Q2 2025 Chevron Corp Earnings Call
Good morning. My name is Katie and I have your conference facilitator. Today, welcome to Chevron second quarter 2025 earnings conference call. At this time, all participants are in 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 head of investor relations of Chevron Corporation. Mr. Jake spiering. Please go ahead.
Thank you, Katie, welcome to Chevron second quarter 2025 earnings conference call on webcast. I'm Jake spiering head of investor relations on the call with me today is our chairman and CEO Mike Wirth. Our vice chairman Mark Nelson, and our vice president and CFO Heir, Bonheur.
We will refer to the slide 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 of this presentation.
Please review the cautionary statement and additional information presented on slide 2. Now I will turn it over to Mike.
All right. Thanks Jake.
In the second quarter, Chevron achieved several important milestones, continuing the momentum we've been building over the last year.
The success underpins strong financial results, industry-leading free cash, flow growth and Superior distributions to shareholders.
Production was a quarterly record for the company, both in the US and worldwide.
In the Perman production averaged more than 1 million barrels of oil equivalent per day, a Target. We introduced over 5 years ago and achieved right on schedule.
This is in Arkansas. Our first step toward establishing a scalable domestic lithium business.
And we returned over 5 billion dollars to shareholders for the 13th consecutive quarter.
2 weeks ago, we achieved a favorable arbitration outcome and closed our merger with Hess
Bringing together world-class assets, people, and capabilities to create a premier international energy company.
Sobs long-term low-cost growth in Guyana.
The box and expands our Shale portfolio to 1.6 million, barrels of oil, equivalent per day.
We're now the largest lease holder in the Gulf of America.
And our overall U.S. production is nearly 60% higher than it was just two years ago.
Our combined Upstream portfolio has interest in some of the most attractive basins in the world.
And is forecast to lead the industry in total cash generation over the remainder of the decade.
We've been actively preparing for integration for nearly 2 years.
Since the announcement we've repurchased more than half of the shares issued for the transaction.
We now expect to realize the full $1 billion in annual run rate synergies by the end of this year, 6 months faster than our original guidance.
We anticipate the transaction to be cash flow creative per share in the fourth quarter.
Last week we completed the sale of our interest in the Thailand and Malaysia joint Development Area. And this week, John Hess was elected to and actively participated in chevron's board of directors meeting.
The deal was good when we announced it and has only gotten better.
Now, I'll turn it over to Mark to cover our operational achievements.
Thanks Mike.
Jeff's been producing in the puran Basin for a 100 years.
Our unique position traces its roots back to the Texas Pacific Land Trust and now contains more than 2 million net acres, along with an advantageous mineral interest.
We produce nearly as many royalty. Barrels as the next 3 largest royalty. Producers combined.
With mineral Holdings that benefit around 75% of our total permanent acreage.
over the last 5 years, we've nearly doubled production organically, while capturing significant efficiencies
Improved well in completion designs reduce cycle times. And Technology deployment have led to a 30% reduction, in development and production unit costs.
We expect cost to decline further, as we shift our Focus to free cash flow generation.
With our advantage. Royalty position. We believe our portfolio is unmatched.
Our scale technological capabilities and focus on Capital discipline position us to continue leading the Basin in returns long into the future.
Across our portfolio, we have a long history of taking good assets and making them better.
Our large complex complex facilities in Kazakhstan and Australia are operating well. Above design capacities and we continue to find Opportunities to improve.
In our deep water assets, we have a track record of applying Leading Edge technology to unlock economic projects and increase resource recovery.
We also continue to deliver top, quote, cortile turnaround performance.
We used real-time data analytics to complete our recent turnaround at Pascagoula on budget and ahead of schedule.
And in the second quarter, we had our highest us Refinery crude throughput in over 20 years despite fewer refineries today.
Highlighting the success of recent optimization efforts.
We have strong base assets and we're leveraging our capabilities to capture more value across our Global portfolio.
just as we have enhanced our portfolio, we've also restructured our work
In Upstream, we've reduced the number of reporting units by approximately 70%, bringing together similar assets such as our Shell and type businesses in the Puran, the DJ, the Bachan, and Argentina, enabling us to scale best practices faster, standardize solutions, and streamline support.
Our engineering hubs are designed to drive standardization, efficiency, and value.
We're already seeing benefits today through centralized, well-designed turnaround planning.
And we expect faster innovation in scaling of solutions like artificial intelligence to optimize fracks in real time and accelerate exploration data analysis, among other use cases.
