Workflow
Chevron(CVX) - 2025 Q1 - Earnings Call Transcript
CVXChevron(CVX)2025-05-02 15:00

Financial Data and Key Metrics Changes - Chevron reported earnings of 3.5billionor3.5 billion or 2 per share for Q1 2025, with adjusted earnings of 3.8billionor3.8 billion or 2.18 per share, reflecting a 200millionincreaseinadjustedearningscomparedtothepreviousquarter[9][12]−Cashreturnedtoshareholdersreached200 million increase in adjusted earnings compared to the previous quarter [9][12] - Cash returned to shareholders reached 6.9 billion through dividends and buybacks, marking twelve consecutive quarters of over 5billionreturned[5][6]−OrganicCapExwas5 billion returned [5][6] - Organic CapEx was 3.5 billion, the lowest quarterly total in two years, while inorganic CapEx was approximately 400million[10][11]BusinessLineDataandKeyMetricsChanges−Adjustedupstreamearningsremainedflatcomparedtothelastquarter,withhigherrealizationsoffsetbylowerliftingsandaffiliateearnings[12]−Adjusteddownstreamearningsincreasedduetoimprovedrefiningmarginsandlowermaintenancecosts[12]−Firstquarteroilequivalentproductionwasflatcomparedtothepreviousquarter,withgrowthexpectedtoresumeinthePermianinQ22025[13]MarketDataandKeyMetricsChanges−ChevronachievedfirstoilatBallymoreintheGulfofAmerica,contributingtoexpectedproductiongrowthto300,000barrelsofoilequivalentperdayby2026[7][46]−TheexpansionofthePasadenarefineryhasstrengthenedtheGulfCoastvaluechain,allowingforincreasedcapacityandintegrationwithPascagoula[8][109]CompanyStrategyandDevelopmentDirection−Chevron′sstrategyfocusesonexecutiontounlockindustry−leadingcashflowgrowth,withacapitalprogramdirectedtowardsshort−cycleassetsanddeepwaterprojects[6][14]−Thecompanyaimsforstructuralcostsavingsof400 million [10][11] Business Line Data and Key Metrics Changes - Adjusted upstream earnings remained flat compared to the last quarter, with higher realizations offset by lower liftings and affiliate earnings [12] - Adjusted downstream earnings increased due to improved refining margins and lower maintenance costs [12] - First quarter oil equivalent production was flat compared to the previous quarter, with growth expected to resume in the Permian in Q2 2025 [13] Market Data and Key Metrics Changes - Chevron achieved first oil at Ballymore in the Gulf of America, contributing to expected production growth to 300,000 barrels of oil equivalent per day by 2026 [7][46] - The expansion of the Pasadena refinery has strengthened the Gulf Coast value chain, allowing for increased capacity and integration with Pascagoula [8][109] Company Strategy and Development Direction - Chevron's strategy focuses on execution to unlock industry-leading cash flow growth, with a capital program directed towards short-cycle assets and deepwater projects [6][14] - The company aims for structural cost savings of 2 billion to 3billionbytheendofnextyear,alongsidea3 billion by the end of next year, alongside a 2 billion reduction in CapEx budgets [6][14] - Chevron is expanding its pipeline of future opportunities, adding over 11 million net exploration acres since the start of last year [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and commodity cycles, emphasizing cost and capital discipline [6][14] - The company remains well-positioned to generate cash flow growth, even in lower price environments, with a strong balance sheet and a net debt ratio of 14% [14][104] - Management highlighted the importance of maintaining flexibility in capital spending to adapt to market conditions [101][104] Other Important Information - Chevron's guidance for annual buybacks remains unchanged at 10billionto10 billion to 20 billion, with expected buybacks of 2.5billionto2.5 billion to 3 billion in Q2 2025 [14][15] - The company is actively engaging in power ventures, with plans for a floating production unit in Cyprus expected to produce 800 million cubic feet of gas per day [60][94] Q&A Session Summary Question: Update on TCO and production levels - Management expressed satisfaction with the startup performance at TCO, achieving nameplate capacity in less than 30 days and positive discussions regarding concession extensions [18][20] Question: Position in California refining market - Management noted a strong position with two refineries and highlighted challenges posed by state policies affecting investment [23][24] Question: Financial framework and buyback decisions - Management reiterated the importance of maintaining a balance between buybacks and capital discipline, with a focus on long-term financial priorities [30][32] Question: Impact of macroeconomic factors on production - Management discussed the implications of potential production losses in Venezuela and Kazakhstan, emphasizing the value of TCO production to the government [41][43] Question: Future prospects in the Gulf of Mexico - Management provided insights on Ballymore's production ramp-up and the potential for significant output from the project [46][47] Question: Update on power ventures - Management confirmed strong demand for power projects and ongoing discussions with prospective customers, aiming for a final investment decision by year-end [92][94] Question: Tariff impacts on CapEx - Management indicated limited direct exposure to tariffs, with most costs being service-related and local sourcing mitigating potential impacts [121][123]