularly in the Delaware Basin ended up in line with where you.

Jason: Anticipated them being as shown in that capital markets day type curve. Thanks.

Michael K. Wirth: Yeah, so. I'll quickly just touch on the Midland Basin, where we continue to be a first quartile performer, steady, consistent performance. We understand the geology; there's less fluid complexity.

Speaker Change: Yeah. So.

Speaker Change: I'll quickly just touch on the Midland Basin, where we continue to be a first quartile performer steady consistent performance, we understand the geology geology theres less fluid complexity.

Michael K. Wirth: And so we're a top quartile, you know, a first quartile performer there in the Midlands. In the Delaware, we last year showed actual data on a Delaware-wide basis, and then we showed some forward guidance, particularly focused on New Mexico, because we were shifting so much of our program into New Mexico, which, as I mentioned earlier, is a more productive portion of the basin. And in Delaware-New Mexico, we saw a significant improvement with our second half POPs last year. More than 80 percent of our POPs were in the second half in these more productive areas, and the subsurface performance there has been very strong. In the appendix, we've got a slide that shows you that 49 out of the 59 POPs were in the second half, and you can see that they lay right on the type curve.

Speaker Change: And so we're a top quartile first quartile performer there in the Midland in the Delaware.

Speaker Change: Last year showed.

Speaker Change: Actual data on a.

Speaker Change: Delaware wide basis.

Speaker Change: And then we showed some forward guidance, particularly focused on new Mexico, because we were shifting so much of our program into new Mexico, which as I mentioned earlier is a more productive portion of the basin and the Delaware The Mexico, we saw.

Speaker Change: A significant improvement with our second half Pops last year more than 80% of our pumps.

Speaker Change: We're in the.

Speaker Change: The second half in these more productive areas in the subsurface performance. There has been very strong in the appendix. We've got a slide that shows you a $49 59 Pops are in the second half and you can see that they lay right on on the type curve.

Speaker Change: And then you can see the improvement in the Delaware Basin in Texas, which we didn't guide to.

Michael K. Wirth: And then you can see the improvement in the Delaware Basin, Texas, which we didn't guide to last year because it was in that combined chart there. But we've seen strong improvement. We've updated our well spacing and completion designs there, and, you know, within the basin there are subbasins, and some of those are performing exceptionally well as well. So we're seeing performance that is very consistent with what we outlined on the markets day last year. I think the shift in basis was just to provide you with a little bit more detail about these subbasins, and we'll continue to report on that basis going forward. And just as a reminder, Jason, last year's performance in New Mexico wasn't impacted by long-sitting ducks, so the year-on-year is bang-on, it's consistent with the SID guidance, and you see the improvement in Texas because Thanks. We'll take our next question from Joffrey Labouchon with TPH. Morning, everyone.

Speaker Change: Last year, because it was in that combined chart there, but we've seen we've seen strong improvement we've updated our well spacing and completion designs there.

Speaker Change: And within the basin, there sub basins and some of those are performing exceptionally strong as well. So we're seeing we're seeing performance that is very consistent with what we outlined in the in the markets day last year I think the shift in basis was just to provide you a little bit more detail into the sub basins and we'll continue to report on that basis going forward.

Speaker Change: And just as a reminder to Jason So last year's performance in new Mexico. It wasn't impacted by long sitting deck. So the the year on year is bang on its consistent with the guidance and you see the improvement in Texas, because there was the impact from long sitting ducks in the prior year.

Speaker Change: Thanks.

Speaker Change: Thanks.

Speaker Change: We will take our next question from Jeffrey Bruce.

With GBH <unk> company.

Jeffrey Bruce: Good morning, everyone. Thanks for taking my question I wanted to follow up actually on the Permian and specifically ask on the program. This year, what kind of opportunity do you see from here for further improvements of spacing and completion design cycle times, if any in the Texas, Delaware region and could what's working well there translate to dealers.

