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    CVX
    Earnings call· Mar 2025(Q1 FY25)

    CHEVRON Q1 FY25 earnings call CVX

    May 2, 2025 Source

    Executive summary

    Chevron Q1 FY25 — Strong Project Start-ups and Shareholder Returns Amidst Macro Uncertainty

    Chevron delivered robust Q1 FY25 results, driven by successful project start-ups and disciplined capital allocation, including significant shareholder returns. The company is navigating macro uncertainties and policy challenges with a focus on cost efficiency and portfolio optimization, while actively pursuing future growth opportunities in energy transition and traditional assets.

    Highlights

    4

    • Returned $6.9 billion to shareholders through dividends and buybacks in Q1 FY25, marking 12 consecutive quarters exceeding $5 billion.

    • Achieved nameplate capacity at TCO's Future Growth Project in under 30 days, significantly ahead of plan.

    • Achieved first oil at Ballymore, the latest in a series of major project start-ups expected to increase production to 300,000 boe/d by 2026.

    • Reduced 2025 CapEx and affiliate CapEx budgets by $2 billion from last year, targeting $2 billion to $3 billion in structural cost savings by end of next year.

    Concerns

    4

    • Adjusted earnings were impacted by $138 million from foreign currency effects.

    • Working capital was negatively impacted by tax payments related to Canadian asset sales, with $1 billion unwind expected over the remainder of the year.

    • Refinery investments in California are challenged by state policies, leading to higher costs for consumers and potential future supply tightness.

    • Share repurchases are expected to be $2.5 billion to $3 billion in Q2 FY25, a reduction from prior quarters due to current macro environment.

    Guidance & targets

    14
    CategoryTargetConfidence
    Production increase from major projects (Gulf of America)
    300,000 barrels of oil equivalent per day
    high materiality
    High
    Structural cost savings
    $2 billion to $3 billion
    medium materiality
    High
    TCO loan repayment
    $1 billion
    medium materiality
    High
    Working capital unwind
    $1 billion
    medium materiality
    High
    Permian production growth
    growth towards a sustained 1 million barrels of oil equivalent per day
    high materiality
    High
    Annual share buybacks
    $10 billion to $20 billion
    high materiality
    High
    Q2 FY25 share repurchases
    $2.5 billion to $3 billion
    high materiality
    High
    2025 CapEx budget
    $15 billion
    high materiality
    High
    Permian 2025 type curves
    pretty similar to what we saw last year
    medium materiality
    High
    Permian oil cut stability
    pretty stable
    medium materiality
    High
    Anchor wells online
    2 additional wells this year, remaining wells in '26 and '27
    medium materiality
    High
    AI data center power solutions FID
    before the end of the year
    high materiality
    High
    CPChem growth projects online
    end of '26, early '27-ish
    medium materiality
    High
    Shale well cost impact from tariffs
    1% impact
    low materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Upstream
    Adjusted earnings were flat quarter-over-quarter. Higher realizations and timing effects were offset by lower liftings and lower affiliate earnings, mainly due to higher DD&A at TCO.
    		——flat—
    Downstream
    Adjusted earnings were higher quarter-over-quarter due to improved refining margins and lower turnarounds and maintenance.
    		——higher—

    Operational metrics

    22
    Adjusted earnings
    $3.8 billion$200 million higher QoQ
    Q1 FY25

    Adjusted earnings for the quarter.

    Adjusted EPS
    $2.18
    Q1 FY25

    Adjusted earnings per share for the quarter.

    Foreign currency effects on earnings
    $138 million
    Q1 FY25

    Decrease in earnings due to foreign currency effects.

    Organic CapEx
    $3.5 billionlowest in 2 years
    Q1 FY25

    Organic capital expenditure for the quarter.

    Inorganic CapEx
    $400 million
    Q1 FY25

    Primarily related to investment in Power Solutions partnership.

    Long-term debt issued
    $5.5 billion
    Q1 FY25

    New long-term debt issued in the quarter.

    Net debt ratio
    14%well below target
    Q1 FY25

    Net debt ratio, indicating strong balance sheet.

    Total shareholder distributions
    $6.9 billion
    Q1 FY25

    Cash returned to shareholders through dividends and buybacks.

    Share repurchases cumulative
    $50 billion
    Trailing 3 years

    Aggregate share repurchases over the last three years. Historically, prior to COVID, max annual buyback was $8 billion even in $140-$150 oil markets.

    Dividend growth streak
    38
    Consecutive

    Years of consecutive dividend increases.

