Chevron Q4 2025 Chevron Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Chevron Corp Earnings Call
Speaker #1: Good morning. My name is Katie, and I will be your conference facilitator today. Welcome, everyone, to Chevron's fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.
Operator: Good morning. My name is Katie, and I will be your conference facilitator today. Welcome everyone to Chevron's Q4 2025 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 requires 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 #1: After the speakers' remarks, there will be a question-and-answer session, and instructions will be given at that time. If anyone requires assistance during the conference call, please press star, then zero on your touch-tone telephone.
Speaker #1: 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.
Speaker #1: Please go ahead.
Speaker #2: Thank you, Katie. Welcome to Chevron's fourth quarter 2025 earnings conference call and webcast. I'm Jake Spiering, Head of Investor Relations. Our Chairman and CEO, Mike Wirth, and our CFO,
Jake Spiering: Thank you, Katie. Welcome to Chevron's Q4 2025 earnings conference call and webcast. I'm Jake Spiering, Head of Investor Relations. Our chairman and CEO, Mike Wirth, and our CFO, Eimear Bonner, are on the call with me today. We will refer to the slides and prepared remarks that are available on Chevron's website. But 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 and additional information presented on slide 2. Now, I will turn it over to Mike.
Jake Spiering: Thank you, Katie. Welcome to Chevron's Q4 2025 earnings conference call and webcast. I'm Jake Spiering, Head of Investor Relations. Our chairman and CEO, Mike Wirth, and our CFO, Eimear Bonner, are on the call with me today. We will refer to the slides and prepared remarks that are available on Chevron's website. But 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 and additional information presented on slide 2. Now, I will turn it over to Mike.
Speaker #1: Eimear Bonner is on the call with me. We will refer to today's slides and remarks that are prepared and available on Chevron's website.
Speaker #1: Before we please begin , be before we begin , please be reminded that this presentation contains estimates , projections , and forward looking I reconciliation of statements .
Speaker #1: Non-GAAP measures can be found in the appendix to this presentation. Please review the cautionary statement and additional information presented on slide two.
Mike Wirth: Okay, thanks, Jake. 2025 was a year of execution. We set records, started up major projects, and strengthened our portfolio. Production reached record levels globally-
Mike Wirth: Okay, thanks, Jake. 2025 was a year of execution. We set records, started up major projects, and strengthened our portfolio. Production reached record levels globally and in the US, supported by key milestones and strategic actions, including completion of the Future Growth Project at Tengiz, adding 260,000 barrels of oil per day. Startup of Ballymore and Whale, and the ramp-up of Anchor in the Gulf of America, advancing toward our goal of 300,000 barrels of oil equivalent per day in 2026. Achieving 1 million barrels of oil equivalent per day in the Permian, and shifting focus to free cash flow growth and closing the Hess acquisition, creating a premier upstream portfolio with the highest cash margins in the industry. Additionally, in the downstream, we delivered the highest US refinery throughput in 2 decades, reflecting recent expansion projects and higher efficiency.
Speaker #1: Now I will turn it over to Mike.
Speaker #2: Okay, thanks. In terms of execution, 2025 was a year. We set records, started up major projects, and strengthened our portfolio.
Speaker #2: Production reached record levels globally and in the US , supported by key milestones and strategic actions , including completion of the Future Growth project at Tengiz , adding 260,000 barrels of oil per day Startup of Ballymore and Whale , and the ramp .
Mike Wirth: ... and in the US, supported by key milestones and strategic actions, including completion of the Future Growth Project at Tengiz, adding 260,000 barrels of oil per day. Startup of Ballymore and Whale, and the ramp-up of Anchor in the Gulf of America, advancing toward our goal of 300,000 barrels of oil equivalent per day in 2026. Achieving 1 million barrels of oil equivalent per day in the Permian, and shifting focus to free cash flow growth and closing the Hess acquisition, creating a premier upstream portfolio with the highest cash margins in the industry. Additionally, in the downstream, we delivered the highest US refinery throughput in 2 decades, reflecting recent expansion projects and higher efficiency. This performance drove strong results, including industry-leading free cash flow growth.
Speaker #2: Up of Anchor in the Gulf of America. Advancing toward our goal of 300,000 barrels of oil equivalent per day in 2026, achieving 1 million barrels of oil equivalent per day in premier upstream, focusing cash in the Permian and shifting growth, and closing the Hess flow acquisition, creating the highest cash in the industry.
Speaker #2: Additionally , in the downstream , highest we U.S. delivered the throughput in two decades , reflecting recent expansion projects and higher efficiency . This performance drove strong results , including industry leading free cash growth flow excluding asset sales .
This performance drove strong results, including industry-leading free cash flow growth. Excluding asset sales, adjusted free cash flow was up over 35% year-over-year, even with oil prices down nearly 15%. For the fourth consecutive year, we returned a record cash to shareholders, delivering on our consistent approach to superior shareholder returns. Chevron has been in Venezuela for over a century, and we remain committed to leveraging our deep expertise and long-standing partnerships for the benefit of our shareholders and the people of Venezuela. Since 2022, in full compliance with US laws and regulations, we've worked with our Venezuelan partners to increase production in our ventures there by over 200,000 barrels per day through a venture-funded model to recover outstanding debt. We see the potential to further grow production volumes by up to 50% over the next 18 to 24 months.
Mike Wirth: Excluding asset sales, adjusted free cash flow was up over 35% year-over-year, even with oil prices down nearly 15%. For the fourth consecutive year, we returned a record cash to shareholders, delivering on our consistent approach to superior shareholder returns. Chevron has been in Venezuela for over a century, and we remain committed to leveraging our deep expertise and long-standing partnerships for the benefit of our shareholders and the people of Venezuela. Since 2022, in full compliance with US laws and regulations, we've worked with our Venezuelan partners to increase production in our ventures there by over 200,000 barrels per day through a venture-funded model to recover outstanding debt. We see the potential to further grow production volumes by up to 50% over the next 18 to 24 months.
Speaker #2: Adjusted free cash flow was up over 35% year over year with oil, even with prices down nearly 15%. And, for the fourth consecutive year, we returned a record cash to shareholders, delivering on our consistent approach to superior shareholder returns.
Speaker #2: Chevron has been in Venezuela for over a century, and we remain committed to leveraging our deep expertise and long-standing partnerships for the benefit of our shareholders and the people of Venezuela.
Speaker #2: Since 2022, in full compliance with U.S. laws and regulations, we've worked with our Venezuelan partners to increase production in our ventures there by over 200,000 barrels per day through a venture-funded model to recover outstanding debt.
Speaker #2: We see the potential to further grow production volumes by up to 50% over the next 18 to 24 months. We're reliably delivering Venezuelan crude to the market, including our own refining system.
Mike Wirth: We're reliably delivering Venezuelan crude to the market, including our own refining system. There is significant potential in our assets and in the country. We're optimistic the future holds a more competitive and robust pathway to deliver value to Venezuela, the United States, and Chevron. We've been a pivotal part of Venezuela's past, we're committed to the present, and we look forward to a continued partnership into the future. Our advantaged assets in the Eastern Mediterranean continue to grow, and we're advancing multiple high-return projects to bring world-class gas resources to regional markets. Leviathan recently reached FID to further expand production capacity. Combined with a near-term expansion, gross capacity is anticipated to reach roughly 2.1 billion cubic feet per day at the end of the decade, contributing to a doubling of current earnings and free cash flow.
We're reliably delivering Venezuelan crude to the market, including our own refining system. There is significant potential in our assets and in the country. We're optimistic the future holds a more competitive and robust pathway to deliver value to Venezuela, the United States, and Chevron. We've been a pivotal part of Venezuela's past, we're committed to the present, and we look forward to a continued partnership into the future. Our advantaged assets in the Eastern Mediterranean continue to grow, and we're advancing multiple high-return projects to bring world-class gas resources to regional markets. Leviathan recently reached FID to further expand production capacity. Combined with a near-term expansion, gross capacity is anticipated to reach roughly 2.1 billion cubic feet per day at the end of the decade, contributing to a doubling of current earnings and free cash flow.
Speaker #2: There is significant investment and assets in the country. We're optimistic the future holds a more competitive and robust pathway to deliver value to Venezuela.
Speaker #2: The United States and Chevron. We've been a pivotal part of Venezuela's past. We're committed to the present, and we look forward to a continued partnership into the future.
Speaker #2: Our assets advantage to in the Eastern Mediterranean continue to grow , and we're advancing multiple high return projects to bring world class gas resources to regional markets .
Speaker #2: Leviathan FID expand to further production recently reached capacity , combined with a near-term expansion , gross capacity is anticipated to reach roughly two point 1,000,000,000 cubic feet per day at the end of the decade , contributing to a doubling of current earnings and free cash flow at Tamar .
Mike Wirth: At Tamar, the optimization project startup is in progress, increasing gross capacity to approximately 1.6 billion cubic feet per day. Aphrodite has now entered feed, working toward developing a competitive investment in Cyprus. We expect these projects to build on the existing assets' top-quartile reliability and unit development costs, further expanding our differentiated position. Before concluding, I want to provide a brief update on TCO. Earlier this month, TCO experienced a temporary issue on the power distribution system. Production was safely put in recycle mode while the team identified the root cause. Early production has now resumed, and we expect the majority of the plant capacity to be online within the coming week and unconstrained production levels within February. Our full year 2026 guidance of $6 billion of Chevron share free cash flow from TCO at $70 Brent is unchanged.
At Tamar, the optimization project startup is in progress, increasing gross capacity to approximately 1.6 billion cubic feet per day. Aphrodite has now entered feed, working toward developing a competitive investment in Cyprus. We expect these projects to build on the existing assets' top-quartile reliability and unit development costs, further expanding our differentiated position. Before concluding, I want to provide a brief update on TCO. Earlier this month, TCO experienced a temporary issue on the power distribution system. Production was safely put in recycle mode while the team identified the root cause. Early production has now resumed, and we expect the majority of the plant capacity to be online within the coming week and unconstrained production levels within February. Our full year 2026 guidance of $6 billion of Chevron share free cash flow from TCO at $70 Brent is unchanged.
Speaker #2: The optimization project startup is in progress gross capacity to . Increasing approximately one point 6,000,000,000 cubic feet per day , and Aphrodite has now entered feed , working toward developing a competitive investment in Cyprus .
Speaker #2: We expect these projects to build on the existing assets' top quartile reliability and unit development costs, further expanding our differentiated position. Before concluding, I want to provide a brief update on TCO.
Speaker #2: Earlier this month, TCO experienced a temporary issue on the power distribution system. Production was safely put in recycle mode while the team identified the root cause.
Speaker #2: Production has now resumed early, and we expect the majority of the plant capacity to be online within the unconstrained production week and within February.
Speaker #2: Full year, our 2026 guidance of $6 billion of Chevron share free cash flow from TCO at $70 Brent is unchanged. I want to reiterate our message from Investor Day.
Mike Wirth: I want to reiterate our message from Investor Day. Chevron is bigger, stronger, and more resilient than ever. We're entering 2026 from a position of strength, and we'll continue building on our momentum in the years ahead. Now, over to Eimear to discuss the financials.
I want to reiterate our message from Investor Day. Chevron is bigger, stronger, and more resilient than ever. We're entering 2026 from a position of strength, and we'll continue building on our momentum in the years ahead. Now, over to Eimear to discuss the financials.
Speaker #2: Chevron is bigger, more resilient, stronger than ever. We're entering 2026 from a position of strength and will continue building on our momentum in the years ahead.
Speaker #2: Now over to Emre to discuss the financials.
Eimear Bonner: Thanks, Mike. Chevron reported fourth quarter earnings of $2.8 billion, or $1.39 per share. Adjusted earnings were $3 billion, or $1.52 per share. Included in the quarter were pension curtailment costs of $128 million and negative foreign currency effects of $130 million. Cash flow from operations was $10.8 billion for the quarter and included $1.7 billion from a drawdown in working capital. In line with historical trends, we expect to build in working capital in Q1 2026. Organic CapEx was $5.1 billion for the quarter, and full-year organic CapEx was in line with guidance. Inorganic CapEx related mostly to lease acquisitions and new energies investments.
Eimear Bonner: Thanks, Mike. Chevron reported fourth quarter earnings of $2.8 billion, or $1.39 per share. Adjusted earnings were $3 billion, or $1.52 per share. Included in the quarter were pension curtailment costs of $128 million and negative foreign currency effects of $130 million. Cash flow from operations was $10.8 billion for the quarter and included $1.7 billion from a drawdown in working capital. In line with historical trends, we expect to build in working capital in Q1 2026. Organic CapEx was $5.1 billion for the quarter, and full-year organic CapEx was in line with guidance. Inorganic CapEx related mostly to lease acquisitions and new energies investments.
Speaker #3: Mike Thanks , . Chevron reported fourth quarter earnings of $2.8 billion , or $1.39 per share . Adjusted earnings were $3 billion , or $1.52 per share Included .
Speaker #3: quarter were pension curtailment costs of $128 million and negative foreign currency effects of $130 million . Cash flow from operations was $10.8 billion for the quarter , a and $1.7 billion from a included drawdown in capital working with , in line trends , we historical expect a build in working capital in the first quarter of 2026 .
Speaker #3: Organic CapEx was $5.1 billion for the quarter, and full-year organic CapEx was in line with guidance. Inorganic CapEx related mostly to lease acquisitions and new energies.
Eimear Bonner: We repurchased shares at the high end of our Q4 guidance range at $3 billion. Our balance sheet remains strong, ending the year with a net debt coverage ratio of 1x. Compared to last quarter, adjusted earnings were lower by roughly $600 million. Adjusted upstream earnings decreased primarily due to lowered liquids prices. Adjusted downstream earnings were lower, largely due to lower chemicals earnings and refining volumes. Adjusted free cash flow was $20 billion for the year and included the first loan repayment from TCO and $1.8 billion in asset sales. Share repurchases, combined with the Hess shares acquired at a discount for over $14 billion. Looking ahead, we expect continued growth in cash flow, driven by low-risk production growth, ongoing cost savings, and continued capital discipline.
We repurchased shares at the high end of our Q4 guidance range at $3 billion. Our balance sheet remains strong, ending the year with a net debt coverage ratio of 1x. Compared to last quarter, adjusted earnings were lower by roughly $600 million. Adjusted upstream earnings decreased primarily due to lowered liquids prices. Adjusted downstream earnings were lower, largely due to lower chemicals earnings and refining volumes. Adjusted free cash flow was $20 billion for the year and included the first loan repayment from TCO and $1.8 billion in asset sales. Share repurchases, combined with the Hess shares acquired at a discount for over $14 billion. Looking ahead, we expect continued growth in cash flow, driven by low-risk production growth, ongoing cost savings, and continued capital discipline.
Speaker #3: Investments . We repurchased shares at the high end of our fourth quarter guidance range at $3 billion . Our balance sheet remains strong , the year with a and in net debt coverage ratio of one x compared to last quarter .
Speaker #3: Adjusted earnings were lower by roughly $600 million . Adjusted earnings upstream decreased , primarily due to lower liquids prices . Adjusted downstream earnings were lower , largely due to lower chemicals earnings and refining volumes Adjusted free cash flow was .
Speaker #3: $20 billion for the year and included the first loan repayment from TCO and $1.8 billion in asset sales. Share repurchases. Combined with cash, shares acquired at a discount for over $14 billion.
Speaker #3: Looking ahead, we expect continued growth in cash flow driven by low-risk production growth, ongoing cost savings, and continued capital discipline.
Eimear Bonner: 2025 marked the highest full year worldwide in US production in Chevron's history. Excluding impacts of the Hess acquisition, net oil equivalent production growth was at the top end of our 2025 guidance range of 6 to 8%. Production at TCO, the Permian, and the Gulf of America was in line with or better than previous guidance due to strong performance and disciplined execution. We expect volume growth to continue in 2026 as we see the benefits of project ramp-ups, a full year of Hess assets, and continued efficiency in our shale portfolio. A full year of Permian above 1 million barrels of oil per day and VAC in production underpins the expected growth in shale and tight.
2025 marked the highest full year worldwide in US production in Chevron's history. Excluding impacts of the Hess acquisition, net oil equivalent production growth was at the top end of our 2025 guidance range of 6 to 8%. Production at TCO, the Permian, and the Gulf of America was in line with or better than previous guidance due to strong performance and disciplined execution. We expect volume growth to continue in 2026 as we see the benefits of project ramp-ups, a full year of Hess assets, and continued efficiency in our shale portfolio. A full year of Permian above 1 million barrels of oil per day and VAC in production underpins the expected growth in shale and tight.
