Q2 2024 Chevron Corp Earnings Call

Justin: Please stand by. Good morning, my name is Justin, and I will be your conference facilitator today. Welcome to Chevron's second quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. 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 for Chevron Corporation, Mr. Jake Spiering. Please go ahead.

Please stand by.

Justin: Good morning, My name is Justin and I will be your conference facilitator today welcome to Chevron's second quarter 2024 earnings Conference call.

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.

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.

Speaker Change: Now I'll turn the conference call over to the General manager of Investor Relations of Chevron Corporation, Mr. Jake Spirit. Please go ahead.

Jake Spirit: Thank you Justin.

Jake Spiering: Welcome to Chevron's second quarter 2024 earnings conference call and webcast. I'm Jake Spiering, Head of Investor Relations. Our Chairman and CEO, Mike Wirth, and CFO, Eimear Bonner, are on the call with me today.

Jake Spirit: Welcome to Chevron's second quarter 2024 earnings conference call and webcast I'm, Jake steering head of Investor Relations, our chairman and CEO, Mike Wirth, and CFO femur bone or are on the call with me today.

Jake Spiering: We will refer to the slides and prepared remarks that are available on Chevron's website. Before we begin, please be reminded that this presentation contains estimates, projections, and other forward-looking statements. A reconciliation of non-GAAP measures can be found in the appendix to this presentation. Please review the cautionary statement on slide two. Now I will turn it over to Mike. Thanks, Jake.

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

Before we begin please be reminded that this presentation contains estimates projections and other forward looking statements. A reconciliation of non-GAAP measures can be found in the appendix to this presentation.

Please review the cautionary statement on slide two.

Jake Spirit: Now I will turn it over to Mike.

Mike: Thanks Jake.

Mike Wirth: This quarter, Chevron delivered strong production and extended our track record of consistent shareholder returns. Production increased by more than 11% from the prior year, and it included a new quarterly record in the Permian.

Mike: This quarter Chevron delivered strong production and extended our track record of consistent shareholder returns.

Mike: Production increased by more than 11% from the prior year.

Mike: A new quarterly record in the Permian.

Mike Wirth: Over the past two years, we've returned over $50 billion to shareholders, approximately 18% of our market cap. We continue to advance growth opportunities in our traditional and new energies businesses by adding new exploration plays in West Africa and South America. Achieving key milestones on the ACES Green Hydrogen Project and commissioning the Geismar Renewable Diesel Plant Expansion, which is expected to come online by the end of the year. The merger with Hess achieved a successful shareholder vote, and we now expect the FTC review process to conclude in the third quarter.

Speaker Change: Over the past two years, we've returned over $50 billion to shareholders approximately 18% of our market cap.

Speaker Change: We continue to advance growth opportunities in our traditional and new energies businesses through adding new exploration plays in West Africa, and South America.

Speaker Change: Key milestones on the Acis Green hydrogen project and commissioning of the Geismar renewal diesel plant expansion, which is expected to come online by the end of the year.

Speaker Change: The merger with has achieved a successful shareholder vote and we now expect the FTC review process to conclude in the third quarter.

Mike Wirth: The arbitration panel addressing the Staybrook JOA has set a hearing for next year. Hess had requested an earlier hearing, but the panel ultimately sets the schedule. We remain confident this is a straightforward matter, and the outcome will affirm a preemption right that does not apply.

Speaker Change: The arbitration panel addressing the state road <unk> has set a hearing for next year.

Speaker Change: <unk> requested an earlier hearing at the panel ultimately sets the schedule.

Speaker Change: We remain confident this is a straightforward matter and the outcome will affirm our France, you're right that does not apply.

Mike Wirth: We're committed to the merger and look forward to combining the two companies. In the Gulf of Mexico, we're leveraging our deep water expertise with plans to deliver high cash margin, low carbon intensity production. First of all, an anchor is imminent.

Speaker Change: We're committed to the merger and look forward to combining the two companies.

Speaker Change: In the Gulf of Mexico, we are leveraging our deepwater expertise with plans to deliver high cash margin low carbon intensity in production growth.

Speaker Change: First of all on the anchor is imminent.

Mike Wirth: Delivering the industry's first deepwater 20,000 pound development, the project is on track to come in under budget while deploying multiple breakthrough technologies. After Anchor, three more projects are scheduled to come online, and we expect production to grow to 300,000 barrels a day by 2026. Our developments have become more capital efficient, unit drilling costs have come down, and facility designs are optimized for high returns. As one of the largest leaseholders in the Basin, we are well positioned for the future with leading technology capability and attractive exploration opportunities near existing infrastructure and in frontier areas.

Speaker Change: Delivering the industry's first deepwater 20000 pound development.

Speaker Change: Project is on track to come in under budget, while deploying multiple breakthrough technologies.

Speaker Change: After anchor three more projects are scheduled to come online and we expect production to grow to 300000 barrels a day by 2026.

Speaker Change: Our development to become more capital efficient unit drilling costs have come down and facility designs are optimized for high returns.

Speaker Change: It was one of the largest lease holders in the basin, we are well positioned for the future with leading technology capability and attractive exploration opportunities near existing infrastructure and in frontier areas.

Speaker Change: In the Permian base business performance continues to improve with higher reliability and lower decline rates.

Mike Wirth: In the Permian, base business performance continues to improve with higher reliability and lower decline rates, and development activity continues to get more efficient. We're one of the first operators to deploy triple frac. We learned that cost reductions of more than 10% and shortening completion times by 25% were applied. In the Delaware Basin, company operative wealth performance continues to improve as we optimize development strategies. In the Midland Basin, early well results are lower versus last year. Our program for the second half of the year is more heavily weighted to development targets than we expect to perform better.

Speaker Change: Development activity continues to get more efficient.

Speaker Change: We're one of the first operators to deploy triple Frac delivering.

Speaker Change: Delivering cost reductions of more than 10% and shortening completion times by 25% were applied.

Speaker Change: In the Delaware Basin company operated well performance continues to improve as we optimize development strategies.

Speaker Change: In the Midland Basin early well results are lower versus last year our.

Speaker Change: Our program in the second half of the year is more heavily weighted to development targets and we expect to perform better.

Mike Wirth: With strong momentum in our operated portfolio and predictable results from our non-operated and royalty acreage, we now expect full year production growth of about 15%, and in the fourth quarter, production to average around 940,000 barrels per day. At TCO, cost and schedule guidance is unchanged, with FGP expected to start up in the first half of 2025. We continue to bring major equipment online and complete key project milestones. Eight out of 21 metering stations have been converted to low pressure, and three pressure boost facility compressors are in operation. A third gas turbine generator is also in service.

Speaker Change: With strong momentum in our operated portfolio and predictable results from our non operated and royalty acreage. We now expect full year production growth of about 15% in fourth quarter production to average around 940000 barrels per day.

Speaker Change: At Tcl cost and schedule guidance is unchanged with <unk> expected to startup in the first half of 2025.

Speaker Change: We continue to bring major equipment online and completed key project milestones.

Speaker Change: Eight out of 21 metering stations have been converted to low pressure.

Speaker Change: Three pressure boost facility compressors are in operation.

Speaker Change: A third gas turbine generators in service.

Mike Wirth: The first 3GP process system is ready for operation, and we completed the SGI turnaround on time and under budget. The wells converted to low pressure are meeting expectations, and the pressure boost facilities are operating with high reliability. Over the next two quarters, we'll continue converting the field to low pressure while further commissioning key equipment for FGP. The project team remains focused on completing the project safely and starting up reliably to deliver value to Kazakhstan, TCO, and shareholders.

Speaker Change: The first three GP process system is ready for operation and we completed the SGI turnaround on time and under budget.

Speaker Change: The wells converted to low pressure are meeting expectations and the pressure boost facilities are operating with high reliability.