Joffrey Labouchon: Thanks for taking my question. I wanted to follow up on the Permian and specifically ask about the program this year. What kind of opportunity do you see from here for further improvement to the spacing and completion design cycle times, if any, in the Texas-Delaware region, and could what's working well there translate to New Mexico to make those wells even stronger, quicker to drill and complete, or even to the Midland side? And then secondly, how are you all thinking about the mix of capital allocation across these regions within the Permian throughout this year? Yeah, so, um... You know, we're constantly looking to learn and improve. And as I mentioned earlier, we've seen significant improvement in drilling time, completion time, and time from completion to production this year. And these are a lot of little things, right?

Jeffrey Bruce: Mexico.

Jeffrey Bruce: To make those wells, even stronger within a drill and complete or even to the Midland side and then secondly, how are you all thinking about the mix of capital allocation across these regions within the Permian throughout this year. Thanks.

Yeah. So.

Jeffrey Bruce: We're constantly looking to learn and improve and.

Jeffrey Bruce: And as I mentioned earlier, we've seen significant improvement in drilling time completion time.

Jeffrey Bruce: From a completion to pop this year and these are a lot of little things right. This is as you continue doing things you find more and more efficiencies, we can bring more technology to bear et cetera.

Michael K. Wirth: As you continue doing things, you find more and more efficiencies. We can bring more technology to bear, et cetera. So we look to extend those learnings across the basin and, frankly, between basins. So into the DJ basin and from the DJ basin down to the Permian. You know, there are differences in the sub-basins that you have to understand and respect. But I mean, the short answer is yes.

Jeffrey Bruce: No.

Jeffrey Bruce: And we look to we look to extend those learnings across the based on frankly between basins, so into the DJ basin and from the DJ Basin.

Jeffrey Bruce: Down to.

Jeffrey Bruce: Down to the Permian.

Jeffrey Bruce: There are differences in the sub basins that you have to understand and.

Jeffrey Bruce: In respect but.

Speaker Change: I mean, the short answer is yes, we are looking for ways to transfer.

Michael K. Wirth: We are looking for ways to transfer learnings across there. And every time I think we're probably at a plateau in terms of productivity improvement, smart people find ways to continue to get even better at this. So I don't think we've seen the end of the performance improvement cycle. Our overall capital allocation to the basin is largely a function of where our portfolio lies. About 25% is in the Midland Basin and 25% is in the Delaware, New Mexico portion of the basin.

Speaker Change: Learnings across there and every time I think we're probably at.

Speaker Change: At the plateau in terms of productivity improvements smart people find ways to continue to get even better at this and so.

Speaker Change: I don't think we've seen the end of the performance improvement cycle, our overall capital allocation into the basin is largely a function of where our portfolio lies.

Speaker Change: About 25% is in the Midland Basin, 25% is in the in.

Speaker Change: In the Delaware New.

Speaker Change: New Mexico.

Speaker Change: Portion of the base and then the balance about 50% is in Delaware, Texas, It's been that way here.

Michael K. Wirth: And then the balance, about 50%, is in Delaware and Texas. It's been that way here. This past year and going forward, that's a pretty good way to approximate it. Great. Appreciate the time.

Speaker Change: This past year and going forward Thats, a pretty good way to to approximated.

Speaker Change: Great I appreciate the time.

Speaker Change: We'll go next to John Royall with Jpmorgan.

John S. Watson: We'll go next to John Royal with J-P-E-N-D-I-C-K-E-N-D-I-C-K-E-N-D-I-C-K-E-N-D-I-C-K-E-N-D-I-C-K-E, Hi, good morning and thanks and congratulations to Pierre. I'm going to give you guys a break on TCO and the Permian. I'm going to ask a question on the DJ.

John Royall: Hi, good morning, and thanks, and congratulations to up here.

John Royall: I'm going to give you guys a break on TCE Oh and.

John Royall: The Permian I'm going to ask a question on the DJ.

John S. Watson: So just looking at this growth of 125 KBD for 24, how should we think about that growth off of a Proforma 23 base? I'm just trying to understand what's kind of the underlying, you know, real growth rate in the DJ. And then if you could just update us, you know, with a couple quarters behind you now post-PCE on your broader plans for development in the DJ. Yeah, so.