This improved operational efficiency, and execution supports. Our targets of 2, to 3 billion dollars in structural cost reductions by the end of 2026,
Through deep technical Acumen, operational best practices and great people. We expect to drive continued performance Improvement across all asset classes.
Now, I'll turn it over to Emma, to discuss the financials.
Thanks Mark.
For the second quarter Chevron reported earnings of 2.5 billion or 1.45 cents per share.
Billion dollars or $0.0177 per share.
Included in the quarter were special items related to the fair value measurement of hash shares.
Company, pension curtailment costs and the gain on sale of assets, resulting in a net charge of 215 million.
Foreign currency affects decreased earnings by 348 million.
Organic capex was 3.5 billion. Our lowest quarterly total since 2023 while delivering significant volume growth.
In our organic capex was approximately 200 million.
Primarily related to the acquisition of lithium acreage.
Chevron generated cash flow from operations, excluding working capital, of $8.3 billion.
Adjusted free cash flow which includes Equity, affiliate loans and asset sales with 4.9 billion.
Representing a 15% increase quarter-on-quarter despite 10% lower crude prices.
These results were driven by our organic high-margin production growth, strong reliability, and continued commitment to capital discipline.
Adjusted second quarter, earnings were dying, 760 million versus last quarter.
Adjusted Upstream earnings decreased due to lower realizations, higher ddna from increased production and unfavorable tax impacts.
Adjusted Downstream earnings were higher due to improved refining margins, and higher volumes.
Second quarter oil equivalent production was up over 40,000 barrels per day from last quarter.
Due to strong performance in our base business and solid execution. In our growth Assets, in the first half of the year, we now, expect production growth to be closer to the top end of our 6 to 8% guidance range. Excluding health
Over the last year, we've consistently
Delivered key project Milestones that we expect to drive industry-leading. Free cash, flow growth.
A TCO FTP is producing at full rates.
In the Gulf of America, we're ramping up production from recent. Major project startups.
In the permanent, we achieved a significant production milestone and are beginning to moderate growth, reduce CapEx, and increase free cash flow.
And we're already realizing structural cost benefits and expect to lock in $1.5 to $2 billion of annual run rate savings by year-end.
The integration of Legacy Health assets is expected to contribute additional free cash flow more than covering the incremental dividend from the merger. Share issuance.
All of this leads us to increase our 2026 additional free cash flow guidance.
To 12.5 billion dollars.
We're building on our strong momentum to deliver sustained long-term value.
And I handed off to Jake.
That concludes our prepared remarks.
Additional guidance can be found in the appendix of this presentation, as well as the slides and other information posted on chevron.com.
And we look forward to sharing more with you at chevron's investor day on November 12th in New York City.
We are now ready to take your questions.
We ask that you limit yourself to just one question, and we will do our best to get all of your questions answered. Katie, please open the line.
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Our first question comes from barrage, Borgata, with RBC.
Hi thanks for taking my uh questions. So firstly, congratulations again on the arbitration win, nice to get that um uncertainty behind you. Um I wanted to ask and pick up on the comments you made in the Parian you obviously hit a milestone in the second quarter with the production and you know million barrels of oil equivalent. And now talking about moderating spend, are you able to give us a sense of what we should expect in terms of 26/27 budget? Uh, in capital spend versus what you're spending in 2025. Thank you.
Barrage. Thank you for your, uh, for your recognition of the arbitration outcome, as well as the performance of our of our permanent team. I, I, I think I would start just by reminding everybody of, of the foundation of that performance, and it's the that large acreage position that we have that.
And a royalty advantage that quite frankly is a very tough. If not impossible to replicate it a reasonable price today and that that allows us to, you know, to structurally have better returns and allows us to sustain performance and cash flow generation with this intentional shift. You remember that we put Peak capex well behind us here not too long ago and we we talked about in 2025 having Capital, spend between 4 and a half to 5 billion dollars. You should expect us to be in the lower end of of that range as we finish 2025, given the efficiencies we brought to bear and as we deliver that um free cash flow growth of 2 billion next year in the Permian, I think you should see that drop further as we continue to manage a a sustained performance in the Parian. So more to come there in our investor day but we're we're definitely drawing down our our capex and generating a lot more free, cash flow.
Thank you. We'll go next to Neil Mehta with Goldman Sachs.