Speaker Change: Over the next two quarters will continue converting the field to low pressure, while further commissioning in key equipment for FTP.

Speaker Change: The project team remains focused on completing the projects safely and starting up reliably to deliver value to Kazakhstan, Tcl and shareholders.

Speaker Change: This quarter was a little light due to some operational and other discrete items that impacted results, but I remain confident we are well positioned to deliver our long term earnings and cash flow growth.

Mike Wirth: This quarter was a little light due to some operational and other discrete items that impacted results, but I remain confident we're well-positioned to deliver on long-term earnings and cash flow. Now, I'll turn it over to Eimear to cover the details.

Speaker Change: Now I'll turn it over to <unk> to cover the details.

<unk>: Thanks, Mike.

Eimear Bonner: We reported second-quarter earnings of $4.4 billion, or $2.43 per share. Adjusted earnings were $4.7 billion, or $2.55 per share. Results in the quarter were impacted by downtime and upstream that weighed on realizations, higher expiration expense, and downstream turnaround timing. Organic CapEx was $3.9 billion in line with budget. Our balance sheet remains one of the strongest in the industry, ending the quarter with a net debt ratio of 10.7%

Speaker Change: We reported second quarter earnings of $4 $4 billion or $2 43 per share adjust.

<unk>: Adjusted earnings were $4 7 billion or $2 55 per share.

<unk>: Results in the quarter were impacted by downtime in upstream that weighed on realization.

Speaker Change: Higher exploration expense and downstream turnaround timing.

Speaker Change: Capex was $3 9 billion in line with budget.

Speaker Change: Our balance sheet remains one of the strongest in the industry and in the quarter with a net debt ratio of 10, 7%.

Speaker Change: Chevron generated solid cash flow of nearly $9 billion, excluding working capital.

Eimear Bonner: Chevron generated solid cash flow of nearly $9 billion excluding working capital. Working capital lowered cash flow due to tax true-up payments outside the U.S. and a build in inventories. We expect about half of the working capital to unwind in the second half of this year, primarily in the fourth quarter. We again demonstrated our consistent approach to returning cash to shareholders with $6 billion of dividends and share repayments.

Speaker Change: Working capital lower cash flow due to tax true up payments outside the U S and a build in inventories.

Speaker Change: We expect about half of the working capital to unwind in the second half of this year, primarily in the fourth quarter.

Speaker Change: We again demonstrated our consistent approach to returning cash to shareholders with $6 billion of dividends and share repurchases.

Speaker Change: Adjusted earnings were lower by $700 million versus last quarter.

Eimear Bonner: Adjusted earnings were lower by $700 million versus last quarter. Adjusted upstream earnings were down mainly due to lower liftings, higher expiration expense, and the absence of favourable tax impacts from the prior quarter. Partly offsetting these higher realizations were higher realizations.

Speaker Change: Adjusted upstream earnings were down mainly due to lower lifting higher exploration expense and absence of favorable tax impacts from the prior quarter.

Speaker Change: Partly offsetting were higher realizations.

Eimear Bonner: Adjusted downstream earnings were down due to lower margins and reduced capture rates, although this is partially offset by timing. All other decreases were mainly due to a tax trail. Compared to last year, adjusted second quarter earnings were down $1.1 billion. Adjusted upstream earnings were flat, as higher realizations and listings were mostly offset by higher dDNA due to the PDC acquisition and the absence of prior year favorable tax items. Adjusted downstream earnings decreased mainly due to lower refining margins and higher turnaround in transportation operations.

Speaker Change: Adjusted diluting earnings per dying due to lower margins and reduced capture rates. This was partially offset by timing effects.

Speaker Change: All other decreased mainly due to tax trail.

Speaker Change: Versus last year, adjusted second quarter earnings were down $1 $1 billion.

Speaker Change: Adjusted upstream earnings were flat.

Speaker Change: Realizations in lifting were mostly offset with higher DD&A due to the PTC acquisition on the absence of prior year favorable tax items.

Speaker Change: Adjusted Dine stream earnings decreased mainly due to lower refining margins and higher turnaround and transportation Opex.

Eimear Bonner: The other segment was down primarily due to state tax adjustments. Worldwide oil equivalent production was up over 11% from last year due to the acquisition of PDC Energy and significant growth in the Permian Basin. Now looking ahead. The third quarter will have heavier than usual maintenance with several turnarounds at upstream assets, including TCO and Gorgon. Impacts from refinery turnarounds are mostly driven by El Segundo.

Speaker Change: The other segment was down primarily due to state tax adjustments.

Speaker Change: Worldwide oil equivalent production was up over 11% from last year due to the acquisition of PDC energy a significant growth in the Permian basin.

Speaker Change: Now looking ahead.

Speaker Change: The third quarter will have heavier than usual maintenance with several turnarounds in upstream assets, including Tcl and Gorgon.

Speaker Change: Impacts from refinery turnarounds are mostly driven by also going down.

Eimear Bonner: There will be a one-time payment related to discontinued operations of around $600 million. We anticipate affiliate dividends to be around $1 billion this quarter. With the project in Kazakhstan nearing completion, we expect quarterly dividends from TCO moving forward. As a reminder, Chevron pays a 15% withholding tax on dividends from TCO, which lowers both earnings and cash flow. Sherry Purchases are targeting the $17.5 billion annual guidance rate. Asset sales in the second half of the year are expected to be aligned with full year guidance. Back to you, Michael.

Speaker Change: There'll be a onetime payment related to discontinued operation of around $600 million.

Speaker Change: We anticipate affiliate dividends to be around $1 billion this quarter.

Speaker Change: With the project in Kazakhstan, nearing completion, we expect quarterly dividends from Tcl moving forward.

Speaker Change: As a reminder, chevron pace of 15%, but holding tax on dividend from Tcl, which lowers both earnings and cash flow.

Speaker Change: Share repurchases are targeting to $17 5 billion dollar annual guidance rate.

Speaker Change: Asset sales in the second half of the year are expected to be aligned with full year guidance.

Mike: Back to you Mike.

Mike Wirth: Okay, thanks, Eimear. Today we announced that Chevron's headquarters will move from San Ramon to Houston to enable better collaboration and engagement, both internally and externally. We also announce the retirements of Nigel Hearne, Executive Vice President of Oil, Products, and Gas; Colin Parfit, Vice President of Midstream; and Rhonda Morris, Vice President and Chief Human Resources Officer, after long and distinguished careers. I want to extend my sincere thanks to Nigel, Colin, and Rhonda for their service and their many contributions to our... And finally,

Mike: Okay. Thanks Amer.

Speaker Change: Today, we announced the roofing chevron's headquarters from San Ramon to Houston to enable better collaboration and engagement, both internally and externally.

Speaker Change: We also announced the retirement of Nigel her executive Vice president of oil products and gas.

Speaker Change: Although department, Vice President Midstream, and Rhonda Morris, Vice President and Chief Human Resources Officer, after a long and distinguished careers.

Speaker Change: I want to extend my sincere, thanks, and Nigel Colin and Rhonda for their service and their many contributions to our company.

Speaker Change: And finally.

Mike Wirth: I'd like to offer our deepest condolences to the family of our former chairman and CEO, Ken Durr, who passed away three weeks ago. His vision and leadership helped guide Chevron through momentous times to create a high-performing company with outstanding people and a portfolio that distinguishes our business to this day. Ken left an indelible legacy for our company and all those whose lives have been made better by his leadership. He will never be forgotten.

Speaker Change: I'd like to offer our deepest condolences to the family of our former chairman and CEO of Kinder, who passed away three weeks ago.

Speaker Change: Ken's vision and leadership helped guide Chevron through momentous times to create a high performing company with outstanding people in our portfolio that distinguishes our business to this day.

Speaker Change: Ken left an indelible legacy for our company.

Speaker Change: And all of those who lives whose lives have been made better by his leadership.