So just looking at this growth of 125, K B D. For 24, how should we think about that growth off of the pro forma 23 base I'm just trying to understand.

John Royall: What's kind of the underlying real growth rate in the DJ and then if you could just update us with a couple of quarters behind you now post PCE.

John Royall: On your broader plans for for development in the D J.

Speaker Change: Yeah. So.

So we've now got a fourth quarter is the first full quarter with PVC.

Michael K. Wirth: So, you know, we've now got a fourth quarter, and it's the first full quarter with PDC. You know, in the third quarter, we had two months out of the three with PDC in there. And you can see we came in at a little bit over 400,000 barrels a day in the fourth quarter, which is, you know, our plans are to hold the DJ around 400,000 barrels a day going forward in a highly efficient factory. And you know, the fourth quarter was maybe even a little stronger than we might have expected. We had pretty much weather-related downtime in November and December.

Speaker Change: Third quarter, we had two months out of the three with PDC in there and you can see we came in.

Speaker Change: In the fourth quarter little bit over 400000 barrels a day, which is our plans are to hold the DJ around 400000 barrels a day going forward in a highly efficient.

<unk> factory and the fourth quarter was maybe even a little stronger than we might've expected there wasn't as much weather related downtime in November and December and then there were some accounting adjustments that were booked into the fourth quarter that were not really related to operations. So the above four.

Michael K. Wirth: And then there were some accounting adjustments that were booked into the fourth quarter that were not really related operations. So the above 400 is there are a few things contributing to that that probably are not repeating or, you know, are going to pull back a little bit. But we're confident we can hold around 400,000 barrels a day. We're still executing the well design and well spacing that was in the PDC basis of design, which is a little bit different than ours, a few more wells and tighter spacing and driven more to drive volume.

Speaker Change: <unk> hundred is a few things contributing to that that probably are.

Speaker Change: Not repeating or going to pull back a little bit where we're confident we can hold around 400000 barrels a day.

Speaker Change: We're still executing the well design and well spacing that was in the PDC.

Speaker Change: Basis of design, which is a little bit different than ours, a little a few more wells and tighter spacing and <unk>.

Speaker Change: Driven more to drive volume our basis of design is more focused on return on invested capital and so it's wider spacing, it's bigger fracs, but it's less capital overall and higher return and so as we transition to a standardized.

Michael K. Wirth: Our basis of design is more focused on return on invested capital. And so it's wider spacing, it's bigger fracts, but it's less capital overall and higher return. And so as we transition to a standardized, more standardized basis of design across the basin, you'll see that roll into the numbers. We got four rigs that are going. We got permits out for multiple years, you know, nearly to the end of the decade

Speaker Change: Our standardized basis in design across the basin.

You'll see that roll into the numbers, we've got four rigs that are going we've got permits out for multiple years.

Speaker Change: Nearly to the end of the decade.

Michael K. Wirth: And so we're very, very pleased. And we're learning things. I got to tell you, you know, there's some stuff that we've learned from PDC that will apply not only to the rest of the DJ, but it's going to apply in the Permian as well. It's going to help us. You know, going forward, these are high cash margin, low break-even barrels. We plan to hold it at a plateau around 400. And we've got synergies on track there. We've got virtually all the CAPEX synergies essentially in the bag. We're already down to a billion dollars there.

Speaker Change: And so we're very very pleased and we're learning things I got to tell you.

Speaker Change: There's some stuff that we've learned from PTC that will apply not only in the rest of the DJ but it's going to apply in the Permian as well that's going to help us so.

Speaker Change: Going forward. These are high cash margin low breakeven barrels we plan to hold it at a plateau around 400 and the synergies are on track there. We've got virtually all the capex synergies are essentially in the bag, we're already down to $1 billion there.

Michael K. Wirth: OPEX is very close to the $100 million we got it to. We're now seeing some procurement synergies which we hadn't originally envisioned. So everything about it is at or better than what we had planned. Thank you. We'll go next to Lucas Herman with BNP Perry.