Hey uh, good morning. Mike at team, again, congrats on on has that we really appreciate the updated waterfall here. And so like maybe you could just spend some time, you know, talking about how much of the 10 billion dollars and the Standalone. You feel like you've de-risked and your confidence interval on each of those 4 buckets and then maybe some of the key assumptions that went into the 2 and a half billion dollars, um uh perhaps and uh recognizing you're going to unpack more of this for us on November 12th.
Yeah, Neil thanks. Um, in a word, our confidence level is hi. I'm going to let you email walk. You through each of the each of the buckets.
Good Morning. Neil. Yes. So starting with the, um, 10 billion. Um, if you look at the waterfall and the Upstream catalysts, um, starting with TCO, I mean tco's, ramped up. Its producing a full rates. And so, um, we we've de-risked that production profile. Um, next we've got uh, permanent Mark talked about this significant Milestone over the second quarter, so we've, uh, We've ramped up and our producing at those, those rates. Um, that's the rest as well Gulf of America. Our our 3 projects, our major Capital project startups are behind us. Um, those assets are ramping up so some additional ramp to go uh, between this year and and next year. And then the balance is is really the the cost Reduction Program. Um, we're on track to deliver our Capital program consistent with our budget and our 2 to 3 billion dollar of cost reduction. Um, that's uh that's on its way. Um we have made a lot of progress. We are. We're anticipating that to show up more.
In the bottom line at the back end of the year, and into the year. So all in all the, the 10 billion um is uh, is de-risked and and on track.
The incremental 2.5 billion dollars that we guided to this morning associated with Hess is is coming from from 2 2 places. First, the synergies, um, Mike talked about that the synergies, we are committed to delivering 1 billion dollars of run rate synergies by the end of the year,
And then the balance is coming from production production growth over the next couple of years where the fourth fpso coming online this year and a, and a fifth next year. So, that's the, that's the rack up of the 12.5 billion dollars and, uh, in summary, um, a lot of these, uh, big Milestones are behind us, and we're, and we're on track.
Thanks Neil.
We'll take our next question from Devon McDermott with Morgan Stanley.
Hey, good morning. Thanks for taking my question.
So Mark, I I wanted to dive in in a bit more detail to some of the business reorganization, I appreciate the comments. Uh you gave in the prepared remarks and the slide on the new structure. I was wondering if you could contrast this new organizational structure versus what Chevron currently has, you know, how did you arrive at the conclusion that these were the right adjustments to make? And I think the cost reduction improvements that come along with us are pretty clear but what are some of the other tangible benefits? You're Expecting areas like operational, execution, major project delivery or turnaround efficiency.
%. And now we're applying that same. Um approach very quickly into the Angola's Nigeria's and other deep water locations around the operation. So it's an opportunity to accelerate the application of best practices. And then standardizing and grouping work to fully leverage, scale, and Technology. I I think of our digital Twins and the ability to do turnaround planning in anywhere in the world for a facility that could be on the other side of the world and demonstrating uh world class performance. We have multiple examples of that. And then finally, you know, although we are reducing our total number of of headcount, the ability to enable our people to get get things done in a simpler way, is all part of this and I expect to see more than just cost reductions. I expect to see performance Improvement across the system.
Thank you, Devon.
Thank you, we'll take our next question from Steve Richardson with evercore isi.
Hi, good morning, thanks. Um, I was wondering if we could zoom out a little bit, appreciate the previous comments, um, from Mark about the Permian, but I was wondering if we could talk about the broader tight oil portfolio, now that you've, you know, you're in process on on integrating Hass and so, how should we think about, you know, the puran, DJ bachan as a whole, you know, balancing growth and free cash generation and sort of the, you know, the role of of tight oil in the broader portfolio and to go forward basis?
Yeah, Steve, uh, you know, we really have a, uh, a a
Position that a few years ago, I'm not sure. Uh, we could have imagined as we were ramping up in the puran and uh, at, you know, a few hundred thousand barrels, a day. Uh, if you take the permanent a million a day, the DJ at nearly 400 a day the bachan at 200 a day. That's 1.6.
Million barrels a day, that's larger than a lot of companies. Um and uh and now as we consolidate has this production, you know, we're going to be pushing up close to, you know, 4 million barrels a day. So that's 40% of our production in uh, in Shale and type. Uh, so a substantial portion of our overall Upstream uh certainly 1 of the criticisms of uh, operators in the Shale. Over the years, has been all the cash goes right back into growth and uh, and investors didn't see a lot of it at 1.6 million barrels a day. If we can apply the capital efficiencies that Mark has described operating efficiencies and Drilling and and uh, completion efficiencies as well to hold.
