Q1 2025 Chevron Corp Earnings Call
Katie: Good morning, my name is Katie, and I'll be your conference facilitator today. Welcome to Chevron's first quarter 2025 earnings conference call. At this time, all participants are in all this lonely mode. After the speakers remarks, there will be a question and answer session and instructions will be given at that time.
Speaker Change: If anyone should require assistance during the conference call, please press star 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 head of investor relations of Chevron Corporation, Mr. Jake Spiering. Please go ahead.
Speaker Change: Thank you, Katie. Welcome to Chevron's first quarter, 2025, earnings conference call and web guest. I'm Jake Spiering, head of investor relations. Our chairman and CEO , Mike Wirth, and
Speaker Change: We'll refer to the slides and prepare remarks that are available on Chevron's website.
Speaker Change: Before we begin, please be reminded that this presentation contains estimates, projections, and other forward looking statements. A reconciliation of non-GAAT measures can be found in the appendix to this presentation.
Mike Wirth: Please review the cautionary statement and additional information presented on slide two. Now I will turn it over to Mike.
Mike Wirth: Thanks, Jake. This quarter Chevron delivered strong performance and advanced our plans to further strengthen the company over the near and long-term.
This included multiple project start-ups and acid divestitures.
Mike Wirth: Our Advantage portfolio underpins a track record of consistently rewarding shareholders through the cycle. Cash returns to shareholders has exceeded $5 billion for 12 consecutive quarters.
Mike Wirth: In the first quarter we return $6.9 billion through dividends and buybacks.
Mike Wirth: We're also acquired nearly 5% of Hess's common shares and look forward to completing the merger in the coming months.
Mike Wirth: Our 2025 Capix and Affiliate Capix budgets represent a $2 billion reduction from last year, and we've targeted $2 to $3 billion in structural cost savings to be delivered by the end of next year.
Mike Wirth: Chevron has a proven track record of managing through uncertainty and commodity cycles, and with long standing financial priorities as our guide, we're well positioned to win in any environment.
We're focused on execution to unlock industry leading cash flow growth.
Mike Wirth: At TCO, we reached nameplate capacity in just 30 days, significantly ahead of plan.
Mike Wirth: We expect cash distributions from TCO to increase going forward, including a $1 billion loan repayment in the third quarter.
Mike Wirth: In the Gulf of America, we achieve first oil at Valleymore this month.
Mike Wirth: This is the latest in a series of major project startups within the past year, and they are expected to increase production to 300,000 barrels of oil equivalent per day in 2026.
Mike Wirth: and we make good progress on our asset sale program, achieving premium valuations while retaining future upside in East Texas gas assets that could deliver over $1 billion in value at today's
Mike Wirth: In February , we announced senior leadership appointments and changes to our operating model to enable more efficient execution.
Mike Wirth: We're also expanding our pipeline of future opportunities, adding more than 11 million net exploration
Mike Wirth: Advancing our gigawatt-scale power solutions venture to support the U.S. AI Data Center build-out and participating in a pipeline project to increase export capacity in Argentina.
Mike Wirth: Now I'll turn it over to Emear to go over the financials [inaudible]
Thanks, Mike.
Eimear Bonner: For the first quarter, Chevron reported earnings of $3.5 billion or $2 per share.
Eimear Bonner: Adjusted earnings were $3.8 billion or $2.18 cents per share Included in the quarter were special items, totaling $175 million, legal and tax charges were partially offset by the fair value measurement of the hair shares
Barn Current CFX, decreased earnings by $130 million. $1 million.
Eimear Bonner: Organic CapEx with $3.5 billion, our lowest quarterly total in two years. Inorganic CapEx was approximately $400 million, primary related to investment in our Power Solutions partnership.
Eimear Bonner: Chevron generated cash flow from operations of $7.6 billion excluding working capital. Working capital was primarily tax payments related to the sale of our Canadian assets that completed in the fourth quarter, 2024. We expect a working capital unwind of $1 billion over their remainder of the year.
Eimear Bonner: in the quarter we issued new long term debt of $5.5 billion. $1.00.
Eimear Bonner: Purchase of hair shares is expected to reduce the number of Chevron shares issued at closing by approximately 16 million.
Eimear Bonner: Compared with last quarter, adjusted earnings were $200 million higher. Adjusted upstream earnings were flat to last quarter. Higher realizations and timing effects were offset by lower listings and lower affiliate earnings mainly from higher DDA at TCO.
Eimear Bonner: Adjusted Dinesdry Marinings were hired you to improve defying margins and lower turner lines and maintenance.
Eimear Bonner: First Quarter Oil equivalent production was flat to last quarter. Production from the Future Growth Project at TCO and recent project startups in the Gulf of America offset impacts from asset sales.