Speaker Change: Opex is very close to the $100 million, we guided to were now seeing some procurement synergies, which we hadn't originally envisioned.

Speaker Change: So everything about it is is at or better than what we had guided to.

Thank you.

Speaker Change: We'll go next to Lucas Herrmann with BNP Paribas.

Lucas Herman: Yeah, thanks very much. And Pierre, I'll add my comments to the host right now. Thank you for all the insights. It's always been worth listening to.

Lucas Herrmann: Yes, thanks, very much and.

Lucas Herrmann: Yeah, I'll add my comments to the highest already.

Lucas Herrmann: For all the insights always Seamlessness thing too.

Lucas Herrmann: Okay.

When I look at the growth that you're likely to see in oil in particular over the next two to three years it feels as though you're going to be adding an eye towards half of million, maybe slightly more barrels a pretty high margin black oil.

Lucas Herman: When I look at the growth that you're likely to see in oil, in particular over the next two to three years, it feels as though you're going to be adding towards half a million, maybe slightly more barrels of pretty high-margin black oil. I guess the question is about whiplash, and it's the increased sensitivity that the business is going to have to movements in, you know, a volatile commodity and what, you know, you feel, Pierre, Mike, that implies for the balance sheet and the way you think about balance sheets and managing things. And just, if I could add on, could you just give me an idea of what the loan repayment schedule looks like at TCO?

Lucas Herrmann: And I guess the question is about <unk> is the increased sensitivity of the business is going to have to movements in volatile commodity.

Lucas Herrmann: You feel like that implies the balance sheet and the way you think about balance sheet and managing things.

And just if I can add al could you just give me an idea of what the loan repayment schedule looks like a TCE I wouldn't presume that loan repayments and I will go through the year.

Pierre R. Breber: And I presume that, you know, loan repayments will go through the net in, the net out line on the CapEx side or the investment side of the equation, or, you know, do they play elsewhere? Thank you. Right. No, thanks, Lucas.

Lucas Herrmann: The next day and then outline.

Lucas Herrmann: The capex cycle of investment side of the equation or.

Lucas Herrmann: Do they play elsewhere.

Speaker Change: Thank you.

Right now thanks, Lucas I'll take it we've been overweight upstream and overweight oil liquids for a long time and you are right.

Pierre R. Breber: I'll take it. We've been overweight upstream and overweight oil liquids, you know, for a long time. And you're right, recent acquisitions and Hess certainly add to that. And we like that exposure.

Acquisitions, and Hess, certainly adds to that and we like that exposure.

Pierre R. Breber: In terms of how we manage the balance sheet, I mean, the first thing is that we start with our break even. So what it takes, the oil price it takes to cover our capex and dividend, which was in the low 50s last year. And so we see mostly upside. And that's why we had record share buybacks last year, almost $15 billion, 5% of our shares outstanding, because we were built for a price well below where we currently are. We've also done it while maintaining a strong balance sheet or net debt ratio of 7%.

Speaker Change: In terms of how we manage the balance sheet I mean, the first thing is we start with our breakeven. So what it takes the oil price. It takes to cover our capex and dividend that was in the low <unk> last year and so.

Speaker Change: <unk> seen mostly upside and that's why we had record share buybacks last year, almost $15 billion, 5% of our shares outstanding because they are built for a price well below where we currently are we've also done that while maintaining a strong balance sheet. Our net debt ratio of 7%. We said as we keep our share repurchases steady.

Pierre R. Breber: We've said as we keep our share repurchases steady across the cycle, that we're okay with returning back up towards the low end of our guidance range, which is 20 to 25%. So that guidance, that's a kind of through-the-cycle net debt ratio guidance, that still holds. And if we had a significant change in the portfolio, of course, we would look at that or EMRA would look at that going forward.

Across the cycle that we're OK re levering back up towards the low end of our guidance range versus $20 to 25%. So that guidance, that's a kind of through the cycle net debt ratio guidance that still holds and if we had a significant change in the portfolio of course, we would look at that or EMA would look at that going forward, but I think the actions that.