Speaker #3: 2025 marked the highest full year worldwide in U.S. production in Chevron's history, excluding impacts of the Hess acquisition. Net oil equivalent production growth was at the top end of our 2025 guidance range of 6 to 8%.
Speaker #3: Production at TCO, the Permian, and the Gulf of Mexico was in line with or better than previous guidance due to strong, disciplined performance and execution.
Speaker #3: We expect volume growth to continue in see the 2026 as we benefits of ramp project ups . A full year of Hess assets and continued efficiency in our shield portfolio full year of , a Permian above 1 million barrels of oil per day .
Speaker #3: And back in production expected, underpins the tight shale and growth in recent and upcoming project start-ups in Guyana, the Gulf of Mexico, and the Americas. The Mediterranean is anticipated to increase offshore production by approximately 200,000 barrels of oil equivalent per day.
Eimear Bonner: Recent and upcoming project startups in Guyana, the Gulf of America, and the Eastern Mediterranean are anticipated to increase offshore production by approximately 200,000 barrels of oil equivalent per day. We expect TCO to grow 30,000 barrels of oil equivalent per day, delivering near its original plan as the 2026 maintenance schedule has been optimized. In total, growth in these high-margin assets is anticipated to contribute to a 7% to 10% increase in production year-over-year, excluding the impact of asset sales. Last year, we launched our structural cost reduction program as part of our continued commitment to cost discipline. Execution has exceeded expectations, with $1.5 billion delivered in 2025 and $2 billion captured in the annual run rate.
Recent and upcoming project startups in Guyana, the Gulf of America, and the Eastern Mediterranean are anticipated to increase offshore production by approximately 200,000 barrels of oil equivalent per day. We expect TCO to grow 30,000 barrels of oil equivalent per day, delivering near its original plan as the 2026 maintenance schedule has been optimized. In total, growth in these high-margin assets is anticipated to contribute to a 7% to 10% increase in production year-over-year, excluding the impact of asset sales. Last year, we launched our structural cost reduction program as part of our continued commitment to cost discipline. Execution has exceeded expectations, with $1.5 billion delivered in 2025 and $2 billion captured in the annual run rate.
Speaker #3: We expect TCO to grow 30,000 barrels of oil equivalent per day, delivering nearest original plan as the 2026 maintenance schedule has been optimized.
Speaker #3: total In growth in these high margin assets is anticipated to contribute to a 7 to 10% increase in production year year . Excluding the over impact of sales asset .
Speaker #3: Last year, we launched our structural cost reduction program as part of our continued commitment to cost discipline. Execution has exceeded expectations, with $1.5 billion delivered in 2025 and $2 billion captured in the annual run rate.
Eimear Bonner: These results reflect a broad organization-wide effort to operate more efficiently, challenging high and more work gets done, streamlining processes, integrating advanced technology, and leveraging our scale across the supply chain. We've restructured our operating model to be leaner and faster, with a more intense focus on benchmarking and prioritization. We're not done. We expect this momentum to continue as we aim to deliver on our expanded target of $3 to 4 billion by the end of 2026, with more than 60% of savings coming from durable efficiency gains. As Mike referenced, we're entering 2026 in a position of strength. Our diversified portfolio has a dividend and CapEx breakeven below $50 Brent and a deep opportunity queue with lower execution risk. Capital discipline remains at the core of our strategy as we focus on only the highest value opportunities.
These results reflect a broad organization-wide effort to operate more efficiently, challenging high and more work gets done, streamlining processes, integrating advanced technology, and leveraging our scale across the supply chain. We've restructured our operating model to be leaner and faster, with a more intense focus on benchmarking and prioritization. We're not done. We expect this momentum to continue as we aim to deliver on our expanded target of $3 to 4 billion by the end of 2026, with more than 60% of savings coming from durable efficiency gains. As Mike referenced, we're entering 2026 in a position of strength. Our diversified portfolio has a dividend and CapEx breakeven below $50 Brent and a deep opportunity queue with lower execution risk. Capital discipline remains at the core of our strategy as we focus on only the highest value opportunities.
Speaker #3: These results reflect a broad, organization-wide effort to efficiently, and in a challenging environment, operate more highly and more widely to get work done. Streamlining processes, integrating advanced technology, and leveraging our scale across the supply chain.
Speaker #3: We've restructured our operating model to be leaner and faster, with a more intense focus on benchmarking and prioritization. And we're not done.
Speaker #3: We expect this momentum to continue as we aim to deliver on our expanded target of $3 to $4 billion by the end of 2026, with more than 60% of savings coming from durable efficiency gains.
Speaker #3: As Mike referenced, we're entering 2026 in a position of strength. Our diversified portfolio has a dividend and CapEx breakeven below $50.
Speaker #3: Brent and a deep opportunity. Q with lower execution risk, capital discipline remains at the core of our strategy as we focus on only the highest value opportunities.
Eimear Bonner: Our balance sheet is in excellent shape, with significant debt capacity that provides additional resilience and flexibility. This disciplined approach allows us to manage through cycles, invest for the future, and consistently reward shareholders. Over the last 4 years, we've returned more than $100 billion in dividends and buybacks. As we showed you at our Investor Day, our track record of growing the dividend is unmatched across decades. Today, we announced a 4% increase in the quarterly dividend, in line with our top financial priority. I'll now hand it off to Jake.
Our balance sheet is in excellent shape, with significant debt capacity that provides additional resilience and flexibility. This disciplined approach allows us to manage through cycles, invest for the future, and consistently reward shareholders. Over the last 4 years, we've returned more than $100 billion in dividends and buybacks. As we showed you at our Investor Day, our track record of growing the dividend is unmatched across decades. Today, we announced a 4% increase in the quarterly dividend, in line with our top financial priority. I'll now hand it off to Jake.
Speaker #3: Our balance sheet is excellent and in shape, with significant debt capacity that provides additional resilience and flexibility. This disciplined approach allows us to manage through cycles, invest for the future, and consistently reward shareholders.
Speaker #3: Over the last four years, we've returned more than $100 billion in dividends and buybacks. As we showed you at our Investor Day, our track record of growing the dividend is unmatched across decades.
Speaker #3: Today, we announced a 4% increase in the quarterly dividend, in line with our top financial priority. I'll now hand it off to.
Jake Spiering: That concludes our prepared remarks. Additional guidance can be found in the appendix to this presentation, as well as the slides and other information posted on chevron.com. We are now ready to take your questions. We ask that you limit yourself to just one question. We will do our best to get all of your questions answered. Katie, can you please open the lines?
Jake Spiering: That concludes our prepared remarks. Additional guidance can be found in the appendix to this presentation, as well as the slides and other information posted on chevron.com. We are now ready to take your questions. We ask that you limit yourself to just one question. We will do our best to get all of your questions answered. Katie, can you please open the lines?
Speaker #1: That concludes Jake prepared our. Additional guidance can be found in remarks in the appendix to this presentation, as well as the slides and other information posted on Chevron Corp. We are now ready to take your questions.
Speaker #1: We ask that you limit yourself to just one question. We will do our best to get all of your questions answered.
Speaker #1: Katie, can you please open the lines?
Operator: Thank you. If you have a question at this time, please press star one on your touchtone telephone. To allow for questions from more participants, we ask 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 handset before asking your question to provide optimum sound quality. Again, if you have a question, please press star one on your touchtone telephone. We'll take our first question from Arun Jayaram with J.P. Morgan.
Operator: Thank you. If you have a question at this time, please press star one on your touchtone telephone. To allow for questions from more participants, we ask 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 handset before asking your question to provide optimum sound quality. Again, if you have a question, please press star one on your touchtone telephone. We'll take our first question from Arun Jayaram with J.P. Morgan.
Speaker #4: Thank you. If you have a question at this time, please press star one on your touch-tone telephone to allow for questions.
Speaker #4: For more participants , we ask that you limit to one question . question yourself has been If your or you wish to remove yourself from the queue , please press star two .
Speaker #4: If you are listening on a speakerphone , we ask you please lift your handset before asking your question to provide quality . optimum sound Again , if you question , please have a press star one on your touch tone .
Speaker #4: Telephone. We'll take our first question from Aaron Jerome with J.P. Morgan.
Mike Wirth: Morning, Aaron.
Mike Wirth: Morning, Aaron.
[Analyst] (J.P. Morgan): Yeah, good morning. I was wondering... Yeah, good morning, Mike. I was wondering if you could elaborate on a few of the moving pieces around TCO volumes in 2026, including the optimized maintenance schedule. And perhaps, Mike, you could just discuss the issue on the power distribution system and where you stand with some of the debottlenecking activities that could potentially result in an increase in new productive capacity at TCO.
Arun Jayaram: Yeah, good morning. I was wondering... Yeah, good morning, Mike. I was wondering if you could elaborate on a few of the moving pieces around TCO volumes in 2026, including the optimized maintenance schedule. And perhaps, Mike, you could just discuss the issue on the power distribution system and where you stand with some of the debottlenecking activities that could potentially result in an increase in new productive capacity at TCO.
Speaker #2: Good morning .
Speaker #5: Yeah . Good morning Good morning Mike . I was wondering if you could . elaborate I was on a few of the moving wondering yeah .
Speaker #5: TCO volumes in 2026 , including the optimized maintenance schedule and could perhaps , Mike , you just discuss the the issue on the distribution power system and stand with where you some of the debottlenecking activities that could potentially result in an increase in new productive capacity at TCO .
Mike Wirth: Sure. Let me, let me start with the power issue, since that's been the most recent information there. The team proactively suspended production at the facility when an issue was identified in the power system. I'm really proud of the organization for taking that step, being willing to reduce production when they identified a condition that created a risk, and focusing on the safety of people, assets, the environment. They acted with urgency to get the, you know, the facility into a safe posture, immediately began working on root cause identification and very quickly began implementing solutions to get production back online. Production has been resumed at the Korolev field.
Mike Wirth: Sure. Let me, let me start with the power issue, since that's been the most recent information there. The team proactively suspended production at the facility when an issue was identified in the power system. I'm really proud of the organization for taking that step, being willing to reduce production when they identified a condition that created a risk, and focusing on the safety of people, assets, the environment. They acted with urgency to get the, you know, the facility into a safe posture, immediately began working on root cause identification and very quickly began implementing solutions to get production back online. Production has been resumed at the Korolev field.
Speaker #2: Sure . Let me let me start with the power issue . Since that's been been the most recent information there . The proactively suspended production team at the facility when an issue was identified in the power system .
Speaker #2: I'm really proud of the team for taking that organizational step, being willing to reduce production when they identified a condition that created a risk, and focusing on the safety of people, assets, and the environment. Their urgency to act with the facility to get posture safe immediately began working on root cause identification and very quickly began implementing solutions to get production back on.
Speaker #2: Production has been resumed at the core field. A number of the assets, or power distribution assets, that had been out of service have been brought back into service.
Mike Wirth: A number of the assets or power distribution assets that have been taken out of service have been brought back into service. We've actually got power now to one of the pressure boost facilities and are in the process of beginning to ramp things back up to higher rates through the processing plants, as I outlined in my opening comments. Also, you know, in the news, just to close the loop on it, you know, we have 2 mooring berths back in service at CPC. We've been working for the last 30-plus days, maybe 30 to 45 days, through a single mooring berth. So, back into, you know, startup mode on TCO, and as I indicated, full field production capacity not far away.
A number of the assets or power distribution assets that have been taken out of service have been brought back into service. We've actually got power now to one of the pressure boost facilities and are in the process of beginning to ramp things back up to higher rates through the processing plants, as I outlined in my opening comments. Also, you know, in the news, just to close the loop on it, you know, we have 2 mooring berths back in service at CPC. We've been working for the last 30-plus days, maybe 30 to 45 days, through a single mooring berth. So, back into, you know, startup mode on TCO, and as I indicated, full field production capacity not far away.
Speaker #2: Actually, we’ve got power now to one of the facilities and are in the process of pressure boost, beginning to ramp things back up to higher rates through the processing plants, as I outlined in my opening comments.
Speaker #2: Also , you know , in the news , just to close the loop on it , you know , have two we berths back in service at at CPC .
Speaker #2: We've been working for the last 30 maybe 30 to 45 days through a single mooring berth . So back into , you know , start up mode on TCO .
Speaker #2: And as I indicated , full field production capacity , not far away . When you look at the full year guide where we said we expect to be near our original production expectations , two two things I would point One is a maintenance to .
Mike Wirth: When you look at the full year guide where we said we expect to be near our original production expectations. Two things I would point to. One is a maintenance optimization, which is timing of activity and optimizing downtime. And so as we've looked at the schedule for this year, we've got a more optimal plan that will accomplish the maintenance objectives and reduce the amount of planned downtime that goes with those. And then the second thing gets to your question about debottlenecking. At our Investor Day, we shared some history at TCO that demonstrated over our years there in multiple projects, we've been able to steadily improve plant capacity beyond nameplate.
When you look at the full year guide where we said we expect to be near our original production expectations. Two things I would point to. One is a maintenance optimization, which is timing of activity and optimizing downtime. And so as we've looked at the schedule for this year, we've got a more optimal plan that will accomplish the maintenance objectives and reduce the amount of planned downtime that goes with those. And then the second thing gets to your question about debottlenecking. At our Investor Day, we shared some history at TCO that demonstrated over our years there in multiple projects, we've been able to steadily improve plant capacity beyond nameplate.
Speaker #2: Optimization, which is timing of activity and optimizing downtime. And so, as we've looked at the schedule for this year, we've got a more planned approach that will accomplish the maintenance objectives and reduce the amount of planned downtime that goes with those.
Speaker #2: And then your second thing gets to the question about debottlenecking at our Investor Day. We have some history at TCO that we shared, demonstrated over our years there in multiple projects.
Speaker #2: We've been able to steadily improve plant capacity beyond nameplate. We're working on that again now with the new project. And in fact, one of the Pit Stop—
Mike Wirth: We're working on that again now with the new project, and in fact, one of the pit stop turnarounds that we took late in 2025 was to address—to retrain a column or a portion of a column, and address some issues that have been identified that we believe will allow us to push some more throughput through the plant. We've actually not run that at full capacity long enough to be able to speak to exactly what the impact of that is because of some of these other constraints that I just mentioned. But as we're back up and running, we'll certainly have a chance to test that.
We're working on that again now with the new project, and in fact, one of the pit stop turnarounds that we took late in 2025 was to address—to retrain a column or a portion of a column, and address some issues that have been identified that we believe will allow us to push some more throughput through the plant. We've actually not run that at full capacity long enough to be able to speak to exactly what the impact of that is because of some of these other constraints that I just mentioned. But as we're back up and running, we'll certainly have a chance to test that.
Speaker #2: Turnarounds that we took late in 2025 were to address, to retrain a column or a portion of a column, and issues that have been identified that we believe will allow us to push some more throughput through the plant.
Speaker #2: We've actually not run that at full capacity long enough to be able to speak to exactly what the impact of that is, some of these because of other constraints that I just mentioned.
Mike Wirth: I would expect that and other steps that we take will lead to gradual debottlenecking, and we'll look to try to creep the capacity further upward. And we'll advise you as we've got, you know, runtime and confidence that we can demonstrate that, we'll let you know what that looks like. Thanks, Arun.
Speaker #2: As we're back up and running, we'll certainly have a chance to test that. And I would expect that, and other steps that we take, will lead to debottlenecking.
I would expect that and other steps that we take will lead to gradual debottlenecking, and we'll look to try to creep the capacity further upward. And we'll advise you as we've got, you know, runtime and confidence that we can demonstrate that, we'll let you know what that looks like. Thanks, Arun.
Speaker #2: And we'll look to gradually try to creep the capacity further upward. And we'll advise you, as we have, you know, run and as confidence over time can demonstrate that.
Speaker #2: We'll let you know what that looks like when we do. Thanks, Arun.
Operator: We'll take our next question from Neil Mehta with Goldman Sachs.
Operator: We'll take our next question from Neil Mehta with Goldman Sachs.
Speaker #4: We'll take our next question from Neil Mehta with Goldman Sachs.
[Analyst] (Goldman Sachs): Morning, Mike and team, and thanks for the comments. Hey, just Mike, if you could unpack Venezuela a little bit more, and specifically your just thoughts on the conditions of the assets on the ground and how much running room there is in terms of the resource there. You know, how big could this be in the context of Chevron's portfolio? And I think, Mike, you allude to the fact that you might be thinking about this more in a self-funding model type of way. So anything you can unpack there, too, would be great.
Neil Mehta: Morning, Mike and team, and thanks for the comments. Hey, just Mike, if you could unpack Venezuela a little bit more, and specifically your just thoughts on the conditions of the assets on the ground and how much running room there is in terms of the resource there. You know, how big could this be in the context of Chevron's portfolio? And I think, Mike, you allude to the fact that you might be thinking about this more in a self-funding model type of way. So anything you can unpack there, too, would be great.
