WEBVTT - Chevron CEO Mike Wirth Talks Company's Future

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<v Speaker 1>Chevron missing profit estimates despite record production in the permium basin.

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<v Speaker 1>The company also announcing plans to move its headquarters from

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<v Speaker 1>California to Texas. Now, the disappointing quarter adding pressure to

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<v Speaker 1>the company's fifty three billion dollar effort to acquire has

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<v Speaker 1>Ploomberg's alex Steel caught up with Chevron CEO Mike Worth.

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<v Speaker 2>We had some high maintenance. We had a couple of

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<v Speaker 2>events at L and G facilities that required maintenance during

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<v Speaker 2>the quarter, which brought liftings down, and so it's a

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<v Speaker 2>little bit hard I think for analysts to anticipate that.

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<v Speaker 2>We've tried to communicate those events, but we had that

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<v Speaker 2>refining margins came off hard in some of our key markets,

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<v Speaker 2>and then there were some one time items well write

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<v Speaker 2>offs and tax items that are very difficult to forecast.

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<v Speaker 2>So these are non recurring items that made the quarter

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<v Speaker 2>a little bit light versus expectations. But the underlying execution

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<v Speaker 2>is good and as I said, the growth remained strong.

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<v Speaker 3>So now you do have to wait till May twenty

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<v Speaker 3>twenty five for the arbitration to work out. When it

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<v Speaker 3>comes to that deal, why is this taking so long

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<v Speaker 3>if it's a simple issue or it's an issue of scheduling.

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<v Speaker 3>What's the problem.

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<v Speaker 2>International arbitration often is a lengthy process. Selecting the arbitrators,

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<v Speaker 2>getting schedules aligned between all the parties and the arbitrators

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<v Speaker 2>is more complex sometimes than one might expect. We do

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<v Speaker 2>continue to see this as a straightforward contract interpretation question,

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<v Speaker 2>and we continue to remain confident that the arbitration will

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<v Speaker 2>affirms and Chevron's interpretation of it. But you're correct, it

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<v Speaker 2>is taking more time than we had originally anticipated in

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<v Speaker 2>and that's unfortunately not unusual when you get into international arbitration.

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<v Speaker 3>Moving to some of the intricacies of the quarter, you

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<v Speaker 3>mentioned it that record production for Chevron and the Permian,

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<v Speaker 3>which kind of leads me to you, guys moving your

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<v Speaker 3>headquarters to Texas is part of that needing to be

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<v Speaker 3>closer to sort of the core business of operations right now.

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<v Speaker 2>Well, it's really to be closer to the core, you know,

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<v Speaker 2>epicenter of our industry. Houston is the energy capital of

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<v Speaker 2>the world. We have key partners that are there, suppliers, vendors,

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<v Speaker 2>the universities that we do a lot of research with

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<v Speaker 2>and recruiting from are there, and so it's a natural

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<v Speaker 2>place for companies in our industry to have their their

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<v Speaker 2>home office and headquarters. And in fact, over the last

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<v Speaker 2>many years, we've seen our Houston based employee population go

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<v Speaker 2>up in our California based employee population come down. And

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<v Speaker 2>this is really concluding a process that has been underway.

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<v Speaker 2>It's it's you know, we know how to work around

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<v Speaker 2>the world in kind of a virtual environment, but there's

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<v Speaker 2>no substitute for being face to face with people in

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<v Speaker 2>terms of collaboration, innovation, mentoring and development, external relations, in engagement,

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<v Speaker 2>and Houston really is the place for our company to

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<v Speaker 2>be for all of those reasons. We do have a

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<v Speaker 2>big business footprint in Texas, which is now larger than

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<v Speaker 2>our business footprint in California. For many many years, that

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<v Speaker 2>was not the case. California was our home, it was

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<v Speaker 2>our birthplace, and it was where our largest business footprint is.

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<v Speaker 2>And so that's certainly a change that has occurred. But

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<v Speaker 2>the primary motivator here is to get our people together

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<v Speaker 2>to increase engagement and collaboration.