Pierre R. Breber: But I think the actions that we're taking are consistent with that guidance. And again, adding that exposure when you're built at break even, you know, when we think about our balance sheet, you take into account lots of things, your portfolio, the commodity price outlook, but your break even is really key. And Mike was talking about capital and cost discipline, our ability to fund our reinvestment program in both traditional and new energies and grow the company and pay a growing dividend, right, twice, more than twice our nearest peer, greater than SP500. We just increased it 8%. So all those numbers are before the latest increase.

Speaker Change: We're taking.

Speaker Change: Our consistent with that guidance and again, adding that exposure when you built at the breakeven.

Speaker Change: When we think about our balance sheet.

Speaker Change: Take into account lots of things your portfolio of the commodity price outlook, but your breakeven is really key and Mike was talking about capital and cost discipline, our ability to fund our reinvestment program in both traditional and new energies and grow the company.

Speaker Change: And pay a growing dividend right twice more than twice our nearest peer greater than the S&P 500, we just increase at 8%. So all of those numbers are before the latest increase we can do all that at a low price.

Pierre R. Breber: We can do all that at a low price, return surplus cash, that's how we're going to think about it. So, again, you should expect our net debt to increase over time, depending on commodity prices and how we return cash to shareholders. I would not, you know, having more exposure to high-margin barrels, as you say, that's a good thing; we're built for it. And as long as we keep our break even low and below where prices are trading, we're in a really good spot. And how TCO loan repayments flow through.

Speaker Change: Return surplus cash that's how we're going to think about it. So again you should expect our net debt to increase over time, depending on commodity prices and how we return cash to shareholders I would not.

Speaker Change: Having more exposure to high margin barrels as you say that's a good thing we're built for it and as long as we keep our breakeven low and below where prices are trading we're in a really good spot.

Speaker Change: How do you see more repayments flow through Oh, yes, so articulate and payments that that sorry about that yeah, because I alluded to that that it will not be in cash from ops.

Pierre R. Breber: Oh, yeah, so our TCO loan payments, sorry about that. Yeah, because I alluded to that, that will not be in cash from Ops; that shows up in our investing cash. So Jake and the team will take you all through that. But yeah, what I was saying about that affiliate line, you know, flipping, that's separate from this.

Speaker Change: It shows up in our investing cash flow taken the team will take you all through that but yeah, what I was saying about.

Speaker Change: That affiliate line flipping that's that's separate from this in a different line we will see.

Pierre R. Breber: In a different line, we will see cash being returned. And it's a billion, our share next year, again, in 22 billion, 26, and then in 28 or 30. So all that's disclosed in our 10k. Jake can take you through that.

Speaker Change: Cash being returned and its 1 billion our share next year again in $22 billion 26, and then 28 or 30 30. So all of that is disclosed in our 10-K J J can take you through that but yeah. That's only additional and again, we shouldnt be surprised we've been investing for eight years. In this project that cash is going to come back when the project starts up.

Pierre R. Breber: But yeah, that's only additional. And again, we shouldn't be surprised. We've been investing for eight years in this project, and that cash is going to come back once the project starts up. Okay. Pierre, thanks. And if you're ever in London and fancy a game of tennis, give us a buzz.

Okay.

Speaker Change: Okay. Thanks, and have you ever in London, and fancy game of tennis it was about.

Speaker Change: That's what I'll be doing it sounds good Luca.

Lucas Herman: That's what I'll be doing. Sounds good, Lucas. We'll take our next question from Irene Gimona with Society General. Thank you very much, and Pierre, all the best for the next chapter. My question is about Henry Hub.

Speaker Change: We'll take our next question from Irene homeowner Hem Ono with Society General.

Speaker Change: Thank you very much and all the best for the next chapter and my question is on Henry hub in the New sensitivities you published today.