Speaker Change: You will never be forgotten.

Jacob: Back to you Jacob.

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

Mike Wirth: That concludes our prepared remarks. We're now ready to take your questions. Please limit yourself to one question. We will do our best to get all of your questions answered. Justin, please open the line.

Jacob: Please ask you limit yourself to one question.

Speaker Change: We will do our best to get all of your questions answered Justin Please open the line.

Speaker Change: Thank you if you have a question at this time. Please press star one touchtone telephone to allow questions for 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 you are listening on a speaker phone.

Justin: Thank you. If you have a question at this time, please press star 1 on your touchtone telephone. To allow questions for 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 please lift your handset before asking your question to provide optimum sound quality.

Speaker Change: We ask you to please limit please lift your handset before asking your question to provide optimum sound quality again, if you have a question. Please press star one on your Touchtone telephone.

Justin: Again, if you have a question, please press star 1 on your touchtone telephone. And our first question comes from Neil Mehta with Goldman Sachs. Yeah, thank you so much, and congratulations to Nigel, Colin, and Rhonda on their retirement. My question, Mike, was really focused on TCO, and it sounds like we are making progress on that project, but this is a critical period of time during the summer productivity period, so I just would love your thoughts on how FGP is progressing.

Speaker Change: And our first question comes from Neil Mehta with Goldman Sachs.

Speaker Change: Yeah. Thank you so much and congratulations to Nigel Collyn and Rhonda on their retirement.

Neil Mehta: My question, Mike was really focused around Tcl and <unk>.

Speaker Change: It sounds like we are making progress on that project, but this is a critical period of time during the summer productivity period. So just would love your thoughts on how FTP is progressing and then.

Justin: And then as it relates to Kazakhstan, we're getting a lot of questions about the contention extension as we think about the next decade, and I recognize that's a long way away, but maybe you can help to address some of the investor debate around that topic as well. Sure.

Speaker Change: As it relates to Kazakhstan, we're getting a lot of questions about.

Speaker Change: The concession extension as we think about next decade, and I recognize that's a long way away, but maybe you can help to address some of the investor debate around that topic as well.

Mike Wirth: Sure. Thanks, Neal, and thanks for your kind remarks about a retiring executive. So, at TCO, as I covered in my comments, we're really seeing steady and consistent progress. Work is being planned and liquidated in sequence, which is resulting in strong daily, weekly, and monthly progress. I get a weekly report straight from the project team with a tremendous amount of detail. I'm in regular contact with them, and I can tell you that they are really on top of their game.

Speaker Change: Sure Thanks, Neil and thanks for your kind remarks about our retiring executives.

Speaker Change: So it <unk> as I covered in my comments, we're really seeing.

Speaker Change: Steady and consistent progress work is being planned and liquidated in sequence, which is resulting in strong daily weekly and monthly progress I get a weekly report straight from the project team with a tremendous amount of detail I'm in regular contact with them and.

Speaker Change: And I can tell you that they are really on top of their game.

Mike Wirth: As I said, we've got three of the pressure boost facilities up and running, the fourth not far away, and WPMP is operating very reliably. So, we're pleased with the performance of the equipment. We're very pleased with the performance of the wells flowing at low pressure, and it's early days, but it augers very well for the maintenance of strong production out of the field for a long time to come.

Speaker Change: As I said, we've got three of the pressures facilities up and running before it's not far away and in W. P. M. P is operating very reliably. So we're pleased with the performance of the equipment. We're very pleased with the performance of the wells flowing at low pressure and it's.

Speaker Change: It's early days, but it augurs very well for the.

Speaker Change: Maintenance of strong production out of the field for a long time to come on FTP.

Mike Wirth: On FGP, you know, we're going to have additional FGP major equipment and systems ready for operations or started up later this quarter, and we're just going to continue to work our way through that. You know, we're moving into more complex process units as opposed to some of the big rotating equipment and field metering station conversions, so the nature of some of the startup work on FGP will be a little bit different.

Speaker Change: We're going to have additional FTP major equipment and systems are ready for operations or started up later this quarter.

Speaker Change: And we're just going to continue to work our way through that you know we're moving into more complex.

Speaker Change: Processing units as opposed to some of the big rotating.

Speaker Change: Equipment and field metering station conversion so the nature of some of the startup work on FTP will be a little bit different. The other thing to recall is we do have a large turnaround this quarter. So.

Mike Wirth: The other thing to recall is that we do have a large turnaround this quarter, so, you know, good progress. The one thing that we won't compromise is safety or reliability in pursuit of a schedule, but I can tell you that the team is all over that. With respect to the concession, you know, we're really focused right now on getting this project up and running. The concession expiration is nearly ten years away, and the most important thing we can do is make sure that this big, complex project is started up safely and reliably.

Speaker Change: Good progress the one thing that we won't compromise safety or reliability in pursuit of schedule, but I can tell you. The team is all over that.

Speaker Change: With respect to the concession you know, we're really focused right now on getting this project up and running the concession exploration is nearly a decade away.

Speaker Change: And in the most important thing we can do is make sure that this big complex project is has started up safely and reliably.

Mike Wirth: To remind people that may not know, this is one of the world's deepest producing super-giant oil fields, and it's the largest single trapped producing reservoir in existence, so TCO is very important to the Republic of Kazakhstan, it's very important to us, and we'll certainly be in discussions with the government over time about potential extension. You know, the key thing is that an extension needs to create value for the country, and it needs to create value for Chevron shareholders.

Speaker Change: To remind people that may not know this is one of the world's deepest producing supergiant oilfields and it's the largest single trap producing reservoir in existence. So <unk> is very important to the Republic of Kazakhstan is very important to us and we'll certainly be in discussions with the government over time about potential.

Speaker Change: Extension the key thing is.

Speaker Change: An extension needs to create value for the country and it needs to create value for chevron shareholders.

Mike Wirth: We always seek that kind of outcome. We've extended concessions in other places where value was created for both parties, and then there have been some instances over the recent period of time where we couldn't achieve that outcome, and we did not extend, so we'll be talking more about this subject over time, but right now, we're really focused on project execution and continuing the strong performance in delivering FGP. Thanks, Neal. And next is Alastair Syme with Citi. Thanks Mike, you know this period of limbo around HASS is obviously a period you don't want to be in.

Speaker Change: Always seek that kind of an outcome we've extended concessions in other places where value was created for both parties.

Speaker Change: And then theres been some instances over the recent period of time, where where we couldnt achieve the outcome and.

Speaker Change: And we did not extend so we'll be talking more about this subject over time, but right now we're really focused on project execution and continuing the strong performance on delivering F. G P.

Neil: Thanks Neil.

Neil: And next is Alastair Tim with Citi.

Alastair Syme: And next is Alastair Syme with Citi.

Neil: Okay.

Alastair Tim: Thanks, Mike.

Speaker Change: This period of limbo around Paas is obviously a period you don't want to be in.

Alastair Tim: It's not clear to me when the FCC rules or if they push outs.

Speaker Change: Until arbitration is essentially the previously because it's all part of my question to you is it do you feel are limited.

Neil: Do any other significant portfolio development.

Neil: An interim period.

Speaker Change: I guess, if the right opportunity came along that is.

Alastair Tim: Yeah.

Mike Wirth: Yeah, you know. You could do something else if you wanted to.

Speaker Change: You could do something else. If you wanted to this is a transaction that is the right transaction for us and so we're very we're very focused on it.

Mike Wirth: This is the transaction that's the right transaction for us. And so we're very focused on it, Alastair. And we've made good progress with the shareholder vote. We're steadily marching along with the FTC. And I've already mentioned the timeline for the arbitration. So it's sometimes good things you have to work for.

Alastair: Alastair and.

Alastair Tim: <unk>.

Alastair Tim: We've made good progress with the shareholder vote.