Eimear Bonner: We expect growth towards a sustained 1 million barrels of oil equivalent per day to resume the Permian in the second quarter with higher frack activity.
Eimear Bonner: Shabron Strategy and Financial Priorities remain consistent on our track record is proven.
Eimear Bonner: We've grown our dividend for 30 consecutive years through multiple commodity cycles leading our peers and growth over the last decade.
Eimear Bonner: We've built a resilient upstream portfolio that leads to our peers and break-even.
C-dollar Brent,
Eimear Bonner: Our capital program is as flexible and efficient as it's ever been, with the majority of our 2025 span directed to short cycle assets and soon to be online deep water projects such as those in the Gulf of America and Eastern Mediterranean.
Eimear Bonner: Our balance sheet remains strong. With net debt ratio of 14%, we'll be lower target range of 20 to 25%.
Eimear Bonner: We've repurchased shares 18 of the last 22 years and brought back at record levels in the past two years.
Eimear Bonner: We provided a guidance range for annual buy boxes, 10 to 20 billion dollars, depending on market conditions more than two years ago.
Devin, that guidance remains unchanged. [inaudible]
Eimear Bonner: In line with the current Michael environment, we expect sure repurchases to be $2.5 to $3 billion in the second quarter. I'll now hand it off to Jake.
Jake Spiering: That concludes our prepared remarks. Additional guidance can be found in the appendix to this presentation and the slides and other information posted on Chevron.com.
Jake Spiering: We are now ready to take your questions. We ask that you limit yourself to only one question. We will do our best to get all of your questions answered.
Speaker Change: Thank you. If you have a question at this time, please press star 1 on your touchtone telephone.
Jake Spiering: To allow for questions from more participants, we ask 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 speakerphone, we ask you please lift your hands up before asking your question to provide optimum sound quality.
Jake Spiering: Again, if you have a question, please press star one on your touch tone telephone.
Our first question comes from Neil Mehta with Goldman Sachs.
Yeah, good morning, Mike and team.
Jake Spiering: Mike, I know you were in Kazakhstan a couple of weeks ago, so love a full rundown of your perspective on TCO.
Jake Spiering: Specifically, the startup looks like that has gone really well, early discussions around the concession extension and then your perspective around production levels and risk of curtailment.
Mike Wirth: Okay, well, hey, thanks, Neil. First of all, you know, I am really pleased with the commissioning and startup performance.
Jake Spiering: at the Future Growth Project. It was a world-class ramp. We achieved nameplate capacity in less than 30 days.
Jake Spiering: This was due to extensive testing of equipment during the commissioning phase.
leveraging a lot of the same people, procedures. [inaudible]
Jake Spiering: and other practices that were put in service for the Wellhead pressure management project over the prior 12 months, applying learning from some of our other major capital startup projects over the years. We brought in experienced operators from the existing operations that are familiar with the field, with the operating conditions. [inaudible]
Jake Spiering: People that participated in other startups, so it was just very, very well executed. You know, we'll continue in the short term to do performance testing of major equipment under actual operating conditions. [inaudible]
Jake Spiering: Process Optimization, etc. So, we are very pleased with that.
Jake Spiering: that start up in the performance today. I did travel to Kazakhstan last month.
Jake Spiering: and I had an opportunity to meet with President Kaive with a very good visit. We talked about our historic partnership. We talked about our investments in the country and how they've delivered value over the last three decades plus.
Jake Spiering: and with the project behind us, we did turn our discussion to the future.
Jake Spiering: and there was mutual intent expressed to a negotiated agreement, which extends the constation beyond 2033. I took away a very positive outlook on that. We think it's in everyone's best interest to try to complete these negotiations.
Jake Spiering: in a timely manner. That said, these are complex discussions. They do take some time to complete and will provide updates on that as appropriate as those efforts advance.
Thank you, Neil.
Speaker Change: We'll take our next question from Jean Ann Salisbury with Bank of America.
Speaker Change: Hi, good morning. A lot has been going on in the California refining market with the recently announced competitor closures of refineries. How are you thinking about your position there? Thank you very much.
Speaker Change: in the marketplace. I'm not surprised to see the announcements that have come out. We've been...
Speaker Change: Pretty vocal that the policy is coming out of the state, not a second, particularly make it nearly impossible to invest in California going forward. The result of that has been significantly higher cost for consumers.
Speaker Change: then in the rest of the country. There's the risk that supply of fuels is going to be tighter and that creates a future risk. On the last call I said some of these policies including the state inserting itself into
Speaker Change: and Operation Matters like planning turnarounds, I think is an unwise move, I think central planning.