Irene Gimona: In the new sensitivities you published today, you saw a very material 30% increase in your Henry Hub sensitivity. Is this purely because of PDC and related to that on a macro level? If you can perhaps share your views on the 2024 outlook for Henry Hub, please? Thank you. So I'll start, Irene, and then Mike can take the macro. Yeah, it's a function of PDC, certainly, and then just continued, you know, the associated gas that comes along with the permean. So as we're growing that, it obviously comes along with natural gas. Yeah, and Irene, the macro, I was pulling up the slide on the Henry Hubb sensitivity.

Irene: Still a very material increase annual Henry Hudson City.

Irene: Is this purely because of PDC and related to that on a on a macro level. If you can perhaps share your views on the <unk>.

Irene: For outlook for Henry how please thank you.

Speaker Change: So I'll start Irene and then Mike can take the macro yes, it's a function of PDC certainly and then just continued associated gas that comes along with the Permian. So as we're growing that it obviously comes along with natural gas.

Michael K. Wirth: Yeah, and I ran the macro.

Speaker Change: I was pulling up the slide on the Henry hub sensitivity.

Pierre R. Breber: So broadly speaking, oil markets are pretty balanced right now. I think geopolitics is the thing that is harder to call and could drive movements one way or another. It could be OPEC plus decisions. It could be this conflict in the Middle East. Economic growth in the world continues to be decent, and our outlook on demand growth for oil this year is maybe not quite as strong as last year, but still growing. You know, gas is a little bit different.

So broadly speaking the oil markets are pretty balanced right now I think the geopolitics or the thing that are harder to call and could drive movements, one way or the other could be OPEC plus decisions can be this conflict in the middle East.

Speaker Change: Economic growth in the world continues to be decent and our outlook on demand growth for all this year is maybe not quite as strong as last year, but still growing.

Speaker Change: Gas is a little bit different inventories are high.

Michael K. Wirth: Inventories are high in the U.S. Inventories are high in Europe. We're kind of mostly through the wintertime, certainly through the riskiest period of the wintertime, and now, you know, there's these questions that are not going to really weigh on the market in the near term, but maybe longer term, about exports out of the U.S. And so all of that has got gas markets under a little more pressure than oil markets or refined products, and, you know, that's not unusual. You know, Pierre was just talking about how we built the company to, you know, compete through the cycles, and different parts of the portfolio basket, petrochemicals, are under some pressure right now as well. And so at any point in time, we're going to find some of the fundamentals, you know, probably under pressure.

Speaker Change: In the U S inventories are high in Europe.

Speaker Change: Kind of mostly through the wintertime certainly through the riskiest period of the wintertime.

Speaker Change: And now there is.

Speaker Change: Questions that are not going to really win in the market in the near term, but maybe longer term about exports out of the U S and.

Speaker Change: And so all of that has got gas markets under a little more pressure than oil markets are refined products of <unk>.

Speaker Change: It's not unusual.

Speaker Change: <unk> was just talking about how we build the company too.

Speaker Change: To compete through the cycles and different parts of the portfolio basket petrochemicals are under some pressure right now as well and so at any point in time, we're going to find some of the fundamentals.

Speaker Change: We under pressure others are looking pretty good here in the short term I think Henry hub.

Michael K. Wirth: So it's looking pretty good, and here in the short term, I think Henry Hubb is in the under pressure category. Thank you. We'll go next to Bob Brackett with Bernstein Research. Good morning.

Speaker Change: As in the under pressure category.

Speaker Change: Thank you.

Speaker Change: We'll go next to Bob Brackett with Bernstein research.

Robert Alan Brackett: Good morning, if I look at the production guide of 4% to 7% growth on say $3 1 million and I tried to bookend that between our fourth quarter closer to three four and 2025, where we're going to see Tcl FTP startup plus hitting that $1 billion.