Speaker #6: Morning , Mike . And team . thanks for the comments . Hey , And Mike , if you could unpack Venezuela a little bit more and specifically your just thoughts on the conditions of the of the on the assets ground and how much running room there is in terms of , of the There .
Speaker #6: resource . You know , how big could this be in the context of Chevron's portfolio ? And I think , Mike , you alluded to the fact that you might be thinking about this more in a self-funding model type of way .
Speaker #6: So anything you can unpack there, too, would be great.
Mike Wirth: Yeah, Neil, maybe I'll put a little bit of context around this just 'cause I have had different discussions with people over the years, and I, I'd like to get everybody kind of level set on it since it's been more front and center recently than it has been historically. First of all, our operations there through the last month and all the, you know, things that have happened on the ground have continued uninterrupted. Our people are safe. We continue to work closely with our partners in Venezuela to get crude to the market, so we've not been impacted by any shipping issues or anything else that have been in the media. We're actually in four different joint ventures with PDVSA, three of which are producing assets.
Mike Wirth: Yeah, Neil, maybe I'll put a little bit of context around this just 'cause I have had different discussions with people over the years, and I, I'd like to get everybody kind of level set on it since it's been more front and center recently than it has been historically. First of all, our operations there through the last month and all the, you know, things that have happened on the ground have continued uninterrupted. Our people are safe. We continue to work closely with our partners in Venezuela to get crude to the market, so we've not been impacted by any shipping issues or anything else that have been in the media. We're actually in four different joint ventures with PDVSA, three of which are producing assets.
Speaker #2: Neil , Yeah . maybe I'll put a little bit of context around this just because I have had different people discussions with over the I'd like to get everybody kind of level set on it , since it's been front and center recently than it has been more historically .
Speaker #2: First of all, our operations there through the last month and all the things that have happened on the ground have continued to be uninterrupted.
Speaker #2: Our people are safe. We continue to work closely with our partners in Venezuela to get crude to the market. So we've not been impacted by any shipping issues or anything else that have been in the media.
Speaker #2: We're actually in four different joint ventures, with three of which are producing assets since 2022, when there were some changes in the licenses out of OPEC under the Biden administration.
Mike Wirth: Since 2022, when there were some changes in the licenses out of OPEC under the Biden administration, we've grown production by over 200,000 barrels a day. Gross production now is up at around 250,000 barrels a day. And as Mark mentioned during the White House meeting, there's the potential for up to an incremental 50% production growth over the next 18 to 24 months as we get some additional authorizations from the US government. The activity on the ground right now is entirely funded through the cash within those ventures. And so the current license agreement requires us to pay certain taxes and royalties that we're legally obligated to pay.
Since 2022, when there were some changes in the licenses out of OPEC under the Biden administration, we've grown production by over 200,000 barrels a day. Gross production now is up at around 250,000 barrels a day. And as Mark mentioned during the White House meeting, there's the potential for up to an incremental 50% production growth over the next 18 to 24 months as we get some additional authorizations from the US government. The activity on the ground right now is entirely funded through the cash within those ventures. And so the current license agreement requires us to pay certain taxes and royalties that we're legally obligated to pay.
Speaker #2: We've grown production by over day , 200,000 barrels a gross production now is up 250,000 barrels around a day . And as Mark mentioned House during the white there's the meeting , potential for up to an incremental 50% production the growth over 18 to 24 next months .
Speaker #2: As we get some additional authorizations from the US government, the activity ground right on the now is entirely the cash within those ventures funded through.
Speaker #2: so the And current license agreement requires us to pay certain taxes and legally royalties that were obligated pay to . It enables repayment of debts that that we have , you know , still have debt balances that we're owed .
Mike Wirth: It enables repayment of debts that we have, you know, still have debt balances that we're owed, and we've been steadily working those down. And then the additional cash goes back into the operations for normal operating costs. That has funded things like well work, workovers, basic maintenance on pumps, pipelines, and compressor stations and the like, which have allowed us to improve production as we have and would continue to, as I indicated, up to maybe 50% additional growth. So that's the current state of things. As I think everybody on the call knows, the resource potential in Venezuela is large. It's well established, and there's a lot of running room ahead.
It enables repayment of debts that we have, you know, still have debt balances that we're owed, and we've been steadily working those down. And then the additional cash goes back into the operations for normal operating costs. That has funded things like well work, workovers, basic maintenance on pumps, pipelines, and compressor stations and the like, which have allowed us to improve production as we have and would continue to, as I indicated, up to maybe 50% additional growth. So that's the current state of things. As I think everybody on the call knows, the resource potential in Venezuela is large. It's well established, and there's a lot of running room ahead.
Speaker #2: And we've been steadily those working down . And and then the additional back cash goes into the operations for normal operating costs . That has funded things like , well , work , Workovers , basic maintenance on pumps and pipelines and compressor stations and the like , which have allowed us to improve production as we as we have and would continue to .
Speaker #2: As I indicated , up to maybe 50% additional growth . So that's the current state of things , as I think everybody on the call knows , the resource potential in Venezuela is large .
Speaker #2: well it's established It's a lot of running room ahead . The I can speak to of our assets , and we have worked hard to keep them safe and reliable and maintain them during this period of time .
Mike Wirth: I can speak to the state of our assets, and we have worked hard to keep them safe and reliable and maintain them during this period of time. I think as you look at the performance out of other assets that we're not involved in, you can see that that may not be the case across the rest of the industry and the country, as you know, the production has kind of steadily eroded over you know, the last decade or so. And so I think the opportunity to do some of the things we've done in some of these other operations is probably there. I think it's a little early to say what our longer-term outlook is, Neil. You know, you should expect us to remain focused on value and capital discipline.
I can speak to the state of our assets, and we have worked hard to keep them safe and reliable and maintain them during this period of time. I think as you look at the performance out of other assets that we're not involved in, you can see that that may not be the case across the rest of the industry and the country, as you know, the production has kind of steadily eroded over you know, the last decade or so. And so I think the opportunity to do some of the things we've done in some of these other operations is probably there. I think it's a little early to say what our longer-term outlook is, Neil. You know, you should expect us to remain focused on value and capital discipline.
Speaker #2: I think as you look at the performance out of other assets that were not involved in, you can see that may not be the case across the rest of the industry in the country.
Speaker #2: As you the production has has steadily kind of eroded over the last decade or so . And so I think the opportunity to do some of the things we've done in some of these other operations is , is , is probably there .
Speaker #2: I think it's a little early to say what the longer-term outlook is. Neil, you know, you should expect us to remain focused on value and capital discipline.
Mike Wirth: It's a large resource that has the opportunity to become a more sizable part of our portfolio in the future, but we also need to see stability in the country. We need to have confidence in the fiscal regime. There was a hydrocarbon law that was passed just yesterday, that we're in the process of reviewing to understand how that applies. And so there'll be a number of signposts that we'll be watching. You know, as I try to remind people always, like anywhere that we invest, fiscal terms, stability, regulatory predictability are important. And so it'll have to compete in our portfolio versus attractive investments in many other parts of the world.
It's a large resource that has the opportunity to become a more sizable part of our portfolio in the future, but we also need to see stability in the country. We need to have confidence in the fiscal regime. There was a hydrocarbon law that was passed just yesterday, that we're in the process of reviewing to understand how that applies. And so there'll be a number of signposts that we'll be watching. You know, as I try to remind people always, like anywhere that we invest, fiscal terms, stability, regulatory predictability are important. And so it'll have to compete in our portfolio versus attractive investments in many other parts of the world.
Speaker #2: It's a resource that has the opportunity to become a more sizable part of our portfolio in the future, but we also need to see stability in the country. We need stability.
Speaker #2: We have confidence in the fiscal regime. There was a hydrocarbon law that was just passed yesterday, and one of the processes is reviewing to understand how that applies.
Speaker #2: And have been a and so number of signposts that will be watching , you know , and , you know , as I try to remind people always like , anywhere that we invest fiscal terms , stability , regulatory predictability are important .
Speaker #2: And so, it'll have to compete in our portfolio—attractive versus investments in many other parts of the world. With the right changes, we certainly could see our operations and footprint expand in Venezuela.
Mike Wirth: With the right changes, we certainly could see our operations and footprint expand in Venezuela, and, you know, we're working with the US government and the Venezuelan government to try to create circumstances that would enable that.
With the right changes, we certainly could see our operations and footprint expand in Venezuela, and, you know, we're working with the US government and the Venezuelan government to try to create circumstances that would enable that.
Speaker #2: And, you know, we're working with the US government and the government to try to, Venezuelan, create circumstances that would enable that.
[Analyst] (Goldman Sachs): Thank you, Neil.
Thank you, Neil.
Operator: We'll take our next question from Doug Leggate with Wolfe Research.
Operator: We'll take our next question from Doug Leggate with Wolfe Research.
Speaker #1: Thank you . Neil .
Speaker #4: We'll take our next question from Doug Leggate with Wolfe Research.
[Analyst] (Wolfe Research): ... Good morning, everybody. Mike, I wonder if I could just quickly take you back to Tengiz. And it's - I guess it's really more of a macro question, because I think you're aware that Kazakhstan seemingly has some fairly substantial compensation cuts planned in the summertime. And I don't know how much of that was supposed to be Tengiz. I think it was a previous question from one of the guys asking about maintenance. But now that you've had this unplanned downtime, I'm wondering, does that kind of meet the compensation plan if you had any contribution to that? In other words, we should not expect any further cuts later in the year. I don't know if you can speak to that, both on a macro and a Chevron-specific level, please.
Doug Leggate: ... Good morning, everybody. Mike, I wonder if I could just quickly take you back to Tengiz. And it's - I guess it's really more of a macro question, because I think you're aware that Kazakhstan seemingly has some fairly substantial compensation cuts planned in the summertime. And I don't know how much of that was supposed to be Tengiz. I think it was a previous question from one of the guys asking about maintenance. But now that you've had this unplanned downtime, I'm wondering, does that kind of meet the compensation plan if you had any contribution to that? In other words, we should not expect any further cuts later in the year. I don't know if you can speak to that, both on a macro and a Chevron-specific level, please.
Speaker #7: Hey , good morning Mike , everybody . I wonder if I could just quickly take you back to . And Tengiz it's I guess it's really more of a macro question because I think you're aware that Kazakhstan seemingly has some fairly substantial compensation cuts planned in the summertime , and I don't know how much of that was supposed to Tengiz .
Speaker #7: I think it was the previous be . question from one of the guys asking about maintenance , but now that you've had this unplanned downtime , wondering , does that kind of meet the plan ?
Speaker #7: On compensation, I'm wondering if you had any contribution to that? In other words, we should not expect any further cuts later in the year. I don't know if you can speak to that both on a macro and a specific level.
Mike Wirth: Yeah, Doug, I really can't. You know, that's a matter for the Republic and obviously OPEC Plus as they engage in their discussions, which we're not privy to. I'll point out that historically, because the TCO barrel is a pretty attractive barrel from a fiscal standpoint to the Republic, that what we've seen historically is if there are restrictions on production in the country, you know, those tend to affect the barrels that are less fiscally attractive to the government, and TCO doesn't have a history of being, you know, impacted to a great degree by that. So, you know, I would point to that.
Mike Wirth: Yeah, Doug, I really can't. You know, that's a matter for the Republic and obviously OPEC Plus as they engage in their discussions, which we're not privy to. I'll point out that historically, because the TCO barrel is a pretty attractive barrel from a fiscal standpoint to the Republic, that what we've seen historically is if there are restrictions on production in the country, you know, those tend to affect the barrels that are less fiscally attractive to the government, and TCO doesn't have a history of being, you know, impacted to a great degree by that. So, you know, I would point to that.
Speaker #7: Please .
Speaker #2: Yeah . Doug , I really can't , you know , that's a matter for the Republic . And obviously OPEC . Plus as they engage in their discussions , which we're not privy to , I'll point out historically , because the that TCO barrel is pretty attractive , barrel from a physical standpoint to the Republic , that what we've seen historically is if there are restrictions on production in the country , you know , those tend to affect the barrels that are less fiscally attractive to the government .
Speaker #2: And TCO doesn't have a history of being , you know , impacted to a great degree by that . And so , you know , I would I point to that .
Mike Wirth: I know history is not always, you know, a prediction of the future, but that's how things have historically worked, and I just don't, I just don't know what agreements or understandings there are within the country relative to OPEC.
I know history is not always, you know, a prediction of the future, but that's how things have historically worked, and I just don't, I just don't know what agreements or understandings there are within the country relative to OPEC.
Speaker #2: would I know history is not always a , you a know , prediction but that's of the future , how things have historically worked .
Speaker #2: And I just don't—I just don't know what agreements or understandings there are within the relevant country OPEC to.
[Analyst] (Wolfe Research): Thanks, Doug.
Thanks, Doug.
Speaker #1: Thank you . Doug .
Operator: We'll take our next question from Ryan Todd with Piper Sandler.
Operator: We'll take our next question from Ryan Todd with Piper Sandler.
Speaker #4: We'll take our next question from Piper Sandler.
[Analyst] (Piper Sandler): Great, thanks. Maybe on the Eastern Med, you've made a lot of progress in the Eastern Mediterranean over the last six months. Can you walk through kind of the drivers of the progress in the region, keys to Aphrodite development, getting that to FID, and then maybe additional opportunities in the region, including places like Egypt, where we've seen some headlines involving yourselves of late?
Ryan Todd: Great, thanks. Maybe on the Eastern Med, you've made a lot of progress in the Eastern Mediterranean over the last six months. Can you walk through kind of the drivers of the progress in the region, keys to Aphrodite development, getting that to FID, and then maybe additional opportunities in the region, including places like Egypt, where we've seen some headlines involving yourselves of late?
Speaker #8: Thanks . Great . Maybe Eastern Med , on the lot of progress you've made a Mediterranean Eastern over the six months . Can you in the walk through kind of the drivers of the progress in region ?
Speaker #8: The Aphrodite development—getting keys, that to FID, and then maybe opportunities in the region, including places like Egypt.
Mike Wirth: Yeah. Thanks, Ryan. We are, continue to be very excited about the resource potential in the Eastern Mediterranean. You know, I used to get some questions back during, you know, the last year or so when, there was a lot of, kind of geopolitical, uncertainty in the region. But, you know, this is a, this is a tremendous, resource. All credit to, Noble Energy for the way they developed both Tamar and Leviathan. And, you know, across our core assets, on a gross basis, we've got over 40 TCF of, resource. And this is comparable to our, assets in Australia, which have been the focus of investors for, for a long time, but this is similar scale. In the near term, we're focused on safely bringing online projects at both Tamar and Leviathan later this year.
Mike Wirth: Yeah. Thanks, Ryan. We are, continue to be very excited about the resource potential in the Eastern Mediterranean. You know, I used to get some questions back during, you know, the last year or so when, there was a lot of, kind of geopolitical, uncertainty in the region. But, you know, this is a, this is a tremendous, resource. All credit to, Noble Energy for the way they developed both Tamar and Leviathan. And, you know, across our core assets, on a gross basis, we've got over 40 TCF of, resource. And this is comparable to our, assets in Australia, which have been the focus of investors for, for a long time, but this is similar scale. In the near term, we're focused on safely bringing online projects at both Tamar and Leviathan later this year.
Speaker #2: know , the You last year or so , when there was a lot of kind of geopolitical uncertainty in the region , but , you know , this is a is a tremendous resource .
Speaker #2: All credit to Energean for the way they both tamed and developed Noble Leviathan. And across our core assets, on a gross basis, you know, we've got over 40 TCF of resource.
Speaker #2: This is on a basis comparable to Australia, which has been the focus of investors for a long time. It is a similar scale, but this is in the near term.
Speaker #2: We're focused on safely bringing online projects at both Tamar and Leviathan later this year. Tamar will add about 500 million cubic feet a day of capacity.
Mike Wirth: Tamar will add about 500 million cubic feet a day of capacity, Leviathan, about 200. And then the Leviathan expansion, we just took FID on, will take gross production there to 2.1 BCF by the end of the decade. So steady growth, combine those projects should increase production about 25% and double earnings and cash flow by 2030. And then, as you mentioned, Aphrodite just entered FEED. We're working towards a competitive project in Cyprus. This is one that's been kind of on the drawing board for quite some time, and we've reached a, I think, a good understanding with Cyprus on the development concept there. And so all of these, you know, lead to our confidence in the region.