Alastair Tim: Steadily marching along with the FTC and and I've already mentioned the timeline on the arbitration so.

Alastair Tim: It's sometimes good things you have to work for and this will take a little bit more time than we had anticipated, but we remain confident in the outcome and.

Mike Wirth: And this will take a little bit more time than we had anticipated, but we remain confident in the outcome. And as I tried to cover in our prepared remarks, we've got a really strong queue of organic growth opportunities in flight right now. We didn't mention the Eastern Med, which is another one. So we've got projects in multiple regions of the world that are poised to deliver growth over the next three years.

Speaker Change: And as I tried to cover in our prepared remarks, we've got a really strong Q of organic growth opportunities in flight right. Now we did mentioned in the eastern Med, which is another one so we've got projects.

Alastair Tim: In multiple regions of the world that are.

Alastair Tim: Poised to deliver growth over the next three years absent the house, we've got a 10% growth in free cash flow, we've got projects coming on.

Mike Wirth: Absent Hess, we've got a 10% growth in free cash flow. We've got projects coming on, you know, numerous basins in the world, and in our chemicals business as well. So we're really focused on that and creating value there, but if another opportunity were to present itself that was compelling, we're certainly in a position to consider it. Thanks for the questions. And the next question will come from Paul Cheng with Scotiabank. Thank you. Mike, can you talk about the...

Alastair Tim: Numerous basins in the world and in our chemicals business as well. So we're really focused on that and in creating value there, but if another opportunity were to present itself that were compelling.

Alastair Tim: Certainly in a position to consider it.

Speaker Change: Thanks for the thanks for the question.

Neil: And the next question will come from Paul Cheng with Scotiabank.

Paul Cheng: And the next question will come from Paul Cheng with Scotiabank.

Mike Wirth: Yeah, thanks, Paul. I appreciate it. You and I have known each other for a long time.

Paul Cheng: Thank you Mike can you talk though.

Speaker Change: Potential for further.

Speaker Change: Cost efficiency gain.

Paul Cheng: With that you see over the next two or three years, because volatility and could you quantify that.

Paul Cheng: And if that opportunity set for you guys. Thank you.

Paul Cheng: Yeah. Thanks, Paul I appreciate it you and I have known each other for a long time, so you know that.

Mike Wirth: So you know that capital discipline and cost discipline are near and dear to my heart, and they always matter in a commodity business. You know, year to date and second quarter unit OPEX for us was about $16 a barrel, which is down about 5% from 2022. And improving unit OPEX continues to be a focus. Some of the actions we're taking today drive down energy usage, which is a way to both reduce cost and emissions at the same time. In the upstream, we're electrifying rigs in the Permian. And we're lowering steam use at our San Joaquin Valley operations.

Speaker Change: Capital discipline and cost discipline are near and Dear to my heart and they're always matter in a commodity business.

Alastair Tim: Year to date in the second quarter unit Opex for US was about $16, a barrel, which is down about 5% from 2022.

Speaker Change: Improving unit Opex continues to be a focus some of the actions, we're taking today driving down energy usage, which is a way to both reduce costs and emissions at the same time in the upstream we're electrifying rigs in the Permian, we're lowering stimulus at our San Joaquin Valley operations in the downstream we are implementing energy efficiency.

Mike Wirth: In the downstream, we're implementing energy efficiency projects at our refineries that reduce gas consumption and power use. We're also optimizing supplier contracts, implementing a minimum functional objective approach to operations and maintenance activities at key assets TCO and our LNG plants in Australia, and we're confident that we'll continue to find new ways to increase efficiencies and reduce unit costs. Our plans would call for further unit cost reductions, and I think you can look for us to use technology. For instance, the breakthroughs we're seeing in data technology offer significant opportunities for both efficiency, asset productivity, improved safety, and other performance.

Alastair Tim: CNC projects at our refineries that reduce the gas consumption and power use.

Alastair Tim: We're also optimizing supplier contracts.

Alastair Tim: Implementing a minimum functional objective approach to operations and maintenance maintenance activities at key assets like.

Speaker Change: TCE Oh and.

Speaker Change: And our LNG plants in Australia, and we're confident that we'll continue to find new ways to increase efficiencies and reduce unit cost our plans would call for further unit.

Speaker Change: Cost reductions and.

Speaker Change: I think you can look for us to.

Speaker Change: Use technology for instance, the.

Speaker Change: The breakthroughs, we're seeing in data technology offer significant opportunities for both our efficiency asset productivity.

Speaker Change: <unk> safety and other performance and so.

Mike Wirth: You can rest assured that I am focused on costs; we are focused on costs, and you'll continue to hear more about that from us over time. Thanks, Paul.

Speaker Change: You can rest assured that I am focused on costs. We are focused on costs and youll continue to hear more about from that from us over time.

Paul Cheng: Thanks, Paul Thanks, Paul.

Speaker Change: Yeah.

Biraj Borkhataria: And the next question will come from Biraj Borkhataria with RBC.

Speaker Change: And the next question will come from Raj <unk> with RBC.

Raj: Hi, Thanks for taking my question I wanted to just go back to Kazakhstan on the F. T E ramp up so.

Mike Wirth: Hi, thanks for taking my question. I wanted to just go back to Kazakhstan and the FTP ramp-up. I wasn't asking an operational question, but I appreciate FGP's on track, but it was related to the OPEC promises or curtailment. So Kazakhstan this year has been a bit ahead of its quota, stated quota, and if you take the headline figures from OPEC into next year, it doesn't look like there's a huge amount of room in that quota for growth, and obviously FGP's So I just wanted to get your thoughts on any sort of issues or risks related to that. Thank you. Yeah, thanks, bro.

Raj: I wasn't asking the operational question, but I know I. Appreciate FTP is on track, but it was related to the OPEC promises or gets elements of Catholic family. She has been.

Speaker Change: Ahead of its quota stated quota if you'd take the headline figures from OPEC into next year. It doesn't look like the huge amount of room in that are in that cause it to grow and obviously S. T piece of that is some central projects. So I just wanted to get your thoughts on any sort of <unk>.

Speaker Change: Issues or risks related to that thank you.

Mike Wirth: Yeah, thanks, Biraj. So, obviously, we're not party to those discussions. We comply with, you know, the requirements in any country where we operate, including if they have some sort of production targets or requirements that they impose upon producers in the country. We have not received any indication from the Republic of Kazakhstan with regard to any curtailments relative to OPEC+.

Speaker Change: Yeah. Thanks barrage so.

Speaker Change: Obviously, we are not party to those discussions we comply with the requirements in any country, where we operate including if they have.

Speaker Change: I have some sort of production.

Speaker Change: Targets of requirements that they impose upon.

Speaker Change: Producers in the country.

Speaker Change: We have not received any indication from the Republic of Kazakhstan, and with regards to any curtailments relative to two OPEC plus.

Mike Wirth: You know, what often happens there is with the production of several big assets, you have turnarounds, projects, and other things that create some degree of variability across multiple different producers. And I think the Republic, you know, looks to manage that and fit their plan together. So I don't have any unique knowledge about 2025, but we have a very close relationship. I will tell you that the TCO barrels are very attractive, from a contribution to the Republic standpoint.

Speaker Change: What oftentimes happens there is with the production in several big assets, you have turnarounds projects and other things that create some degree of variability across multiple different producers and I think the Republic.

Speaker Change: It looks to manage that and.

Speaker Change: Fit fit their plan together, so I don't have any unique knowledge about 2025.

Speaker Change: But we are we have a very close relationship I will tell you that the tcl barrels.

Speaker Change: I think from a contribution to the Republic standpoint are very attractive.

Mike Wirth: And our intent is to produce at full capacity at any point in time for our facility in order to maximize revenue for the Republic and for Chevron. So if there's further developments on that front, we'll certainly provide them, but we don't have anything from the government right now.

