Key Metrics
- Total Net Oil-Equivalent Production: 3,364 MBOED
- U.S.: 1,605 MBOED
- International: 1,759 MBOED
- Liquids Production:
- U.S.: 1,156 MBD
- International: 834 MBD
- Natural Gas Production:
- U.S.: 2,694 MMCFD
- International: 5,550 MMCFD
- Total Adjusted Earnings: $4.531 billion (decreased 20.8% yoy, decreased 3.1% qoq)
- Upstream:
- U.S.: $1.946 billion
- International: $2.630 billion
- Downstream:
- U.S.: $146 million
- International: $504 million
- Other: $(695) million
- Cash Flow from Operations: $9.7 billion (remained the same yoy)
- Discretionary Cash Flow: $8.3 billion
- Total Capex: $4.1 billion (decreased 12.8% yoy)
- U.S.: $2.791 billion
- International: $1.264 billion
- Free Cash Flow (FCF): $5.6 billion (increased 12% yoy)
- Free Cash Flow (ex-WC): $4.2 billion
- Avg Price of Crude/NGL (U.S.): $54.86 per barrel
- Avg Price of Natural Gas (U.S.): $0.55 per MCF
- Avg Price of Crude/NGL (International): $70.59 per barrel
- Avg Price of Natural Gas (International): $7.46 per MCF
- Crude Input (U.S. Downstream): 995 MBD
- Refined Product Sales (U.S. Downstream): 1,312 MBD
- Crude Input (International Downstream): 628 MBD
- Refined Product Sales (International Downstream): 1,507 MBD
Forward guidance
- Gulf of Mexico Production: Expected to grow to 300,000 barrels per day by 2026 due to ongoing projects and water injection initiatives.
- Production Plateau: Anticipate holding production at a plateau of 400,000 barrels of oil equivalent per day through the end of the decade.
- Cost Reductions: Projecting $2 to $3 billion in structural cost reductions by the end of 2026, primarily from portfolio optimization and technology enhancements.
- Share Repurchases: Fourth-quarter share repurchases expected to be between $4 billion and $4.75 billion, consistent with prior guidance.
- Asset Sale Proceeds: Anticipate approximately $8 billion in before-tax proceeds from announced asset sales, expected to close in Q4 2024.
- Production Growth Guidance: Full-year average production growth expected to finish at the top end of the guidance range of 4% to 7%.
- TCO Startup: Initial startup activities for TCO expected in the first quarter of 2025, with ongoing complex commissioning work.
Key takeaways
- Positives:
- Michael Wirth highlighted strong operational results, stating, "We continue to see strong performance in the Permian," with a 7% increase in worldwide production and record cash returns to shareholders.
- The successful execution of major turnarounds at TCO and Gorgon ahead of schedule indicates operational efficiency, with Wirth noting, "We have been very diligent about discerning what is in and what is out" regarding maintenance work.
- Chevron's strategic asset sales, including $8 billion from non-core positions, reflect a focus on portfolio optimization, as Wirth stated, "We will always ask ourselves if the balance of the portfolio has more value to others than it does to us."
- The company is on track to achieve $2 to $3 billion in structural cost reductions by 2026, driven by technology and operational efficiencies, according to Eimear Bonner, who emphasized, "Costs always matter in a commodity business."
- The Gulf of Mexico's technological advancements, particularly the Anchor project, are expected to unlock new resource opportunities, with Wirth noting, "The heyday of the Gulf of Mexico is far from over."
- Negatives:
- The uncertainty surrounding the TCO startup remains a concern for investors, with Wirth acknowledging, "There is still significant complex commissioning work ahead."
- Adjusted earnings decreased by $1.2 billion year-over-year, primarily due to lower refining margins, as Bonner noted, "Adjusted downstream earnings decreased mainly due to lower refining margins."
- The ongoing regulatory challenges in California could impact profitability, with Wirth criticizing state policies that "discourage investment and constrain supply."
- The potential for production impacts from divestments is anticipated, with Bonner stating, "Impacts to production from divestments are expected to be around 45,000 barrels of oil equivalent per day for the quarter."
Peer Summary
- Production Trends: ConocoPhillips reported a production increase, with Q4 guidance raised to 1.99-2.03 million barrels per day, indicating a competitive edge in upstream production amidst a backdrop of operational challenges faced by others, such as EOG's anticipated slower U.S. liquids growth.
- Cost Management: ExxonMobil highlighted a 24% reduction in turnaround costs, while Chevron noted lower refining margins impacting earnings. This suggests a sector-wide focus on cost efficiency, with competitors successfully managing operational expenses.
- Market Demand: Valero Energy emphasized strong product demand, with U.S. wholesale volumes exceeding 1 million barrels per day, contrasting with EOG's acknowledgment of softer demand growth expectations for 2024.
- Regulatory Challenges: Both Chevron and Valero cited regulatory pressures in California, with Valero noting that state policies have led to refinery losses, indicating a shared concern about the impact of local regulations on operational viability.
- Future Outlook: EOG anticipates significant natural gas demand growth starting in 2025, while ConocoPhillips and Occidental Petroleum are focusing on production efficiencies and capital optimization, reflecting a sector-wide trend towards sustainable growth strategies.
