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President Donald Trump touting lower prices.
We're down lower than we've been in seven years, and gasoline prices and oil prices, not just the three states that I talk about. With one ninety ninety.
Gallon, how would you like to have one ninety nine?
Do you know that's that's the equivalent of a very.
Major tax cut, you know, when you get the energy prices down, the national average for gas falling below three dollars a gallon for the first time since twenty twenty one. Mike Worth, the CEO of Chevron, joins us now for an exclusive interview. I am so glad that we're going to speak with you, Mike. Thank you so much for being here with us.
You're welcome, Lisa.
So let's start about that one ninety nine a gallon. It might be great for a lot of people in terms of filling up their gas tanks. A real question around drill, baby, drill, and how much you're incentivized to increase production given the lower cost of all.
Well, you know, we make our investment plans on a long term basis. We look at supply and demand well out into the future, and so the price of oil today can affect short term financial performance of the company, but it really doesn't play as much into some of the longer term investment plans as we look down the road, not really out the window as we decide what the capital program looks like.
But how do you reconcile the too sure doing a lot of exploration internationally, and to Lisa's point, prices are low and potentially are going to even go lower.
Well, exploration is a long cycle business. We just brought a project online in the Gulf of America last year where the discovery was made twenty years prior, and so the timeline between when you actually make a discovery, when you appraise that and you ultimately develop and bring it to market can be years or even decades. And so we really have to take that long view on the business. And you know, in the short term we'll keep cost tight.
We've got to industry leading free cash flow over the next few years as we'ringing cost down, capital spending down, increase the synergies on the hes transaction. So we're going to deliver strong financial performance through the cycle.
Based on what the IA has said recalibrated where they see oil demand growing. It was twenty thirty, now it's twenty fifty. Ope says they had a rendezvous with reality, seeing that the world needs a lot more of this, a lot more fossil fuels.
If outlook is.
So strong, should Chevron, should all.
Of these big oil companies?
So do they increasing more of that investment?
Well, on the idea, even a blow broken clock is right twice a day. So they have finally acknowledged what we've long known, which is that the world will continue using oil and gas for many decades into the future. We are in that long cycle business and the capital spending amory has become more efficient in our industry. A
decade ago, we were spending money on big projects. There's a lot of growth going on in shale at a relatively high cost structure, and the entire industry has found ways to standardize designs, simplify projects, and actually get more for every capital dollar that we spend, so the size of our capital spending doesn't necessarily correlate to the growth.
The way that it would have in years gone by when it comes to expansion. The US government is backing this plan of Rock has to transfer Louke Oil stakes to an American company, So it's really only your x on how are those negotiations going.
Well, I can't comment on commercial negotiations. What I will say is we've got a well established reputation as a good partner, as a world class operator in international locations. We're sought out as a partner in countries around the world. We got long history working in the Middle East, and we put a real premium on partnership and that goes to every country we work with and every company we work with.
Can you talk about those assets though, do you think those would be good assets the Chevron portfolio?
Well, we always look to strengthen our portfolio. Iraq is a country that's blessed with very substantial petroleum resources and some of the largest fields in the world, and so those are the kinds of things that we always look at.
If you're talking about the capital profile and investments, and how it's become a lot more efficient to make the same kinds of investments and frankly the same kind of output. Where is this sufficiency coming from. Is it coming from artificial intelligence? Is is it coming from just better technology and getting oil and gas out of the ground.
Yeah, So in shale, for instance, which is something the US has been a world leader. In a decade ago, break evens were seventy or eighty dollars a barrel. Today they're not even half of that, as we found ways to drill longer laterals, to optimize the spacing of wells, to complete wells at lower cost with greater production coming
out of them. So it's a series of things. In the deep water, we've simplified and standardized designs, and what used to take thirty dollars a barrel or more in terms of cost of capital to go into a project now has been cut in half. And so it's not driven by AI yet. I do think over time we're going to see technologies like that continue this path and we're on We're going to get.