Speaker Change: And our intent is to.

Speaker Change: Is to produce at full capacity at any point in time for our facility in order to maximize revenue for the Republic and for Chevron. So if there is further developments on that front will certainly provide them, but we don't have any anything from the government right now.

Speaker Change: Thank you.

Speaker Change: And we'll take a question from Doug Leggate with Wolfe Research.

Doug Leggate: And we'll take a question from Doug Leggate with Wolf Research.

Mike Wirth: Thank you. Good morning, everyone. Hey, Mike, I'm delighted to see you guys come to Houston. Welcome.

Doug Leggate: Thank you good morning, everyone, Hey, Mike I'm delighted to see you guys come to just welcome.

Doug Leggate: But if you want to stop by for coffee, let me know. Mike, I missed out on the last earnings call, and I apologize for bringing it up. I know it's highly sensitive and highly, I guess, subjective, but the issue around the played arbitration, I wanted to pose a question to you and see if we can get you to probe a little bit on this. Exxon Mobil, regardless of their motivation, has stated that they have no interest in buying Hess.

Speaker Change: But.

Speaker Change: We want to still buy for coffee, let me know but.

Speaker Change: Mike I missed out on the last earnings call and I apologize for bringing it up I know, it's highly sensitive and highly <unk>.

Speaker Change: I guess subjective but the.

Speaker Change: The issue around the blade arbitration.

Speaker Change: I wanted to pose a question to you and see if we can get you to pull a little bit on this.

Speaker Change: Exxon Mobil, regardless of their motivation has stated that they have no interest in buying tests.

Mike Wirth: But at the same time, our understanding is the bigger concern is global contractual ROFR credibility, you know, protecting that aspect of a contract. So without going into too much of the legalities, I wonder if there is a compromise? [inaudible] cut short the arbitration timeline, so you don't have to go to arbitration. For example, okay, I acknowledge you have a roofer, but Exxon acknowledges they're not going to exercise a roofer, so everybody gets to, you know, protect their contracts for Exxon and secure their acquisition for Chevron. Is there a compromise that could cut the arbitration short? is my question.

Speaker Change: But at the same time.

Speaker Change: Our understanding is the bigger concern is global contractual rule for credibility protecting that aspect of our contract.

Speaker Change: Going into two onto the legalities I wonder is there a compromise.

Speaker Change: Got kids caught short the arbitration timeline. So you don't have to go to arbitration for example.

Speaker Change: Okay acknowledge you have a rule for Exxon technologies, they're not going to exercise at all of course, everybody gets too.

Speaker Change: Protector contracts for Exxon and secure your acquisition for Chevron is it a compromise that could cut the arbitration short was my question.

Mike Wirth: Yeah, hey, it's great to hear a familiar voice back on the call, Doug, and I look forward to seeing you in Houston. What you have outlined is very sensible. It could be the foundation for something, but I really can't comment on specific conversations. I think we have indicated previously that there was a period of time where Hess and Chevron worked with the other partners in the Staybrook block to try to find a resolution here that accommodated everybody's interests, and that time has now passed, and we're in the arbitration process.

Speaker Change: Yeah, Hey, it's great to hear a familiar voice back on the call, Doug and and I look forward to seeing you in Houston.

Speaker Change: You were you have outlined.

Speaker Change: It's very sensible.

Speaker Change: You know could be the foundation for something.

Speaker Change: But I really can't comment on specific conversations I think we have indicated previously that there was a period of time, where.

Speaker Change: Hess and.

Speaker Change: Chevron and worked with the other partners in the state broke block to try to find a.

Speaker Change: A resolution here that accommodated everybody's interests and and that that time is now past and we're in the arbitration process. So that that's the path that we're on.

Mike Wirth: So that's the path that we're on. We sought something along the lines of an outcome as you described earlier, but it doesn't appear that that is how this is going to end up. Everything is confidential, obviously, the language in the contract. Contracts around the world have specific language, and in each instance, I think the parties understand how that contract is written and how it would apply.

Speaker Change: We thought of something along the lines of an outcome as you described earlier, but.

Speaker Change:

Speaker Change: Contracts around the world have specific language and.

Speaker Change: Understand how that contract is written and and how it would apply so.

Mike Wirth: You know, I really can't say anything more about it than that. Thank you, Doug. And the next question comes from Josh Silverstein with UBS. Hey, thanks. Good morning, guys. Nice update on the Permian. I was wondering if you could provide a little bit more details around

Josh Silverstein: And the next question comes from Josh Silverstein of UBS.

Mike Wirth: Yeah, so look, the Permian is performing strongly, as you can see in the numbers. And just to remind everybody, about 80% of our program is in Delaware.

Mike Wirth: The performance is up year on year, and first half 24 production overall in the basin now averaged over 870,000 barrels a day, which is essentially flat or even slightly up from the fourth quarter of last year. The drivers of that are improved performance across multiple dimensions of the business, and in the base business, we're seeing lower decline from proactive maintenance efforts, lower operated downtime, and artificial lift optimization. I mentioned triple frack earlier, which is reducing costs and increasing cycle time.

Mike Wirth: So the, you know, spud to pop cycle has shortened further, so we're getting more pop days online than we might have a year ago, and well performance, as I said, in the Delaware has been very strong. In the Midland, you know, some of the first half pops have been a little bit below expectation. There's only a finite number of pads, I could count them on one hand, that are involved in this, and, you know, we're always moving into new zones, new acreage, and as part of that, you know, we've got an active learning and continuous improvement effort to be sure we're optimizing development across the basin, because it is not completely homogeneous, and so as we're testing new zones to, you know, better inform our future development plans we learn, in this particular case, the learnings will be applied as we go forward.

Mike Wirth: That said, as I mentioned, the second half pops are actually not, won't carry nearly the same component of continual improvement kind of exploration or testing here, and they're much more similar developments that have performed very well in the past. I think the thing, you know, you can pull yourself up from that, and look, this is a big long-term asset that's got a lot of life ahead of us, and we should be continually improving it so that over time, we can deliver even stronger returns, and stronger performance, and we should be learning as we develop it as the basin matures, and, you know, it's exceeding expectations for this year. We've raised our full-year guidance, and we've got great confidence in what we can deliver in 2020.

Roger Read: And the next question comes from Roger Read with Wells Fargo.

Mike Wirth: Hey, good morning. Let's want a mic, and yeah, welcome to Texas. If we could maybe dig into the Gulf of Mexico, as you said, the first kind of 20,000 PSI development, what are the, Given that it's new, what are some of the experiences you've had, or the industry has had, with this level of pressure? And what are some of the things we should be watching for? Maybe in another way of asking the question, how have you gotten comfortable on the technology side, in terms of bringing this forward and developments behind it?

Mike Wirth: Yeah, I might make a couple of comments on that, and then ask Eimear, who was our chief technology officer before becoming our chief financial officer. You know, moving into that pressure regime, obviously, you need bigger equipment because you have to contain higher pressures, you've got greater wall thickness on all your equipment, it's heavier, you need. We have a lot of technology qualification to satisfy our own standards and to satisfy the regulator that every element of your kit is proven at pressures well beyond anything that it will see in service.

Mike Wirth: And so this goes from components large to small, and you get into tighter tolerances and a whole host of other things as you step up the pressure regime there. So I would say that we've worked closely with some of our suppliers who have developed the specific equipment that is in place, and we're very pleased with everything from the drilling rigs and the equipment that's used in drilling to trees and production equipment, both subsurface and surface. So you might have some thoughts from your technology days to share with us. Yeah, Mike, you had it all.

