Chevron Corporation Barclays 40th Annual Energy-Power Conference
Review the key takeaways and the transcript of this earnings call.
- Chevron is increasing investment in Venezuela, aiming to double production to over 600,000 barrels per day by 2031, with a plateau expected between 600,000 and 700,000 barrels per day.
- Chevron plans to invest $7 billion over five years in Venezuela, leveraging existing infrastructure without major new capital projects.
- Chevron negotiated new competitive and sustainable fiscal terms in Venezuela, including legal provisions for contract stability and international arbitration rights.
- Chevron has improved its balance sheet post-Hess acquisition, prioritizing dividend growth, efficient capital investment, balance sheet strengthening, and share buybacks within a $10 billion to $20 billion range.
- Chevron’s US shale and tight business achieved a 25% lower capex intensity guidance for 2026 versus 2025, driven by operational integration, improved reliability, drilling efficiency, and technology adoption.
- Chevron delivered $3 billion in structural cost reductions six months ahead of schedule, driven by portfolio optimization, organizational changes, and technology use.
- The Tengizchevroil (TCO) asset increased oil capacity from 260,000 to 320,000 barrels per day after a turnaround, with ongoing efforts to identify further incremental capacity gains.
- Chevron is actively negotiating contract terms for TCO with no current showstoppers, though no timeline was provided.
- Chevron’s exploration portfolio has expanded with 35% more acreage last year and 10 million acres added this year, focusing 50% near infrastructure and 50% on frontier areas including Guyana, West Africa, Eastern Mediterranean, and the Middle East.
- In the Middle East, Chevron is negotiating exclusive commercial terms for three opportunities in Iraq: the West Qurna 2 producing asset, the adjacent Nazaré exploration field, and a pipeline project.
- Chevron is advancing a gigawatt-scale power plant in the Permian, leveraging unique capabilities including abundant gas, turbine access, operational experience, and strong stakeholder relationships.
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Transcript
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All right. I think I will start a minute early and just welcome everyone to the 40th Barclays Energy-Power Conference. My name is Betty Jiang. I am covering the integrated majors and E&P space at Barclays. Note the theme of this year's conference is the Global Race for Energy. I think given all the disruptions that we see, we realize that all energy of all sources are needed. So have a pretty exciting 3 days of meetings ahead of us. So welcome again, and thank you for being here. This year, we are trying something a bit new. We have an audience polling questions where we will be asking you to participate in answering some questions that I will be putting on the board on some of the sessions that you will be seeing in this conference. But before I start, I do want to introduce Eimear Bonner from Chevron.
Chevron, thank you so much for kicking us off for this track on the majors and E&Ps. Please join me on stage, and we will start on some questions before we get into the fireside conversation. Let's see. Ooh, let's see if this is going to work. So we will have 3 questions from audience polling, and you will have clickers on every one of your seats, and all you have to do is click the number corresponding to your view. Sorry, this is not the first question for this session. It should be about mid-cycle. What mid-cycle Brent oil price are you using for your equity evaluation? Can we get to the right questions? All right. Well, clearly, we will try to figure that out for the next session. But Eimear, thank you so much for being here.
I think I want to kick off the conversation with Venezuela because that is clearly the big news from this summer over the last month about Chevron's increasing investment in the country. So I want to start off the conversation there. Why now, and what do you see that is so exciting about going into that country now?
Well, thanks, Betty, for having me here this afternoon. Good afternoon, everyone. We are excited because the new terms unlock competitive low-cost growth in Venezuela. So that is why we are excited. We have got new terms, we have got new legal provisions, and we are building on 100 years of history in Venezuela and 3 joint ventures that are operating really well. So that is what excites us. Why now? We were able to negotiate new terms. In addition to that, we were able to get additional acreage as well. That started back in April when we executed a swap and got some contiguous acreage and more working interest. Then as part of the deal that we announced last week, we also got 2 other blocks, Carabobo One and Two. So we are just really excited.
This is an enormous resource base, low cost, total cost less than $20 a barrel, lots of run room. That is why we are excited, and that is why we are growing.