    Dividend increase
    5%
    Earlier this year

    Percentage increase in dividend.

    Payout ratio
    almost 100%
    LTM

    Payout ratio over the last 12 months.

    Oil equivalent production
    flatQoQ
    Q1 FY25

    Company-wide oil equivalent production.

    Permian oil cut
    43% to 45%
    Current

    Current range for oil cut in the Permian Basin.

    Pasadena refinery stable operations
    110,000
    Q1 FY25

    Stable operations at the Pasadena refinery after expansion.

    Pasadena refinery capacity increase
    50%
    Q1 FY25

    Increase in crude unit capacity at Pasadena refinery due to expansion.

    Structural cost savings target
    $2 billion to $3 billion
    by end of 2026

    Targeted structural cost savings program.

    CapEx reduction
    $2 billionfrom last year
    FY25

    Reduction in 2025 CapEx and affiliate CapEx budgets compared to the previous year.

    Exploration acres added
    >11 million
    since start of last year

    Net exploration acres added.

    Ballymore production per well
    25,000
    per well

    Expected production from each prolific well at Ballymore.

    Deepwater development costs
    in the teens and pushing into the low teensdown from 20s-30s
    Current

    Breakeven development costs for deepwater projects, significantly reduced from a decade ago.

    Exploration portfolio within tieback range
    80%
    Current

    Percentage of exploration portfolio within tieback range of existing hubs.

    Industry KPIs

    1
    MetricValueDetails
    FCF shareholder distributions$6.9 billionUSD

    Orderbook & backlog

    2
    Annual share buyback authorization$10 billion to $20 billionQ1 FY25

    unchanged

    Guidance range provided more than 2 years ago, remains consistent with market conditions.

    Hess shares to be reducedapproximately 16 millionQ1 FY25

    Expected reduction in Chevron shares issued at closing due to purchase of Hess shares.

    Deals & partnerships

    5
    Hess CorporationMerger with Hess, including acquisition of common shares.

    Acquired nearly 5% of Hess's common shares. Looking forward to completing the merger.

    Kazakhstan GovernmentNegotiation for extension of TCO concession.beyond 2033

    Mutual intent expressed to negotiate an agreement which extends the concession beyond 2033.

    Multiple (asset sale program)Asset sale program, including East Texas gas assets.

    Made good progress on asset sale program, achieving premium valuations while retaining future upside in East Texas gas assets.

    Cyprus GovernmentAgreement on Aphrodite field development plan.

    Signed an agreed field development plan for Aphrodite, including updates to the PSA.

    ArgentinaParticipation in a pipeline project to increase export capacity.

    Participating in a pipeline project to increase export capacity in Argentina.

    Capital programs

    6
    TCO Future Growth Projectcompleted

    Benefit: nameplate capacity

    Achieved nameplate capacity in less than 30 days, significantly ahead of plan, due to extensive testing and experienced personnel.

    Ballymore Projectcompleted

    Benefit: first oil

    Achieved first oil. Executed on time, on budget, in just 3 years. Highly prolific wells expected to produce 25,000 bbl/d each.

    Pasadena Refinery Expansioncompleted

    Benefit: 40,000 bbl/d crude feed capacity increase

    Project is complete and online, increasing capacity from 85,000 bbl/d to 125,000 bbl/d. Stable operations at 110,000 bbl/d crude feed in Q1 FY25.

    CPChem Growth Projects (Qatar, Texas)underway

    Two growth projects, one in Qatar and one in Texas, are on track for completion.

    AI Data Center Power Solutions Ventureunderway
    Period spend: $400 million

    Benefit: gigawatt scale power solutions

    Inorganic CapEx of approximately $400 million in Q1 FY25 primarily related to investment in this partnership. Working towards a Final Investment Decision (FID) before year-end.

    Aphrodite Field Developmentunderway
    Start: Q1 FY25 (pre-FEED)

    Benefit: 800 million cubic feet of gas per day

    Agreed field development plan for Aphrodite with initial development plan for a floating production unit in Cypriot waters, flowing gas to Egypt. Pre-FEED activities started in Q1 FY25.

    Risks & headwinds

    6
    Macro uncertaintyOngoing

    Not quantified

    Mitigation: Focus on cost and capital discipline; long-standing financial priorities; strong balance sheet.

    California regulatory policiesOngoing

    Higher cost for consumers; potential future supply tightness

    Mitigation: No immediate announcements on refineries, but critical of state intervention in operational matters.