Eimear Bonner: Yeah, Mike, you hit on one key thing, and that is the partnership that was demonstrated here between ourselves, with industry partners to be able to deliver the first 20K subsea development and, you know, answer your question in terms of how did we get it comfortable. I think it was because we brought the best of our engineers, the best of our suppliers, the best technology that we had, several examples of technology, proprietary technology that we brought, and the extensive testing So, you know, some things to mention just to put that in perspective. You know, we delivered the first 20K subsea well completion and subsea production trees and manifolds, so this is the core equipment that protects us from loss of containment and ensures that we, you know, safely and reliably can operate the field.

Eimear Bonner: We drilled wells, we developed a drilling rig, and we built a drilling rig with our partners to enable drilling at these depths and the equipment to allow us to do that. It had very special dynamic positioning technology as well. On the subsurface side, when we think about the prospect and how we were able to see it and get a really good, accurate image of it, we used our proprietary seismic technology here.

Eimear Bonner: This was more of our in-house Chevron proprietary technology to help us with that image, and that enabled us to make the right decisions about the development and optimize the development. So those are just a couple of examples of where surface and subsurface technology really enabled us to achieve this outcome.

Devin Mcdermott: And the next question will come from Devin McDermott with Morgan Stanley.

Eimear Bonner: Hey, good morning. Thanks for taking my question. Eimear, I wanted to stick with you, and I have a bit of a strategy question for you. If we kind of put together several of the things that have been talked about on this call so far, the TCO startup, strong premium production growth, rising production in the Gulf of Mexico, it all kind of materializes in the form of this inflection in free cash flow as we go into 2025 and beyond.

Eimear Bonner: And Chevron has historically had four, I think, very consistent priorities for the use of cash. But now that you've had some time in the CFO role, I was wondering if you could talk about your views on the optimal use of cash, especially in the context of your current low leverage levels and how you're thinking about the tradeoff between further dividend growth or more buybacks as cash flow rises over the next few years.

Eimear Bonner: Yeah, thanks, Devin. Well, I'm thinking about it consistent with how we have for decades and consistent with our long-standing financial priorities. So just to step through them, you know, first, it's growing the dividend. That's our first priority. So cash that enables us to continue with our track record of growing the dividend for 37 years. So that's the first priority.

Eimear Bonner: And when we look at the projects that we have, and the growth that's underway, that Mike talked about, our 10% free cash flow growth really supports future dividend increases. So when we think of cash, that's where it goes, first and foremost. Secondly, to invest in the business to deliver profitable growth and to use that capital efficiently. This is an area of leadership for Chevron.

Eimear Bonner: And when you when you look at the percentage of CapEx as a percentage of CFFO, and so I'm focused on ensuring that we maintain leadership in this area. And your point about the balance sheet, you know, our third priority is to maintain a strong balance sheet. We are currently under-levered, and we expect and are comfortable with modestly increasing the leverage over time, but to stay within historical ranges. We look at our balance sheet as an asset to create value, manage volatility, and ensure steady capital returns through the cycle.

Eimear Bonner: And so, when we've satisfied all three of the financial priorities, the fourth is to return surplus cash to shareholders through buybacks. And that's what we intend to do. And we take a multi-year view of that, considering a range of commodity prices. So, you know, in my time at the company, on the business side and on the corporate side, I've seen how these financial priorities have served us well, and they'll continue to serve us well. And, you know, so in my time, they're not going to change. Thanks.

Nitin Kumar: And the next question will come from Nitin Kumar with Mizuho.

Mike Wirth: Hi, good morning Mike, and thanks for taking our questions. I want to maybe shift the focus on the downstream side. You know, last quarter you had a heavy turnaround schedule, and just the way things worked out, it probably wasn't the best timing. As you're coming out of that turnaround, what are you seeing in your markets? And if you can maybe touch on renewable diesel specifically with Geyser coming on later this year, you know, what's the outlook for economics?

Mike Wirth: Yeah, so you're right. You know, we had some turnaround activity in the second quarter that occurred during the more attractive margin portion of the quarter, and then we had more capacity back online as margins dropped precipitously in some cases. So we didn't capture as much as we could because of the timing of some of our activity.

Mike Wirth: You know, globally, product demand is, is, decent. You know, overall, demand for oil is going to be up one to 2%. You know, most products have recovered to pre-COVID levels, plus or minus.

Mike Wirth: And we see, you know, decent economic growth underway around the world. We've had some new refining capacity come into the system. In the Middle East, in Africa, in Mexico, and in Asia.

Mike Wirth: So it's, you know, coming online, so it's in startups. So, you're seeing some capacity come online, and inventories have all risen over the first half of the year, and they're at or above five-year levels. For some period of time, we've been, you know, of the view that margins were going to revert to mid-cycle by this year or next year, and that's certainly, I think, what we see going on in some cases. You know, mid-cycle has been pretty tough in some parts of the world, and we're back to pretty tough, tough margins.

Mike Wirth: And that's maybe a way to transition to renewable fuels, where, you know, these are markets that are heavily influenced, not just by supply and demand but also by policy, because a lot of the value is driven through the credits associated with those. We've seen periods of time in the past where the targets haven't been met, and we've now seen APA get ahead of the game and set numbers well out into the future, and it's hard for people to anticipate markets, and so right now, what we've got is a market where a lot of capacity has been incentivized, and we don't have the RBOs that necessarily match up with that. It's an oversupplied market. Credit values are down. That happens both at the federal level and at the state level.

Mike Wirth: Welcome to a margin business. This is the way value chain businesses work, at least in my career, much of which has been in the downstream. And you need to be prepared for it.

Mike Wirth: And so you need to have a capital-efficient investment philosophy, which we do. You know, some of our refinery investments have been to create flexibility to move back and forth between fossil feed and renewable feed. We've done that. We've idled some plants, which you do when you're in a period like this.

Mike Wirth: And we're completing the Geismer project, which will give us scale and, importantly, feedstock flexibility. And in a margin business, you need to have access to affordable, competitive, and reliable feedstock. The flexibility that Geismer will have will allow it to compete very well. We've got another project underway, a joint venture with Bungie, to move back into the bean crush portion of the value chain, which further helps us assure competitive supply into

Mike Wirth: But, you know, this is a business where we're going to see periods of time where margins are tough, and you probably see some competitive capacity under pressure, and some of it shut down. And over time, then, they'll tend to cycle the other way. So we're in this business for the long haul. We think drop-in renewable fuels are going to be part of creating a lower-carbon energy system in the future. And we're very committed to that business through good times and through challenging times. We'll be pragmatic, efficient, and value chain-oriented in optimizing.

Jason Gabelman: And the next question will come from Jason Gabelman with TD Cowen.

Mike Wirth: Morning. Thanks for taking my question. You guys have built out a pretty large exploration portfolio over the past few years, and I think you're starting to delineate some of that acreage, and I'm wondering out of the positions you've amassed around the world what you're most excited about, and then related to that, specifically in Namibia, there's a lot of interest in the market for that region. Could you remind us what your drilling plans are for that region this year Thanks. Yeah, thanks.

Mike Wirth: Yeah, thanks, Jason. You're right.

Mike Wirth: We have added some new acreage to our portfolio and some acreage that's in areas that are kind of more frontier than some of the stuff we've historically held. Look, we're excited about; I'm excited about any number of, you know, regions in the world. I'll start with the Gulf of Mexico, where we've got projects lined up, as I mentioned earlier, and a lot of expertise. We're one of the largest leaseholders in the deepwater Gulf of Mexico, and as we move into these higher pressure regimes, we're well positioned to continue to have exploration success and development success there. The second raw point, too, is the eastern Mediterranean, where we've got interesting acreage in the offshore western portion of the waters off of Egypt.

Mike Wirth: We've got some plans to drill there. We've got a discovery where we'll do a delineation well on the Nargis discovery. And then the third one I would point to is West Africa, and that would include existing positions in places like Nigeria, Angola, Equatorial Guinea, and Namibia, where there's certainly been a lot of interest lately in Namibia.