Tamar will add about 500 million cubic feet a day of capacity, Leviathan, about 200. And then the Leviathan expansion, we just took FID on, will take gross production there to 2.1 BCF by the end of the decade. So steady growth, combine those projects should increase production about 25% and double earnings and cash flow by 2030. And then, as you mentioned, Aphrodite just entered FEED. We're working towards a competitive project in Cyprus. This is one that's been kind of on the drawing board for quite some time, and we've reached a, I think, a good understanding with Cyprus on the development concept there. And so all of these, you know, lead to our confidence in the region.
Speaker #2: Leviathan, about 200, and then the Leviathan expansion we just took FID on, will take gross production there to 2.1 BCF by the end of the decade.
Speaker #2: So, growth combined with those projects should increase steady production by about 25% and double earnings and cash flow by 2030. And then, as you mentioned, Aphrodite entered FEED, just working.
Speaker #2: towards a project in We're competitive Cyprus . been kind of on the drawing This is one that's quite some time . And we've reached , I think , a good understanding Cyprus on the development concept .
Speaker #2: There . and And so all of you these , know , lead to our our , confidence in region the . Last thing is we've got at least one exploration .
Mike Wirth: Last thing is, we've got at least one exploration well, I know, that is going to go down offshore Egypt. We've got a large position in a number of blocks offshore Egypt, further to the west, in areas that are relatively underexplored and have been under some military exclusions. Historically, there's working petroleum systems onshore and, you know, we've got reasons to believe they could extend offshore, so we're gonna be testing that with shot seismic and gonna be getting some wells down. So an important part of our portfolio, good things underway now, and I think, you know, the running room on this one continues well into the future.
Last thing is, we've got at least one exploration well, I know, that is going to go down offshore Egypt. We've got a large position in a number of blocks offshore Egypt, further to the west, in areas that are relatively underexplored and have been under some military exclusions. Historically, there's working petroleum systems onshore and, you know, we've got reasons to believe they could extend offshore, so we're gonna be testing that with shot seismic and gonna be getting some wells down. So an important part of our portfolio, good things underway now, and I think, you know, the running room on this one continues well into the future.
Speaker #2: Well , I know that is going to go down offshore Egypt . We've got a large position number of in a offshore Egypt , further to the west , in areas that are relatively underexplored have been and under some military exclusions There's historically .
Speaker #2: petroleum working systems onshore you know , we've got reasons to . believe they could extend And , offshore . going to be that .
Speaker #2: We've started testing seismic, and so we're going to be getting some wells down. An important part of our portfolio, so good things are underway now.
Speaker #2: And I , you know , think the the running room on this one continues . Well into the future .
[Analyst] (Piper Sandler): Thank you, Ryan.
Thank you, Ryan.
Operator: We'll go next to Devin McDermott with Morgan Stanley.
Operator: We'll go next to Devin McDermott with Morgan Stanley.
Speaker #1: Ryan Thank you . .
Speaker #4: We'll go next to Devin McDermott with Morgan Stanley.
[Analyst] (Morgan Stanley): Hey, good morning. Thanks for taking my question. Eimear, you had some helpful comments and details in the, the slides on the cost reduction progress so far. And if we look at, you know, what's on deck for 2026, what's ahead still, I think some of the remaining improvement is really driven by some of the fairly material organizational changes that Chevron implemented last fall. And now that you're a few months into this new operating model, I was wondering if you could talk about some of the early results that you're seeing so far, both on costs and operations. So any positive surprises or conversely, kind of lessons learned or areas that are still a work in progress?
Devin McDermott: Hey, good morning. Thanks for taking my question. Eimear, you had some helpful comments and details in the, the slides on the cost reduction progress so far. And if we look at, you know, what's on deck for 2026, what's ahead still, I think some of the remaining improvement is really driven by some of the fairly material organizational changes that Chevron implemented last fall. And now that you're a few months into this new operating model, I was wondering if you could talk about some of the early results that you're seeing so far, both on costs and operations. So any positive surprises or conversely, kind of lessons learned or areas that are still a work in progress?
Speaker #9: Hey, good morning. Thanks for taking my question. You had some helpful comments and details in the slides on the cost reduction progress so far.
Speaker #9: And if we look at what's on deck for 2026, what's ahead? Still, I think some of the remaining improvement is really driven by some of the fairly material organizational changes that Chevron made last fall.
Speaker #9: Implemented. And now that you're a few months into this new operating model, I was wondering if you could talk about some of the early results that you're seeing so far, both on cost and operations.
Speaker #9: So, any positive surprises or, conversely, kind of lessons learned or areas that are still a work in progress?
Eimear Bonner: Okay. Thanks, Devin. Yeah, we've hit the ground running. We went live with the new organization in October, and the new operating model is, is live and well, and, you know, we're seeing that reflected in the early results that we've shown you today in the prepared comments. So we've saved $1.5 billion thus far on the cost reduction program. So some of that's coming from divestments, some of that's coming from efficiencies and technology. And so you see the, the early results of the organizational impacts in the results already. The run rate's greater than $2 billion, you know, at the end of the year, so, we're expecting the organizational efficiencies to add to the results that we're seeing thus far.
Eimear Bonner: Okay. Thanks, Devin. Yeah, we've hit the ground running. We went live with the new organization in October, and the new operating model is, is live and well, and, you know, we're seeing that reflected in the early results that we've shown you today in the prepared comments. So we've saved $1.5 billion thus far on the cost reduction program. So some of that's coming from divestments, some of that's coming from efficiencies and technology. And so you see the, the early results of the organizational impacts in the results already. The run rate's greater than $2 billion, you know, at the end of the year, so, we're expecting the organizational efficiencies to add to the results that we're seeing thus far.
Speaker #3: Devin Okay . . Yeah , ground running and hit the Thanks , we've live with organization in October went . And operating is live and And , you well .
Speaker #3: We’re seeing that reflected in the early results that we've shown you in the prepared today comments. So we'll see if, so far, the cost program—
Speaker #3: reduction So some of that's coming 1.5 billion thus on divestments , some from efficiencies . And from you And so see the the early of the results organizational results in the .
Speaker #3: The run already is more than $2 billion. You know, at the end of the year, that rate is greater. So we are expecting the impacts of organizational efficiencies to add to the results that we've seen thus far.
Eimear Bonner: So we're very confident in the target that we've set on delivering that over the course of this year. And just a reminder, that's $3 to 4 billion. Look, in terms of the lessons learned, what I'd say is we're seeing results everywhere. Every team, as part of this program, has been benchmarking, has been looking for areas of improvement. So we've got a lot of programs that are looking at improving our competitiveness across every metric. Some of the examples that I would call out, production chemicals, now that we have our shale and tight portfolio and assets all together in one business, we've been able to look at that from an operational efficiency perspective, not only to optimize operationally, you know, the chemical treatments, but also the cost, and the dosing.
So we're very confident in the target that we've set on delivering that over the course of this year. And just a reminder, that's $3 to 4 billion. Look, in terms of the lessons learned, what I'd say is we're seeing results everywhere. Every team, as part of this program, has been benchmarking, has been looking for areas of improvement. So we've got a lot of programs that are looking at improving our competitiveness across every metric. Some of the examples that I would call out, production chemicals, now that we have our shale and tight portfolio and assets all together in one business, we've been able to look at that from an operational efficiency perspective, not only to optimize operationally, you know, the chemical treatments, but also the cost, and the dosing.
Speaker #3: So we're seeing very confident in the target that we've set and delivering that over the course of this year. And just a reminder, that's, look, in terms of $3 to $4 billion.
Speaker #3: Lessons learned, what I'd say is we're seeing results everywhere. Every team as part of this program has been benchmarking, has been looking for areas of improvement.
Speaker #3: So, we've got a lot of programs that are improving, looking at our competitiveness across every metric. Some of the examples that I would call out: production chemicals.
Speaker #3: Now that we have our shale and tight assets portfolio and all together in one business , we've been able to look at that from an operational efficiency perspective , not only the optimize operationally , you know , the chemical treatments , but also the cost and the dosing .
Eimear Bonner: So that would be an operational lessons learned, where the scale and the design of the new organization makes that easier to do, and the results speak for themselves. Another area, maybe in the technology space, you know, we've talked about this for a number of years, but AI is really starting to take off in terms of being used in every part of the business. And in the new organization, our supply chain team is set up a little bit differently, and they've really been using AI in a neat way to glean more intelligence around how to approach certain negotiations, and so that would be an example as well. So all in all, we're on track to deliver the $3 to 4 billion. I'm very confident in that. And this is overall OpEx reduction while we significantly grow. So we'll keep you updated on the progress.
So that would be an operational lessons learned, where the scale and the design of the new organization makes that easier to do, and the results speak for themselves. Another area, maybe in the technology space, you know, we've talked about this for a number of years, but AI is really starting to take off in terms of being used in every part of the business. And in the new organization, our supply chain team is set up a little bit differently, and they've really been using AI in a neat way to glean more intelligence around how to approach certain negotiations, and so that would be an example as well. So all in all, we're on track to deliver the $3 to 4 billion. I'm very confident in that. And this is overall OpEx reduction while we significantly grow. So we'll keep you updated on the progress.
Speaker #3: So, that would be an operational lesson learned, where the scale and the design of the new organization makes that easier to do. And the results speak for themselves.
Speaker #3: Another, maybe in the technology space or area, we've talked about this for a number of years, but AI is really taking off in terms of being used in every part of the business.
Speaker #3: Starting to, and in the new organization, our supply chain is set up a little bit differently, and they've really been using AI in a neat way to glean more around how intelligence can be used to approach certain negotiations.
Speaker #3: And so, that would be an example as well. So, all in all, we're on track to deliver the $3 to $4 billion.
Speaker #3: I'm very confident in this, and this is overall OPEX reduction, while we significantly grow. So we'll keep you updated on the progress.
Eimear Bonner: Thanks for the question.
Thanks for the question.
Speaker #3: for the Thanks question .
Operator: Thank you. We'll take our next question from Sam Margolin with Wells Fargo.
Operator: Thank you. We'll take our next question from Sam Margolin with Wells Fargo.
Speaker #4: Thank you. We'll take our next question from Sam Margolin with Wells Fargo.
[Analyst] (Wells Fargo): Hey, good morning. Thanks for taking the question. Maybe revisiting the Permian, you know, I think it was, like, the second half of 2023 where you called out that, productivity, well, productivity in the Permian on the operated side was inflecting higher. And, you know, now, two years later, it seems like we're really seeing it flow through in, in capital efficiency. And so the question is, like, when you get this kind of momentum in, short cycle capital efficiency, you know, does what does it do to your decision-making process? Not, you know, I don't wanna spin you around on Permian Plateau, but, just given the cost and productivity structure of, of your operation there, it feels like it's getting incrementally capital efficient to, to accelerate.
Sam Margolin: Hey, good morning. Thanks for taking the question. Maybe revisiting the Permian, you know, I think it was, like, the second half of 2023 where you called out that, productivity, well, productivity in the Permian on the operated side was inflecting higher. And, you know, now, two years later, it seems like we're really seeing it flow through in, in capital efficiency. And so the question is, like, when you get this kind of momentum in, short cycle capital efficiency, you know, does what does it do to your decision-making process? Not, you know, I don't wanna spin you around on Permian Plateau, but, just given the cost and productivity structure of, of your operation there, it feels like it's getting incrementally capital efficient to, to accelerate.
Speaker #10: Hey , good morning . Thanks for taking the question . Maybe revisiting the Permian . You know , I think it was like half the second of 23 where you called out that productivity .
Speaker #10: Well , productivity in the the Permian on operated side was inflecting higher . And , you know , now two years later , it seems like we're really seeing it flow through in capital efficiency the question is .
Speaker #10: like when you And so get this kind of momentum in short cycle capital efficiency , you know , what does it do to decision making process ?
Speaker #10: Not , you know , I don't want to spin you your around on Permian Plateau , but just given the cost and structure of of your operation there , it feels like it's getting incrementally capital efficient to , to accelerate .
[Analyst] (Wells Fargo): So, you know, just in the context of what you're seeing performance-wise, you know, how do you feel about the Permian strategy?
So, you know, just in the context of what you're seeing performance-wise, you know, how do you feel about the Permian strategy?
Speaker #10: So , you know , just in the context of what you're seeing , performance wise , you know , how do you feel about the Permian strategy ?
Eimear Bonner: Hey, Sam, I'll take this one. Yeah, well, what we're seeing is exactly what we set out to achieve, and that was to hold Permian at a million barrels a day. We've seen that for three quarters, and optimize on cash generation. And we're already seeing cash efficiency improve. We're at $3.5 billion of CapEx already, and that was something that we thought that it was gonna take us some time, but the team has just done a terrific job. Every aspect of the factory there has seen efficiency and improvement. And now, you know, we're taking that further, given that our shale and tight portfolio is together as part of the new organization in one business.
Eimear Bonner: Hey, Sam, I'll take this one. Yeah, well, what we're seeing is exactly what we set out to achieve, and that was to hold Permian at a million barrels a day. We've seen that for three quarters, and optimize on cash generation. And we're already seeing cash efficiency improve. We're at $3.5 billion of CapEx already, and that was something that we thought that it was gonna take us some time, but the team has just done a terrific job. Every aspect of the factory there has seen efficiency and improvement. And now, you know, we're taking that further, given that our shale and tight portfolio is together as part of the new organization in one business.
Speaker #3: Hey , Sam , I'll take this one . Yeah . Well , what we're seeing is what exactly we set out to achieve .
Speaker #3: that And was to Permian hold at a million barrels We've seen a day . that for for three quarters . And an optimize on cash generation .
Speaker #3: And we're already seeing cash efficiency improve. We're at $3.5 billion of CapEx already, and that was something that we thought it was going to take us some time.
Speaker #3: But the team has done a terrific job just . Every aspect of the factory there has seen efficiency and improvement and and now , you know , we're taking that further .
Speaker #3: Given that our portfolio is together as new part of the organization in one business . And so see we'll we'll see in that capital efficiency extend to the back end , extend to the DGA and extend to Argentina .
Eimear Bonner: And so we'll see - we're seeing that capital efficiency extend to the back end, extend to the DJ, and extend to Argentina. You know, one data point I'd give you just to illustrate it clearly is drilling rig efficiency. And since 2022, you know, we've more than doubled our drilling efficiency from that point. And so we're drilling the development areas for much less. In terms of our decision-making, right now, no change to our decision-making. I mean, Permian plays a role in our portfolio. We're focused on growing cash flow, not growing production, and, you know, the capital efficiency enables that. So I just finished by emphasizing, you know, all of these actions are improving returns.
And so we'll see - we're seeing that capital efficiency extend to the back end, extend to the DJ, and extend to Argentina. You know, one data point I'd give you just to illustrate it clearly is drilling rig efficiency. And since 2022, you know, we've more than doubled our drilling efficiency from that point. And so we're drilling the development areas for much less. In terms of our decision-making, right now, no change to our decision-making. I mean, Permian plays a role in our portfolio. We're focused on growing cash flow, not growing production, and, you know, the capital efficiency enables that. So I just finished by emphasizing, you know, all of these actions are improving returns.
Speaker #3: You know , one one data point , I'd give you to it clearly illustrate is drilling just rig efficiency . And since 2022 , you know , we've more than our doubled drilling efficiency from that point .
Speaker #3: And so we're we're drilling the development areas for much less in terms of our decision making right now . No change to our decision making .
Speaker #3: I mean , Permian plays a role in our focused on portfolio . We're growing cash flow . Not growing production . And , you know , the capital efficiency enables , enables that .
Speaker #3: So, I just finished by emphasizing, you know, all of these actions are improving returns.
[Analyst] (Wells Fargo): Thank you, Sam.
Mike Wirth: Thank you, Sam.
Operator: We'll take our next question from Paul Cheng with Scotiabank.
Operator: We'll take our next question from Paul Cheng with Scotiabank.
Speaker #1: Thank you . Sam .
Speaker #4: We'll take our next question from Paul Cheng with Scotiabank.
[Analyst] (Scotiabank): Hey, guys. Good morning. Mike, can you discuss how you see the opportunity set in two of the OPEC countries, Libya and Iraq, where a lot of your competitors seems to be believe that the opportunity sets have much improved and making waves, we haven't heard from Chevron. And also that, comparing to your peers, your LNG size or portfolio size is much smaller, and how that fit into your long term? Do you have a different view comparing to your peer on the LNG business? Thank you.
Paul Cheng: Hey, guys. Good morning. Mike, can you discuss how you see the opportunity set in two of the OPEC countries, Libya and Iraq, where a lot of your competitors seems to be believe that the opportunity sets have much improved and making waves, we haven't heard from Chevron. And also that, comparing to your peers, your LNG size or portfolio size is much smaller, and how that fit into your long term? Do you have a different view comparing to your peer on the LNG business? Thank you.