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<v Speaker 3>So pro Texas versus anti California.

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<v Speaker 2>I wouldn't necessarily put it that way. I would look,

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<v Speaker 2>we've had some policy differences with California, and certainly California

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<v Speaker 2>and Texas approach energy very differently, and so we speak

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<v Speaker 2>up on that. We advocate for policies that keep prices low,

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<v Speaker 2>that keeps supply reliable, that encourage an investment, and California's

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<v Speaker 2>advanced policies that do the opposite. And so we've certainly

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<v Speaker 2>expressed our views that we don't think that's good for

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<v Speaker 2>the California economy. But this isn't a move about politics.

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<v Speaker 2>It's a move about what's good for our company to

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<v Speaker 2>compete and perform.

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<v Speaker 1>And I'm pleased to say that alex Steel joins US now.

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<v Speaker 1>Great interview, of course, And I have to say I

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<v Speaker 1>didn't know that Chevron was headquartered in California. It seems

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<v Speaker 1>like Texas would be the natural home here.

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<v Speaker 3>It does, But remember the Premium wasn't always the Permian.

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<v Speaker 3>The Permium was just some rock that no one drilled.

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<v Speaker 3>So now that that's become so important, whether through Exon

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<v Speaker 3>and the Pioneer acquisition or through Noble and a PDC

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<v Speaker 3>acquisition for Chevron, it does make sense from that aspect. Also,

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<v Speaker 3>now the US is a huge exporter of energy, right,

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<v Speaker 3>so it also kind of makes sense for you'd be

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<v Speaker 3>headquartered in the Gulf Coast, which is where so much

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<v Speaker 3>is also being exported. Plus they're starting a Golf of

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<v Speaker 3>Mexico asset, so that's really big for them now as well.

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<v Speaker 3>So from that perspective, it'll be a slow few years

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<v Speaker 3>until this happens.

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<v Speaker 1>But that's not necessarily politics that's driving them there.

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<v Speaker 3>I mean, yes, no, I mean I don't think politics

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<v Speaker 3>helps it either.

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<v Speaker 4>At the end of the day, I want to talk

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<v Speaker 4>a little bit about the pressure here that Chevron is

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<v Speaker 4>under when it comes to HESS. This is a massive

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<v Speaker 4>fifty three billion dollars deal, a lot of delays. How

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<v Speaker 4>did they really respond to that uncertainty?

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<v Speaker 3>I mean, the problem is it keeps getting pushed out,

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<v Speaker 3>and that's really the problem, Like that it went into

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<v Speaker 3>FTC review. Yeah, sure, the arbitration was definitely a surprise,

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<v Speaker 3>but that it keeps getting pushed out and the lack

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<v Speaker 3>of visibility is actually quite difficult. And the problem is

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<v Speaker 3>it just highlights what Exxon has and which Chevron doesn't.

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<v Speaker 3>And if you're an oil investor, can you really own

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<v Speaker 3>both of those stocks in your portfolio? If you can, great,

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<v Speaker 3>If you can't, do you go with the one that

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<v Speaker 3>has Guyana or you go with the one that might

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<v Speaker 3>not have Guyana until May of twenty twenty five, and

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<v Speaker 3>that just kind of delays and pushes it out. Now,

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<v Speaker 3>Mike Worth is going to say, but we have a

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<v Speaker 3>really strong production profile in the Permian, we have really

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<v Speaker 3>strong overseas assets, we have Gulf of Mexico, there are

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<v Speaker 3>ten ten geese operation in Kazakhstan, huge cost overruns. But

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<v Speaker 3>he's going to talk pretty positively about that production profile.

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<v Speaker 3>But you know what, it's still not Guyana, and that's

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<v Speaker 3>really where the growth profile is going to be coming from.

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<v Speaker 1>Well, this gets to what you were saying in the

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<v Speaker 1>commercial break, right, GINALI like, is this a paar trade

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<v Speaker 1>that's developing? How are investors thinking about this?