Thank you, J.M.
We'll take our next question from Biraj Borkhataria with RBC.
Baraj Borketaria: Hi, thanks for taking my question. I just wanted to go back to the departure framework and the decision to slow down the vibe back today.
Baraj Borketaria: If I look at the last 12 months, the payout ratio has been almost 100%, and that was obviously a lower price of much higher than yesterday.
So I'm just trying to reconcile with you.
Eimear Bonner, Eimear Bonner, Michael Wirth
Speaker Change: To me, it looks like the bottom of the range should maybe be lower than that 10 billion. So, how are you thinking about the balance between...
Speaker Change: Executing the Byr act on a consistent basis and then obviously leaning in the balance sheet because that balance sheet is allowed you to do, you know, count six heels like mobile or things like that. So appreciate some color on that. Thank you.
Yeah, thanks, brush.
Speaker Change: Second is to invest in the business, we've been very disciplined with capital. [inaudible]
Speaker Change: Lowered Organic Capital by a billion dollars this year and to fill it capital by another billion dollars.
Speaker Change: This year, keeping a strong balance sheet, 14% net debt, a AA credit rating, which is something very few companies in any industry carry. And then buybacks with a through the cycle approach. We've referred to shares in 18 of the last.
22 years, including through COVID, through the financial crisis.
and, you know...
Speaker Change: 10-20 billion dollars based on a view of the external environment.
Speaker Change: The high end of that was premised on a strong outlook on the commodity. The lower end of that was based on a weaker outlook.
Speaker Change: for the commodity. And I think it was 85-ish on the top end and 60-ish on the bottom end.
Speaker Change: and so for most of the last two years we've been in the upper portion of that range. The market has moved to the lower portion of that range and our guidance remains within that range.
Speaker Change: So I think it's important to look at this through the cycle.
Speaker Change: You know, the rate at which we're buying shares back now is higher than at any point in our history, other than the last three years.
Speaker Change: 22, 23 and 24, we're the highest by-back years we've had. Before that we never even had a year that got above 8.
Speaker Change: and we've been much stronger than that here, you know, subsequently and continue to do that forward. So the, you know, the range is unchanged. We've also always said that we would move back towards a 20 to 25%.
on that debt ratio.
and so this move is...
Speaker Change: consistent with that. The last thing I'll say is, you know...
Speaker Change: and we will remain attentive to those kinds of opportunities, if and when they arise, and will retain the financial strength to consider them.
Speaker Change: Bras, I might just add a little bit on your point on cash generation at 60.
Speaker Change: So as we guided to in the last quarter, we're poised to deliver leading free cash flow growth, ten billion dollars of incremental free cash flow growth at seventy. That's nine billion dollars at sixty. And you know the key catalysts that deliver that are the startups of kind of our major projects and the achievement of major milestones.
Speaker Change: and all of that as well underway, and then the completion of our cost reduction program as well that's often running. So just the cash generation, we feel that that is very resilient even at lower prices and we're prepared. Thank you very much.
Thanks, Barrage.
Speaker Change: We'll take our next question from Doug Leggate, with Wolf Research.
Doug?
Speaker Change: Oh, sorry, I was on mute. School boy, yeah, I'm so sorry about that. Hey, mate, thanks for taking my question. Gosh, I was gonna ask about the micro, but I didn't want to
Speaker Change: As such an ask-and-answering question, but you seem to be in the crosshairs of probably the two most important.
Speaker Change: Micro stories in the market right now, and I just love your perspective on it. The first is obviously Venezuela.
and the potential loss of production there and the other... [inaudible]
Speaker Change: is what appears to be an impending market share baffle going on with the Declaration of Cooperation single handedly seemingly pointed at ten keys.
In other words, the startup of production is exacerbated. . . . .
Kazakhstan's overproduction against their quota, and of course that's...
It seems to be was driving these accelerated decisions by OPEC PLUSK.
So, I guess my question is, [inaudible]
can you offer any perspective on this physical? No.
Speaker Change: Changes you're seeing in your business in Venezuela, and when you met with the president,
Speaker Change: Was there any consideration whatsoever of curtailment to try and help meet their quotas? Because frankly, if the answer is no, it's pretty very for the all-pressed.
Speaker Change: Yeah, so I'll start with Venezuela, Doug. I think the news coverage on this has been pretty accurate.
Speaker Change: Recent changes have resulted in us being unable to pay our tax and royalty payments for liftings that we're being made to bring Venezuelan oil to the US, and so those liftings have come to a halt.
Speaker Change: The barrels are still flowing, they're just going to other markets. China is the biggest importer of Venezuelan oil, their media reports that government officials from Venezuelan have been in China this week discussing even more.
of Sales to China.