Speaker #11: Hey guys . Good morning . My can you discuss how you see the opportunity set in two of the OPEC countries , Libya and Iraq ?
Speaker #11: Where a lot of your competitors seem to be is that the opportunity sets have improved waves. We haven't heard from Shirvan, and also that, compared to your peers, your LNG size or portfolio size is smaller.
Speaker #11: How much that fits into your long term. Do you have a different view compared to your peers on the LNG business? Thank you.
Mike Wirth: Hey, Paul. A couple of questions there, I guess. First of all, you might have seen we recently signed an MOU in Libya. You know, we're a little bit underweight, relatively speaking, Middle East, versus some other parts of the world, and that's been intentional. The types of contracts and the terms have been on offer in the Middle East, broadly speaking, for the last decade or more, have not been very competitive versus some of our alternatives. And so you've had a lot of service type contracts and, you know, in a world of limited human resources and limited capital resources, we need to deploy these to what we believe are the highest return opportunities, and it's been tough for a lot of those to compete within our portfolio.
Mike Wirth: Hey, Paul. A couple of questions there, I guess. First of all, you might have seen we recently signed an MOU in Libya. You know, we're a little bit underweight, relatively speaking, Middle East, versus some other parts of the world, and that's been intentional. The types of contracts and the terms have been on offer in the Middle East, broadly speaking, for the last decade or more, have not been very competitive versus some of our alternatives. And so you've had a lot of service type contracts and, you know, in a world of limited human resources and limited capital resources, we need to deploy these to what we believe are the highest return opportunities, and it's been tough for a lot of those to compete within our portfolio.
Speaker #2: Paul , a couple of questions there . I guess , first of all , you might have seen we recently signed an MOU in Libya .
Speaker #2: You know little bit underweight , relatively , we're a speaking . Middle East versus some other parts of the world . And that's been intentional .
Speaker #2: The types of contracts and the terms that have been on offer in the Middle East, broadly speaking, for the last decade or more, have not been very versus competitive—some of our alternatives.
Speaker #2: And so you've had a lot of service type contracts . And , you know , in a world of limited human resources and limited capital resources , we need deploy these to what to we believe are the highest opportunities .
Speaker #2: And it's return tough for a lot of those to compete within our portfolio. So we've not gone into Iraq. It's been a decade or more since we've last really had any kind of a serious look at Libya.
Mike Wirth: So we've not gone into Iraq. You know, it's been a decade or more since we've last really had any kind of a serious look at Libya. Those things are changing. And I think in part, you know, when we saw President Trump make a visit through the region earlier this year, we saw a notable uptick in inbound inquiries and a desire to engage, not just in those two countries, but in any number of other countries that would like to see American companies invest in their economies. And so, you know, the resource potential in some of these countries is undeniable. Iraq and Libya are two of the largest resource holders in the world.
So we've not gone into Iraq. You know, it's been a decade or more since we've last really had any kind of a serious look at Libya. Those things are changing. And I think in part, you know, when we saw President Trump make a visit through the region earlier this year, we saw a notable uptick in inbound inquiries and a desire to engage, not just in those two countries, but in any number of other countries that would like to see American companies invest in their economies. And so, you know, the resource potential in some of these countries is undeniable. Iraq and Libya are two of the largest resource holders in the world.
Speaker #2: Those things are changing . And I think in part , you know , when we saw President Trump make a visit through the region earlier this year , we saw a notable uptick in inbound inquiries and and a desire to engage , not just in those two countries , but in any number of other countries that would like to see American companies invest in in their economies .
Speaker #2: And so , you know , we , you know , the resource potential in some of these countries is undeniable . Iraq and Libya are two of the largest resource holders in the world .
Mike Wirth: And so we're engaged in discussions in both of those countries; they've been reported in the media, to look at everything from existing producing fields, and coming into those, to operate and grow. Also looking at exploration opportunities as well. Improvements in fiscal terms have been critical; pairing discovery resources with exploration opportunities make things more attractive. And so we need to see compelling value opportunities there, if we're going to invest. We intend to stay disciplined on capital and seek the highest returns. My quick response on LNG, Paul, I think I've spoken to this before, is, you know, we're a global player.
And so we're engaged in discussions in both of those countries; they've been reported in the media, to look at everything from existing producing fields, and coming into those, to operate and grow. Also looking at exploration opportunities as well. Improvements in fiscal terms have been critical; pairing discovery resources with exploration opportunities make things more attractive. And so we need to see compelling value opportunities there, if we're going to invest. We intend to stay disciplined on capital and seek the highest returns. My quick response on LNG, Paul, I think I've spoken to this before, is, you know, we're a global player.
Speaker #2: And and so we're engaged in discussions in countries . They've been reported in both of those media to look at everything from existing , producing fields and coming into those to operate and and grow .
Speaker #2: Also, at exploration opportunities as well, improvements in fiscal terms have been critical. Pairing discovered resources with exploration opportunities makes things more attractive.
Speaker #2: And so we need to see compelling value opportunities . There . If we're going to invest , we intend to stay disciplined on capital and and seek the highest returns .
Speaker #2: My quick response to LNG , Paul , I think I've spoken to this is , you know , we're before a we're a global player .
Mike Wirth: We need to be in projects that compete, and a lot of things that we've passed on around the world, similarly to my comments about some of these Middle East opportunities, they just don't deliver the returns that we're looking for. And so we've got some US offtake where we don't need to put capital to work because we have a large gas position, we've got a strong, you know, credit position, and we can get attractive throughput rates and let somebody else deploy the capital into those businesses. So we'll have some LNG offtake from the US. And you know, we'll continue to look at opportunities. We're not opposed to adding, but it's got to deliver competitive returns. Thanks for the question, Paul.
We need to be in projects that compete, and a lot of things that we've passed on around the world, similarly to my comments about some of these Middle East opportunities, they just don't deliver the returns that we're looking for. And so we've got some US offtake where we don't need to put capital to work because we have a large gas position, we've got a strong, you know, credit position, and we can get attractive throughput rates and let somebody else deploy the capital into those businesses. So we'll have some LNG offtake from the US. And you know, we'll continue to look at opportunities. We're not opposed to adding, but it's got to deliver competitive returns. Thanks for the question, Paul.
Speaker #2: We need to be in projects that compete. And a lot of things that we've passed on around the world, similarly to my comments about some of these Middle East opportunities, they just don't deliver the returns that we're looking for.
Speaker #2: And so we've got some US offtake where we don't need to put capital to work because we have a large gas position. We've got a strong, you know, credit position.
Speaker #2: And we can get attractive throughput rates and let somebody else deploy those capital into businesses. So we'll have some LNG from the offtake US.
Speaker #2: you know , And , we'll continue to look at opposed opportunities we're not to adding , but it's got to deliver a competitive returns .
Operator: We'll take our next question from Stephen Richardson with Evercore ISI.
Operator: We'll take our next question from Stephen Richardson with Evercore ISI.
Speaker #2: Question, Paul, thanks for the question.
Speaker #4: We'll take our next question from Neil Mehta with Evercore ISI.
[Analyst] (Evercore ISI): Hi, thank you. I was wondering if we could, maybe just dovetail on those, the comments just there on, changing fiscal terms internationally and the opportunity. It just feels like you've positioned the company arguably really well to win in a low commodity price environment and with a ton of leverage to the upside, as your sensitivities suggest. So that said, but the opportunity set just keeps on getting bigger. I mean, we're just talking about Venezuela, talking about some of these opportunities in the Middle East. You've got a revamped exploration program. So, can you just follow up on that in terms of how do we think about, you know, maintaining that leverage to the upside while developing some of these future opportunities? And how do you, you know, instill that discipline in the organization, if you could?
Steve Richardson: Hi, thank you. I was wondering if we could, maybe just dovetail on those, the comments just there on, changing fiscal terms internationally and the opportunity. It just feels like you've positioned the company arguably really well to win in a low commodity price environment and with a ton of leverage to the upside, as your sensitivities suggest. So that said, but the opportunity set just keeps on getting bigger. I mean, we're just talking about Venezuela, talking about some of these opportunities in the Middle East. You've got a revamped exploration program. So, can you just follow up on that in terms of how do we think about, you know, maintaining that leverage to the upside while developing some of these future opportunities? And how do you, you know, instill that discipline in the organization, if you could?
Speaker #12: Thank you Hi . . I was wondering if we could maybe just dovetail on those . Comments . Just there on fiscal changing terms internationally and the opportunity it just feels like you've positioned the company arguably really well to win in a low commodity price environment .
Speaker #12: And with a ton of leverage. The upside, as your sensitivity suggests. So that's it. But the opportunity set just keeps on getting bigger.
Speaker #12: I mean , we're just talking about Venezuela , talking about opportunities in the Middle some of these East . You've got revamped a exploration program .
Speaker #12: So, can you just follow up on that in terms of how we think about maintaining leverage to the upside, while developing some of these future opportunities?
Speaker #12: And and how do you , you instill that that discipline in the organization ? If you could ?
Mike Wirth: Yeah, Steve, I mean, we've steadily worked to high-grade our portfolio. We've looked to add very strong and competitive assets to our business, and we have divested ourselves of positions that are not bad assets, but they fit better for somebody else than they do for us. And so, in doing so, I think we've strengthened the company. You've seen our break-even has come down. You see that, you know, we're able to operate at lower cost because we're actually in fewer positions that have more scale. They've got longevity, so we can apply technology to these assets. And, and I think you can expect us to continue to do so. We want to grow, you know, gradually over time, but demand for our products isn't growing at an enormous rate.
Mike Wirth: Yeah, Steve, I mean, we've steadily worked to high-grade our portfolio. We've looked to add very strong and competitive assets to our business, and we have divested ourselves of positions that are not bad assets, but they fit better for somebody else than they do for us. And so, in doing so, I think we've strengthened the company. You've seen our break-even has come down. You see that, you know, we're able to operate at lower cost because we're actually in fewer positions that have more scale. They've got longevity, so we can apply technology to these assets. And, and I think you can expect us to continue to do so. We want to grow, you know, gradually over time, but demand for our products isn't growing at an enormous rate.
Speaker #2: Yeah , Steve , I mean we've we've We've looked steadily to high add grade our worked to portfolio . strong and competitive assets to our business .
Speaker #2: We have divested ourselves of positions that are not bad assets, but they fit better for somebody else than they do for us.
Speaker #2: And so in doing so , I think we've strengthened the company . You've even has come down . You see that , we're operate at able to lower cost because we're actually in fewer positions that have more scale .
Speaker #2: They've got longevity. So we can apply technology to these assets. And I think you can expect us to continue to do so.
Speaker #2: grow . You know , gradually over time . But demand for our We products isn't growing at an enormous rate . You know , demand for oil is growing .
Mike Wirth: You know, demand for oil is growing, arguably, 1% a year, give or take. Gas is growing a bit more strongly than that. And so, you know, we've got volumetric growth a little bit above that last year, this year, because we had some acquisitions and project startups. But over time, we've got to grow cash flow, and that's the focus. We've got to drive break-evens down because we're in a commodity business; we can never forget about that. And we've got to apply base business excellence to everything that we do. So we've got to drive value out of these assets. We've got to work them better. I'll give you. And Eimear talked earlier about bringing all of our shale businesses together.
You know, demand for oil is growing, arguably, 1% a year, give or take. Gas is growing a bit more strongly than that. And so, you know, we've got volumetric growth a little bit above that last year, this year, because we had some acquisitions and project startups. But over time, we've got to grow cash flow, and that's the focus. We've got to drive break-evens down because we're in a commodity business; we can never forget about that. And we've got to apply base business excellence to everything that we do. So we've got to drive value out of these assets. We've got to work them better. I'll give you. And Eimear talked earlier about bringing all of our shale businesses together.
Speaker #2: Arguably 1% a year , give or take . Gas has grown a little bit more strongly than that . And so , we've got you know , volumetric growth a little bit above that last year .
Speaker #2: This year, because we've got some acquisitions and project startups. But over time, we've got to grow cash flow. And that's the focus.
Speaker #2: We've got to drive breakevens down because we're in we can never forget a about commodity business , that . And we've apply base got to business excellence to everything that we do .
Speaker #2: So, we've got to drive value out of these assets. We've got to work them better. I'll give you—you talked earlier about bringing all of our shale businesses together.
Mike Wirth: As you look now at what we're doing with the Permian, the DJ, the Bakken, and Argentina, all as part of one organization, and I see people, practices, technology, standards, being shared across those businesses. We're steadily driving the kind of improvement that that Eimear was addressing in her response to Sam across that entire entire portfolio. And so, we've consciously positioned the company, as you say, to have the resilience that I talked about. I said we're bigger, better, and more resilient than ever. That means we can ride through the cycles in even better position than we we could in the past. And we've got you know a balance sheet that provides ballast if you get into a long cycle.
As you look now at what we're doing with the Permian, the DJ, the Bakken, and Argentina, all as part of one organization, and I see people, practices, technology, standards, being shared across those businesses. We're steadily driving the kind of improvement that that Eimear was addressing in her response to Sam across that entire entire portfolio. And so, we've consciously positioned the company, as you say, to have the resilience that I talked about. I said we're bigger, better, and more resilient than ever. That means we can ride through the cycles in even better position than we we could in the past. And we've got you know a balance sheet that provides ballast if you get into a long cycle.
Speaker #2: As you look now at what we're doing with the Permian , DJ , the the Bakken and Argentina , all is part of one organization and I see people , practices , technology .
Speaker #2: Standards are being shared across those businesses. We're steadily driving the kind of improvement that Eimear was addressing in her response to Sam.
Speaker #2: …entire, that entire portfolio. And so we've consciously positioned the company, as you say, to have the resilience that I talked about.
Speaker #2: I said, we're bigger, better, and more resilient than ever. That means we can ride through the cycles and be in an even better position than we could in the past.
Speaker #2: And we've got , you know , a balance sheet that provides ballast . get into a If you long cycle and , you this track know , we've got of record raising the continually dividend , steadily buying shares back through the cycle and being able to reinvest in the business to strengthen it over time .
Mike Wirth: And, you know, we've got this track record of continually raising the dividend, steadily buying shares back through the cycle, and being able to reinvest in the business to strengthen it over time. And that's the, that's the playbook going forward.
And, you know, we've got this track record of continually raising the dividend, steadily buying shares back through the cycle, and being able to reinvest in the business to strengthen it over time. And that's the, that's the playbook going forward.
Speaker #2: And that's the playbook going forward.
Operator: Thank you, Steve.
Jake Spiering: Thank you, Steve.
Speaker #2: .
Operator: We'll take our next question from Biraj Borkhataria with RBC.
Operator: We'll take our next question from Biraj Borkhataria with RBC.
Speaker #1: you Thank Steve .
Speaker #4: We'll take our next question from Biraj Borkhataria with RBC.
[Analyst] (RBC): Hi, thanks for taking my question. Just a follow-up on portfolios. It's been touched on a couple of times, but we've seen a bunch of headlines on you maybe looking to sign deals in various countries. I was just wondering, is this a concerted step up in your efforts, or is this largely initiated by, you know, resource-rich countries and reverse inquiries? Some perspective there would be helpful. And one of the things just to note on is, your portfolio has become more concentrated over time, which has been—which is good and bad, depending on the situation. So I was just wondering if that's part of your thinking, is looking to diversify, and how you're thinking about the portfolio there. Thank you.
Biraj Borkhataria: Hi, thanks for taking my question. Just a follow-up on portfolios. It's been touched on a couple of times, but we've seen a bunch of headlines on you maybe looking to sign deals in various countries. I was just wondering, is this a concerted step up in your efforts, or is this largely initiated by, you know, resource-rich countries and reverse inquiries? Some perspective there would be helpful. And one of the things just to note on is, your portfolio has become more concentrated over time, which has been—which is good and bad, depending on the situation. So I was just wondering if that's part of your thinking, is looking to diversify, and how you're thinking about the portfolio there. Thank you.
Speaker #13: Hi . taking my Thanks for question . Just a follow up on portfolio . I've been touched on a couple of times , but we've seen a bunch of headlines on On you maybe looking to sign deals in various countries .
Speaker #13: was I just wondering , is this a concerted step up in your efforts , or is this largely initiated by , you know , resource rich countries and reverse inquiries and There would perspective ?
Speaker #13: be helpful . And one of the things just to . Note on is your portfolio has become more concentrated over time , which has been which is good and bad , depending on the situation .
Speaker #13: So I was wondering if that's part of your thinking. Is looking to diversify in how you're thinking about the portfolio there? Thank you.