Speaker Change: Where are you know theres certainly been a lot of interest lately in Namibia, we've seen others make some discoveries in the Orange basin, we've got.

Mike Wirth: We've seen others make some discoveries. In the Orange Basin, we've got a lease. EEL90, which sits just outboard of where an interesting discovery has recently been made. And we've got a well there that will spud in the fourth quarter of this year. It'll be completed in early 2025. We've already executed the rig and well construction contract. So we're very excited to see what that delivers. In terms of additional acreage in Nigeria, we've farmed into a block in the Walvis Basin, PL82, and are interested in continuing to add to our acreage position there if opportunities present themselves.

Our lease.

E L 90, which sits just outboard.

Speaker Change: Where are you know an interesting discovery has recently been made.

And we've got a well there that will spud in the fourth quarter of this year it'll be completed in early 2025, we've already executed.

Rig and well construction contracts so.

Speaker Change: We're very excited.

Speaker Change: Excited to see what what that delivers.

Terms of additional acreage in Nigeria, we farmed into a block in the wall. This basin P. L 82, and are interested in continuing to add to our acreage position there if opportunities present themselves. So.

Mike Wirth: So we've got three ways of bringing resources into the company. You can explore for them and discover them. You can acquire them, or you can unlock them through technology. Thanks, Juice. The next question comes from Bob Brackett with Bern. Good morning. I had a question given that you have a unique

We've got a three ways to bring in resource into the company you can explore.

Speaker Change: Explore for it and discover it you can acquire it or you can unlock it through technology and all three of those receive a lot of attention. We've got talented people working in each area to bring resourcing through all of them, but I'm excited about some of the new exploration acreage that we're adding.

Thanks, Jason.

Speaker Change: The next question comes from Bob Brackett with Bernstein.

Bob Brackett: The next question comes from Bob Brackett with Burns.

Good morning, I had a question given that you have a unique position did better this way light, we're watching an election or post election unfold any comments on what you're seeing from your folks on the ground and maybe if there is any.

Speaker Change: Vision, what your role in Venezuela could look like in a range of presidential outcomes.

Mike Wirth: Yeah, Bob, you know, on the ground, what we're really doing is really monitoring the situation. You've seen the news coverage, and our focus remains on the safety of our employees and their families and the integrity of the assets in our joint venture operation. We've been a constructive presence in Venezuela for most of the last 100 years. We conduct our business there in compliance with their laws as well as the laws of the U.S., which in this particular case are administered under a general license issued by the Treasury Department. And we've seen some encouraging results here recently since the issuance of the most recent general license. Our JVs produce around 200,000 barrels a day.

Speaker Change: And the integrity of the assets and our joint venture operations.

We've been a constructive presence in Venezuela for most of the last 100 years.

Speaker Change: We conduct our business, they're in compliance with their their laws as well as the laws in the U S, which in this particular case are administered under a general license issued by the Treasury Department.

And we've seen some encouraging results here recently since the issuance in the most recent general license our Jv's are producing around 200000 barrels a day.

Mike Wirth: We're being repaid the debt that we have been owed and are steadily achieving that objective. We've also seen the extension of some of the concessions on some of these non-operated joint ventures that we are involved in. So we remain apolitical in Venezuela and in other countries. We're there to help develop the economy, support the people, create jobs, and not get involved in politics, which can swing in any country from party to party.

Speaker Change: Being repaid debt that.

We have been owed and and are steadily.

Achieving that objective.

We've also seen the extension of some of the concessions on some of these non operated joint ventures that we are involved in so.

We remain a political.

Speaker Change: In Venezuela and other countries are we're there to help develop the economy.

Support the people create jobs and and not get involved in politics, which can swing in it.

Any country from party to party and and we have found that it's best to work with the government. That's in empower respect. The fact that that is the government that we have but not take positions that would make it difficult for us to.

Mike Wirth: And we have found that it's best to work with the government that's in power, respect the fact that that is the government that we have, but not take positions that would make it difficult for us to continue to work with a subsequent government. And so we don't have a role in selecting governments. We're a commercial player, not a political player. And again, our focus is really on keeping our people safe in the end. Thank you, Bob. And next is Neil Dingmann with True.

You need to work with a subsequent government and so we don't have a role in selecting governments, where our commercial player not a political player and again, our focus is really on keeping our people safe and the assets are protected.

Thank you Bob.

And next is Neal Dingmann with truest.

Neal Dingmann: And next is Neal Dingmann with Truist.

Neal Dingmann: Hi, Good morning, Thanks for getting me in Mike My question for you and the team is just on the Oss costs I'm. Just wondering have you seen any change in prices given the very recent fall in oil prices and if so or I guess going forward would you expect to see maybe domestic cost hold why international stays firm or vice versa.

Neil Dingmann: Good morning. Thanks for getting me in. My question...

Yeah.

Mike Wirth: Yeah, certainly, you know, in the economy, broadly speaking, we've seen inflation pressures easing, and I think that's good for consumers, it's good for economic growth. But these things vary across geographies, and, as you say, you can see different dynamics onshore and offshore. We are seeing some softening of pressure in the onshore, some, you know, declining in prices for oil country or oil class tubulars, rigs, props, and trucking; some of the frack services are, you know, more stable.

Certainly you know in the economy broadly speaking, we've seen you know inflation.

Inflation pressures easing and I think that's good for consumers, it's good for economic growth.

You know these these things vary across geographies and as you say you can see different dynamics in the onshore and the offshore.

We are seeing some softening of pressure in.

Speaker Change: The onshore some you.

You know declining in prices for oil country or oil some class tubular rigs proppant trucking.

Speaker Change: Some of the Frac services are are more stable.

Mike Wirth: We have a contracting approach that generally sets up index-based pricing over longer periods of time, which tends to buffer increases; it can also buffer decreases. So we're not a big spot player; we tend to have longer-term contracts and look for things that allow our suppliers to plan their work and allocate their people and resources accordingly.

We have a contracting approach that generally.

Sets up index based pricing over longer periods of time, which tends to buffer increases. It can also buffer the decreases so we're not a big spot player. We tend to have longer term contracts and look for things that allow our suppliers to plan their work and and allocate their piece.

Speaker Change: And resources Accordingly, and so some of these things lag on the way up to lag a little bit on the way down, but I think in the onshore you're right you're seeing some easing of the pressures I think in the offshore youre seeing a little bit of the reverse there's more activity going on in the deepwater youre seeing our rig rates are firm in our in some cases.

Mike Wirth: And so, some of these things lag on the way up, they lag a little bit on the way down. But I think in the onshore, you're right, you're seeing some easing of pressures. I think in the offshore, you're seeing a little bit of the reverse. There's more activity going on in the deep water, you're seeing rig rates firm in some cases, and so you know this is a place where we also take a longer-term contracting approach we've got multiple rigs contracted out over multiple years they're typically laddered so that they don't expire simultaneously and we've legged into the market across the cycle so that we're not exposed to any one particular point in time so you know it's certainly not the inflationary pressure we've seen a couple of years ago Thank you, Neil. And the next question comes from Jeff J. with Daniel Energy Partners. Hey, guys.

<unk>.

Speaker Change: And so.

Speaker Change: This is a place where we also take a longer term contracting approach, we've got multiple rigs contracted out over multiple years theyre typically ladder, so that they don't expire simultaneously and we've lagged into the market.

Speaker Change: Across the cycles, so that we're not exposed to any one particular point in time so.

Speaker Change: No certainly not the inflationary pressure, we're seeing a couple of years ago.

Neil Mehta: Thank you Neil.

Speaker Change: And the next question comes from Jeff J with Daniel Energy Partners.

Jeff J.: And the next question comes from Jeff J. with Daniel Energy Partners.

Jeff J: Hey, guys. This is maybe a follow up to Jason's questions about exploration earlier, but I noticed you got involved in Uruguay I think back in March is that an analog to the orange and Waldo Stephens.