    Venezuela sanctionsCurrent license ends May 27

    Inability to pay tax/royalty for U.S.-bound liftings; barrels redirected to other markets.

    Mitigation: In dialogue with the government on license modification and extension.

    Commodity price cycles (e.g., $50 oil world)Through the cycle

    Not quantified for specific impact, but acknowledged as a scenario.

    Mitigation: Proven track record of managing through cycles; flexible capital budget; strong balance sheet; diversified portfolio with low decline assets.

    Cost pressures on AI data center power venture componentsNear-term

    Not quantified, but acknowledged as a factor.

    Mitigation: Remaining disciplined to ensure competitive returns; secured pricing on turbines; monitoring market demand and potential tariffs.

    TariffsOngoing

    Estimated 1% impact on the cost of a shale well.

    Mitigation: Direct exposure relatively limited; energy largely exempted; strong engagement with suppliers; sourcing from multiple locations; anticipating and preparing for impacts.

    What to watch in Q2 FY25

    5

    TCO Concession Extension Negotiation

    next quarter
    CurrentMutual intent expressed to negotiate beyond 2033
    TargetProgress or agreement on concession extension

    Why it matters

    Extension of the TCO concession is crucial for long-term stability and value generation from a major asset.

    And there was mutual intent expressed to negotiate an agreement which extends the concession beyond 2033.

    Q&A highlights

    7

    Asked for an update on TCO's start-up, early discussions on concession extension, and perspective on production levels/curtailment risk.

    Mike Wirth confirmed a world-class ramp-up at TCO, achieving nameplate capacity in under 30 days. He noted mutual intent with Kazakhstan to negotiate a concession extension beyond 2033 and stated that TCO barrels are high value to the government and historically not curtailed.

    “We achieved nameplate capacity in less than 30 days. This was due to extensive testing of equipment during the commissioning phase, leveraging a lot of the same people, procedures and other practices that were put in service for the wellhead pressure management project over the prior 12 months.”

    asked by Neil Mehta · answered by Michael Wirth

    2 min read7 chapters

    Detailed Narrative

    01

    TCO Future Growth Project Success

    The TCO Future Growth Project achieved nameplate capacity in less than 30 days, a world-class ramp-up attributed to extensive testing, leveraging experienced personnel, and applying learnings from prior projects. This success is expected to increase cash distributions from TCO, including a $1 billion loan repayment in Q3 FY25. Management also expressed mutual intent with Kazakhstan to negotiate a concession extension beyond 2033.

    02

    Gulf of America Project Ramps

    First oil was achieved at Ballymore, contributing to a series of major project start-ups expected to boost production to 300,000 boe/d by 2026. Ballymore's wells are highly prolific, with 25,000 bbl/d expected from each of three wells, two of which are already online. Other projects like Whale and Anchor are also progressing, with additional wells coming online through 2025-2027.

    03

    Permian Basin Outlook

    Permian production is expected to resume growth towards a sustained 1 million boe/d in Q2 FY25, driven by higher frac activity. The Delaware Basin, comprising 85% of the 2025 program, showed strong performance improvements in 2024, particularly in the second Bone Spring in New Mexico. The oil cut is anticipated to remain stable at 43-45% through the end of the decade, with more productive wells expected from New Mexico.

    04

    California Refining Market & Policy

    Chevron maintains a strong position with two large, complex refineries in California, but management expressed concerns about state policies making investment nearly impossible. These policies have led to higher consumer costs and potential future fuel supply tightness. The company has no immediate announcements regarding its California refineries but highlighted the challenges of central planning in the economy.

    05

    AI Data Center Power Solutions

    Chevron is actively engaging with prospective customers and narrowing down potential sites for its gigawatt-scale power solutions venture to support the U.S. AI data center build-out. The company aims for a Final Investment Decision (FID) before year-end, emphasizing speed to market while remaining disciplined on returns given cost pressures on components.

    06

    Capital Discipline and Cost Savings

    The company reduced its 2025 CapEx and affiliate CapEx budgets by $2 billion from the previous year and is targeting $2 billion to $3 billion in structural cost savings by the end of 2026. This reflects Chevron's commitment to cost and capital discipline, positioning it to manage through commodity cycles and maintain financial strength.

    07

    Venezuela Operations

    Recent changes in OFAC sanctions have halted Chevron's ability to pay tax and royalty payments for Venezuelan oil liftings to the U.S., redirecting barrels to other markets like China. The company's current license expires on May 27, and discussions are ongoing with the government regarding its modification and extension.

    AI-generated summary of the company’s earnings call. Not investment advice.