Mike Wirth: Yeah, Biraj. So look, business development is part and parcel of what we do every day, week, month, and year. There are times you're in a pretty sparse environment in terms of opportunity, and there's times when it's more target-rich. What I would say is, and this tends to kind of work on a long cycle sometimes. What we see today are more attractive opportunities, frankly, than I think we've seen in the past. And I spoke to the Middle East, so I won't repeat that. But you know, we do see a lot of interest in that part of the world, and it's reflected in these more competitive fiscal terms.
Mike Wirth: Yeah, Biraj. So look, business development is part and parcel of what we do every day, week, month, and year. There are times you're in a pretty sparse environment in terms of opportunity, and there's times when it's more target-rich. What I would say is, and this tends to kind of work on a long cycle sometimes. What we see today are more attractive opportunities, frankly, than I think we've seen in the past. And I spoke to the Middle East, so I won't repeat that. But you know, we do see a lot of interest in that part of the world, and it's reflected in these more competitive fiscal terms.
Speaker #2: business look , So Yeah . development is is part and parcel of what we do every , every day , week , month and year .
Speaker #2: There are times you're in a a pretty sparse environment in terms of opportunity . And there's times when it's more target rich . What I would say is and this tends to kind of work on a long cycle sometimes what we see today are , are more attractive opportunities .
Speaker #2: Frankly , than I think we've seen in the past . I spoke to the Middle East , so I won't repeat that . But , you know , we do see a lot of interest in that part of the world .
Speaker #2: And it's reflected in these more competitive fiscal terms. And so, I don't think we've necessarily changed our appetite or our level of diligence.
Mike Wirth: And so, I don't think we've necessarily changed our appetite or our level of diligence and activity in the BD environment. We just see a, you know, a more attractive suite of opportunities out there. We'll continue to be very selective and pick and choose. I hear your comment about, portfolio, high grading and concentration, if you will. At the core, you know, we run big things big. We like large positions that have lots of running room. We like to apply technology and base business excellence to drive value through those assets. When you're in a position with a lot of smaller assets spread all over the world, your safety exposure, you've got a lot more surface area on safety, environmental, issues, compliance issues.
And so, I don't think we've necessarily changed our appetite or our level of diligence and activity in the BD environment. We just see a, you know, a more attractive suite of opportunities out there. We'll continue to be very selective and pick and choose. I hear your comment about, portfolio, high grading and concentration, if you will. At the core, you know, we run big things big. We like large positions that have lots of running room. We like to apply technology and base business excellence to drive value through those assets. When you're in a position with a lot of smaller assets spread all over the world, your safety exposure, you've got a lot more surface area on safety, environmental, issues, compliance issues.
Speaker #2: And and activity in the BD environment . We just see a , you know , a more attractive suite of opportunities out there .
Speaker #2: We'll continue to be selective, and choose carefully. I hear your comment about portfolio high grading, and if you want concentration, we will do that.
Speaker #2: At the core , you know , we run big things , big . We like long , large positions that have lots of running room .
Speaker #2: We like to apply technology and base excellence to to drive value through those assets . When you're in a position with a lot of smaller assets spread all over the world , your safety , exposure , you've got a lot more surface area on on safety , environmental issues , compliance issues .
Mike Wirth: You just go down the list, and so you deploy a lot of your great people to manage those things across assets that can be small and out there, kind of in the tail of a portfolio. Having large positions where you can put your best people to work on assets that really matter is something that I believe is important. And so I recognize you could get too concentrated. I don't believe that we are. And as I mentioned earlier, we're a little underweight in the Middle East, which is an area we wouldn't mind having some more exposure if we can find it in a competitive, you know, financial standpoint.
You just go down the list, and so you deploy a lot of your great people to manage those things across assets that can be small and out there, kind of in the tail of a portfolio. Having large positions where you can put your best people to work on assets that really matter is something that I believe is important. And so I recognize you could get too concentrated. I don't believe that we are. And as I mentioned earlier, we're a little underweight in the Middle East, which is an area we wouldn't mind having some more exposure if we can find it in a competitive, you know, financial standpoint.
Speaker #2: You just go down the list, and so you deploy a lot of your great people to manage those things across assets.
Speaker #2: That can be small and out there, kind of in the tail of a portfolio. Having large positions, where you can put your best people to work on assets that really matter, is something that I believe is important.
Speaker #2: And so I recognize you could get two concentrated . I don't believe that we are . And as I mentioned earlier , we're a underweight in the little Middle East , which is an area we wouldn't mind having some more exposure if we can find it in a competitive , you know , financial standpoint .
Operator: Thank you, Barrage.
Jake Spiering: Thank you, Barrage.
Operator: We'll take our next question from Manav Gupta with UBS.
Operator: We'll take our next question from Manav Gupta with UBS.
Speaker #1: Thank you . Biraj .
Speaker #4: We'll take our next question from Manav Gupta, UBS.
[Analyst] (UBS): Good afternoon. You have a very strong refining portfolio, and there are two tailwinds we see to that refining portfolio. One is your competitors closing capacity in California, leaving you with one of the biggest footprints out there and above mid-cycle margins. Second is the possibility of using some of those Venezuelan and AV sour barrels in your refining systems, the Gulf Coast and other places. Can you talk a little bit about those two possible tailwinds to your refining margins? Thank you.
Manav Gupta: Good afternoon. You have a very strong refining portfolio, and there are two tailwinds we see to that refining portfolio. One is your competitors closing capacity in California, leaving you with one of the biggest footprints out there and above mid-cycle margins. Second is the possibility of using some of those Venezuelan and AV sour barrels in your refining systems, the Gulf Coast and other places. Can you talk a little bit about those two possible tailwinds to your refining margins? Thank you.
Speaker #14: Good afternoon . You have a very strong refining portfolio , and there are two tailwinds we see to that refining portfolio . One is your competitors closing capacity in California , leaving you with one of the biggest footprints out there .
Speaker #14: above and midcycle margins. And second is the possibility of using some of those and AV Venezuelan sour barrels in refining your systems.
Speaker #14: Gulf Coast in other places. Can you talk a little bit about those two possible tailwinds to your refining margins? Thank you.
Mike Wirth: Yeah, Manav. Thanks for bringing up something near and dear to my heart, the downstream business, where I spent a lot of my career. First off, on where you ended on, Venezuelan crude. We've been bringing about 50,000 barrels a day, give or take, into our Pascagoula, Mississippi, refinery on the Gulf Coast. We can take another 100,000 barrels a day into our system, both at Pascagoula and on the West Coast, where we've got coking capacity at El Segundo. So I think you should expect to see us, assuming it competes against alternatives, to be running more of Venezuelan crude in our system over time. In California, it's an interesting situation. We have a very strong downstream position there.
Mike Wirth: Yeah, Manav. Thanks for bringing up something near and dear to my heart, the downstream business, where I spent a lot of my career. First off, on where you ended on, Venezuelan crude. We've been bringing about 50,000 barrels a day, give or take, into our Pascagoula, Mississippi, refinery on the Gulf Coast. We can take another 100,000 barrels a day into our system, both at Pascagoula and on the West Coast, where we've got coking capacity at El Segundo. So I think you should expect to see us, assuming it competes against alternatives, to be running more of Venezuelan crude in our system over time. In California, it's an interesting situation. We have a very strong downstream position there.
Speaker #2: Yeah, thanks for bringing up something near and dear to my heart—the downstream business, where I spent a lot of my career.
Speaker #2: First off , on where you ended on Venezuelan crude . We've been bringing about 50,000 barrels a day , give or take , into our Pascagoula , Mississippi the Gulf refinery on Coast .
Speaker #2: take another 100,000 barrels a day into our We can system . Both at Pascagoula and on the West Coast , where we've got coking capacity at El Segundo .
Speaker #2: I think you should expect to see us—assuming it competes against alternatives—to be running more Venezuelan crude in our system over time.
Speaker #2: In California , it's an interesting situation . We have a very strong downstream position there . We've got scale , we've got complexity in terms of conversion capacity .
Mike Wirth: We've got scale, we've got complexity in terms of conversion capacity. We've got flexible crude sourcing, advanced logistics, a very strong retail brand to integrate the business. And so we're as competitive as anybody, and I would argue advantage really versus the rest of the competitors in California. You're seeing some refineries close that is going to take capacity out of the system. And already, you know, we've got a market there that is geographically and logistically isolated, it's isolated by specification as well. And as a result, California pays higher fuel prices than the rest of the country by simple market forces being at work there.
We've got scale, we've got complexity in terms of conversion capacity. We've got flexible crude sourcing, advanced logistics, a very strong retail brand to integrate the business. And so we're as competitive as anybody, and I would argue advantage really versus the rest of the competitors in California. You're seeing some refineries close that is going to take capacity out of the system. And already, you know, we've got a market there that is geographically and logistically isolated, it's isolated by specification as well. And as a result, California pays higher fuel prices than the rest of the country by simple market forces being at work there.
Speaker #2: We've got crude flexible sourcing , advanced logistics , a very strong retail brand to to integrate the business and , and so we're as competitive as anybody .
Speaker #2: And I would argue, really, versus the rest of the competitors in California, you're seeing some refineries close. That is going to take capacity out of the system.
Speaker #2: Already, you and know, we've got a market is there that, geographically and logistically, it's isolated by specification as isolated. Well.
Speaker #2: And as a result, California pays higher fuel prices than the rest of the country by simple market forces being at work there.
Mike Wirth: We've seen decades of what, in my opinion, has been, you know, poor energy policymaking that has made it more difficult to invest. The irony is, we have places in the world like Venezuela that are trying to become more attractive to investment, as places like California enact policies to become less attractive to investment. All of that is unfortunate, as someone who's spent a lot of time in that state, but it highlights the need for policy that enables investment and for competitive terms and a regulatory environment. So, we'll see how things play out in California over time.
We've seen decades of what, in my opinion, has been, you know, poor energy policymaking that has made it more difficult to invest. The irony is, we have places in the world like Venezuela that are trying to become more attractive to investment, as places like California enact policies to become less attractive to investment. All of that is unfortunate, as someone who's spent a lot of time in that state, but it highlights the need for policy that enables investment and for competitive terms and a regulatory environment. So, we'll see how things play out in California over time.
Speaker #2: There's we've seen decades of what , in my opinion , has been , you know , poor energy policy making that has made it more difficult to invest .
Speaker #2: The irony is we have places in the world like Venezuela that are trying to become more attractive to investment, as places like California have policies to become less attractive to investment.
Speaker #2: All of that is unfortunate. As someone who spent a lot of time in that state, it highlights the need for policy that enables investment and for competitive terms and a regulatory environment.
Speaker #2: And so we'll see how things play out in time, California, over.
Operator: Thank you, Manav.
Jake Spiering: Thank you, Manav.
Speaker #1: Thank you . Manav .
Operator: We'll take our next question from Alastair Syme with Citi.
Operator: We'll take our next question from Alastair Syme with Citi.
Speaker #4: We'll take our next question from Alastair Sim with Citi.
[Analyst] (Citi): Thanks very much. Reserve replacement this year obviously benefits from Hess, but you're also taking on the new production and, you know, that means reserve life has dropped again, and it's now a lot lower than it was 5 to 6 years ago. How, you know, how the question is: How do you think about the suitability of this metric to your business and really as a guide for investors in your business? Thank you.
Alastair Syme: Thanks very much. Reserve replacement this year obviously benefits from Hess, but you're also taking on the new production and, you know, that means reserve life has dropped again, and it's now a lot lower than it was 5 to 6 years ago. How, you know, how the question is: How do you think about the suitability of this metric to your business and really as a guide for investors in your business? Thank you.
Speaker #15: Thanks very much . Reserve replacement this year . Obviously benefits Hesse , from but you're also taking on the new production . And that means reserve has dropped life again and it's now a lot lower than it was 5 to 6 years ago .
Speaker #15: You know, the question is, how do you think about the suitability of this metric to your business? And really, is it a guide for investors in your business?
Eimear Bonner: Hey, Alastair, I'll take this one. Yeah, I mean, triple R, our reserve replacement ratio, in a business that has depletion, is an important metric. It's not the only metric that we look at when we think about the, the depth of our, our inventory or the quality of the portfolio. And last year, in addition to the triple R that was associated with the inorganic growth, you know, with closing Hess and bringing Guyana and backing into the portfolio, there are also, you know, some of that did come from organic adds as well, so extensions, discoveries, and project sanctions. So it's a blend, it's a blend of both. Look, with Triple R, it can be lumpy. So some years, you know, you can get kind of a flurry of things happening at one time.
Eimear Bonner: Hey, Alastair, I'll take this one. Yeah, I mean, triple R, our reserve replacement ratio, in a business that has depletion, is an important metric. It's not the only metric that we look at when we think about the, the depth of our, our inventory or the quality of the portfolio. And last year, in addition to the triple R that was associated with the inorganic growth, you know, with closing Hess and bringing Guyana and backing into the portfolio, there are also, you know, some of that did come from organic adds as well, so extensions, discoveries, and project sanctions. So it's a blend, it's a blend of both. Look, with Triple R, it can be lumpy. So some years, you know, you can get kind of a flurry of things happening at one time.
Speaker #15: Thank you .
Speaker #3: Hey , Alastair , I'll take this one . Yeah . I triple mean , our our reserve replacement ratio in a business that has depletion is an important metric .
Speaker #3: It's not the only metric that we look at when we think about the depth of our inventory or the quality of the portfolio.
Speaker #3: And last year , in addition to the triple R that was associated with the inorganic growth , you know , with closing Hesse and bringing Guyana and backing into the portfolio , there are also , you know , some of that did come from organic ads as well .
Speaker #3: So extensions , discoveries and , and project sanctions . So it's blend . It's a a blend of both . Look with triple R it can be lumpy .
Speaker #3: So, some years, you know, you can get kind of a flurry of things happening at one time. So what we look at is, we look at the one year, but we also look at the longer-term trends as well.
Eimear Bonner: So what we look at is we look at the one year, but we also look at the longer-term trends as well. We look at the competitive metrics too. You know, when we take all of that into consideration, we had a great year in 2025 on Triple R, and we lead the peer group in both 5- and 10-year. Thanks for the question.
So what we look at is we look at the one year, but we also look at the longer-term trends as well. We look at the competitive metrics too. You know, when we take all of that into consideration, we had a great year in 2025 on Triple R, and we lead the peer group in both 5- and 10-year. Thanks for the question.
Speaker #3: We look competitive at the metrics too. And you know, when we take all of that into consideration, and we had a great year in 2025 on triple R, and we lead the peer group in both five and ten year, thanks to the question.
Operator: Thank you. We'll take our next question from Jeanann Salisbury, with Bank of America.
Operator: Thank you. We'll take our next question from Jeanann Salisbury, with Bank of America.
Speaker #4: Thank you. We'll take our next question from Jean Ann Salisbury with Bank of America.
[Analyst] (Bank of America): Hi, good morning. You all had said at the Investor Day that you had started to test the chemical surfactants in other basins outside of the Permian. Have you gotten any early results back from the DJ or Bakken? And do you anticipate that it's going to work as well there?
Jeanann Salisbury: Hi, good morning. You all had said at the Investor Day that you had started to test the chemical surfactants in other basins outside of the Permian. Have you gotten any early results back from the DJ or Bakken? And do you anticipate that it's going to work as well there?
Speaker #16: Hi. Good morning to you all. You had said at Investor Day that you had started to test the chemical, surfactants, and other basins outside of the Permian.
Speaker #16: Have you gotten any early results back from the DJR Bakken? And do you anticipate that it's going to work as well there?
Eimear Bonner: Yeah, thanks. I'll take this one. So we've been primarily focused on Permian, and in fact, we've increased the treatments from about 40% of the new wells being treated in the first half of 2025 to almost 85% will be treated this year, and we're striving to hit 100% in 2027. So it has been more of a focus in the Permian. And I just point out, we're testing our proprietary chemical technology, but we're also testing the combination of that with other commercially available chemicals. So, cocktails as such. We're trying out different things, depending on the development area. We showed in Investor Day some of our results. What I'd say is we're now realizing 20% improvement in 10-month cumulative recovery on the new wells.
Eimear Bonner: Yeah, thanks. I'll take this one. So we've been primarily focused on Permian, and in fact, we've increased the treatments from about 40% of the new wells being treated in the first half of 2025 to almost 85% will be treated this year, and we're striving to hit 100% in 2027. So it has been more of a focus in the Permian. And I just point out, we're testing our proprietary chemical technology, but we're also testing the combination of that with other commercially available chemicals. So, cocktails as such. We're trying out different things, depending on the development area. We showed in Investor Day some of our results. What I'd say is we're now realizing 20% improvement in 10-month cumulative recovery on the new wells.
