Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: President Donald Trump touting lower prices.
Speaker 3: We're down lower than we've been in seven years, and
Speaker 3: gasoline prices and oil prices, not just the three states
Speaker 3: that I talk about. With one ninety ninety.
Speaker 1: Gallon, how would you like to have one ninety nine?
Speaker 3: Do you know that's that's the equivalent of a very.
Speaker 2: Major tax cut, you know, when you get the energy
Speaker 2: prices down, the national average for gas falling below three
Speaker 2: dollars a gallon for the first time since twenty twenty one.
Speaker 2: Mike Worth, the CEO of Chevron, joins us now for
Speaker 2: an exclusive interview. I am so glad that we're going
Speaker 2: to speak with you, Mike. Thank you so much for
Speaker 2: being here with us.
Speaker 3: You're welcome, Lisa.
Speaker 2: So let's start about that one ninety nine a gallon.
Speaker 2: It might be great for a lot of people in
Speaker 2: terms of filling up their gas tanks. A real question
Speaker 2: around drill, baby, drill, and how much you're incentivized to
Speaker 2: increase production given the lower cost of all.
Speaker 3: Well, you know, we make our investment plans on a
Speaker 3: long term basis. We look at supply and demand well
Speaker 3: out into the future, and so the price of oil
Speaker 3: today can affect short term financial performance of the company,
Speaker 3: but it really doesn't play as much into some of
Speaker 3: the longer term investment plans as we look down the road,
Speaker 3: not really out the window as we decide what the
Speaker 3: capital program looks like.
Speaker 1: But how do you reconcile the too sure doing a
Speaker 1: lot of exploration internationally, and to Lisa's point, prices are
Speaker 1: low and potentially are going to even go lower.
Speaker 3: Well, exploration is a long cycle business. We just brought
Speaker 3: a project online in the Gulf of America last year
Speaker 3: where the discovery was made twenty years prior, and so
Speaker 3: the timeline between when you actually make a discovery, when
Speaker 3: you appraise that and you ultimately develop and bring it
Speaker 3: to market can be years or even decades. And so
Speaker 3: we really have to take that long view on the business.
Speaker 3: And you know, in the short term we'll keep cost tight.
Speaker 3: We've got to industry leading free cash flow over the
Speaker 3: next few years as we'ringing cost down, capital spending down,
Speaker 3: increase the synergies on the hes transaction. So we're going
Speaker 3: to deliver strong financial performance through the cycle.
Speaker 1: Based on what the IA has said recalibrated where they
Speaker 1: see oil demand growing. It was twenty thirty, now it's
Speaker 1: twenty fifty. Ope says they had a rendezvous with reality,
Speaker 1: seeing that the world needs a lot more of this,
Speaker 1: a lot more fossil fuels.
Speaker 2: If outlook is.
Speaker 1: So strong, should Chevron, should all.
Speaker 3: Of these big oil companies?
Speaker 1: So do they increasing more of that investment?
Speaker 3: Well, on the idea, even a blow broken clock is
Speaker 3: right twice a day. So they have finally acknowledged what
Speaker 3: we've long known, which is that the world will continue
Speaker 3: using oil and gas for many decades into the future.
Speaker 3: We are in that long cycle business and the capital
Speaker 3: spending amory has become more efficient in our industry. A
Speaker 3: decade ago, we were spending money on big projects. There's
Speaker 3: a lot of growth going on in shale at a
Speaker 3: relatively high cost structure, and the entire industry has found
Speaker 3: ways to standardize designs, simplify projects, and actually get more
Speaker 3: for every capital dollar that we spend, so the size
Speaker 3: of our capital spending doesn't necessarily correlate to the growth.
Speaker 1: The way that it would have in years gone by
Speaker 1: when it comes to expansion. The US government is backing
Speaker 1: this plan of Rock has to transfer Louke Oil stakes
Speaker 1: to an American company, So it's really only your x
Speaker 1: on how are those negotiations going.
Speaker 3: Well, I can't comment on commercial negotiations. What I will
Speaker 3: say is we've got a well established reputation as a
Speaker 3: good partner, as a world class operator in international locations.
