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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Chevron heading to West Texas, where the oil giant will

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Speaker 2: build its first AI data center power project. The facility

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Speaker 2: expected to be operational in twenty twenty seven as the

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Speaker 2: energy company looks to capitalize on the boom in AI.

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Speaker 2: Here to discusses the man in charge. His name is

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Speaker 2: Mike Worth, the CEO of Chevron. Mike, great to see

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Speaker 2: you in person, Katie.

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Speaker 3: It's good to be here.

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Speaker 2: So let's talk about, of course, this AI Data center

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Speaker 2: power project, because I have to imagine this decision wasn't

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Speaker 2: taken lightly to enter the energy or the power business.

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Speaker 2: That is, so walk us through the decision tree there. Sure. Well.

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Speaker 3: First of all, we had an investor date today, our

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Speaker 3: first one in almost three years.

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Speaker 2: Congratulations, Thank you.

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Speaker 3: We had a chance to talk about Chevron being bigger, stronger,

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Speaker 3: and better than ever with growing free cash flow and

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Speaker 3: earnings over the next five years, free cash flow growing

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Speaker 3: it greater than ten percent compound daniel growth rate, driven

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Speaker 3: out of our core business and then supplement and by

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Speaker 3: opportunities like the one that you refer to. We started

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Speaker 3: working on this at least a couple of years ago,

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Speaker 3: as we could see the coming boom in AI and

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Speaker 3: the need for more power to support the data center

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Speaker 3: build out, and anticipated that grid connected power could become

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Speaker 3: increasingly problematic as people saw their electricity rates go up.

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Speaker 3: And so our project is disconnected from the grid. It

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Speaker 3: will serve only a dedicated customer for AI. And of

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Speaker 3: course the customers in the sector want large scale, they

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Speaker 3: want it soon, and so we've made commitments to several

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Speaker 3: large serbans. A lot of engineering work underway, site acquisition

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Speaker 3: and permitting work underway, and we shared that with investors today.

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Speaker 2: And so this of course will be operational by twenty

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Speaker 2: twenty seven. That's the plan. Who knows what the world

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Speaker 2: will look like. And you think about Chevron obviously synonymous

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Speaker 2: with oil and gas, but should we see this AI

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Speaker 2: boom really continue and maintain sort of the trajectory that

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Speaker 2: it's on. How big do you think that the power

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Speaker 2: business within Chevron could be?

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Speaker 3: Yeah, it's hard to say. This is a first step.

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Speaker 3: It's not been a core part of our strategy historically,

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Speaker 3: and we have great respect for people that generate power,

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Speaker 3: that serve utilities and customers. Today, that's not the market

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Speaker 3: that we're going into. We're really talking about something that

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Speaker 3: we do to support our own business. We have five

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Speaker 3: gigawatts of power generation we run twenty four hours a

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Speaker 3: day three and sixty five days a year to support

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Speaker 3: facilities in remote locations that don't have access to the grid.

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Speaker 3: This is a very similar concept where we will set

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Speaker 3: up a facility that will have natural gas supply for

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Speaker 3: the turbines and data center customers clustered around it that

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Speaker 3: it can serve it a high degree of reliability, just

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Speaker 3: as we do for our operations around the world, and

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Speaker 3: so if it works for us, we would like to

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Speaker 3: extend that and see if it can become a larger

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Speaker 3: part of our business. This first step one that will

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Speaker 3: learn a lot.

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Speaker 1: And just to be clear, I mean most of this

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Speaker 1: gas you more or less have, right, I mean it's

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Speaker 1: there on your own properties. Right.

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Speaker 3: This is in West Texas, the heart of the Permium basin,

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Speaker 3: where not only is there a lot of oil production,

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Speaker 3: pot of gas that comes with that. Often this gas

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Speaker 3: can be discounted because it's far away from the market center.

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Speaker 3: We need to get into pipelines and move it sort

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Speaker 3: of create a demand hub close to where all this

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Speaker 3: gas is and will be for many decades. Is a

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Speaker 3: way to use that and not need access to all

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Speaker 3: that trans.

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Speaker 1: The connectivity there though the idea of being able to

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Speaker 1: transport that where it needs to go is that there

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Speaker 1: or will it be there soon?

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Speaker 3: Well, one of the interesting things is it's actually easier

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Speaker 3: to build fiber networks than it is pipelines, and so

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Speaker 3: you can locate the data centers close to the gas

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Speaker 3: and the power, you can connect into the fiber infrastructure,

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Speaker 3: and moving electrons is easier than moving molecules, and so

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Speaker 3: that is kind of at the heart of this location

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Speaker 3: and the reason that we're looking at West Texas.

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Speaker 2: And let's talk about where else you're looking at outside

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Speaker 2: of West Texas, because I know that you've said that

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Speaker 2: you're going to increase exploration spending by about fifty percent.

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Speaker 2: I know that you went into a little bit of

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Speaker 2: detail in the Investor Day about where in the world

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Speaker 2: you're looking. But where do you think that the most

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Speaker 2: promising locations are at this point?

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Speaker 3: Well, we've acquired a lot of new acreage around the world,

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Speaker 3: in South America where there's been a lot of success,

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Speaker 3: in Guyana, in Brazil, We've acquired acreage in West Africa

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Speaker 3: where there's been success in Namibia, where the largest leaseholder

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Speaker 3: in the Gulf of America today, where there's a long

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Speaker 3: history of success and we're one of the largest producers.