Production at a plateau for years and years and years. Uh, the amount of cash that that can throw off for investment across the rest of the portfolio is very meaningful and that cash also, of course, supports balance sheet strength, the dividend, and the share repurchase. And so we, we want to see a balanced portfolio with both short and long cycle Investments, you know, for those of you that have been around for a while, remember a decade ago when we were overweight on Long cycle, uh, it was a long, wait to see some of that, uh, that production arrived. And so, uh, we intend to have a nice balanced mix, uh, within our portfolio, across geographies across asset classes, uh, across segments of the business, uh, with the real focus on using that to deliver steady predictable reliable, uh, cash that, uh, you know, large portion of it will be returned to shareholders. So, uh, we're, we're very pleased to have such a large shale portfolio and at some point, um,
You know growth uh, is less the objective than than free cash flow and and you know we're we're approaching that point.
Hey, Steve.
We'll take our next question from Doug. Legit, with Wolfe research.
Uh, good morning everyone. Uh, Mike, I still haven't got the whiskey but I'm I'm holding out. Hope so congratulations again. All right, well, I'll hold out with you.
I, uh, we'll take it offline. Um, I have a very specific question. Actually, it's a follow-up to Steve's question, um, on the back end.
Hess was kind enough to report their us business separate from the international and even with the synergies, the US business under their reporting would still be free cash flow negative.
And the reason for it, of course, is they pay out significant dividends, uh, or tariffs, rather, to test them.
Um, my question is that
is this a core business for Chevron? Because
Specifically in your portfolio.
Yeah, I'll I'll let Mark talked about that. Thanks for the question, you know, Doug, I listen stepping back. I would say we're excited to add the position in North Dakota to our shell and type portfolio is Mike, as Mike mentioned, our view is today, it generates a solid cash flow. When you look at the entity in in total, and we've learned from our, our experience, integrating Noble and PDC that, you need to step back and look at both the talent and the assets that were acquiring here. And we've come to know the Hest team very well, they use some things very well, um, in the Box in and we've obviously got our own capabilities in unconventional, so we look forward to bringing those uh, together. We haven't made any long-term development plans just yet, but we'll talk about that more in our investor day. I think you're, you know, your comment is linked to Hess Midstream. And, and obviously, that is a bit of a unique financing structure and, and my personal belief is that, that can be more efficient, it's different than some other, um, Midstream elements that we have divested of its different in its size and its structure. And obviously,
It's logistic linkage to the to the bachan. We'll be value driven in regard to how we handle that over time, and we can talk about that more in our investor day in November.
Thanks to.
We'll take our next question, from Jean and Salsbury with Bank of America.
Hi, good morning. Um, can you just recap how things stand in Venezuela for you today? Um, are the production levels and contract structures basically, as they were prior to lvm movement there year to date.
Yeah, Gina. And thanks, uh, you know, I’ll just remind everybody. We’ve been operating in Venezuela for over 100 years, and our presence has played an important role in regional energy security as well as maintaining American economic interests. Since our license changed in May, we’ve been engaged with the U.S. government, working closely with the administration.
To ensure our compliance with our country's policies towards Venezuela, this month it looks like there will be a limited amount of oil that will begin flowing to the U.S. from the Venezuela operations that we have an interest in, consistent with U.S. sanctions policy.
Uh, and crude from Venezuela is sought after and very valuable to, you know, to us Gulf refiners that are specifically built to process heavy grades like that. And so, it serves as a reliable source of supply for the American economy. Uh, we don't expect the, uh,
Flows from Venezuela, will have a material impact on our results here in the third quarter, although it will, uh, you know, at the margin help satisfy some of the debt we're owed. Uh, and uh over time we hope to continue uh recovering that. And I'll just end by saying, you know, as in all countries, where we have a presence, we'll continue to operate in accordance with all applicable laws and regulations in any us sanctions regime or policies and that includes Venezuela.
Thanks Janet.
We'll go next to Ryan Todd with Piper Sandler.
Uh, good thanks. Um
congratulations on the on a strong quarter and um, in particular, strong operational performance right now, I think if if you look at the
Across the portfolio with, you know, the timing and the ramps successful ramps on multiple projects from the Gulf of Mexico per me and hitting the million Barrel a day Target.