Our current license reaches its end on May 27th.
Speaker Change: We're in dialogue with the government on how that license will be modified and extended if in fact that's what they choose to do and that's certainly been the history over the many years I just referenced so we'll share more about that as we...
Speaker Change: as we know more, but the barrels are flowing, they're just not flowing to the U.S. today.
Speaker Change: On OPEC Plus in Kazakhstan, there really were not discussions of that. We don't engage in discussions about...
Speaker Change: OPEC, or OPEC Plus, Targets, and my discussion with the president focused on A, the startup of the project, which has been good, and B, the future.
Speaker Change: and so the fact of the matter is the barrels we produce at TCR of high value to the government, they're important.
Speaker Change: to their fiscal balance, and historically those barrels have not been curtailed. Anything beyond that I would refer you over to, you know, people that speak on behalf of OPEC Plus or the countries.
Speaker Change: Thank you. We'll take our next question from Lloyd Byrne with Jeffries.
Lloyd Byrne: Hey, good morning, Mike, team. Thank you for all your answers. I was going to ask about the return of capital.
Speaker Change: And I think that's a really good answer you guys had. But let me try the Gulf of Mexico.
Speaker Change: The Baltimore is online. He just walked through the next steps to get to the 300,000 miles a day, and are there any hurdles we have to look out for? [inaudible]
Yeah, we're, as I said, we're very pleased with, with Valleymore.
Speaker Change: That project in particular has some of the most prolific wells.
Speaker Change: that we've seen in the Gulf of America, frankly, well beyond that. The expectation as we ramp up, there is that we'll see 25,000 barrels a day flow from each of three wells.
Speaker Change: So 75,000 barrels a day of production from just three wells. We've got two of those wells online right now and ramping them up.
The third one will come online later this year.
Speaker Change: and other prolific fields in the Gulf of America have been...
Speaker Change: at 275-252-255. So a very interesting field, a very prolific field.
Speaker Change: Well, you know, I won't speak for the operator, I'll just say that the start up there has been smooth and we expect that to ramp.
through 2025, and I'd refer you to them.
Speaker Change: for details and at Anchor we've got two wells online right now that are performing very well.
We expect two additional wells to come online.
Speaker Change: This year, one around mid-year, one towards the end of the year, and remaining wells to come online in 26 and 27. So at each project we've got strong production flowing, we've got drilling activity and completion activity. [inaudible]
Speaker Change: Underway or in the queue, rigs, vessels, crews, all assigned to them and so, you know, in the Gulf weather can always be a bit of a risk but other than that from an execution standpoint, these are all three in a very good posture.
Ryan Todd: Thank you. We'll go next to Ryan Todd with Piper Sandler.
Ryan Todd: Good, thanks. You've got to slide in the deck looking at Permian wall performance.
Ryan Todd: and the improvement you've seen there on the Delaware Basin in 2024. Can you talk about some of this in the past, but can you talk about what drove the difference, whether in terms of well-mixed development strategy, completions, et cetera, and what you see is the potential implications for the 2025 programmer outlook?
Ryan Todd: Yeah, so just to ground everybody, roughly 80% of our development program last year was in the Delaware.
Ryan Todd: and we saw strong improvement in performance there versus the year prior. In particular, the second bone spring in the Mexico outperformed.
Expectations,
We also had good performance in the Texas portion.
Ryan Todd: of the Delaware and the Wolf Camp C and the Wolf Camp A, which showed a good year on year performance improvements. So we expect 2025 type curves.
Ryan Todd: to look pretty similar until we saw Alastair in the Delaware. And again, most of our program is in the Delaware 85% as we look at 2025. So even a little bit more than we saw last year.
All right, last thing maybe I'll say on that.
Ryan Todd: Ryan is, you know, sometimes we had questions when I mean with investors on gas oil ratio.
Ryan Todd: We are right now seeing an oil cut that's somewhere in the range of 43 to 45 percent.
Ryan Todd: We think that's going to continue as we move through the end of the decade. It may move around a little bit by quarter based on pop timing and geography, but we expect that to be pretty stable.
Ryan Todd: and also on New Mexico. You know, we're going to see more pops in New Mexico this year than we did last year.
Ryan Todd: and overall those tend to be bigger wells. They're more productive wells. They produce more oil. They also produce more gas, but very pleased with performance in the Permian and feel very good about the outlook for this year.
Thank you, Ryan.
We'll go next to Paul Cheng with Scotia Bank.
Thank you. Good morning.
Ryan Todd: Paul Jack, in terms of the gas warning, any kind of that you can provide, thank you.