To that in just a second. If that's the case, if you can get more even at a break even cost, it's a lot lower. Why has the rig count gone down so much? Why aren't there more rigs coming online given the capacity here in the United States?
Because we can drill more feet per day with a rig today than we could in the past, and so rig count is not nearly as interesting a metric as how many feet a day you can drill, how many wells you can complete in a period of time, and so we're getting more work done out of fewer pieces of equipment.
Today, you talk about how AI isn't delivering those efficiencies yet, the indication being that maybe down the road it might be the case. Where specifically are you thinking, and I'm saying at a time when Chevron's cutting staff, so are other people. Is this a headcount issue? Is this something else? How are you seeing it be deployed?
Well, we're in I think we're still in the very early days of applying AI at scale in our industry. One of the things that's undeniable about AI is it needs lots of data. A company like ours has as much data as just about any company in the world, and so we've got decades and decades of geologic data, seismic data, operating data, all of which can be used to feed these models, to optimize operations, to improve our exploration success, to squeeze more production out of existing assets.
And so we see huge opportunities to run our business with smarter technology, get better decisions made faster, and so there's certainly a cost dimension to this, but I think the real opportunity is going to be about the productivity of our assets in our business.
You announced this project, the first of its kind, to provide natural gas fired power for data centers. Do you expect to do more of these projects and what's the update on this one in West Texas well.
Certainly, the demand for power has been talked about now for the last year or so, as the constraint in the growth of AI data centers and the ambition for data centers at a scale we've never seen before has become a commonplace. The reality is we need large scale power. What we're working on is off the grid power because it's also becoming an issue with electricity prices and we're
seeing this show up in consumer sentiment and elections. Our approach is to develop gigawatt scale power generation, not through the grid, but dedicated to data centers. We've got a project in a couple of sites actually we're working on in West Texas where we've got a lot of natural gas. We've got large gas turbines, the largest in the world being delivered starting next year, and we're deep into discussions with multiple customers that would like to cite data centers to use this power You're.
At the center of a lot of politically very important converse stations, not just when it comes to AI and not just when it comes to Luke oil assets. Also Venezuela the only American company left. Can you give us an update on either conversation with the administration, your team on the ground. What is the future of Chevron in this country? Is the president's sense maybe he's going to send troops there?
Yeah, I don't know what the presence intentions are. We've been in Venezuela for the last one hundred years. Our presence there, we believe is important for the local economy, the regional economy, the people of Venezuela. The Venezuelan oil is sought after by US refiners, and we operate there in full compliance with all US law and sanctions. We're in discussions with the administration to ensure that we stay in compliance, that they understand the value that our presence brings to America.
And so you know that's and you plan on being there for the long term.
Venezuela actually has more oil and gas resource than Saudi Arabia. It's right here in our hemisphere, very close to the Gulf coast. Refine and in complex and we've been there through ups and downs, and like many places in the world, we have to take a long view on our presence in countries like this.
You talked about succession yesterday at this conference. How are you thinking about that as you talk to the board? Is there something you want to get done before you hand over the reins?
Well, succession discussions begin on day one. I think for most CEOs it's part of a board's responsibility to be thinking about the next generational leadership. I have a long list of things, some of which have been accomplished. I mentioned the Hest transaction, which was a big one for US earlier this year. We have laid out a plan for the next several years to investors last month that grows free cash flow, that drives a significant return to cash to shareholders. All of those are things that I
want to make progress on. But when the time is right for someone to follow me in this job, the board will make that determination and I will happily hand over.
Will you go right for Landman?
Just three seconds left? Do you think that in ten years gas or oil is going to be more valuable?
Well on an energy content basis, you know oil's got about six times more energy content per unit of volume than gas to us, and so you know they trade in sympathy with one another because energy is somewhat fungible. I think both of those commodities are going to be essential to the global economy. I think demand for both of those will be much higher than it is today.
And I think you're going to see good companies in our industry still producing more of that and doing it in a way that keeps costs very affordable for the economy.
My fourth wonderful to see you. Thank you so much for being with us here this morning. Mike Worth, the CEO of Chevron