An impressive ramp at Tangy, and even Australian LG, which hasn't always been. Um,
The greatest operations are operating at 7% above nameplate right now. So, what has worked? Well, of late, as you look across the operational portfolio, how do you continue to build on that momentum going forward?
Ryan. Thanks for the acknowledgement. That that's um all that Improvement. You described on the on the backs of a lot of people across our our portfolio. So thank you, thank you for that. I I would sit back on 2 things, I would say um, operational efficiency when it comes to production. And turnaround management are 2 areas that have driven a lot of our improvement over time. So you'll note that in our um, Downstream portfolio, our Refinery, throughput, hit a new record, which was mentioned in the, um, formal remarks. That was that was driven by the startup of a light title project in Pasadena that quickly uh, ramped up to name plate capacity. It was also linked to some very, very successful turnarounds. In fact, 14 of our last 16 turns on our major assets, both in the refining sector and in our LNG facilities, 14 out of 16 have been top top cortile performance in regard to duration. So the team is doing a really good job of of driving, our turnaround performance to kind of competitive lead.
Leverage previous investments. In fact, our production efficiency for the whole portfolio is up 1% to 2% year to date. So, we will continue pressing forward, and you should expect more of the same.
Thank you, Ryan.
We'll go next to Paul Cheng with Scotia Bank.
Hey uh, good morning.
Um, Mark and uh, Mike if we look at today as you say, I mean, that, uh, post has about 40% of your production from the US Shale and they have a different, uh, risk profile and everything. So I try to understand that how important going forward the expiration uh, fit into your overall portfolio. Uh, I think that many years ago that we would say oh exploration you want to be targeting that organically. We pay 100% of your resource uh that your production but with 40% of your production basis on there, what is the right target uh going forward for you guys and do you think that you have uh the right program because frankly that the last several years that exploration program from you uh may not have yield uh the result that you may want. So I want to see that. Do you happy with the result? And if not what changes that uh you think you need to make over there? Thank you.
Yeah, Paul. Thanks for that. Um, I'm not happy with the results out of expiration over the last few years, um, but I, I want to acknowledge our exploration team has been operating in a pretty, uh, narrow, uh, uh range. Uh, We've reduced our investment for the reasons. You point out. We're seeing big resource and, and, uh, Reserve ads from our Shale business for many years. And, um, and we were really serious about Capital discipline. And so ramping up the spending on that, uh, we, uh, we, we pulled back and, um, and focused in to a pretty narrow range of activities, uh, as we move towards a plateau. And as earlier, I talked about the need for a balanced and diversified portfolio. Expiration needs to play an important role and we are making some some changes to our program and our approach, and I'll let Mark give you some highlights on that. Yeah, thanks Mike and Paul. Thanks for the thanks for the question, you know.
Expiration will continue to play an important part in building our future portfolio. I think in the past fall, we've talked about ensuring that we have a balanced portfolio for exploration, and that means.
You know, mature areas near existing infrastructure and early High entry or early entry high impact Frontier areas. So 1's about replenishing resources for Investments, we've already made and the other it would be resources.
For the future that philosophy hasn't changed. We've just opened the aperture, a bit to lean in a bit more. And I think you have seen us have success in our infrastructure enabled exploration here over the last few years thinking about the Gulf of America, Nigeria, the partition Zone and Angola and then we've been um, restocking the coverage. If you will, when it comes to Frontier acreage, we've added over 20%, we've increased our portfolio by over 20%. Um, as you look over the last couple of years, and as you look towards the end of this year, you'll see us put down wells in the sernam Namibia and Egypt in those Frontier type of offerings. And so when you think about that flying more attention to it, as well as us making some operational changes where we've streamlined, our exploration organization and have brought into Talent of the Hest team as well as some others. I think you'll start to see the the best build on the positive momentum that we have on our infrastructure finds.
Thanks Paul. And and it will be an area of Paul maybe just a tech on 1. Other thing, Mark talked earlier about some of the more centralized decision-making and, and execution, that's another thing as we will, um, we'll we'll bring some of that decision making into a, a tighter group with an Enterprise Focus.
Okay, thank you.
We'll take our next question from Arun. J Ram with JP Morgan.
Yeah, good morning. I was wondering if we get a brief update on your Eastern Med, gas strategy and thoughts on a potentially upgrading
Um, or doing an extension project at Leviathan, as well as where Aphrodite sits in terms of your thoughts.