Speaker 3: We're sought out as a partner in countries around the world.
Speaker 3: We got long history working in the Middle East, and
Speaker 3: we put a real premium on partnership and that goes
Speaker 3: to every country we work with and every company we
Speaker 3: work with.
Speaker 1: Can you talk about those assets though, do you think
Speaker 1: those would be good assets the Chevron portfolio?
Speaker 3: Well, we always look to strengthen our portfolio. Iraq is
Speaker 3: a country that's blessed with very substantial petroleum resources and
Speaker 3: some of the largest fields in the world, and so
Speaker 3: those are the kinds of things that we always look at.
Speaker 2: If you're talking about the capital profile and investments, and
Speaker 2: how it's become a lot more efficient to make the
Speaker 2: same kinds of investments and frankly the same kind of output.
Speaker 2: Where is this sufficiency coming from. Is it coming from
Speaker 2: artificial intelligence? Is is it coming from just better technology
Speaker 2: and getting oil and gas out of the ground.
Speaker 3: Yeah, So in shale, for instance, which is something the
Speaker 3: US has been a world leader. In a decade ago,
Speaker 3: break evens were seventy or eighty dollars a barrel. Today
Speaker 3: they're not even half of that, as we found ways
Speaker 3: to drill longer laterals, to optimize the spacing of wells,
Speaker 3: to complete wells at lower cost with greater production coming
Speaker 3: out of them. So it's a series of things. In
Speaker 3: the deep water, we've simplified and standardized designs, and what
Speaker 3: used to take thirty dollars a barrel or more in
Speaker 3: terms of cost of capital to go into a project
Speaker 3: now has been cut in half. And so it's not
Speaker 3: driven by AI yet. I do think over time we're
Speaker 3: going to see technologies like that continue this path and
Speaker 3: we're on We're going to get.
Speaker 2: To that in just a second. If that's the case,
Speaker 2: if you can get more even at a break even cost,
Speaker 2: it's a lot lower. Why has the rig count gone
Speaker 2: down so much? Why aren't there more rigs coming online
Speaker 2: given the capacity here in the United States?
Speaker 3: Because we can drill more feet per day with a
Speaker 3: rig today than we could in the past, and so
Speaker 3: rig count is not nearly as interesting a metric as
Speaker 3: how many feet a day you can drill, how many
Speaker 3: wells you can complete in a period of time, and
Speaker 3: so we're getting more work done out of fewer pieces
Speaker 3: of equipment.
Speaker 2: Today, you talk about how AI isn't delivering those efficiencies yet,
Speaker 2: the indication being that maybe down the road it might
Speaker 2: be the case. Where specifically are you thinking, and I'm
Speaker 2: saying at a time when Chevron's cutting staff, so are
Speaker 2: other people. Is this a headcount issue? Is this something else?
Speaker 2: How are you seeing it be deployed?
Speaker 3: Well, we're in I think we're still in the very
Speaker 3: early days of applying AI at scale in our industry.
Speaker 3: One of the things that's undeniable about AI is it
Speaker 3: needs lots of data. A company like ours has as
Speaker 3: much data as just about any company in the world,
Speaker 3: and so we've got decades and decades of geologic data,
Speaker 3: seismic data, operating data, all of which can be used
Speaker 3: to feed these models, to optimize operations, to improve our
Speaker 3: exploration success, to squeeze more production out of existing assets.
Speaker 3: And so we see huge opportunities to run our business
Speaker 3: with smarter technology, get better decisions made faster, and so
Speaker 3: there's certainly a cost dimension to this, but I think
Speaker 3: the real opportunity is going to be about the productivity
Speaker 3: of our assets in our business.
Speaker 1: You announced this project, the first of its kind, to
Speaker 1: provide natural gas fired power for data centers. Do you
Speaker 1: expect to do more of these projects and what's the
Speaker 1: update on this one in West Texas well.
