WEBVTT - Chevron CFO Eimear Bonner Talks Navigating Middle East Conflict

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>Speaking of Chevron, we're taking a look at shares right now,

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<v Speaker 2>lower by about one point four percent after a first

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<v Speaker 2>quarter report that in lists called quote MESSI let's bring

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<v Speaker 2>in Bloomberg Surveillance co host Anri hor Dern, who is

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<v Speaker 2>joining us with the fo of Chevron right now.

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<v Speaker 3>Thanks so much. Yeah, Chevron Blue past all of these

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<v Speaker 3>expectations for earnings per share, but they're obviously in the

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<v Speaker 3>thick of it when it comes to the conflict in

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<v Speaker 3>the Middle East and the volatility we're seeing in the

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<v Speaker 3>energy market. I'm so pleased to be joined now by

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<v Speaker 3>the CFO Emar Bonner. Thank you so much for joining us.

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<v Speaker 3>So obviously earnings per share Blue past all of these expectations,

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<v Speaker 3>but it's a volatile time right now. How is the

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<v Speaker 3>company weathering what we're seeing in terms of the conflict

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<v Speaker 3>in the Middle East.

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<v Speaker 1>Yeah, well, thanks for having me on, Mariette. It was

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<v Speaker 1>you know, EPs beat that we posted this morning, and

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<v Speaker 1>behind that is a very resilient portfolio with many operational highlights.

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<v Speaker 1>You know, starting here in the US, we had our

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<v Speaker 1>third consecutive quarter of production over two million barrels of

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<v Speaker 1>oil equivalent per day. We had record refinery runs in March,

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<v Speaker 1>and our diversified portfolio created high margin capture and demonstrate

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<v Speaker 1>a strong utilization. So while we're managing all the volatility

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<v Speaker 1>and all the dynamics in the market, our portfolio is incredibly,

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<v Speaker 1>incredibly resilient. Also, in the Middle East, we have relatively

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<v Speaker 1>less exposure than some others. We have a few operations

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<v Speaker 1>there and they're all running, but it's a very small

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<v Speaker 1>percentage of our production, less than five percent. So what

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<v Speaker 1>we're really doing is we're optimizing all the levers that

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<v Speaker 1>we have, our equity, cruds, our refineries, and we're bringing

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<v Speaker 1>supply to market and to our customers.

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<v Speaker 3>It does see some investors were disappointed that the buyback

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<v Speaker 3>was not increased, and see analyst said, it's really just

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<v Speaker 3>a matter of when not if. Is that an accurate assessment.

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<v Speaker 1>Well, we guide our ranges around capex, around buybacks. We

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<v Speaker 1>guide with a range of prices in mind. So probably

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<v Speaker 1>the comment that came from the analyst talks to the

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<v Speaker 1>fact that analysts know that we operate within within our

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<v Speaker 1>range and we're not changing where we're within that range

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<v Speaker 1>right now when it comes to buyback Because with eight

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<v Speaker 1>weeks of a conflict, we really need to see more

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<v Speaker 1>in terms of an outlook for oil prices in particular

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<v Speaker 1>that are structurally different than the range of prices that

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<v Speaker 1>we used when we put our plans together. So that's

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<v Speaker 1>probably what the analyst is talking about. We guided to

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<v Speaker 1>ten to twenty billion of buybacks, and we guided with

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<v Speaker 1>a range. We'll use the range when we believe conditions

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<v Speaker 1>warrant it.

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<v Speaker 3>Well, obviously you're going to be looking at all the

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<v Speaker 3>scenarios that could play out given the uncertainty with what

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<v Speaker 3>is going on in the straight of her moves. What

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<v Speaker 3>is Chevron looking at in terms of say the straight

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<v Speaker 3>was shut for another month or two months?

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<v Speaker 1>Well, I mean we're not looking with that level of

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<v Speaker 1>definition around the timeline. I mean, when we look at

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<v Speaker 1>our plans, we plan for the long term, so we

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<v Speaker 1>don't typically look out a month and then make adjustments

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<v Speaker 1>in our actions in the business. Because our business is

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<v Speaker 1>so long term. We look through the cycles. We make

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<v Speaker 1>decisions with ranges in mind, and right now we're not

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<v Speaker 1>changing anything that we're doing. We're growing seven to ten

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<v Speaker 1>percent this year from a production perspective, and so what

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<v Speaker 1>we're focused on is delivering on those plans, delivering them

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<v Speaker 1>with cost and capital discipline. We're not moving things around

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<v Speaker 1>with an outlook that's one month ahead.

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<v Speaker 3>If we do have one hundred dollars oil though for

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<v Speaker 3>the foreseeable future, would that offer scope to say, increase

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<v Speaker 3>the buyback later this year.

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<v Speaker 1>Well, at the prices of those ranges, we would obviously

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<v Speaker 1>go back look at our plans. I mean, right now

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<v Speaker 1>we've planned for high prices and low prices, and so

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<v Speaker 1>you know, the duration of the price is important and

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<v Speaker 1>important to us, so we typically have you know, a

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<v Speaker 1>wide range. So nothing right now that would be temporary

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<v Speaker 1>in terms of high oid prices. We change what we're

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<v Speaker 1>what we're doing on Marie.

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<v Speaker 3>Imer, I know you've been looking at the massive dislocation

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<v Speaker 3>of what is actually going on in the physical market

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<v Speaker 3>and the reality versus what we see on our screens

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<v Speaker 3>every single day. But we have seen an uptick and

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<v Speaker 3>crude over the past few days in terms of WTI

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<v Speaker 3>really holding on to triple digits. Do you think that

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<v Speaker 3>the financial markets are finally catching up to what you

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<v Speaker 3>see every day in the physical market.