Robert Alan Brackett: If I look at the production guide of 4 to 7 percent growth on, say, 3.1 million, and I try to bookend that between a fourth quarter closer to 3.4 and 2025 where we're going to see TCO, FGP startup, plus hitting that million barrels a day milestone in the Permian sort of implies there's an inflection point in production growth coming at some point, or perhaps there's a conservative guide for this Well, you know, coming into this year, we now have a full year of PDC that'll be part of the portfolio. So that's pretty safe in terms of counting on that. I've already mentioned that the fourth quarter was a little bit higher than maybe we even might have expected because we had high reliability. You know, some of these midstream issues we'd faced in the permium didn't repeat. We had some counting catch-up thing in the permium as well. And we had a pretty light turnaround schedule in the fourth quarter. So it was a strong, strong quarter all the way around.

Robert Alan Brackett: Oral a day milestone in the Permian sort of implies there is an inflection point in production growth coming at some point or perhaps there is a conservative guide for this year is that the right way to think about it.

Robert Alan Brackett: Well.

Speaker Change: Coming into this year, we now have a full year of PDC that'll be part of the portfolio. So that's pretty safe in terms of counting on that.

Speaker Change: You already mentioned that fourth quarter was a little bit higher than maybe we even might've expected because we.

Speaker Change: We had high reliability with you know some of these midstream issues, we faced in the Permian.

Speaker Change: Didn't repeat with.

Speaker Change: There's some counting catch up thing in the Permian as well and we had a pretty light turnaround schedule in the fourth quarter. So it was a strong strong quarter all the way around.

Michael K. Wirth: As we head into next year, we've got some asset sales in the guidance. And, you know, Bob, we've been at the low end. We've kind of ended up the last couple of years hitting our guidance range, but at the low end. And so I think you could probably think of this as being a little more comfortably in the middle of the range this year, given a number of the things that you mentioned.

Speaker Change: As we head into next year, we've got some asset sales in the guidance.

Bob we've been at the low end, we've kind of ended up last couple of years, hitting our guidance range, but at the low end and so.

Bob: I think you could probably think of this as being a little more comfortably in the middle of the range. This year given a number of other things.

Things that you mentioned so.

Michael K. Wirth: So, you know, we try to give you guidance each year that we expect to hit, and we certainly expect to hit it this year. Okay, very clear. Thanks. We will take our last question from Neil Dingman with Truce Security. Good morning, all.

Bob: We tried to give you guidance each year that we expect to hit and we certainly expect to hit it this year.

Speaker Change: Okay very clear thanks.

Speaker Change: We will take our last question from Neal Dingmann with Truth Securities.

Neil Mehta: Thanks for getting me in. My question, Mike, is maybe just on shareholder returns specifically, trying to get a sense of, sounds like you will, but just want to get a sense if you'll continue paying out the majority of free cash flow for the remainder of this year and if the buybacks will continue to constitute, you know, a bit over 50% of that payout. Yeah, you know, Neil, we have not, um.., used some percentage or range of percentage of cash from operations as kind of a go-buy for distributions. What we've done is, you know, leaned on our track record on the dividend, first of all, and we've already clarified what you can expect this year with the 8% increase that we've announced.

Neal Dingmann: Good morning, all thanks for getting me in my question, Mike maybe just on the shareholder returns specifically trying to get a sense of it sounds like you will but just wanted to get a sense. If youll continue paying out the majority of free cash flow for the remainder of this year and if the buybacks will continue to constitute a bit over 50% of that payout.

Michael K. Wirth: Yes, Neal we have not.

Michael K. Wirth: Used some percentage or range of percentage of cash from operations.

Michael K. Wirth: As a kind of.

Go buy for distributions, what we've done as you know.

Speaker Change: Wind on our track record on the dividend first of all in we've already clarified what you can expect this year with the 8% increase that we've announced and then.

Neil Mehta: And then, you know, I would point you back towards our upside and downside guidance that we've had out there for a number of years, 10 to 20 billion on the range for buybacks, and that's in an upside price case. You know, we'd be up towards the higher end of that in a lower price case down at the lower end, both of which we can comfortably handle.

Speaker Change: I would I would point you back towards our upside and downside guidance that we've had out there now for a number of years.

Speaker Change: 10% to $20 billion on the range for buybacks.

Speaker Change: And that's in an upside price case, we'd be up towards the higher end of that in a lower price cases down at the lower end both of which we can comfortably handle we have.