Speaker 3: Certainly, the demand for power has been talked about now
Speaker 3: for the last year or so, as the constraint in
Speaker 3: the growth of AI data centers and the ambition for
Speaker 3: data centers at a scale we've never seen before has
Speaker 3: become a commonplace. The reality is we need large scale power.
Speaker 3: What we're working on is off the grid power because
Speaker 3: it's also becoming an issue with electricity prices and we're
Speaker 3: seeing this show up in consumer sentiment and elections. Our
Speaker 3: approach is to develop gigawatt scale power generation, not through
Speaker 3: the grid, but dedicated to data centers. We've got a
Speaker 3: project in a couple of sites actually we're working on
Speaker 3: in West Texas where we've got a lot of natural gas.
Speaker 3: We've got large gas turbines, the largest in the world
Speaker 3: being delivered starting next year, and we're deep into discussions
Speaker 3: with multiple customers that would like to cite data centers
Speaker 3: to use this power You're.
Speaker 1: At the center of a lot of politically very important
Speaker 1: converse stations, not just when it comes to AI and
Speaker 1: not just when it comes to Luke oil assets. Also
Speaker 1: Venezuela the only American company left. Can you give us
Speaker 1: an update on either conversation with the administration, your team
Speaker 1: on the ground. What is the future of Chevron in
Speaker 1: this country? Is the president's sense maybe he's going to
Speaker 1: send troops there?
Speaker 3: Yeah, I don't know what the presence intentions are. We've
Speaker 3: been in Venezuela for the last one hundred years. Our
Speaker 3: presence there, we believe is important for the local economy,
Speaker 3: the regional economy, the people of Venezuela. The Venezuelan oil
Speaker 3: is sought after by US refiners, and we operate there
Speaker 3: in full compliance with all US law and sanctions. We're
Speaker 3: in discussions with the administration to ensure that we stay
Speaker 3: in compliance, that they understand the value that our presence
Speaker 3: brings to America.
Speaker 1: And so you know that's and you plan on being
Speaker 1: there for the long term.
Speaker 3: Venezuela actually has more oil and gas resource than Saudi Arabia.
Speaker 3: It's right here in our hemisphere, very close to the
Speaker 3: Gulf coast. Refine and in complex and we've been there
Speaker 3: through ups and downs, and like many places in the world,
Speaker 3: we have to take a long view on our presence
Speaker 3: in countries like this.
Speaker 1: You talked about succession yesterday at this conference. How are
Speaker 1: you thinking about that as you talk to the board?
Speaker 1: Is there something you want to get done before you
Speaker 1: hand over the reins?
Speaker 3: Well, succession discussions begin on day one. I think for
Speaker 3: most CEOs it's part of a board's responsibility to be
Speaker 3: thinking about the next generational leadership. I have a long
Speaker 3: list of things, some of which have been accomplished. I
Speaker 3: mentioned the Hest transaction, which was a big one for
Speaker 3: US earlier this year. We have laid out a plan
Speaker 3: for the next several years to investors last month that
Speaker 3: grows free cash flow, that drives a significant return to
Speaker 3: cash to shareholders. All of those are things that I
Speaker 3: want to make progress on. But when the time is
Speaker 3: right for someone to follow me in this job, the
Speaker 3: board will make that determination and I will happily hand over.
Speaker 1: Will you go right for Landman?
Speaker 2: Just three seconds left? Do you think that in ten
Speaker 2: years gas or oil is going to be more valuable?
Speaker 3: Well on an energy content basis, you know oil's got
Speaker 3: about six times more energy content per unit of volume
Speaker 3: than gas to us, and so you know they trade
Speaker 3: in sympathy with one another because energy is somewhat fungible.
Speaker 3: I think both of those commodities are going to be
Speaker 3: essential to the global economy. I think demand for both
Speaker 3: of those will be much higher than it is today.
Speaker 3: And I think you're going to see good companies in
Speaker 3: our industry still producing more of that and doing it
Speaker 3: in a way that keeps costs very affordable for the economy.
Speaker 2: My fourth wonderful to see you. Thank you so much
Speaker 2: for being with us here this morning. Mike Worth, the
Speaker 2: CEO of Chevron