Chevron(US:CVX)2026-01-30 17:02Financial Data and Key Metrics Changes - Chevron reported fourth quarter earnings of $2.8 billion or $1.39 per share, with adjusted earnings of $3 billion or $1.52 per share, reflecting a decrease of roughly $600 million compared to the previous quarter [9][10] - Cash flow from operations was $10.8 billion for the quarter, including a $1.7 billion drawdown in working capital [9] - Adjusted free cash flow for the year was $20 billion, which included the first loan repayment from TCO and $1.8 billion in asset sales [10] Business Line Data and Key Metrics Changes - Adjusted upstream earnings decreased primarily due to lowered liquids prices, while adjusted downstream earnings were lower due to reduced chemicals earnings and refining volumes [10] - Chevron achieved record levels of production globally and in the U.S., with significant contributions from the Future Growth Project at Tengiz, which added 260,000 barrels of oil per day [4][11] - The company expects production growth to continue in 2026, driven by project ramp-ups and a full year of Hess assets [11][12] Market Data and Key Metrics Changes - Chevron's production in Venezuela increased by over 200,000 barrels per day since 2022, with potential for an additional 50% growth over the next 18-24 months [5][30] - The Eastern Mediterranean assets are expected to contribute to a doubling of current earnings and free cash flow, with Leviathan reaching FID to expand production capacity [6][42] Company Strategy and Development Direction - Chevron is focused on free cash flow growth and capital discipline, with a break-even below $50 Brent [14][15] - The company is committed to leveraging its expertise in Venezuela and expanding its operations in the Eastern Mediterranean, while maintaining a disciplined approach to capital allocation [6][60] - Chevron aims to continue its structural cost reduction program, targeting $3 billion-$4 billion in savings by the end of 2026 [14][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering 2026 from a position of strength, with a diversified portfolio and a strong balance sheet [8][15] - The company highlighted the importance of fiscal stability and regulatory predictability in its international operations, particularly in Venezuela and the Middle East [32][60] - Management emphasized the need to focus on high-return opportunities while maintaining capital discipline [60][66] Other Important Information - Chevron's balance sheet remains strong, with a net debt coverage ratio of 1x, and the company returned over $100 billion in dividends and buybacks over the last four years [10][15] - The company announced a 4% increase in the quarterly dividend, aligning with its financial priorities [15] Q&A Session Summary Question: TCO volumes and maintenance schedule - Management discussed the recent power distribution issue at TCO and the proactive measures taken to resume production, with expectations for full capacity to be online soon [20][24] Question: Venezuela asset conditions and growth potential - Management confirmed uninterrupted operations in Venezuela, with production currently at around 250,000 barrels per day and potential for significant growth [30][31] Question: Tengiz compensation cuts and production impact - Management stated that historical trends suggest TCO production is less likely to be impacted by national compensation cuts due to its fiscal attractiveness [37] Question: Eastern Mediterranean resource potential - Management expressed excitement about the resource potential in the Eastern Mediterranean, with ongoing projects expected to significantly increase production and cash flow [41][42] Question: Cost reduction progress and organizational changes - Management reported $1.5 billion in savings from the cost reduction program, with expectations for further efficiencies as the new operating model is fully implemented [47][48] Question: Permian productivity and capital efficiency - Management confirmed that the Permian is being held at 1 million barrels per day, with significant improvements in capital efficiency and cash generation [53][54] Question: Opportunities in Libya and Iraq - Management acknowledged ongoing discussions in Libya and Iraq, emphasizing the need for competitive fiscal terms to consider investments in these regions [59][60] Question: LNG portfolio size and strategy - Management indicated a selective approach to LNG investments, focusing on projects that deliver competitive returns [61]