Chevron (CVX) Q2 FY26 earnings call: guidance and Q&A

Inquired about TCO performance, debottlenecking opportunities, and the current situation and mitigation strategies for the CPC pipeline.

TCO showed stellar operating performance, up 170,000 bbl/d QoQ, with the 3GP debottlenecking increasing nameplate capacity from 260,000 bbl/d to 320,000 bbl/d. CPC pipeline is flowing, with two SPMs in service and the third expected in Q3. Alternatives like Caspian/rail shipments and storage are available, but CPC is the primary route, with strong government commitment to keep it open.

“I can tell you that, today, both of our SPMs are in service there. The third SPM has been down for a while, undergoing some refurbishment activities, will be open here in the third quarter. So all 3 will be available later in the third quarter. But the pipeline is flowing the -- we've been loading ships this week.”

asked by Devin McDermott · answered by Michael Wirth

Asked for an update on the shale and tight portfolio, focusing on capital efficiency improvements in the Permian, Bakken, and Vaca Muerta.

The shale and tight portfolio, now under common management, is focused on efficiency and free cash flow. Permian CapEx is expected to be below $3.5 billion this year, a 25% improvement in capital efficiency. Bakken is seeing improvements in lateral length and rig count. Vaca Muerta is growing, leveraging learnings from other assets. The company continues to find more capital efficiencies despite prior expectations.

“Our capital is now, we expect it to be below $3.5 billion this year. So that's a 25% improvement in capital efficiency. So CapEx per barrel of oil over 2025.”

asked by Neil Mehta · answered by Eimear Bonner

Inquired about Chevron's long-term view for the power business, its potential contribution to the business mix, and how it fits into future growth.

Project Kilby demonstrates a larger business potential with durable customer demand and differentiated capabilities. The structural shift in power demand, with AI accelerating, creates a persistent supply-demand imbalance. Chevron leverages its natural gas portfolio, behind-the-meter experience, and project execution. The company will pursue additional opportunities but remain disciplined, focusing on value over growth.

“We do see a larger business potential here. Kilby is a good proof point. It demonstrates that there's durable, very high customer demand. It demonstrates that the -- this model, this behind-the-meter power model works for customers.”

asked by John Royall · answered by Jeff Gustavson

Asked if the Permian could return to a growth trajectory in the post-2030 outlook, given its current plateau strategy and other portfolio opportunities.

The Permian has continued to grow, but the focus is on efficiencies and productivity to generate free cash flow. While it could grow 100%, the company prioritizes value. Technology advancements (advanced chemicals, AI, simulation) could unlock more resources and extend the plateau. Chevron has a deep inventory of growth options globally, and the Permian is one of many options for the next decade.

“Could the Permian grow? 100%. But we've learned the lessons that at some point, you want to see free cash out of these assets and we're seeing that in significant quantums.”

asked by Douglas George Blyth Leggate · answered by Michael Wirth

Sought perspective on the Iraq opportunity (West Qurna 2, Nasiriyah), its competitiveness for capital, commercial terms, and managing above-ground risk.

Iraq offers potentially huge resources, with West Qurna 2 alone having billions of barrels of gross oil potential. Discussions are advancing on commercial and economic principles for new contract forms. The terms appear competitive within Chevron's portfolio, and a cross-border pipeline concept is being evaluated. The Iraqi Prime Minister is personally engaged and supportive, making progress possible.

“The terms look like they will be competitive within our portfolio. We still have work to be done to nail down all of the details. And then there's a cross-border pipeline concept that would allow alternative routes to market, north through Iraq and potentially either through Syria or Turkey or perhaps even both to get to the Mediterranean.”

asked by Arun Jayaram · answered by Michael Wirth

Asked for more detail on the $3 billion in cost savings, where outperformance is seen, chunky elements, and confidence in sustainability.

The $3 billion in structural cost reductions were achieved ahead of schedule, with 70% from efficiency gains. 35% of these came from organizational rewiring, centralizing functions, and standardizing engineering. Other examples include predictive maintenance in shale and tight assets and turnaround optimization. These are built into the business, ensuring sustainability, and the company maintains a strong culture of cost focus.

“70% of the results are associated with efficiency gains. And maybe what I'd point to there is we went through a massive restructuring, rewiring of the organization last year. So that is impacting the results by 35% of the 70% that I referenced.”

asked by Stephen Richardson · answered by Eimear Bonner

Inquired about the timing of Venezuela debt repayment, whether contractual terms shift, and how negotiations are progressing to unlock additional volumes and investments.

Debt recovery is ongoing, expected to be fully recovered by early 2027. Chevron operates three JVs successfully, growing production from 40,000 bbl/d to 280,000 bbl/d, with anticipation of 50% growth by end of 2028. The company is actively working with the government on new opportunities, seeking competitive fiscal terms that can compete for capital within its portfolio.

“On debt recovery, we are continuing to recover our debt. We expect that by early 2027, that will be fully recovered. In terms of our JVs, today, we are operating 3 JVs very successfully.”

asked by Jason Gabelman · answered by Eimear Bonner