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<v Speaker 1>Well, it's very hard. It's really hard to deno and

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<v Speaker 1>to predict that and so you know what we're seeing

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<v Speaker 1>in the physical markets, what we're what we're focused on

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<v Speaker 1>is ensuring that we're operating safely and reliably. And it's

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<v Speaker 1>it's hard to make a prediction on It's very hard

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<v Speaker 1>for physical markets and future markets to line up always.

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<v Speaker 1>It's it's very difficult. So what we're focused on is

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<v Speaker 1>just delivering our plan.

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<v Speaker 3>When you look at how the market is supplied right now,

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<v Speaker 3>between supply and demand, how quickly do you see the

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<v Speaker 3>world just driving down inventories.

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<v Speaker 1>Well, a lot of the inventory and spur capacity has

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<v Speaker 1>been depleted already, Anne Marie. You know, before the conflict

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<v Speaker 1>a few months ago, we had a certain certain buffer

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<v Speaker 1>in the system, and so there's there's very little of

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<v Speaker 1>the buffer left. So the spur capacity, the inventories that

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<v Speaker 1>we would rely on to buffer some of the sup

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<v Speaker 1>of the constraints, it is really under pressure right now.

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<v Speaker 1>And so you know, that's why what we're focused on

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<v Speaker 1>in Chevron is adjusting the flows of our of our

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<v Speaker 1>products to customers because a number of those routes are

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<v Speaker 1>not available anymore. The street of Hermus obviously still shut in,

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<v Speaker 1>So we pivot and we adjust, and this is where

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<v Speaker 1>the resilience of the portfolio, both the upstream assets and

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<v Speaker 1>the refining footprint really has shown in the first quarter

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<v Speaker 1>of the resilience.

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<v Speaker 3>So we're seeing that large out of the United States.

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<v Speaker 3>With exports reaching a record high this week. The US

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<v Speaker 3>seems to be filling some of that gap with what

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<v Speaker 3>is going on with the closure of the Strait of removes.

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<v Speaker 3>How long do you think that can actually continue.

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<v Speaker 1>Well, the US is more resilient, of course, you know,

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<v Speaker 1>very strong domestic production, and we've got many assets in

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<v Speaker 1>the US and more infantries than you know than in

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<v Speaker 1>other parts of the world. There's more of a pinch

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<v Speaker 1>being felt in places like Europe and Africa and Asia.

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<v Speaker 1>So you know, from a US perspective, I think they're

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<v Speaker 1>playing the role that they can play with exporting as

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<v Speaker 1>much of their production, but they're also moving production around

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<v Speaker 1>the country and that's one of the things that we

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<v Speaker 1>are doing. Given that we had some waivers from the administration,

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<v Speaker 1>that's been really helpful in helping us take some of

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<v Speaker 1>our products from the Gulf Coast, for example, to the

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<v Speaker 1>West Coast to relieve some of that pressure. So I

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<v Speaker 1>think the US is contributing in multiple ways here at home,

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<v Speaker 1>but also from an export perspective.

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<v Speaker 3>And how is Chevron contributing when it comes to maybe

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<v Speaker 3>advice you're offering the administration. I know CEO Mike Worth

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<v Speaker 3>was at the White House this week a number of

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<v Speaker 3>under individuals briefing the President and members of his team.

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<v Speaker 3>What's the relationship been like?

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<v Speaker 1>Well, first, I would say that, you know, we engage

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<v Speaker 1>with governments all around the world, so where we have operations,

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<v Speaker 1>where we have employees, good government relations is very important

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<v Speaker 1>for us, and the current administration here at home in

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<v Speaker 1>the US is no different. So you know, we've had

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<v Speaker 1>very regular communications with the administration about the business and

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<v Speaker 1>so you know, we meet regularly and share perspectives, and

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<v Speaker 1>we believe that's very healthy.

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<v Speaker 3>I know there's a close relationship as well, working relationship.

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<v Speaker 3>When it comes to Venezuela. I went with Secretary Wright

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<v Speaker 3>to Caracas. I actually visited some of Chevron's facilities in Venezuela.

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<v Speaker 3>On the call earlier today, you said venezuel Wall likely

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<v Speaker 3>repay the one and a half billion dollars in debt

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<v Speaker 3>they owe Chevron by twenty twenty seven. Imer at that point,

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<v Speaker 3>would Chevron be willing to invest more into Venezuela.

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<v Speaker 1>Well, i'mrie you were there and you saw some of

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<v Speaker 1>our operations. We've been in the country for over one

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<v Speaker 1>hundred years. We are the advantage incumbent in the country.

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<v Speaker 1>We have lots of history working with the Venezuelans in

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<v Speaker 1>a very productive way. We have grown production from fifty

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<v Speaker 1>thousand barrels a day to two hundred and fifty thousand

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<v Speaker 1>barrels a day over the course of the last few years,

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<v Speaker 1>and we intend to grow production even even further. We

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<v Speaker 1>have a model, a self funding model that has enabled

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<v Speaker 1>the development of the assets and the improvement of the

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<v Speaker 1>assets and the growth that I just referenced, and pay

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<v Speaker 1>off our debt and so so you know that has

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<v Speaker 1>been paid off in a very readable way. And beyond that,

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<v Speaker 1>you know, what we look for is the competitives of

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<v Speaker 1>the physical terms in Venezuela. And there's a lot of

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<v Speaker 1>potential in the country. We've obviously stayed there for one

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<v Speaker 1>hundred years for a reason, and so we would look for,

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<v Speaker 1>you know, steps, further steps, maybe from the steps that

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<v Speaker 1>have already been taken, which are positive, but further steps

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<v Speaker 1>just to improve the physical competitiveness of Venezuela. And then

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<v Speaker 1>We'll look at all opportunities like we do around the

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<v Speaker 1>world from with a competitive lens