Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Speaking of Chevron, we're taking a look at shares right now,
Speaker 2: lower by about one point four percent after a first
Speaker 2: quarter report that in lists called quote MESSI let's bring
Speaker 2: in Bloomberg Surveillance co host Anri hor Dern, who is
Speaker 2: joining us with the fo of Chevron right now.
Speaker 3: Thanks so much. Yeah, Chevron Blue past all of these
Speaker 3: expectations for earnings per share, but they're obviously in the
Speaker 3: thick of it when it comes to the conflict in
Speaker 3: the Middle East and the volatility we're seeing in the
Speaker 3: energy market. I'm so pleased to be joined now by
Speaker 3: the CFO Emar Bonner. Thank you so much for joining us.
Speaker 3: So obviously earnings per share Blue past all of these expectations,
Speaker 3: but it's a volatile time right now. How is the
Speaker 3: company weathering what we're seeing in terms of the conflict
Speaker 3: in the Middle East.
Speaker 1: Yeah, well, thanks for having me on, Mariette. It was
Speaker 1: you know, EPs beat that we posted this morning, and
Speaker 1: behind that is a very resilient portfolio with many operational highlights.
Speaker 1: You know, starting here in the US, we had our
Speaker 1: third consecutive quarter of production over two million barrels of
Speaker 1: oil equivalent per day. We had record refinery runs in March,
Speaker 1: and our diversified portfolio created high margin capture and demonstrate
Speaker 1: a strong utilization. So while we're managing all the volatility
Speaker 1: and all the dynamics in the market, our portfolio is incredibly,
Speaker 1: incredibly resilient. Also, in the Middle East, we have relatively
Speaker 1: less exposure than some others. We have a few operations
Speaker 1: there and they're all running, but it's a very small
Speaker 1: percentage of our production, less than five percent. So what
Speaker 1: we're really doing is we're optimizing all the levers that
Speaker 1: we have, our equity, cruds, our refineries, and we're bringing
Speaker 1: supply to market and to our customers.
Speaker 3: It does see some investors were disappointed that the buyback
Speaker 3: was not increased, and see analyst said, it's really just
Speaker 3: a matter of when not if. Is that an accurate assessment.
Speaker 1: Well, we guide our ranges around capex, around buybacks. We
Speaker 1: guide with a range of prices in mind. So probably
Speaker 1: the comment that came from the analyst talks to the
Speaker 1: fact that analysts know that we operate within within our
Speaker 1: range and we're not changing where we're within that range
Speaker 1: right now when it comes to buyback Because with eight
Speaker 1: weeks of a conflict, we really need to see more
Speaker 1: in terms of an outlook for oil prices in particular
Speaker 1: that are structurally different than the range of prices that
Speaker 1: we used when we put our plans together. So that's
Speaker 1: probably what the analyst is talking about. We guided to
Speaker 1: ten to twenty billion of buybacks, and we guided with
Speaker 1: a range. We'll use the range when we believe conditions
Speaker 1: warrant it.
Speaker 3: Well, obviously you're going to be looking at all the
Speaker 3: scenarios that could play out given the uncertainty with what
Speaker 3: is going on in the straight of her moves. What
Speaker 3: is Chevron looking at in terms of say the straight
Speaker 3: was shut for another month or two months?
Speaker 1: Well, I mean we're not looking with that level of
Speaker 1: definition around the timeline. I mean, when we look at
Speaker 1: our plans, we plan for the long term, so we
Speaker 1: don't typically look out a month and then make adjustments
Speaker 1: in our actions in the business. Because our business is
Speaker 1: so long term. We look through the cycles. We make
Speaker 1: decisions with ranges in mind, and right now we're not
Speaker 1: changing anything that we're doing. We're growing seven to ten
Speaker 1: percent this year from a production perspective, and so what
Speaker 1: we're focused on is delivering on those plans, delivering them
Speaker 1: with cost and capital discipline. We're not moving things around
Speaker 1: with an outlook that's one month ahead.
Speaker 3: If we do have one hundred dollars oil though for
Speaker 3: the foreseeable future, would that offer scope to say, increase
Speaker 3: the buyback later this year.
Speaker 1: Well, at the prices of those ranges, we would obviously
Speaker 1: go back look at our plans. I mean, right now
Speaker 1: we've planned for high prices and low prices, and so
Speaker 1: you know, the duration of the price is important and
Speaker 1: important to us, so we typically have you know, a
Speaker 1: wide range. So nothing right now that would be temporary
Speaker 1: in terms of high oid prices. We change what we're
Speaker 1: what we're doing on Marie.
Speaker 3: Imer, I know you've been looking at the massive dislocation
Speaker 3: of what is actually going on in the physical market
Speaker 3: and the reality versus what we see on our screens
Speaker 3: every single day. But we have seen an uptick and
Speaker 3: crude over the past few days in terms of WTI
Speaker 3: really holding on to triple digits. Do you think that
Speaker 3: the financial markets are finally catching up to what you
Speaker 3: see every day in the physical market.
