Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chevron Corp (CVX, Financial) delivered strong financial and operational results, with a 7% increase in worldwide production, setting a third-quarter record.
- The company achieved significant project milestones, including the start-up of the high-pressure Anchor project and water injection at the Jack/St. Malo and Tahiti fields.
- Chevron Corp (CVX) expanded its CO2 storage portfolio by adding over 2 million acres offshore Western Australia.
- The company successfully integrated PDC Energy, exceeding its synergy guidance by more than 30% and delivering over $1 billion in incremental free cash flow.
- Chevron Corp (CVX) maintained a strong balance sheet with a net debt ratio under 12% and executed record share repurchases of $4.7 billion.
Negative Points
- Adjusted earnings were down $1.2 billion compared to the same quarter last year, primarily due to lower refining margins and higher depreciation, depletion, and amortization (DD&A) at TCO.
- The company anticipates downtime in the fourth quarter, impacting production from divestments by approximately 45,000 barrels of oil equivalent per day.
- Chevron Corp (CVX) faces challenges in the Eastern Mediterranean due to regional conflicts, affecting expansion projects at Tamar and Leviathan.
- The company is experiencing pressure from California's regulatory environment, which could impact future investments in the state.
- Chevron Corp (CVX) is dealing with the uncertainty surrounding the Hess acquisition, which has contributed to relative underperformance in its stock.
Q & A Highlights
Q: Investors are concerned about the TCO start-up and tests. When should they consider it largely derisked?
A: Michael Wirth, CEO: We are making great progress with predictable commissioning and start-up activities. Significant complex commissioning work is still ahead, particularly on the future growth project. We expect to begin start-up procedures in the first quarter. Our cost and schedule guidance remains unchanged. Every quarter that passes, the project is being derisked, and everything we see is positive.
Q: Can you elaborate on the Permian's performance and its sustainability?
A: Michael Wirth, CEO: We had a strong quarter in the Permian, particularly in New Mexico. New well performance has been strong, and we are seeing efficiency gains across the board. As we approach the 1 million-barrel-a-day mark next year, we will focus more on free cash flow rather than growth, with this year likely being the peak in Permian CapEx.
Q: Why not close the Hess deal given your confidence in the legal position?
A: Michael Wirth, CEO: The deal structure with Hess includes a condition precedent that requires arbitration to be concluded. We are confident it will be successful, and we are executing the transaction as written. Integration planning is going well, and we are preparing for the future.
Q: Can you explain the rationale behind the Canada asset sales, especially given the Hess deal's focus on long-cycle resources?
A: Michael Wirth, CEO: The Canadian assets were not core to our portfolio. We received an attractive offer for both the Kaybob Duvernay and AOSP, which we accepted. While we aim to add quality long-duration assets, we also continuously high-grade our portfolio and divest non-core assets when it makes sense.
Q: How do you view the balance sheet and shareholder returns amid volatile commodity markets?
A: Michael Wirth, CEO: We maintain a strong balance sheet to navigate volatility and reward shareholders consistently. Our net debt is under 12%, and we are comfortable with our financial position. Share repurchase guidance remains unchanged, and we have a track record of maintaining shareholder distributions through various cycles.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