Increase our production capacity by about 25%, over the next couple of years and we see more growth potential in the region in general. Um, Cyprus is is part of that equation. Our Aphrodite, uh, project that where we're doing front-end engineering today. We've made good progress with our with the government there. And we've got approved plans, uh, to push ourselves towards FID, the initial development in Cyprus, you know, was for a an FPU and I think we'll build something that leverages the Egypt market as well over time as maybe the regional market. So more to come in regard to to FID, but we'll make sure we have competitive returns before we proceed on the Aphrodite project.
Thanks Arun.
We'll take our next question from Josh. Josh Silverstein with UBS.
You think the good morning guys, uh, you have these the strong operational performance at TCO, um, and it's producing 18% above name plate. Is this just an fgp or the whole project and and maybe see uh if you can uh give us kind of the forward outlook here. Is it kind of sustainable at this level and any sort of other devout making opportunities, thanks?
Yeah, Josh, thank you. Um, we are very pleased with the performance of our whole uh, tenis operation there. The teams worked hard. I, you know, I think the
You know, starting all the way back to the 30 days ramp up of FCP to name plate. The team just has built on on that momentum and maybe the things that excites me the most and it, it gets to maybe your question is the integrated operation control center. That was a part of our future growth project investment allows both the, uh, previous Investments, all the way back to our first generation Investments to the recent, uh, projects that were commissioned and started up. It allows that whole system to be optimized. So Wells, plants everything. And I think we're just scratching the surface as to, you know, what potential that has over time. Um, when when I talked to, in my prepared remarks, about the performance being above name plate, that's obviously the first and second generation projects, which are as you described 18% above name plate, you know, we see the same type of opportunities as we now look at the whole integrated.
System and, as in the fourth quarter, we're planning a pit stop for maintenance activities that allows us maybe to continue to improve our operations there and build on the positive momentum we have.
Thanks Josh.
We'll go next to Betty Jiang with Barclays.
Hi morning, thank you for taking my question. Um,
The actual 1 I asked about the Affiliates distribution and that actually ties to the TCL outperformance as well. Um, second quarter really stood out from how strong, the cash flow generation was the part of that is the Affiliates distribution, um, much higher. Um, highlighting the, uh, the outperformance in TCO just wondering how you see that uh, evolving especially with the performance that you're seeing at the asset Co, we see some website to that distribution, number for 25 and 26.
Yeah, morning Betty. It's it's Amber here. I, I'll take that 1. Uh, yeah, to, to Mark's earlier Point. Um, the the ramp up on TCO went really well in the first quarter, uh, much faster than anticipated. And so over the second quarter we had higher higher production for for sustained, for the entire quarter, um, coupled with the the prices that we saw, I mean, at the beginning of the quarter um, prices were were lower. When we give the guidance, I think they were in the low 60s and we saw a higher prices um during the quarter. So the the combination of both higher prices and um higher production, um is uh is the result of that is the higher distributions that you.
Saw in the in the second quarter and, you know, going forward, uh, what I point out is in the third quarter, we'll see the first, uh, loan repayment, and then we'll see that coming through in our adjusted free cash flow metric that that now includes. Um, distributions from Equity Equity Affiliates. Um, so that's what you can expect, um, to see in in addition, to the guidance around affiliate distributions, um, that that we've shared today.
Thanks for the question.
Thank you. We'll go next to Lucas Herman with BNP Paribas.
Yeah, thanks very much, Emma. Sorry. Just going back to the last question. Before I come on to what I want to ask you, just to be clear, that the billion of loan repayments you’re saying will go through CFSO will be included in the Affiliates line.
No. Um, look at
But in the adjusted free cash flow metric, um, that we shared today, we will be combining both both of those, so they're flowing in through through different parts of the cash flow statement, but the the combination will be in the adjusted free cash flow.
We'll take our next question from Nit and Kumar with MHA.
Hi, good morning, and thanks for taking my question. Uh, maybe I'll take advantage of Mark being on the call. You talked about EU's in the Gulf of America being 9% about what you would expect it. Um, could you talk a little bit about what you're seeing there? Um, is it a reservoir? Is it operations? And how does that change the view of the Gulf of America within your portfolio in terms of investment?
Yeah, thank you for the question. We're actually very pleased with our performance in the Gulf of Mexico. You know, the
The strong performance will take that 300,000 barrels a day that we've talked about in 2026 and likely put that through the, um, through the remainder of the decade. And it's really.