Michael K. Wirth: We have indicated that post-Hess close, although the thing's equal, we'll see when it happens and how the world looks when we get there, but we would expect to move from a rate of 17.5 to the top end of 20 because we're so confident in the long-term cash productive capacity of our portfolio and the strength of our balance sheet. So rather than focusing in on those percentages, I'd really point you towards the specific guidance that we've issued in the, you know, kind of track record. Now, and of course, I think Pierre mentioned this in his comments, we do remain under SEC restrictions right now relative to the rate at which we can buy back, and then we'll be out of the market when the Hess proxy is open. And so all of these things are, you know, under normal times, we don't have one of those constraints.

Speaker Change: Indicated that post that has close.

Speaker Change: Although the things equal, we'll see when it happens and how the world looks when we get there, but we would expect to move from a rate of 17 five to the top end of 'twenty because we're so confident in the long term cash.

Speaker Change: The capacity of our portfolio and the strength of our balance sheet, so rather than focusing in on those percentages I'd really point you towards the specific guidance that we've issued in the kind of the track record and of course I think Pierre mentioned this in his comments, we do remain under.

Speaker Change: Sir.

Speaker Change: Restrictions right now relative to the rate at which we can buy back.

Speaker Change: And then we'll be out of the market when the proxy is open and so all of these things are under normal times, we don't have one of those constraints on us.

Pierre R. Breber: Hey, and I would just add, let me just add a little bit. It's fitting, maybe my last words will be on share buybacks, six straight years of buybacks, right? 17 out of the past 21 years, but we actually bought back more shares last year than the year before, even though earnings and cash flow were higher, right? There were records in 22, still strong in 23. That's the whole point.

Speaker Change: And I was just that.

Speaker Change: Hey, let me just add a little bit it's fitting maybe my last words it'll be on share buybacks six straight years of buybacks right 17 out of the past 21 years, but we actually bought back more shares last year and year before even though earnings and cash flow over higher right. They were records in 2000 is still strong in 'twenty three that's the whole point, we're trying to be steady across the country.

Speaker Change: This cycle, we've heard from investors that buybacks should not be pro cyclical.

Pierre R. Breber: We're trying to be steady across the commodity cycle. We've heard from investors that buybacks should not be pro-cyclical. And it's hard to be counter-cyclical in the commodity business, which has some price volatility. So being steady across the cycle is how we guide to it. And these formulas, in fact, reinforce the opposite. They reinforce pro-cyclicality.

Speaker Change: And it's hard to be countercyclical in a commodity business that has some price volatility so being steady across the cycle.

Speaker Change: We guide to and these formulas in fact reinforce the opposite they reinforce pro cyclicality. So we're giving a return that in some ways is almost independent of prices within a range because we are.

Speaker Change: Could it paid more out in 'twenty, two but we held it back and we use some of that to pay in 'twenty. Three we will see where it goes but the intent is to try to be steady across the cycle, either pro cyclical or countercyclical.

Pierre R. Breber: So we're giving a return that, in some ways, is almost independent of prices within a range, because we could have paid more out in 22, but we held it back, and we used some of that to pay in 23. We'll see where it goes. But the intent is to try to be steady across the cycle, neither pro cyclical nor counter cyclical.

Thanks, Neil peer great departure and comments thank you.

Speaker Change: Thank you I would like to thank everyone for your time today. We appreciate your interest in Chevron and your participation on today's call. Please stay safe and healthy Katie back to you.

Speaker Change: Thank you. This concludes chevron's fourth quarter 2023 earnings Conference call you may now disconnect.

Katie: Pierre, great departure comments. Thank you. Thank you. I would like to thank everyone for their time today. We appreciate your interest in Chevron and your participation on today's call. Please stay safe and healthy. Katie, back to you. Thank you. This concludes Chevron's fourth quarter 2023 earnings conference call. You may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

Katie: Thank you.

Katie: Okay.

Katie: Sure.

Katie: Okay.

Katie: Okay.

Katie: [music].