Speaker #3: Yeah , thanks . I'll take this one . So we've been primarily focused on Permian and in fact , we've increased the treatments from about 40% of the new wells being treated at the first half of 2025 to almost 85% will be treated this year .
Speaker #3: And we're striving to hit 100% in 2027 . So it has been more of a focus in in the Permian and just I point out we're we're testing our proprietary chemical technology , but we're also testing the combination of that with other commercially available chemicals .
Speaker #3: So cocktails as such , we're trying different things out depending on the development development day , investor We area . showed an some of our results , what I'd say is we're now realizing 20% improvement in cumulative ten month recovery on the new wells .
Eimear Bonner: So we have even more information than what we shared since. So we're really excited, and we expect that's at least a 10% recovery uplift, when we think about it over the full life of the well. What we've also learned is we, we can apply these technologies not only to the new wells, but the existing wells. And what we've seen in almost 300 of the treatments that we've done in existing wells, that we've arrested decline by 5% to 8%. So all in all, very encouraging. The programs to scale in other parts are underway, though we don't have results that we can share with you today. We did do some treatments in Bakken in Q4. We expect to see some of that soon.
So we have even more information than what we shared since. So we're really excited, and we expect that's at least a 10% recovery uplift, when we think about it over the full life of the well. What we've also learned is we, we can apply these technologies not only to the new wells, but the existing wells. And what we've seen in almost 300 of the treatments that we've done in existing wells, that we've arrested decline by 5% to 8%. So all in all, very encouraging. The programs to scale in other parts are underway, though we don't have results that we can share with you today. We did do some treatments in Bakken in Q4. We expect to see some of that soon.
Speaker #3: So, we have even more information than what we shared at SID. So we're really excited, and we expect at least a 10% recovery uplift—think about it, over the full life of the well. And what we've also learned is we can apply these technologies not only to the new wells, but the existing ones. And what we've seen in almost 300 of the treatments that we've done in existing wells is that we've arrested decline by 5 to 8%.
Speaker #3: So all , very all in encouraging . The programs to scale in other parts are underway , though we don't have results that we can share with you today .
Speaker #3: We did do some treatments in Bakken in the fourth quarter. We expect to see some of that soon. We have a pilot underway in the DGA and Argentina as well. We'll share those and the results.
Eimear Bonner: We have pilots underway in the DJ and Argentina as well, and so we'll share the results. I mean, we publish the results, they're verifiable. We give you the paper references so that you can see for yourself, but we will share all of that in due course. But we're really, really excited. And what I would also say, this is one technology program amongst a set of programs that's really focusing on doubling shale and tight recovery. We've got a stimulation program that it's very, very deep. We've also got an effort to leverage the unmatched data position we have around our shale and tight wells, using AI to glean insights into how to design wells, develop wells, and increase recovery.
We have pilots underway in the DJ and Argentina as well, and so we'll share the results. I mean, we publish the results, they're verifiable. We give you the paper references so that you can see for yourself, but we will share all of that in due course. But we're really, really excited. And what I would also say, this is one technology program amongst a set of programs that's really focusing on doubling shale and tight recovery. We've got a stimulation program that it's very, very deep. We've also got an effort to leverage the unmatched data position we have around our shale and tight wells, using AI to glean insights into how to design wells, develop wells, and increase recovery.
Speaker #3: I mean , we publish the results . They're verifiable . We give you the the paper references so that you can see for yourself .
Speaker #3: But we'll share all of that in due course. But we're really, really excited. And what I would also say is, this is one technology program amongst a set of programs that's really focused on doubling shale and tight recovery.
Speaker #3: We've got a stimulation program that is very, very deep. We've also got an effort to leverage the unmatched data position we have around our shale and tight wells.
Speaker #3: Using AI to glean insights into how to design wells , develop wells and recovery . increase So very comprehensive . And we anticipate we'll have some results for you .
Eimear Bonner: So, very comprehensive, we anticipate we'll have some results for you this year, but right now, we're just focusing on getting the treatments out to those other shale and tight basins.
So, very comprehensive, we anticipate we'll have some results for you this year, but right now, we're just focusing on getting the treatments out to those other shale and tight basins.
Speaker #3: But now we're just focusing on getting the treatments right out to those other shale and tight basins.
[Analyst] (Bank of America): Thank you, Jeanann.
Jake Spiering: Thank you, Jeanann.
Operator: We'll take our next question from Betty Jiang with Barclays.
Operator: We'll take our next question from Betty Jiang with Barclays.
Speaker #1: Thank you . Gene . An .
Speaker #4: We'll take our next question from Betty Jang with Barclays.
[Analyst] (Barclays): Good morning. This is a good follow-up to Jeanann's question. Wanna ask about the Bakken specifically, since you've been there for a couple quarters now. How's it performing relative to your expectations? What's the cross-learning between the two teams, and how do you think about the Bakken position overall today?
Betty Jiang: Good morning. This is a good follow-up to Jeanann's question. Wanna ask about the Bakken specifically, since you've been there for a couple quarters now. How's it performing relative to your expectations? What's the cross-learning between the two teams, and how do you think about the Bakken position overall today?
Speaker #17: Good morning . This is a good follow up to Gene's question . I want to ask about the Balkans specifically , since you've been there for a couple of quarters now , how's it performing relative to your with the expectations cross learning between the two teams and how do you think about the Bakken position overall today ?
Mike Wirth: Yeah, thanks, thanks, Betty. Look, we're pleased with the Bakken. We're applying best practices, as Eimear mentioned, from other parts of our portfolio. We're looking at things that Hess had been doing in the Bakken to apply those in the DJ, the Permian, and Argentina. We've already optimized our development program to reduce capital spending, better utilize existing infrastructure, maximize value. We've moved from 4 rigs to 3 with a similar drilling output. We've optimized the workover fleet, renegotiated some of the key supplier contracts, working on advanced chemicals with some optimism. We're implementing long lateral development in 60% of the wells this year and up to 90% in 2027.
Mike Wirth: Yeah, thanks, thanks, Betty. Look, we're pleased with the Bakken. We're applying best practices, as Eimear mentioned, from other parts of our portfolio. We're looking at things that Hess had been doing in the Bakken to apply those in the DJ, the Permian, and Argentina. We've already optimized our development program to reduce capital spending, better utilize existing infrastructure, maximize value. We've moved from 4 rigs to 3 with a similar drilling output. We've optimized the workover fleet, renegotiated some of the key supplier contracts, working on advanced chemicals with some optimism. We're implementing long lateral development in 60% of the wells this year and up to 90% in 2027.
Speaker #2: thanks . Thanks , Betty Yeah , . Look , we're we're pleased with the Bakken . We're applying best practices . As Emma mentioned from other parts of our portfolio .
Speaker #2: We're looking at things that Hess had been doing in the Bakken to then apply those in the DJ, the Permian, and Argentina. We've already optimized our development program to reduce capital spending, better utilize existing infrastructure, and maximize value.
Speaker #2: We've moved from four rigs to three, with a similar drilling output. We've optimized the workover fleet, renegotiated some of the key supplier contracts, and are working on advanced chemicals with some optimism.
Speaker #2: We're implementing long lateral development in 60% of the year , and wells this up to 90% in 2027 . So driving value there , we're going to , you know , Hess had a target and we will hold that to , you know , level it out around 200,000 barrels a day plus or minus and really focus on cash flow .
Mike Wirth: So, driving value there, we're gonna, you know, Hess had a target, and we will hold that to, you know, level it out around 200,000 barrels a day, ±, and really focus on cash flow. So similar to the way you've heard us talk about the, the DJ and the Permian, we think we can drive a, a lot of, asset productivity, efficiency, technology, and free cash flow growth, in this asset as well.
So, driving value there, we're gonna, you know, Hess had a target, and we will hold that to, you know, level it out around 200,000 barrels a day, ±, and really focus on cash flow. So similar to the way you've heard us talk about the, the DJ and the Permian, we think we can drive a, a lot of, asset productivity, efficiency, technology, and free cash flow growth, in this asset as well.
Speaker #2: similar to the So way you've heard us talk about the DJ and the Permian , we think we can drive a lot of asset productivity , efficiency , technology and free cash flow growth in this asset as well .
Operator: Thank you. We'll take our next question from Geoff Jay with Daniel Energy Partners.
Operator: Thank you. We'll take our next question from Geoff Jay with Daniel Energy Partners.
Speaker #4: Thank you. We'll take our next question from Jeff Jay with Daniel Energy Partners.
Eimear Bonner: Hi, guys. I was just really struck by the margin improvement sequentially in US Upstream. And I know there's a lot of moving parts, but it looks like realizations were down over $3 on a BOE basis, but, you know, costs, you know, but the margin was actually up. And I guess I'm wondering if there's a way you can help me understand how much of that are the structural cost savings and production optimization efforts you guys are doing, and kind of what the pathway for that looks like going forward over the next year or so.
Geoff Jay: Hi, guys. I was just really struck by the margin improvement sequentially in US Upstream. And I know there's a lot of moving parts, but it looks like realizations were down over $3 on a BOE basis, but, you know, costs, you know, but the margin was actually up. And I guess I'm wondering if there's a way you can help me understand how much of that are the structural cost savings and production optimization efforts you guys are doing, and kind of what the pathway for that looks like going forward over the next year or so.
Speaker #5: guys . Hi , was just I really struck by the margin improvement sequentially in US upstream . And I know there's a lot of moving parts , but it looks like realizations were over $3 on a daily basis .
Speaker #5: guys . Hi , was just I really struck by the margin improvement sequentially in US upstream . And I know there's a lot of moving parts , but it looks like realizations were over $3 on a daily down know But you , costs you know , the the margin was actually up .
Speaker #5: And I guess I'm wondering if you understand how much of that are the structural cost savings and production optimization efforts you guys are doing?
Speaker #5: Kind of, and what the pathway for that looks like going forward over the next year or so.
Mike Wirth: Yeah, Jeff, I'd point to a couple of things. Number one, you know, we've been bringing on new production in the Gulf of America. These are high-margin barrels. And so when you bring that into the mix, you start to see the margin expand. Number two, as we've moved to plateau in the Permian, and I also mentioned the DJ and the Bakken, that's 1.6 million barrels a day. As you start to drive efficiency, productivity, and technology across that kind of a production base, you can see a real impact of that. The third contributor then are some of these structural reductions that we're making in our organization, in a more efficient support of people to these businesses, consolidating all of our shale assets into one organization.
Mike Wirth: Yeah, Jeff, I'd point to a couple of things. Number one, you know, we've been bringing on new production in the Gulf of America. These are high-margin barrels. And so when you bring that into the mix, you start to see the margin expand. Number two, as we've moved to plateau in the Permian, and I also mentioned the DJ and the Bakken, that's 1.6 million barrels a day. As you start to drive efficiency, productivity, and technology across that kind of a production base, you can see a real impact of that. The third contributor then are some of these structural reductions that we're making in our organization, in a more efficient support of people to these businesses, consolidating all of our shale assets into one organization.
Speaker #2: Jeff , I'd Yeah . point to a couple of things . Number one , you know , we've been bringing on production in new the Gulf of America .
Speaker #2: These are high margin barrels . And so when you bring that into the mix , you start to see the the margin expand .
Speaker #2: Number two, as we've moved to in the Plateau Permian. And I also mentioned the DJ and the Bakken. That's 1.6 million barrels a day.
Speaker #2: You start to drive efficiency and productivity and technology across kind of that production base, you can see a real impact of that.
Speaker #2: The third contributor, then, are some of the structural reductions that we're making in our organization in more efficient support of people to these businesses, consolidating all of our shale assets into one organization.
Mike Wirth: So I'd say there are multiple levers there, but your broader point is one that I think is important. I mentioned earlier that, you know, we're in a relatively low growth. It's a growth business, no doubt about it, but demand for energy globally grows gradually. We need to focus not only on growing volumes in order to meet that demand, we've got to continually work on expanding margins, and that's through value chain optimization, it's through all these other things that I just talked about. And so margin expansion is something that, in my background, in the downstream, we worked hard to expand margins through things we can control. You can do that in the upstream, too. We've got people focused on that, and we're seeing the results, as you point out.
So I'd say there are multiple levers there, but your broader point is one that I think is important. I mentioned earlier that, you know, we're in a relatively low growth. It's a growth business, no doubt about it, but demand for energy globally grows gradually. We need to focus not only on growing volumes in order to meet that demand, we've got to continually work on expanding margins, and that's through value chain optimization, it's through all these other things that I just talked about. And so margin expansion is something that, in my background, in the downstream, we worked hard to expand margins through things we can control. You can do that in the upstream, too. We've got people focused on that, and we're seeing the results, as you point out.
Speaker #2: So I'd say there are there are multiple levers there , but your broader point is one that I think it's important I mentioned earlier that , you know , we're in a relatively low growth .
Speaker #2: It's a growth, no doubt, about business—it is. But demand for energy globally grows gradually. We need to focus not only on growing volumes in order to meet demand.
Speaker #2: We've got to meet that continually expanding work on margins. And that's through value chain optimization, through all these other things that I just talked about.
Speaker #2: And so, expansion is margin—something that, in my background in the downstream, we worked hard to expand margins through things we can control.
Speaker #2: You can do that in the upstream too . I've got we've got people focused on that . And and we're seeing the results .
[Analyst] (Sankey Research): Thanks, Jeff.
Jake Spiering: Thanks, Jeff.
Speaker #2: As you point out .
Speaker #1: Thanks , Jeff .
Operator: Thank you. We'll take our next question from Bob Brackett with Bernstein Research.
Operator: Thank you. We'll take our next question from Bob Brackett with Bernstein Research.
Speaker #4: Thank you. We'll take our next question from Bob Brackett with Bernstein Research.
[Analyst] (Bernstein Research): Good morning. A follow-up around Venezuela. You've mentioned bringing Venezuela heavy into your Gulf Coast refineries and having some capacity on the West Coast. Do you have a sense of how much heavy from Venezuela could be absorbed by the US without impacting heavy-light diffs or without backing up Canadian heavy?
Bob Brackett: Good morning. A follow-up around Venezuela. You've mentioned bringing Venezuela heavy into your Gulf Coast refineries and having some capacity on the West Coast. Do you have a sense of how much heavy from Venezuela could be absorbed by the US without impacting heavy-light diffs or without backing up Canadian heavy?
Speaker #18: Good morning. A follow-up around Venezuela. You've mentioned bringing Venezuela heavy into Gulf Coast refineries and having some capacity on the West Coast.
Speaker #18: Do you have a sense of how much heavy from Venezuela could be absorbed by the U.S. without impacting heavy-light diffs, or without backing up Canadian heavy?
Mike Wirth: You know, Bob, good analysts do great work on that. You know, markets are wonderful things, and what's gonna happen as you bring more of these barrels in, as you say, you're gonna kind of back out what's currently feeding the system. They're gonna redistribute around the world, and kind of a new equilibrium will establish, and light heavies will reflect that, flows will reflect that. I don't have a simple rule of thumb I can give you or a kind of a simple way to describe that. I'm pretty sure you can get down into the details and model that better than I'm gonna be able to describe it to you. But you're right, it's gonna shift these things around.
Mike Wirth: You know, Bob, good analysts do great work on that. You know, markets are wonderful things, and what's gonna happen as you bring more of these barrels in, as you say, you're gonna kind of back out what's currently feeding the system. They're gonna redistribute around the world, and kind of a new equilibrium will establish, and light heavies will reflect that, flows will reflect that. I don't have a simple rule of thumb I can give you or a kind of a simple way to describe that. I'm pretty sure you can get down into the details and model that better than I'm gonna be able to describe it to you. But you're right, it's gonna shift these things around.
Speaker #2: You know , Bob , good analysts do great work on that . You know , markets are wonderful things . And what's going to happen as you barrels bring more of these in , as you say , you're going to kind of back out what's currently feeding the system .
Speaker #2: They're going to, around the world, redistribute, and kind of a new equilibrium will establish, and light heavies will reflect that—will reflect that.
Speaker #2: . I Flows don't have a simple rule of thumb . I can give you , or a kind of a simple way to describe that .
Speaker #2: I'm pretty sure you can get down into the details and model that better than I'm going to be able to, but you're right, it's going to describe it to shift these things around.
[Analyst] (Bernstein Research): Thanks, Bob.
Jake Spiering: Thanks, Bob.
Operator: Thank you. We'll take our next question from Phillip Jungwirth with BMO.
Operator: Thank you. We'll take our next question from Phillip Jungwirth with BMO.
Speaker #4: Thank you . We'll take our next we'll take our next question from Philipp Jungwirth with BMO .