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Speaker 3: And we're also interested in the Mediterranean, where there are

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Speaker 3: some areas that remain under explored. So we're exposed to

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Speaker 3: a number of interesting basins around the world, and I

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Speaker 3: think over the next several years you'll see increased exploration

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Speaker 3: activity in all of those. And when it.

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Speaker 2: Comes to new countries entry into new countries, you think

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Speaker 2: about Iraq, you think about Libya. Does did Trump administration

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Speaker 2: play any role or in helping to guide along those negotiations.

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Speaker 3: I would say there's a role in guiding the negotiations,

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Speaker 3: but there's certainly been a role in opening the door.

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Speaker 3: I think we see countries around the world have a

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Speaker 3: rendered interest in doing business with the US. That's both

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Speaker 3: bringing investment dollars to the US and also opening up

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Speaker 3: their countries to investors from the US. And I have

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Speaker 3: any number of examples where we have operations around the

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Speaker 3: world and we've seen new opportunities that have developed for

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Speaker 3: our industry and others to invest in both directions. And

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Speaker 3: so I think the Trump administration has played a critical

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Speaker 3: role in opening doors and creating an environment where people

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Speaker 3: are looking to do these kinds of deals.

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Speaker 1: Based on what you can see, how far out you

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Speaker 1: can see, our economic condition is going to be supportive

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Speaker 1: not only to what you were just talking about there,

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Speaker 1: but also some of the projections that you gave investors

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Speaker 1: today with reguards to free cash flow, etc.

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Speaker 3: Absolutely, demand for energy will only grow into the future.

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Speaker 3: In fact, the International Energy Agency today updated their scenariosoting

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Speaker 3: laying out a scenario based on current policies that shows

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Speaker 3: demand for oil and gas growing to a twenty to

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Speaker 3: fifty very different than what some of their prior scenarios

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Speaker 3: have indicated. We've long held a view that that is

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Speaker 3: more likely than some of these other scenarios. So the

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Speaker 3: underlying demand is very strong. Our portfolio was resilient even

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Speaker 3: at a lower oil price. We can generate strong free

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Speaker 3: cash flow. We've increased our dividend thirty eight years in

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Speaker 3: a row. We've repurchased shares twenty two or eighteen of

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Speaker 3: the last twenty two years, so we've got a very

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Speaker 3: strong track record of distributing free cash to shareholders, and

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Speaker 3: at any price, we're well positioned to do that well.

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Speaker 1: Not at any price. I mean, I mean we're very reasonables.

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Speaker 1: I mean we're at sixty bucks more or less for

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Speaker 1: Brent and WTI is the idea that that for some

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Speaker 1: reason came down into the fifties or even below. Is

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Speaker 1: that still doable?

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Speaker 2: Oh?

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Speaker 3: Yeah, absolutely. Our dividend. We increased our dividend during COVID

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Speaker 3: when prices were in the teams and went negative for

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Speaker 3: a while. And so we've got to prepare for the

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Speaker 3: volatility of commodity business. That's the business that we're in,

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Speaker 3: and we've built a portfolio that will withstand the cycles

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Speaker 3: of this business well.

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Speaker 2: With that in mind, I mean you talk about demand,

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Speaker 2: it looks pretty good there, but then you think about

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Speaker 2: the supply side of the equation. I know that you

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Speaker 2: said earlier today that LNG spot prices in particular are

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Speaker 2: going to be pressured due to high supply. How does

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Speaker 2: that sort of dynamic overall look going into twenty twenty six,

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Speaker 2: Does it ever come more into balance?

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Speaker 3: Well, I think oil prices in twenty twenty six are

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Speaker 3: likely to feel more pressure than LNG prices. There's a

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Speaker 3: lot of oil supply that's coming back from the OPEC

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Speaker 3: plus countries that had been holding supply back, and so

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Speaker 3: that has brought crude prices lower than they had been

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Speaker 3: for the prior period of time. LNG is a little

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Speaker 3: bit of a longer dated story where there are a

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Speaker 3: lot of new projects underway in the Middle East and

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Speaker 3: in the United States that will add supply in large

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Speaker 3: chunks over the second half of this decade, and demand

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Speaker 3: tends to grow in a linear fashion and you get

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Speaker 3: a step change of new supply, and so there's a

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Speaker 3: period of time when it would appear we're going to

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Speaker 3: see more supply coming into the market than demand we'll

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Speaker 3: be able to absorb. That probably results in lower spot prices.

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Speaker 3: That's the commodity business that we're in.

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Speaker 1: Are there are there any sort of technological improvements that

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Speaker 1: you see that actually makes the supply side of it

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Speaker 1: a little bit more efficient.

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Speaker 3: Well, one of the things we talk a lot about

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Speaker 3: today was not the power demand of AI, but what

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Speaker 3: we can do with AI to improve our business, to

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Speaker 3: make our business safer, to reduce emissions, to improve asset productivity,

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Speaker 3: to improve efficiency, to improve our ability to explore for

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Speaker 3: and find resources. And I think the story of technology

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Speaker 3: in our industry is it only goes in one direction.

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Speaker 3: It helps us do things at lower cost at higher efficiency.

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Speaker 3: And I think that story will be rewritten again with

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Speaker 3: AI leading the next leg of that journey.

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Speaker 1: With regards to leading Chevron. And you've done a great

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Speaker 1: job in investors and re rewarding you your plans right

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Speaker 1: now to stick around.

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Speaker 3: I'm happy. I've got a full plate and my plans

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Speaker 3: are to stick around as long as the board will happen.

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Speaker 1: Yes,