Great. That is a pretty big growth when you are talking about doubling production to over 600,000 barrels per day by 2031. Can you just talk about the ramp-up cadence? Is there a plateau level, and how do you think about the cash flow contribution from that asset over time?
Yeah. Well, the production will grow, and the cash flow will grow with the production. That is really the punchline. If I put it into context of the production today, we are producing about 280,000 barrels of oil per day, and so we anticipate growing that to 600,000 barrels a day. So there is obviously a ramp over time. We intend to increase the number of rigs, so more than double the number of rigs with that. In terms of investment, we intend to invest on a growth basis, $7 billion over that five-year period. So that will take us into the early 2030s. 2031 is when we will likely hit 600,000 barrels a day, and that will be close to plateau levels. We anticipate plateau will be between 600 and 700.
The large resource base gives us the opportunity to extend that plateau from five to 10 years, and that is just primary recovery. So that is just the initial recovery from the reservoirs. There is a lot more upside there. So this is growth at low cost and very attractive returns. The ramp will happen over the next five years, and then from the next decade, we will be moving into plateau. I think the best way to think about this is we are developing or intend to develop this like the way we developed the Permian. It really is just another factory-type development. There will be a period of investment and a period of plateau. So we are looking forward to adopting and scaling and implementing all of the lessons learned from the factory experience that we have.
Right. No, that makes sense. I think another area that we think about getting into this asset is it will require a lot of infrastructure, and there are still questions around is the infrastructure ready for this type of growth? Can you just speak to the availability of the infrastructure in the asset now and how much investment that is needed in order to enable this level of growth?
The infrastructure is in great shape. The equipment has been maintained over the last few years. Almost 3 years ago, when we implemented a capital-efficient model for investment into our JVs, we have been dedicating, since that time, we have been dedicating OpEx and CapEx to the fields. That has allowed us to drill and grow production, but it has also allowed us to do maintenance programs and take care of the infrastructure and ensure that all our asset integrity programs are in place, process safety programs are in place, that we have been doing turn-arounds. Our infrastructure is in good shape. We do not need a new infrastructure or significant infrastructure to be built to deliver the growth that we have guided to.
Again, think of this as a factory where the infrastructure expansions will be more like small tie-ins of pipelines and utilities, just as you would build out in the Permian. No major capital project required for us to deliver the doubling of production in the next 5 years.
Got it. Last one on Venezuela before we move on is the terms. Clearly, you have to negotiate with the government to get to the point in order to move forward, to invest. How confident do you feel about the sustainability of the terms that you have and the ability to maintain these fiscal terms in the long run so that the asset can compete within the portfolio for a long time?
Yeah. Well, the new terms obviously unlock the competitiveness, and that gives us the assurance to grow. Venezuela took a large step when they implemented the Organic Hydrocarbons Law. What that did early in the year was provide the opportunity then to negotiate on the terms, the terms that ultimately made the difference for us in terms of growing production and increasing investment. Terms such as royalty, terms such as taxes. Think of it overall, how much is split between the government and the investor. Through that negotiation, we were able to get to a very competitive place, and the Venezuelan team and government was open to looking at the global benchmarks, and they realized that for investment to occur in their country, the investments had to compete for capital, along with all other options in our portfolio and all other options around the world.
They worked with us actively, and we've got to a great place where this is a win for Venezuela, and this is a win for the investor. Overall, it's a win for the U.S. in terms of energy security. So a win-win-win is how Mike described it, and I think it really points to that. In addition to the new terms, there was a lot more to the announcement last week as well. We also got more provisions. Think of them as strengthening our legal provisions so that we have stability clauses in those contracts that protect the royalty and taxes and terms that we have negotiated. Those protections will enable those terms to endure across administrations. In our business, we think about the long term.
We see administrations change in this country and all around the world, and we have to ensure they endure. These type of revisions that are as strong as what we have in other parts of the world, in this country, help protect that. That should give the investor assurance that these investments are solid. In addition, we also got the right to international arbitration, which is a provision that we typically see in oil and gas contracts around the world. Those things really came together, the improved returns, the strengthened legal provisions, and obviously the competitive positioning of this large resource base in our portfolio. When those three things came together, that's what got us excited about leaning in.
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