[Analyst] (BMO): Thanks. Good morning. On chemicals, I mean, you made no secret about wanting to get bigger in this area. Obviously, you need a willing buyer and seller, price that works, plus it's tough to do deals at the bottom of the cycle. But the question is, how do you view the benefits to Chevron of owning more of CPChem? Are there things you could do differently versus the current JV structure, whether it's operational or strategic? And are there other avenues to get larger in petchems beyond this?
Phillip Jungwirth: Thanks. Good morning. On chemicals, I mean, you made no secret about wanting to get bigger in this area. Obviously, you need a willing buyer and seller, price that works, plus it's tough to do deals at the bottom of the cycle. But the question is, how do you view the benefits to Chevron of owning more of CPChem? Are there things you could do differently versus the current JV structure, whether it's operational or strategic? And are there other avenues to get larger in petchems beyond this?
Speaker #19: Thanks . Good morning . On on chemicals . I mean , you made no secret about wanting to get bigger in this area .
Speaker #19: Obviously , you need a willing buyer and seller price that works . Plus , it's tough to do deals at the bottom of the cycle , but the the question is , how do you view the benefits to Chevron of owning more of cpk-mb ?
Speaker #19: Are there things you could do differently , whether versus the current structure , JV whether it's operational or strategic ? And are there other avenues to get larger and Pet chems beyond beyond this ?
Mike Wirth: Yeah. So, look, CPChem is a well-run company, and I want to give them full credit, and it's been a well-run company for a long time. We've been very pleased with our investment in that company. We've been pleased with our relationship with our partner, and it's been a good vehicle for us. We think the long-term outlook for chemicals is positive. We're in a tough part of the cycle right now, but with the growing middle class and a growing global population, the products that CPChem needs are increasingly going to be in demand around the world. We've got a couple of projects underway that will be highly competitive when they come on next year. We'll see how this cycle plays out.
Mike Wirth: Yeah. So, look, CPChem is a well-run company, and I want to give them full credit, and it's been a well-run company for a long time. We've been very pleased with our investment in that company. We've been pleased with our relationship with our partner, and it's been a good vehicle for us. We think the long-term outlook for chemicals is positive. We're in a tough part of the cycle right now, but with the growing middle class and a growing global population, the products that CPChem needs are increasingly going to be in demand around the world. We've got a couple of projects underway that will be highly competitive when they come on next year. We'll see how this cycle plays out.
Speaker #2: Yeah . So look , Cpk-mb is a well run company and I want to give them full credit . And it's been a well run company for a long time .
Speaker #2: We've been very pleased with our investment in that company . We've been pleased with our relationship with our partner , and it's been a good it's been a good vehicle for us .
Speaker #2: We think the term outlook for chemicals is long positive . We're in a tough part of the now , cycle right but with the growing middle class and a growing , growing global population .
Speaker #2: The products that CPK-MB needs are increasingly going to be in demand around the world. We've got a couple of projects underway that will be highly competitive when they come on next year.
Mike Wirth: I think it's still got some time to go. We would like more exposure to the sector, but you know, you, as you say, you got to have two people that wanna do a deal. Are there other ways we could do things? Yes, we can look at things. You know, I'd remind you, we also have a very large aromatics position in North Asia, at GS Caltex, one of the largest aromatics plants on the Earth. And so we'll look for the right ways to increase our exposure to petrochemicals over time.
I think it's still got some time to go. We would like more exposure to the sector, but you know, you, as you say, you got to have two people that wanna do a deal. Are there other ways we could do things? Yes, we can look at things. You know, I'd remind you, we also have a very large aromatics position in North Asia, at GS Caltex, one of the largest aromatics plants on the Earth. And so we'll look for the right ways to increase our exposure to petrochemicals over time.
Speaker #2: We'll see how how this cycle plays out . I think it's still got some some time to go . would like more We exposure to the sector , but you know , as you say , you got to have two people that that want to do a deal .
Speaker #2: Are there other ways we could do things ? can look at Yes . We things . We , you know , I'd remind you we also have a very large aromatics position in North Asia at Caltech .
Speaker #2: It's one of the largest aromatics plants on the earth . And and so we'll look we'll look for the right ways to increase exposure to petrochemicals over time .
[Analyst] (BMO): Thank you, Phil.
Jake Spiering: Thank you, Phil.
Speaker #1: Thank you . Phil .
Operator: Thank you. We'll take our next question from Paul Sankey with Sankey Research.
Operator: Thank you. We'll take our next question from Paul Sankey with Sankey Research.
Speaker #4: Thank you. We'll take our next question from Paul Sankey with Sankey Research.
[Analyst] (Sankey Research): Morning, all. Mike, good to hear that you're not modeling the heavy light spread constantly. Mike, if I could ask you a couple of specifics on Kazakhstan, which you've already referenced, but was the power outage, what caused that? Was that just an upset? And secondly, the specifics of the loading, was that owing to military activity, I guess?
Paul Sankey: Morning, all. Mike, good to hear that you're not modeling the heavy light spread constantly. Mike, if I could ask you a couple of specifics on Kazakhstan, which you've already referenced, but was the power outage, what caused that? Was that just an upset? And secondly, the specifics of the loading, was that owing to military activity, I guess?
Speaker #20: Morning , Mike . Good to hear that . You're not modeling the heavy light spread constantly . Mike , if I could ask you a couple of specifics on Kazakhstan , which you've already referenced , but was the power outage the power outage ?
Speaker #20: What caused that ? Was was that just an upset ? And secondly , the specifics of the was that loading owing to military activity , I guess .
Mike Wirth: Yeah. So, look, the investigation is ongoing, on the power outage, and I don't wanna, I don't wanna speculate on it. The team's gathering new information each day. We've got our subject matter experts from in-country, from outside the country. We've got OEMs from all the various vendors that we work with involved in this, and they're making good progress, but I'm not gonna comment on it at all. It's. I think it's a mechanical issue, I can say that, but, but beyond that, I don't want to say anything more. It's not a sabotage or cybersecurity or anything like that. On the loading berth, it's been well publicized. You know, there are 3 offshore single-point moorings at the Novorossiysk terminal or offshore at Novorossiysk.
Mike Wirth: Yeah. So, look, the investigation is ongoing, on the power outage, and I don't wanna, I don't wanna speculate on it. The team's gathering new information each day. We've got our subject matter experts from in-country, from outside the country. We've got OEMs from all the various vendors that we work with involved in this, and they're making good progress, but I'm not gonna comment on it at all. It's. I think it's a mechanical issue, I can say that, but, but beyond that, I don't want to say anything more. It's not a sabotage or cybersecurity or anything like that. On the loading berth, it's been well publicized. You know, there are 3 offshore single-point moorings at the Novorossiysk terminal or offshore at Novorossiysk.
Speaker #2: Yeah. So look, the investigation is ongoing on the power outage, and I don't want to—I don't want to speculate on it.
Speaker #2: The team's gathering new information each day. We've got our subject matter experts from in-country, from outside the country. We've got OEMs from all the various vendors that we work with involved in this.
Speaker #2: And they're making good—I'm not going to progress, but comment on it at all. It's, I think, it's a mechanical issue.
Speaker #2: I can say that , but , but but beyond that , I don't want to say anything more . It's not a it's not a sabotage or cybersecurity or that anything like .
Speaker #2: On the , on the loading berth . It's been well publicized . You know , one , there's three offshore single point moorings at the Novorossiysk terminal or offshore Novorossiysk at .
Mike Wirth: One of those was out for maintenance. Two were in service. One of those two was hit by a submarine drone back in December as part of the military activity in the Black Sea. So that's what took CPC down to one loading berth. It is, you know, we're back up to two loading berths now, and there's a third one that is slated for some repair, big maintenance work, and we'll be back later this year. Historically, the Caspian Pipeline and that terminal have been very, very reliable, and I think if you look at it in the fullness of time, the uptime and the reliability record has been very good.
One of those was out for maintenance. Two were in service. One of those two was hit by a submarine drone back in December as part of the military activity in the Black Sea. So that's what took CPC down to one loading berth. It is, you know, we're back up to two loading berths now, and there's a third one that is slated for some repair, big maintenance work, and we'll be back later this year. Historically, the Caspian Pipeline and that terminal have been very, very reliable, and I think if you look at it in the fullness of time, the uptime and the reliability record has been very good.
Speaker #2: One of those was out for maintenance. Two were in service. One of those two was hit by a submarine drone back in December as part of the military activity in the Black Sea.
Speaker #2: So that's what took CPC down to one . Loading berth . It is , you know , up to we're back two . Loading berths now , and there's a third one that is slated some for big maintenance work , and we'll be back later this year .
Speaker #2: Historically , the Caspian Pipeline and that terminal have been very , very reliable . And I think if you look at it in the fullness of time , the uptime and the reliability record has been very good , notwithstanding that when it's , you know , when you're pinched back like that , it's frustrating .
Mike Wirth: Notwithstanding that, when it's, you know, when you're pushed back like that, it's frustrating, and a lot of people have been working very hard at TCO and all the shareholders at CPC to address these issues.
Notwithstanding that, when it's, you know, when you're pushed back like that, it's frustrating, and a lot of people have been working very hard at TCO and all the shareholders at CPC to address these issues.
Speaker #2: And a lot of people have been working very hard at TCO, and all the shareholders at CPC, to address these issues.
Jake Spiering: Thank you, Paul.
Jake Spiering: Thank you, Paul.
Operator: Thank you. We will take our final question from Jason Gabelman with TD Cowen.
Operator: Thank you. We will take our final question from Jason Gabelman with TD Cowen.
Speaker #1: Thank you . Paul .
Speaker #4: Thank you. We will take our final question from Jason Gabelman with TD Cowen.
[Analyst] (TD Cowen): Yeah, hey, thanks for taking my question. I wanted to ask about the balance sheet as it relates to M&A. You know, in the past, you funded acquisitions primarily through shares, and there are some assets on the market in Kazakhstan that can make sense to acquire, though it seems like maybe that acquisition would need to be funded by cash instead of stock. So with that in mind, and maybe in a broader sense, how do you view using cash to fund acquisitions, you know, not of the Hess size, but of some of a smaller size, like Reggie and Noble, versus using equity, given the current balance sheet?
Jason Gabelman: Yeah, hey, thanks for taking my question. I wanted to ask about the balance sheet as it relates to M&A. You know, in the past, you funded acquisitions primarily through shares, and there are some assets on the market in Kazakhstan that can make sense to acquire, though it seems like maybe that acquisition would need to be funded by cash instead of stock. So with that in mind, and maybe in a broader sense, how do you view using cash to fund acquisitions, you know, not of the Hess size, but of some of a smaller size, like Reggie and Noble, versus using equity, given the current balance sheet?
Speaker #21: Yeah . Hey , thanks for taking my question . I wanted to ask about the balance sheet as it relates to M&A . You know , in the past you funded acquisitions primarily through shares .
Speaker #21: And there are some assets on the market in Kazakhstan that can make sense to acquire, though it seems like maybe that acquisition would need to be funded by cash instead of stock.
Speaker #21: So with that in mind , and maybe in a broader sense , how do you view using cash to fund acquisitions ? You know , not of the Hess size , but of some of the , of a of a smaller size , like Reggie and Noble versus using equity , given the current balance sheet and kind of related to that , I noted that on the front of the earnings release , you put that to flow cash instead of net debt to cap it looks like that's maybe a preferred debt metric .
[Analyst] (TD Cowen): And kind of related to that, I noted that on the front of the earnings release, you put debt to cash flow instead of net debt to cap. It looks like that's maybe a preferred debt metric. Is that so, and if so, why the change? Thanks.
And kind of related to that, I noted that on the front of the earnings release, you put debt to cash flow instead of net debt to cap. It looks like that's maybe a preferred debt metric. Is that so, and if so, why the change? Thanks.
Speaker #21: Is that so? And if so, why the change?
Mike Wirth: Yeah, Jason, let me talk about transactions, and I'll let Eimear talk about ratios and metrics. When we do a deal, you're negotiating with a counterparty, and the consideration is part of the negotiation. And there are times when your counterparty prefers cash. There's times when they prefer equity. There's times when they may want a mix. And so that's a matter of negotiation. On large scale, M&A in our sector, where you're gonna have a long time between deal signing and close, i.e., a deal we just closed after a very long cycle, using equity hedges commodity price risk on both sides of the transaction.
Mike Wirth: Yeah, Jason, let me talk about transactions, and I'll let Eimear talk about ratios and metrics. When we do a deal, you're negotiating with a counterparty, and the consideration is part of the negotiation. And there are times when your counterparty prefers cash. There's times when they prefer equity. There's times when they may want a mix. And so that's a matter of negotiation. On large scale, M&A in our sector, where you're gonna have a long time between deal signing and close, i.e., a deal we just closed after a very long cycle, using equity hedges commodity price risk on both sides of the transaction.
Speaker #21: Thanks .
Speaker #2: Yeah .
Speaker #2: Jason, let me talk about transactions, and I'll let Emre talk about ratios and metrics when we do a deal. You're negotiating with a counterparty, and the consideration is part of the negotiation.
Speaker #2: And there are times when your counterparty prefers cash . There's times when equity . There's times when they may they prefer mix . And and so that's a that's a matter of negotiation on large scale M&A in our sector where you have a can long time between deal signing and close , i.e. a deal .
Speaker #2: We closed just after a very long cycle using equity hedges , commodity price risk on both sides of the transaction . And if you enter into a deal in one commodity price environment and you close it in another and you've got a lot of cash in the deal , you can find out that you find yourself where one party feels like the deal got a lot better for them , and the other worse .
Mike Wirth: If you enter into a deal in one commodity price environment, and you close it in another, and you've got a lot of cash in the deal, you can find out that you find yourself where one party feels like the deal got a lot better for them, and the other feels like it got a lot worse. And so, equity and transactions like that tend to be preferred by both counterparties because it's a way to hedge out some of the commodity price risk. Smaller deals that close faster and are of a different nature, you can find cash is preferable. And so we'll work with whatever consideration makes sense in a negotiation.
If you enter into a deal in one commodity price environment, and you close it in another, and you've got a lot of cash in the deal, you can find out that you find yourself where one party feels like the deal got a lot better for them, and the other feels like it got a lot worse. And so, equity and transactions like that tend to be preferred by both counterparties because it's a way to hedge out some of the commodity price risk. Smaller deals that close faster and are of a different nature, you can find cash is preferable. And so we'll work with whatever consideration makes sense in a negotiation.
Speaker #2: And so, it feels like equity and transactions like that tend to be preferred by both counterparties, because it's a way to hedge out some of the commodity price risk. Smaller deals that close faster and are of a different nature—you can find cash is preferable.
Speaker #2: And so we look with whatever consideration makes sense in a negotiation. We're flexible. And, you know, we've bought things with cash over the last many years.
Mike Wirth: We're flexible, and, you know, we've bought things with cash over the last many years, and we've done equity deals, so it really depends on the circumstances. Eimear, do you wanna talk about metrics, debt metrics?
We're flexible, and, you know, we've bought things with cash over the last many years, and we've done equity deals, so it really depends on the circumstances. Eimear, do you wanna talk about metrics, debt metrics?
Speaker #2: And we've done—we've done equity deals. So it really depends on the circumstances. Do you want to talk about metrics?
Eimear Bonner: Yeah, there's a number of metrics out there to look at the debt ratios. And so what we've done here is we've just moved towards what our rating agencies look at and what many of you look at in terms of ratios. So we're just trying to be consistent. And we still look at net debt ratio, but overall, the message is our balance sheet is in really good, really good shape, and we're in a position of strength. Thanks for the question.
Eimear Bonner: Yeah, there's a number of metrics out there to look at the debt ratios. And so what we've done here is we've just moved towards what our rating agencies look at and what many of you look at in terms of ratios. So we're just trying to be consistent. And we still look at net debt ratio, but overall, the message is our balance sheet is in really good, really good shape, and we're in a position of strength. Thanks for the question.
Speaker #3: Yeah, there are metrics out there to look at the debt ratios. And so what we've done here is we've just moved towards what our rating agencies look at.
Speaker #3: And what many of you look at in terms of ratios . So we're just trying to be be consistent . I mean , we still look at net debt ratio , but overall the message is our balance sheet is in in really good really good shape .
Speaker #3: And we're in a position—we're in a position of strength. Thanks for the question.
Jake Spiering: 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.
Jake Spiering: 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 #3: .
Speaker #1: I’d 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.
Operator: Thank you. This concludes Chevron's Q4 2025 earnings conference call. You may now disconnect.
Operator: Thank you. This concludes Chevron's Q4 2025 earnings conference call. You may now disconnect.