Yeah, you got Paul.
Ryan Todd: is a tribute to the people at Noble, largely a legacy.
Ryan Todd: Noble, Energy Position. We've got some good exploration acreage in the offshore Egypt area that we brought to the table as well and the expectations for some exploration while there in the coming.
Ryan Todd: and a couple of years. But it was a nice milestone to see that we've got an agreed field development plan for Afro90.
some updates to the PSA there.
Ryan Todd: and the initial development plan, Paul, is going to be a floating production unit in the in Cypriot waters, production of about 800 million cubic feet of gas per day. The gas would flow to Egypt, a market that's growing and has a need for more gas demand there is very strong.
We entered pre-feed activities in the first quarter.
Ryan Todd: We're working to ensure that we get competitive returns. Out of this project there's some commercial work that needs to be done as well.
Ryan Todd: and all that needs to be done before we move to a potential FID.
Ryan Todd: We are, again, pleased that we've got agreement on that. That gives you a little bit of the scale of the project in the first phase here, and we'll talk about it more as we move through the pre-feed and in feed.
Stephen Richardson: Thank you. We'll go next to Steven Richardson with Evercore ISI.
Stephen Richardson: Good morning, Mike. I was wondering if you could give us a little...
Speaker Change: You're curious on your recent thoughts on CP CAM, obviously, in the middle of some pretty significant investments in that business.
Stephen Richardson: Through it looks to be a trough, at least on the old side of the business, but maybe your current thoughts on the business and also, you know, how are you thinking about, you know, potentially maybe owning more of it over time and how that fits into your current thoughts.
Stephen Richardson: Sure, thanks, Steve. Well, first of all, I'll say we like the longer-term fundamentals of the chemicals business.
Stephen Richardson: We've been in a top part of the cycle here recently as we've seen some capacity additions into the markets, so it's going to take time.
Stephen Richardson: for the market to absorb those. So we think we're still a few years away from...
Stephen Richardson: Returning to mid-cycle, but CP Chem has been a great business for us, and we've got 25 years of history roughly now.
Stephen Richardson: and they've been a good operator, they've been a good project executor. It's a portfolio that's significantly advantaged due to their feedstock position which is primarily ethane in the US Gulf Coast and the Middle East.
Stephen Richardson: Devin, a very good low cost operator and we've got a couple of growth projects underway, one in Cutter, one in Texas, on track to come online, end of 26 early 27-ish.
Stephen Richardson: and so it's been a very successful partnership for us over more than two decades.
Stephen Richardson: Getting a larger share of a business that you like is always something that you would take a look at. We have advised the partner in CPCAM that we'd be interested in acquiring the other half at a reasonable value for both parties, and we'll see how that plays out.
We'll take our next question from Josh Silverstein with EBS.
Speaker Change: Good morning guys. Chevron has a pretty unique asset in the Perming given your mix of operated not up and royalty volumes. Give her by some details as to what you're seeing across the not up and royalty side now and any reduction activity there and how that may play into the plateau level for Chevron. Thanks.
Speaker Change: Yeah, so at this point we don't really see any actions that have been taken to pull back by our partners, you know.
Speaker Change: We haven't always identified exactly who our partners are, but three quarters of our production come from large or mega-cap companies, people that you cover and know. And most of that production comes in the core parts of the basin, areas that have got low break evens and are very proven.
Speaker Change: So on NOJV, we've got a line of sight to essentially all of the AFEs and most of the POPs
Speaker Change: They have already spun the planned pops for this year in our NOJV, the wells have already been spun.
Speaker Change: So I think there's a pretty high degree of confidence that we're going to see that.
Speaker Change: Go on royalty, maybe not quite as high a number but close on pops that are also in execution. So, you know, we do have an interest and I want to say it's a one in every four acres in the Permian.
Speaker Change: and a lot of that exposure gives us the ability to see exactly what's going on with other operators, and at this point I think people are what we see as people pretty well stand of course.
Thank you, Josh
We'll go next to Lucas Herrmann with BMP Perryball.
Lucas Herman: Oh, thanks very much, and thanks to the opportunity. Probably just a question on cash bloke for Rima. It looks as though the equity contribution or dividend contribution that you're anticipating this year is now two billion relative to, I think you're to guided towards one billion years of access, et cetera, Tom.
Lucas Herman: B, Full Year Stage. Am I correct but you've changed your expectation and if so is that a consequence of higher expected dividends or I don't think it's a change in lower net income. So any comment
Eimear Bonner: Yeah, Lucas, I think maybe the two things to point out are the impact of the TCO DDNA, so given that we started up the project in January and runs up ahead of our original schedule and the earnings guidance going forward reflects the DDNA update. In addition to that, we've got some CPCAM.
