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Chevron(CVX) - 2025 Q1 - Earnings Call Transcript
CVXChevron(CVX)2025-05-02 15:00
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Financial Data and Key Metrics Changes - Chevron reported earnings of 3.5billionor3.5 billion or 2 per share for the first quarter, with adjusted earnings of 3.8billionor3.8 billion or 2.18 per share, reflecting a 200millionincreasefromthepreviousquarter[11][12]−Cashreturnedtoshareholdersreached200 million increase from the previous quarter [11][12] - Cash returned to shareholders reached 6.9 billion through dividends and buybacks, marking twelve consecutive quarters of over 5billionreturned[6][7]−OrganicCapExwas5 billion returned [6][7] - Organic CapEx was 3.5 billion, the lowest quarterly total in two years, while inorganic CapEx was approximately 400million[11][12]BusinessLineDataandKeyMetricsChanges−Adjustedupstreamearningsremainedflatcomparedtothelastquarter,withhigherrealizationsoffsetbylowerliftingsandaffiliateearnings[13]−Adjusteddownstreamearningsincreasedduetoimprovedrefiningmarginsandlowermaintenancecosts[13]−Firstquarteroilequivalentproductionwasflatcomparedtothepreviousquarter,withgrowthexpectedtoresumeinthePermianinthesecondquarter[14]MarketDataandKeyMetricsChanges−TheexpansionofthePasadenarefineryhasstrengthenedtheGulfCoastvaluechain,allowingforincreasedproductioncapacity[10]−ThecompanyachievedfirstoilatBallymore,withexpectationstoincreaseproductionto300,000barrelsofoilequivalentperdayby2026[9][49]−Chevronhasaddedover11millionnetexplorationacressincethestartoflastyear,enhancingitsfutureopportunitypipeline[10]CompanyStrategyandDevelopmentDirection−Chevron′sstrategyfocusesonexecutiontounlockindustry−leadingcashflowgrowth,withadisciplinedapproachtocapitalandcostmanagement[8][14]−Thecompanyaimstodelivergrowthprojectsexpectedtogenerateanincremental400 million [11][12] 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 [13] - Adjusted downstream earnings increased due to improved refining margins and lower maintenance costs [13] - First quarter oil equivalent production was flat compared to the previous quarter, with growth expected to resume in the Permian in the second quarter [14] Market Data and Key Metrics Changes - The expansion of the Pasadena refinery has strengthened the Gulf Coast value chain, allowing for increased production capacity [10] - The company achieved first oil at Ballymore, with expectations to increase production to 300,000 barrels of oil equivalent per day by 2026 [9][49] - Chevron has added over 11 million net exploration acres since the start of last year, enhancing its future opportunity pipeline [10] Company Strategy and Development Direction - Chevron's strategy focuses on execution to unlock industry-leading cash flow growth, with a disciplined approach to capital and cost management [8][14] - The company aims to deliver growth projects expected to generate an incremental 9 billion of free cash flow in 2026 [15] - Chevron's balance sheet remains strong, with a net debt ratio of 14%, well below the target range of 20% to 25% [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and commodity cycles, emphasizing the importance of cost and capital discipline [6][8] - The company anticipates share repurchases of 2.5billionto2.5 billion to 3 billion in the second quarter, maintaining a robust buyback program [16][18] - Management highlighted the positive outlook for negotiations regarding the concession extension in Kazakhstan, indicating a strong partnership with the government [22][23] Other Important Information - Chevron's capital expenditure budget for 2025 represents a 2billionreductionfromthepreviousyear,withtargetedstructuralcostsavingsof2 billion reduction from the previous year, with targeted structural cost savings of 2 billion to $3 billion by the end of next year [8] - The company is actively engaging in the power solutions sector, with plans to secure competitive returns on new projects [92][95] 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 thirty days and discussing future concession negotiations with the Kazakh government [20][22] Question: Position in California refining market - Management noted a strong position in California with two well-scaled refineries, while expressing concerns over state policies affecting investment [26][27] Question: Financial framework and buyback strategy - Management reiterated the importance of maintaining a consistent buyback strategy through cycles, with a focus on dividend growth and capital discipline [32][34] Question: Impact of macroeconomic factors on production - Management discussed the implications of potential production losses in Venezuela and the dynamics of OPEC+ on market share [41][46] Question: Future production in the Gulf of Mexico - Management highlighted the successful startup of Ballymore and the expectation of ramping production to 300,000 barrels per day [49] Question: Permian well performance and outlook - Management reported strong performance in the Delaware Basin and anticipated similar results for 2025 [52][55] Question: Update on power ventures - Management confirmed strong demand for power solutions and progress towards final investment decisions by year-end [92][95] Question: Tariff situation and cost control - Management is actively monitoring tariff impacts and taking actions to mitigate costs [120]