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<v Speaker 3>I mean, I don't want to say yes, but I

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<v Speaker 3>don't want to say no to that. I mean, I

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<v Speaker 3>don't know.

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<v Speaker 1>If you're doing a very good economist, thank you.

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<v Speaker 3>I don't know if it's easy to be like short Chevron,

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<v Speaker 3>like buy Exon. I don't think it's that clear in

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<v Speaker 3>any way whatsoever, because you know, Chevron isn't just maybe Guyana,

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<v Speaker 3>like they do have a behemoth assets in the Permian.

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<v Speaker 3>They have great stuff going on there as well. But

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<v Speaker 3>that is a tough asset to then live with out

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<v Speaker 3>they're going to say they can live without it, but so.

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<v Speaker 4>Can you explain a little bit more behind the stock

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<v Speaker 4>both today, because ultimately it wasn't just about Hess.

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<v Speaker 3>It wasn't just about Hess, So it was about a

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<v Speaker 3>couple of things, largely about us, but also they had

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<v Speaker 3>a huge perd. They had a huge earnings miss and

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<v Speaker 3>a large part of that is due to some international

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<v Speaker 3>earnings revenue miss and you heard Mike Worth talking about

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<v Speaker 3>that on the tape that some of it was like

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<v Speaker 3>a one off. He doesn't necessarily expect that to continue.

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<v Speaker 3>That's one off tax things like the stuff you wouldn't

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<v Speaker 3>have had already on before. What we do know is

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<v Speaker 3>a Tekzig in a Kazakhstan has had a lot of

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<v Speaker 3>cost overruns over the years. It's supposed to be on track,

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<v Speaker 3>but that's always going to be a question mark. You've

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<v Speaker 3>also had a Chevron be hit really hard with the

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<v Speaker 3>war in Israel and Gaza because they have a natural

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<v Speaker 3>gas deposit over there as well, and the Gorgon Facility

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<v Speaker 3>energy facility over in Australia has also had a lot

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<v Speaker 3>of difficulties. So there are just production stuff that is happening,

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<v Speaker 3>as you do when you're an oil company, you always

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<v Speaker 3>have production stuff that you got to maintain and take

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<v Speaker 3>care of.

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<v Speaker 4>What about renewables, I know that this did come up

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<v Speaker 4>in fits and starts, but I understand that they took

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<v Speaker 4>a little bit of a different approach here in how

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<v Speaker 4>they address the question around.

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<v Speaker 3>Renewables, so particularly when it comes to Xon. Actually, so

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<v Speaker 3>they actually address this on the call and saying the

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<v Speaker 3>complexity of low carbon markets is particularly challenging, and they

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<v Speaker 3>talk about how it involves new technology and new markets

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<v Speaker 3>and not an existing customer base. That is very different

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<v Speaker 3>than the European guys like shel MVP and the approach

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<v Speaker 3>that they've taken. They invested heavily renewables, are now pulling

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<v Speaker 3>back a little bit and sort of not moving away

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<v Speaker 3>from oil and gas in the same way. Chevron is

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<v Speaker 3>somewhere like in the middle. I mean, they have their

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<v Speaker 3>own venture profile where they can put money into new

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<v Speaker 3>cool stuff. They have a hydrogen project that's gonna they're

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<v Speaker 3>working on. So I think that for both chef On

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<v Speaker 3>an Exxon, what they're doing is they're trying to stick

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<v Speaker 3>to their knitting, Like what can I do in an

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<v Speaker 3>energy transition space, that already is stuff that I'm doing,

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<v Speaker 3>like I'm drilling stuff out of rocks, I'm putting stuff

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<v Speaker 3>in rocks, Like how can I keep doing that when

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<v Speaker 3>it comes to the energy transition And that's sort of

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<v Speaker 3>that approach versus like hey, let me go buy this

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<v Speaker 3>wind farm.

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<v Speaker 4>For example, Alex, we thank you so very much for

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<v Speaker 4>your time, for your reporting, for your great interview as well.

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<v Speaker 4>Let us, of course, Bloomberg's Alex Steele