Eimear Bonner: I look for margins has been updated as well, so those would be the two main factors. Everything else is consistent. And Lucas, the affiliate dividend guidance for the full year is unchanged as it was, so it's just a difference between the two. Thanks.
Speaker Change: We'll take our next question from Roger Read with Wells Fargo.
Yeah, thanks. Good morning.
Thank you. Bye. Bye.
Speaker Change: I guess, maybe with the macro and a lot of people's minds at risk of lower oil prices, just wondering, Mike, with all the changes here, or project completions, Gulf of Mexico,
Speaker Change: Fairly, you know, essentially through its process, Kazakhstan up and running, the Permian kind of flat lining. When we think about the resiliency of Chevron and say a $50 oil world, what do you think has been sort of the change in the? [inaudible]
Speaker Change: You know, whether you want to call it a basic line rate or the sustaining cat bats, like how should we think about
Speaker Change: and kind of cash flows and cash, cap-ex commitments in a possibly software oil price world.
Speaker Change: Yeah, I mean, there's two things that I might point to, Roger. Number one is, you know, we've got a portfolio now that has a much larger percentage of it in large and very flat.
Production Profile Assets, a low decline asset. So...
Speaker Change: Big LNG projects in Australia and Western Africa, the expansion of TCO.
Speaker Change: Relatively, you know, highly efficient investment in some of the unconventionals. And so...
Speaker Change: If I go back a decade ago, we were fighting to climb.
and that required a lot of capital investment and...
Speaker Change: and just to hold even, let alone to show some growth. And we've been showing growth here in recent years with a much lower capital budget. The second thing that's really important is the flexibility that we have in our capital budgets.
Speaker Change: So, you know, we've already come down a billion dollars from last year, from 16 to 15. Our capex is a percentage of cash from ops, is I think the lowest.
in the industry.
Speaker Change: and almost two-thirds of our capital is either Short Cycle, Shale, or Project that's, you know, Project
year or so.
Speaker Change: And so we've got a lot of flexibility if we need to exercise that. You know, we've shown I would call discipline coming into this year by tightening our belt a notch and bringing capital down a little bit. But if we needed to bring capital down further, you know, we certainly could do so. We showed in 2020.
Speaker Change: We started the year at a $20 billion capital budget and I think we finished the year at 12. So, we've got the ability to flex that capital if we need to. We've not made that decision at this point but certainly that's...
Speaker Change: I would say those are the two big things that are different if you look back to days gone by.
Thank you. We'll go next to Philip Jungworth with BMO.
Thanks. Good morning.
Philip Jungwirth: Congrats on the start-up of Valleymore anchor well before that. As we think about what's next in the Gulf of America, can you just talk about your optimism around future prospects, paleogen or brownfield tiebacks and generally how do you see the cost structure or break even now for deep water versus shell? No, no.
Philip Jungwirth: Yeah, so thanks for the congratulations. What I would say is in the relative near term, you're going to see us focus on infill.
Philip Jungwirth: and Stage Developments. You know, we've got a long history here of projects that once we've got a new hub in place, they have multiple stages of development.
Philip Jungwirth: you know, Mad Dog and Perdito, and we're working on future stages of some of these recent startups. So an anchor phase two, a Ballymore two, a Whale two.
Philip Jungwirth: If you look at our exploration portfolio, 80% of it is within tie-back range of existing hubs.
Philip Jungwirth: Identifying opportunities to develop accumulations that might not support a new Greenfield development but are highly economic to tie on.
Philip Jungwirth: as a brownfield project and so we'll continue to focus our exploration portfolio in that we've had, you know, we've been a participant in a discovery that's already been announced earlier this year and our very optimistic about our exploration program.
Philip Jungwirth: and then the other 20% you would maybe describe as more frontier. Break evens have come down a lot, and you know, there was at time...
Speaker Change: Again, a maybe an kind of Lincoln Rogers question about what's changed, you know, a decade ago we needed oil prices that were well north of what we see today to get a very modest return.
Development costs were going up. [inaudible]
Speaker Change: They were in the 20s, headed to the 30s and higher. We're now down in the teens and pushing into the low teens on development costs through a whole different approach to facility design and construction, standardization.
Speaker Change: and so we've seen the break evens there become very competitive, they had to because we had such good opportunities in other parts of our business. So, you know, we've got one of the best portfolios in the industry and, you know, Woodmac data shows that we've got the lowest
Speaker Change: Upstream Breakeven in the industry and I think a big part of that is what we've been able to see in deep water development.
Thank you, Phil.
We'll take our next question from Betty Jian with Barclays.
