Chevron touts Hess, PDC Energy acquisitions

May 3—Having completed two major acquisitions, the Chevron Corp. continues to lower the carbon intensity of its operations, grow lower carbon businesses and advance foundational projects in both hydrogen and carbon capture.

That's according to Chairman-CEO Mike Wirth, who said in his San Ramon, Calif.-based company's fourth quarter 2023 earnings report that Chevron over the past five-year commodity cycle "with prices high, low and everywhere in-between" led its peer group in the most important value-creating measures.

"We were the most capital efficient while managing unit costs well below inflation and many peers," Wirth said, noting the acquisitions of the Hess and PDC Energy corporations. "Capital and cost discipline always matter in a commodity business.

"Combining this discipline with our focused portfolio of advantage assets, Chevron was able to lead the peer group in returning cash to shareholders. Our five-year dividend growth rate was greater than the S&P 500 and more than double our nearest peer.

"Surplus cash was returned to our shareholders in each of the past five years through share buybacks. Our track record has proven and we intend to continue growing value for our shareholders in any environment. In the Permian Basin we delivered on our full year production guidance and set a quarterly record of 867,000 barrels of oil equivalent per day while building our drilled but uncompleted inventory in the fourth quarter.

"Looking to the year ahead our program is back-end loaded as we plan to continue to build our DUC inventory before adding an additional completion crew in the second half of the year."

As a result, Wirth said, he expects production in the first half of the year to be down from the fourth quarter by 2 to 4 percent before climbing toward a 2024 exit rate of around 900,000 barrels per day.

"We have strong momentum and expect to achieve one million barrels of oil equivalent per day in the Permian in 2025," he said.

At Tengizchevroil in Kazakhstan, he said, the field, currently flowing at high pressure, continues to keep the existing plants full.

"In fact 2023 net production was the highest since 2020," Wirth said. "TCO is producing from the new wells. The upgraded and new utilities, gathering system, control center and power distribution system are all currently in operation."

He said the TCO's wellhead pressure management project start-up is expected to begin in the second quarter when the first metering station is converted to low pressure, which will enable increased flow rates.

"Low pressure production streams going back to existing process units will be driven by the pressure boost compression," Wirth said. "At the same time production from metering stations not yet converted will continue to flow in the high-pressure system."

Chief Financial Officer Pierre Breber reported fourth quarter earnings of $2.3 billion or $1.22 per share with adjusted earnings of $6.5 billion or $3.45 per share and $3.7 billion in charges that were pre-announced in January.

"Foreign currency charges were almost $480 million," Breber said. "Our balance sheet remains strong, ending the year with a net debt ratio comfortably in the single digits.

"Turning to the quarter, adjusted earnings were higher than last quarter by roughly $730 million. Adjusted upstream earnings improved due to higher liftings in line with record quarterly production and favorable timing effects.

"Adjusted downstream earnings decreased on lower refining margins, partially offset by a favorable swing in timing effects."

Breber said adjusted earnings for the full year decreased by nearly $12 billion compared to the prior year.

"Adjusted upstream earnings decreased primarily due to lower prices and adjusted downstream earnings were lower largely due to declining refining margins," he said. "Solid financial performance enabled Chevron to deliver again on all four of its financial priorities.

"We announced an 8-percent increase in our dividend, reflecting our confidence in expected future free cash flow growth, and we maintained capital discipline in both traditional and new energies. We reduced debt by over $4 billion, including all debt assumed in the PDC acquisition, and we repurchased about 5 percent of our shares outstanding."

Last year, Breber said, Chevron produced more oil and gas than in any other year in the company's history including a record number of LNG cargoes out of Australia.

"We expect 2024 production to be higher again by 4 to 7 percent," he said. "Our plans include production growth in the DJ Basin with a full year of legacy PDC operations and continued organic growth in the Permian."