A combination of two things: it's the ramp-up of our anchor, whale in Baltimore Investments, and it's the performance and full leverage of our base assets. So I'll focus on that. You know, we've been in the Gulf of America for nearly one hundred years.
And the improved recovery that you're seeing from our base assets is really from from stage developments either water flood subk multi-phase pumping or Andor, well, stimulation programs, and all I'll use Tahiti. Um, as an example that, you know, the Tahiti project has actually reached its name plate, capacity twice.
In its history, over over 4 different stage developments, and then Jack St. Malo has had 6 development over its period of existence. And so the the reality here is um, we've we're committed to fully leveraging our base assets, to take them as far as we can be. And with the addition of Hesse, you know, we become the largest lease holder as Mike mentioned in his comments in the Gulf of America. And 80% of those leases are adjacent to or within distance of tieback range for further Investments over time. So we have a an opportunity to have a, a continued um High cash flow generating operation in the Gulf of America going forward. And then I think what Mark just described you can expect uh projects like anchor ball, and more whale all to have this type of follow on development and um and and those fields are likely to yield a very similar story to what Mark just described.
Thank you. We'll take a question from Lucas Herman with BNP Paribas.
Welcome back very much good.
Thank you. Um sorry I I've got a couple but let's just start on this LNG. I mean, 1 of the things that you've highlighted in your um, summary Slide. The morning is that you've increased your LG uptake capacity to 7 million tons per hour and a lot of that comes on stream quite late this decade. So really the question is, is simply, you know, the approach of strategy because what I haven't seen from yourself is, is placing that should we say with within markets. So there's a question around, how much risk you're willing to take on and the extent to which you know the 7 million that you know is going to be flowing into the portfolio, will largely be used? How do you see balancing it, how much will end up being long-term, placing back to back? How much of it do you want the flexibility to play more short term?
Yeah, uh, look, we we've uh, We've executed some uh, offtake agreements. Uh, that you might not be aware of, and so we're, we're actually placing some of that volume out there. But uh, there's there's more to be done. I'm going to let Mark talk to you a little bit about how we think about a larger LNG system in in optimizing that? Yeah. Lucas, I think in the past when we've talked about this, we've talked about this kind of building a a globally connected, um, LNG portfolio. And, and remember, you know, we're generating what 2.7 BCF of gas out of the United States in.
These, um, uptake Arrangements that we've built up out of the US Gulf Coast. I think it's up to now about 7 metric tons per year, it allows us to expose ourselves to multiple margin sets over time. So this is a, a balanced offering when you think of Our Winning positions in of gas generation in Australia and the US Gulf Coast in particular allows us to serve the global system and move product to where the margin um, best best suits us over time. So appreciate the question,
Thank you. We're going next to Jason gableman with TB Cohen.
Confused on the buyback outlook for next year. Um, should we expect a step up from the current rate by that 2.5 billion dollars that you uh, guided to when the hes deal was announced or, or is this kind of the rate, uh, we should expect in 2026? Thanks. Yeah. Jason that that, uh, that was a long time ago, um, and um, and at the time, uh, we anticipated a um, a prompt
Approval and closure of the transaction. And, uh, and we intended to retire shares on an accelerated basis to, uh, to reduce the outstanding shares in the interim. Uh, we've been delayed through the actions of others. And, uh, We've now actually, uh, purchased more than 50% of the shares. That would have been issued, uh, for the or that were issued for the transaction. We bought them back during uh, the interim period of time and effectively accomplished, what the increased uh, buyback rate was uh, was intended to do. Uh, we also bought uh, you know, 5% of hess's outstanding shares at about ten dollars a share lower average price than what we closed, the transaction at. Uh so um we were able to affect uh a little bit of a different strategy to retiring those shares than we had envisioned originally. And we also were in a a bit of a stronger commodity price environment at that time and we outlined a range. Uh,
And so, I think what I'd point you to is our investor day in November, where we will, have had a chance to bring together all the information. Now, as we've integrated hes, and, uh, and as part of that, of course, we'll review our, uh, forward, uh, Outlook and guidance for, uh, for, for share, uh, repurchases and we'll, we'll update you on that at, uh, at that point in time.
We'll take our next question. From Philip Jeong worth with BMO.
Thanks, good morning.
On on Kazakhstan. Uh the country has has announced significant petrochemical investment and capacity growth plans through the decade. So uh, more broadly can you talk about the the importance of domestic oil and gas production to contributing to these or other power Ambitions and uh how untapped is the, the gas resource at tingi?