Speaker 1: Well, it's very hard. It's really hard to deno and
Speaker 1: to predict that and so you know what we're seeing
Speaker 1: in the physical markets, what we're what we're focused on
Speaker 1: is ensuring that we're operating safely and reliably. And it's
Speaker 1: it's hard to make a prediction on It's very hard
Speaker 1: for physical markets and future markets to line up always.
Speaker 1: It's it's very difficult. So what we're focused on is
Speaker 1: just delivering our plan.
Speaker 3: When you look at how the market is supplied right now,
Speaker 3: between supply and demand, how quickly do you see the
Speaker 3: world just driving down inventories.
Speaker 1: Well, a lot of the inventory and spur capacity has
Speaker 1: been depleted already, Anne Marie. You know, before the conflict
Speaker 1: a few months ago, we had a certain certain buffer
Speaker 1: in the system, and so there's there's very little of
Speaker 1: the buffer left. So the spur capacity, the inventories that
Speaker 1: we would rely on to buffer some of the sup
Speaker 1: of the constraints, it is really under pressure right now.
Speaker 1: And so you know, that's why what we're focused on
Speaker 1: in Chevron is adjusting the flows of our of our
Speaker 1: products to customers because a number of those routes are
Speaker 1: not available anymore. The street of Hermus obviously still shut in,
Speaker 1: So we pivot and we adjust, and this is where
Speaker 1: the resilience of the portfolio, both the upstream assets and
Speaker 1: the refining footprint really has shown in the first quarter
Speaker 1: of the resilience.
Speaker 3: So we're seeing that large out of the United States.
Speaker 3: With exports reaching a record high this week. The US
Speaker 3: seems to be filling some of that gap with what
Speaker 3: is going on with the closure of the Strait of removes.
Speaker 3: How long do you think that can actually continue.
Speaker 1: Well, the US is more resilient, of course, you know,
Speaker 1: very strong domestic production, and we've got many assets in
Speaker 1: the US and more infantries than you know than in
Speaker 1: other parts of the world. There's more of a pinch
Speaker 1: being felt in places like Europe and Africa and Asia.
Speaker 1: So you know, from a US perspective, I think they're
Speaker 1: playing the role that they can play with exporting as
Speaker 1: much of their production, but they're also moving production around
Speaker 1: the country and that's one of the things that we
Speaker 1: are doing. Given that we had some waivers from the administration,
Speaker 1: that's been really helpful in helping us take some of
Speaker 1: our products from the Gulf Coast, for example, to the
Speaker 1: West Coast to relieve some of that pressure. So I
Speaker 1: think the US is contributing in multiple ways here at home,
Speaker 1: but also from an export perspective.
Speaker 3: And how is Chevron contributing when it comes to maybe
Speaker 3: advice you're offering the administration. I know CEO Mike Worth
Speaker 3: was at the White House this week a number of
Speaker 3: under individuals briefing the President and members of his team.
Speaker 3: What's the relationship been like?
Speaker 1: Well, first, I would say that, you know, we engage
Speaker 1: with governments all around the world, so where we have operations,
Speaker 1: where we have employees, good government relations is very important
Speaker 1: for us, and the current administration here at home in
Speaker 1: the US is no different. So you know, we've had
Speaker 1: very regular communications with the administration about the business and
Speaker 1: so you know, we meet regularly and share perspectives, and
Speaker 1: we believe that's very healthy.
Speaker 3: I know there's a close relationship as well, working relationship.
Speaker 3: When it comes to Venezuela. I went with Secretary Wright
Speaker 3: to Caracas. I actually visited some of Chevron's facilities in Venezuela.
Speaker 3: On the call earlier today, you said venezuel Wall likely
Speaker 3: repay the one and a half billion dollars in debt
Speaker 3: they owe Chevron by twenty twenty seven. Imer at that point,
Speaker 3: would Chevron be willing to invest more into Venezuela.
Speaker 1: Well, i'mrie you were there and you saw some of
Speaker 1: our operations. We've been in the country for over one
Speaker 1: hundred years. We are the advantage incumbent in the country.
Speaker 1: We have lots of history working with the Venezuelans in
Speaker 1: a very productive way. We have grown production from fifty
Speaker 1: thousand barrels a day to two hundred and fifty thousand
Speaker 1: barrels a day over the course of the last few years,
Speaker 1: and we intend to grow production even even further. We
Speaker 1: have a model, a self funding model that has enabled
Speaker 1: the development of the assets and the improvement of the
Speaker 1: assets and the growth that I just referenced, and pay
Speaker 1: off our debt and so so you know that has
Speaker 1: been paid off in a very readable way. And beyond that,
Speaker 1: you know, what we look for is the competitives of
Speaker 1: the physical terms in Venezuela. And there's a lot of
Speaker 1: potential in the country. We've obviously stayed there for one
Speaker 1: hundred years for a reason, and so we would look for,
Speaker 1: you know, steps, further steps, maybe from the steps that
Speaker 1: have already been taken, which are positive, but further steps
Speaker 1: just to improve the physical competitiveness of Venezuela. And then
Speaker 1: We'll look at all opportunities like we do around the
Speaker 1: world from with a competitive lens