Betty Jiang: Good morning. Thank you for taking my question. I want to ask about the progress on the power of ventures. It means clear that the AI power domain is not falling down and you guys have the timing advantage.
How are the customer conversations going?
and the Joby in one two. [inaudible]
on the Inflationary Pressure Order hearing.
Bye.
Betty Jiang: Yeah, so we've been actively engaging with prospective customers and are still seeing very strong demand in those conversations.
Thanks for watching.
Betty Jiang: We're trying to narrow, frankly, because there are so many people that are interested in trying to partner up when you can move quickly as we can with these turbines.
Betty Jiang: So we're also nearing down the potential sites, we screened a lot of...
Betty Jiang: potential locations in different geographies around the country. We have narrowed those significantly and are moving towards engineering and EPC options on the sites that we find to work the best for us and for customers, which is important.
Betty Jiang: Part of that. We're working toward an FID before the end of the year. As you note, speed to market is an important differentiator here. We will remain disciplined. There are cost pressures on some of the...
Components of building out a power complex.
like this, we've secured pricing on the turbines themselves. [inaudible]
Betty Jiang: There's other elements of the build out that are also required and between...
Market Demand,
Betty Jiang: and potential tariffs and other effects. We have to keep an eye on that. So we're going to stay very disciplined because this needs to generate returns that will compete in our portfolio. And if we...
Betty Jiang: Can achieve those kinds of returns these projects will move forward if we can't...
Betty Jiang: We will need to look at our alternatives, but right now I would say everything is moving fast, as you said, there's a tremendous amount of interest, a tremendous amount of activity and I'm very pleased that we're in a first mover position on this, or called an early mover position. [inaudible]
Thank you, Betty.
We'll go next to Devin McDermott with Morgan Stanley .
Hey, thanks for taking my question.
Thank you.
Speaker Change: Yeah, I think you've read the situation right, Devin. You know, we're prepared. You get into an environment like this and you pull out the playbook and we've looked at different market scenarios.
Speaker Change: and both the depth and duration of a potential commodity cycle.
Speaker Change: and we've looked at our business and how we're postured today from a production standpoint, a cash generation standpoint, a debt standpoint, and all the different levers that we have to pull and have identified the things we could do based on...
Speaker Change: Signposts and a view on the market. It's very early to, I think, have a high degree of confidence in terms of how this all plays out.
The trade in a tariff situation has been dynamic.
and of course the OPEC change. [inaudible]
Speaker Change: is one that is relatively recent as well and we have to see how that plays out and so we're very well prepared and we've been through these kinds of things before. I would say, you know, I've been in, you know, one of the senior positions.
Speaker Change: in 2008 when we had the financial crisis in 2014 when we saw prices drop in 20 when we had COVID and again now. I don't think we've ever been in a better position.
Speaker Change: to navigate it and have had more, levers available to our disposal and more strength to come through a cycle than we have today.
Speaker Change: Devin, our balance sheet is in a really strong position at 14%.
Speaker Change: Netette, you know, our credit rating is AA, so as part of being prepared, it's ensuring that our balance sheet is strong and so that's good. I'd also mention that the cost reduction program and the capital reduction that is underway, actions that we took last year, put us in a strong position as well and cost and capital discipline always matter in our business.
and so we are focused on delivering.
Preparation we have. [inaudible]
Thank you, Devin.
Speaker Change: We'll take our next question from John Royall with JP Morgan.
Good morning, thanks for taking my question.
Speaker Change: So I was hoping for a little more color on the expansion at Pasadena and how that's running and the benefits you're seeing overall to your Gulf Coast system. I know it was partly about synergies with Pasagula. So maybe just a little more color on that and how the project's contributing several months into the startup.
Speaker Change: Yeah, thanks, John . The project is complete and online. We had feed into the crew unit the first week of December , and we've been ramping up to full capacity here this quarter.
Speaker Change: We had stable operations in the first quarter at about 110,000 barrels a day of crude feed and we're really learning how to optimize that plant now at these higher feed rates.
Speaker Change: It'll allow us to run more of our own equity from the Permian and as we look at export markets that can be attractive to capture full valued chain margins here in the US.
Speaker Change: You know, it'll take it up by about 50 percent before we could run about 85,000 barrels a day. This will take us up by 40 to 125,000 barrels a day.
Speaker Change: and so we've got the ability to supply more products to our customers in the Gulf Coast. We've got a big market position in Texas, which historically has been served through product exchanges or purchases. We can integrate fully into that now with our own production.
Very significant synergies we can realize with Pascagula.
on Intermediate. [inaudible]
Speaker Change: Streams that can be moved from one facility to the other for upgrading to higher value products.