Yeah, it uh, you know, the, the Republic of Kazakhstan has been, uh, looking to diversify their economy and to, uh, broaden out the, uh, the ways they can utilize their energy wealth, and abundance, uh, to participate in other parts of the value chain, uh, refining petrochemicals. Um, gas, all I, I think are of an interest to them, we we engage in discussions, uh, with the Republic and with our our partner, the, the state, multiple State companies actually in the different segments there. Um, and so, uh, I do think you're
You're likely to see, uh, a continued appetite for further investment, on the part of the Republic. Uh, there's a lot of gas, uh, that's associated with our, uh, field and other fields. Uh, we reject, uh, a large portion of that gas today. Uh, and then the other reality that that, um, you know, the Republic deals with is some of the gas production volumes are not necessarily where the gas consumers are and so they, they will tend to maybe sell the gas into the market, or to their neighbor, uh, Russia and then buy back in another location. And so investment in domestic infrastructure, to better connect production and markets. I think is another thing that, uh, uh, is likely to happen over time. And so, uh, we try to be a good partner. We try to work closely to help evaluate these kinds of opportunities. Uh, we haven't, uh, participated in a petrochemical plant there, for instance, uh, Although our affiliate, uh, Chevron Phillips chemical has taken
A look at that, uh, in the past. And I think, uh, you'll continue to see us, uh, look to help the Republic, achieve their, uh, economic and energy, uh, diversification goals.
Thank you, we'll take our final question from Jeff. J with Daniel Energy Partners.
Hi guys. Thanks for taking the question. You know, it just seems to me that Chevron was kind of depressed for a multi-year period. I guess there's been a step change down in the capital intensity to feed the beast on the upstream side. Even before that...
You know, with title hitting plateau levels and spend for several low decline, long cycle projects kind of in the rearview mirror, we seem to be that has still kind of makes that even better. And I'm just curious, how do you think about Chevron's overall reinvestment and decline rates over the next few years as a result of the deal closing?
I might say 1 of the precipice of a wide expansion in free cash flow rather than a sharp decline in capex. You know, as we've got a business that a couple of years ago was 2.9 Million barrels, a day in the Upstream. We're going to end this year close to 4 million barrels a day. So a larger system does require, uh, a certain amount of capital to keep it keep it running. Uh, but you've, you've characterized the, uh, the approach to Shale, well, which I I touched on earlier, uh, we've got a portfolio that's deep with opportunities, uh, around the world. It's a mix of near-term, growth and and longer dated resource options. Uh, we intend to be active in expiration as Mark said in in the Gulf of America West Africa. Egypt cernuum Namibia other places. Uh, we've got projects, like the Eastern Med opportunity that we talked about. We're investing in petrochemical projects uh, in both the, the US and the Middle East. And so um, I I think the from a capital standpoint, what you should expect capixyl
Step up a little bit with has because, uh, the Guyana development and, uh, and the bachan are both, uh, going to require Capital to support them, but uh, but overall our, uh, MMO or our reputation for Capital discipline, uh, will remain. And so, I think you can expect us to challenge ourselves to only invest in the best opportunities, to divest the assets of the portfolio that don't compete for capital in a in a tight Capital environment and and might fit better for others.
And uh and really be focused on delivering uh, you know, strong uh returns and free cash flow, uh, to support distributions to shareholders across a really Advantage portfolio. Which of course, we will continue to look for opportunities to make even stronger.
Thank you, uh, for that question. And uh, before uh, I don't know if you're going to sign us off Jake or um, uh, our operator will. But I just want to, I want to thank everybody for your, uh, for your questions and interest today, on remind you, uh, that as, as Jake noted up front. Uh, we will have another investor day. It's been a while. Uh, but on November 12th in New York City back at the St. Reges for those of you that have been with us for a while, uh, we will be holding our investor day and we look forward to sharing with you, uh, how we view our, uh, new and is stronger portfolio. Our differentiated portfolio, uh, to reiterate the consistency in our strategy, and our fundamental commitment to, uh, Capital discipline and Superior shareholder returns and how we intend to, uh, continue to deliver growth and shareholder value into the future. So, uh, I guess we'll have 1 more of these calls before, uh, before we see you at investor day, but Mark that on your calendar and I look forward to seeing everybody in person.
We appreciate your interest in Chevron and your participation on today's call. Please stay safe and healthy Katie back to you.
Thank you, this concludes chevron's second quarter 2025 earnings conference call. You may now disconnect