Jeff J: I just wonder if you can maybe update us on what you think the potential could be there and what the timeline of exploration might be there.

Speaker Change: Yes. So we did we did pick up a block of.

Mike Wirth: Yeah, so we did, we picked up a block off Uruguay. And there are, you know, beliefs that there are certain conjugate margin, margin analogs that we see on the South American side of the Atlantic Rim. Obviously, you know, there's a lot of work that needs to be done to explore those theories. And in some instances, you know, we've seen evidence that supports them, in other instances, less so.

Speaker Change: Uruguay and there are you know.

Speaker Change: Beliefs that there are certain.

Speaker Change: Conjugate margin margin analogs that we see on the South American side of the Atlantic.

Speaker Change: Obviously, you know there's a lot of work that needs to be done to explore those theories.

Speaker Change: And in some instances.

Speaker Change: We've seen evidence that supports it and other.

Mike Wirth: So, you know, we've also picked up some acreage in Brazil and in Suriname. So, across that whole eastern coast of South America, we've got some pretty good exposure and intend to, you know, do the geotechnical work and seismic work to understand the prospectivity of it. So, very early days on that particular prospect, but we're intrigued by it. And it's an example of what I mentioned earlier that we're moving into some areas that are a little more frontier than where we've been over the last number of years.

Speaker Change: Other instances less so so you know we've also picked up some acreage in Brazil.

Speaker Change: In Suriname, so across that whole eastern coast of South America.

Speaker Change: We've got some some pretty good exposure and intend to do the geotechnical work and seismic work to understand.

Speaker Change: The prospective of the of it so very early days on that particular.

Speaker Change: Prospect, but we're intrigued by it and as an example of what I mentioned earlier that we're moving into some areas that are a little more.

Speaker Change: Frontier than where we've been over the last number of years.

Betty Chang: And the next question will come from Betty Chang with Barclays.

Speaker Change: And the next question will come from Betty Chen with Barclays.

Betty Chen: Good morning, and thanks for taking my question I wanted to go back to the Permian.

Mike Wirth: Good morning. Thanks for taking my question. I want to go back to the Permian.

Speaker Change: To see the momentum the operational momentum you're seeing all the operators side just given the.

Mike Wirth: It's great to see the momentum, the operational momentum you're seeing on the operative side. Just given the triple fracks and certainly acceleration of the cycle time, curious how you think about this pull forward of activity. Would you likely do more with the same equipment, or would things slow down or end up using less equipment? And also curious about what you're seeing on your royalty and then operative production front as well.

Speaker Change: Triple Fracs and certainly in celebration of the cycle time curious how you think about this pull forward of activity would you likely to do more with the same equipment or where things slow down or ended up using less equipment.

Speaker Change: And also curious about what youre seeing on your royalty and non operated production front as well.

Mike Wirth: Okay, let me start with the royalty and non-op first. We're continuing to see strong contributions from that. We've got a line of sight to essentially all the AFEs this year across that acreage, and it's been, you know, the, If you want to call it, the upside performance we've seen this year has been spread across all three of those portions of our business company, Operated Royalty and NOJV. So strong contributions from those two.

Speaker Change: Okay, Let me start with the royalty on non op first we're continuing to see strong contributions from that we've got line of sight too.

Ben: Essentially all the fees this year across that acreage and it's Ben.

Speaker Change: Yes.

Speaker Change: If you want to call. It the upside performance. We've seen this year has been spread across all three of those portions of our business company operated royalty and.

Speaker Change: JV so.

Strong contributions from those two.

Mike Wirth: When you get to the Permian, yeah, these efficiencies have accelerated activity. We get through more lateral feeds of wells. We complete more feeds. We use more consumables and sand and everything as we do that. Some of the easing of pressure on the cost of goods and inputs helps us offset that.

When you get to the Permian Yeah. These efficiencies have accelerated activity, we get through more lateral feet of wells, we complete more feet, we use more consumables in sand and everything as we do that.

Speaker Change: Some of the easing of pressure on on cost of goods and inputs helps us offset that and so we are trying to manage we're going to manage to our capex numbers.

Mike Wirth: And so we are trying to manage, you know, we're going to manage to our CapEx numbers. And you can expect us to balance out activity and capital. We're not going to get off to the races on capital.

Speaker Change: And you can expect us to balance out.

Speaker Change: Activity and in capital, we're not going to get off to the races on capital and you can see very disciplined out of the budget is a budget.

Mike Wirth: We're going to stay very disciplined on it. A budget is a budget. So, but the nice thing is we're getting, because of the improved cycle times, improved efficiencies, we're getting more productivity out of the equipment, so we're getting more production per unit of capital input. And that really is the story here.

Speaker Change: So.

Speaker Change: But the nice thing is we're getting because of the improved cycle times.

Speaker Change: Improved efficiencies, we're getting more productivity out of the equipment. So we're getting more production per unit of capital input and and that really is the story here. So you can expect us to to land our capital as we've guided that at close to $5 billion and the production as we have guided in our prepared remarks.

John Royall: So you can expect us to land our capital as we've guided it at close to $5 billion and the production as we have guided in our prepared remarks. And our last question comes from John Royall with J.P. Morgan. Hi, good morning. Thanks for taking my question.

Mike Wirth: Yeah, John, so the downtime in Upstream in May and June was associated with some unplanned events in Gorgon and Wheatstone. So, on Gorgon, there was a blade failure, and so they had to take some time to repair that. They used the time when they were down to try and do as much maintenance as possible on Wheatstone. They actually had a gas leak that was discovered by an operator, and you know we're always going to shut the plant down and repair any leaks in the spirit of operational excellence, so they repaired that, it was on the fuel gas system, and got things back up and running.

John Royall: And our last question comes from John Royall with J.P. Morris.

Speaker Change: And our last question comes from John Royall with Jpmorgan.

John Royall: Hi, good morning, Thanks for taking my question.

John Royall: My question was just if you could give some color on the downtime you saw at both.

John Royall: Both Gorgon and Wheatstone and <unk>, what was the source of those outages.

Speaker Change: However, the facilities running now in media, including some color on the planned work you called out for Gorgon and <unk>.

Speaker Change: Yeah, John So the downstream the dine and time and upstream and me in January associated with them.

Speaker Change: Some unplanned events in Gorgon and Wheatstone. So you know on Gorgon and there was a plant failure and so they had to take some time to repair that they.

Speaker Change: They use the time when they were dying to try and do as much maintenance as possible on on Wheatstone and they actually had a gas leak that was discovered by an operator and you know we're always going to shut the plant dine in unrip her rip her any lakes and the spirit of operational excellence.

Speaker Change: So they are they are apart.

Speaker Change: It was on the field gas system, and <unk> got things back up and running so you know the the the repairs were executed safely and efficiently and we still expect both of those assets to run with good reliability and this year with top quartile performance and the.

Mike Wirth: So you know the repairs were executed safely and efficiently, and we still expect both of those assets to run with good reliability this year, with top quartile performance. The Gorgon asset, Train 2, you turn around is currently underway, and that's going really well, so we expect that to come in under the planned duration this quarter, and even with or despite the down time, we expect to close the full year and deliver on the planned production for the combined Australia assets.

Speaker Change: The Gorgon and <unk> turnaround is currently underway and that's going really well so we expect that to come in.

Speaker Change: Under the plan duration and that this quarter and.

Speaker Change: Even with our despite the the downtime we expect to close the if a year and deliver on the planned production for the combined Australia assets.

John: Thanks, John.

Mike Wirth: 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. Justin, back to you.

Speaker Change: 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 Justin back to you.

Justin: Thank you. This concludes Chevron's second quarter 2024 earnings conference call. You may now disconnect.

Justin: Thank you. This concludes chevron's second quarter 2024 earnings Conference call you may now disconnect.

Speaker Change: [noise].