He also helps during turn-arounds. [inaudible]
to be able to store inventories, to move intermediates. [inaudible]
Back and forth, or finished products back and forth. [inaudible]
Speaker Change: and we've got U.S. flagged tonnage that allows us to move those streams between the two facilities, and so a good project to improve flexibility and margin capture here on the Gulf Coast.
Thank you, John [inaudible]
We'll go next to Jason Gabelman with TV Cowan.
Jason Gabelman: Yeah, hey my team, thanks for taking my question. I wanted to go back to the buyback guidance if I could.
Jason Gabelman: Quarter to Quarter, and Year to Year. So I was wondering if you could provide any additional color on how to think of the pace.
Jason Gabelman: if it's going to oscillate between the low end of the high end of the range or where it will oscillate in between and then the other point on that is if you could just talk about where the buybacks could be following the HES acquisition, you had a prior guidance of $5 billion.
Jason Gabelman: I'm wondering, per quarter, sorry, I'm wondering if you have any update on that figure. Thanks.
Speaker Change: Yeah Jason, first of all there's not a formula that we're going to announce a percentage of this or that because that really in some ways defeats
Speaker Change: The purpose of what we've tried to do, which is to be steady through cycles and not expose investors to the uncertainty that volatile markets can introduce into this.
Speaker Change: and so you've seen our range has been consistent. We introduced it as I said more than two years ago as we've issued quarterly guidance and executed. That's also been fairly consistent with the guidance and with the then current market conditions.
Speaker Change: and as we have seen market conditions change and we've modified our guidance.
Speaker Change: I would expect to remain consistent if we're in a market like the one that we're in right now. And so, you know, we don't intend to yo-yo this around if that was kind of the question and I think our track record.
Speaker Change: You know, if you lay it out and look at it versus others, it speaks for itself, that we have been able to stay steadfast and consistent, as I mentioned earlier, 18 out of 22 years, including during some significant downturns, and the absolute rates...
of the range that we've issued now, 10 to 20. [inaudible]
Speaker Change: are above anything we ever did prior to COVID, even in the late 2000s before the financial crisis when we were seeing $140,000 or $150 oil.
Speaker Change: Markets, we were repurchasing at max, one year, $8 billion, and we've now had, you know, three years, I think the lab trailing three years.
Speaker Change: The number is $50 billion in aggregate and the 10-20 going forward is a very strong and robust range that you can expect us to stay within.
Speaker Change: Jason, then maybe just specific to the guide read that we issued for the quarter, you know, 2.5 to 3 billion, and if we were to rule it forward, I mean it would keep us well within the 10 to 20 billion dollar annual range that Mike talked about. So it's still a very strong program, you know, putting it into the context of
Speaker Change: What we've done in the last couple of years, I mean prices have been 15 to 20 bucks higher when we've delivered a 15 billion dollar program and you know we'll deliver something between 11 and 13 if we just project it so it's still a very strong program we're still buying a significant. Thank you.
Speaker Change: A Mind of Our Shares, and that's on top of a dividend that's growing faster than our peers on the S&P 500.
Thanks, Jason.
Speaker Change: Thank you. We'll take our final question from Bob Brackett with Bernstein Research.
Bob Brackett: Good morning. Thanks for getting me in. A question around the tariff situation and how it might impact either the capex or projects. What are some of the things you can do to adjust the tariffs in terms of controlling costs?
Bob Brackett: Yeah, Bob, we're watching this very closely, and preparing an actual process of taking some actions to mitigate the impacts.
Bob Brackett: Our direct exposure is relatively limited. Energy has been largely exempted from tariffs.
Bob Brackett: and if you're looking at our cost structure, goods that we buy, of our third party spend.
of the 20% that is spent on goods. [inaudible]
Bob Brackett: A lot of that tends to be sourced locally or regionally. [inaudible]
Bob Brackett: and our US, for example, where our largest portion of our capital spend is, we've got strong domestic sourcing.
Bob Brackett: on most of the goods that we use in our unconventional programs in the DJ and the Permian.
Bob Brackett: For instance, our current estimate is we may see one percent impact on the cost of a sale well.
Bob Brackett: So it's a dynamic environment and we'll watch how these things evolve, but we've got strong engagement with our suppliers, we've got sourcing from multiple locations.
Bob Brackett: and we've been anticipating this and preparing for it. So the impact is not zero, but I think the impact is manageable. You've seen announcements in other industries where they're more directly exposed than we are.
Thank you, Bob.
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. Katie, back to you.
Speaker Change: Thank you. This concludes Chevron's first quarter 2025 earnings conference call. You may now disconnect.