Chevron Q4 2024 Earnings Report

Gossamer Bio EPS Results

• Actual EPS: $2.06
• Consensus EPS: $2.42
• Beat/Miss: Missed by -$0.36
• One Year Ago EPS: $3.45

Gossamer Bio Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $47.40 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Gossamer Bio Announcement Details

• Quarter: Q4 2024
• Date: 1/31/2025
• Time: Before Market Opens
• Conference Call Date: Friday, January 31, 2025
• Conference Call Time: 11:00AM ET

Gossamer Bio (NASDAQ:GOSS), a clinical-stage biopharmaceutical company, focuses on developing and commercializing seralutinib for the treatment of pulmonary arterial hypertension (PAH) in the United States. The company is developing GB002, an inhaled, small molecule, platelet-derived growth factor receptor, or PDGFR, colony-stimulatin factor 1 receptor and c-KIT inhibitor, which is in Phase 3 clinical trial for the treatment of PAH. It has license agreements with Pulmokine, Inc. to develop and commercialize GB002 and related backup compounds. The company was formerly known as FSG, Bio, Inc. and changed its name to Gossamer Bio, Inc. in 2017. Gossamer Bio, Inc. was incorporated in 2015 and is headquartered in San Diego, California.

Chevron Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning. My name is Katie, and I will be your conference facilitator today. Welcome to Chevron's Fourth Quarter twenty twenty four Earnings Conference Call. As a reminder, this conference call is being recorded. I will now turn the conference call over to the Head of Investor Relations of Chevron Corporation, Mr.

[Operator]

Jake Spiering. Please go ahead.

[Jake Spiering, General Manager of Investor Relations at Chevron]

Thank you, Katie, and welcome to Chevron's fourth quarter twenty twenty four earnings conference call and webcast. I'm Jake Spiering, Head of Investor Relations. Our Chairman and CEO, Mike Worth and CFO, Eimear Bonner, are on the call with me today. We will refer to the slides and prepared remarks that are available on Chevron's website. Before we begin, please be reminded that this presentation contains estimates, projections and other forward looking statements.

[Jake Spiering, General Manager of Investor Relations at Chevron]

A reconciliation of non GAAP measures can be found in the appendix to this presentation. Please review the cautionary statement and additional information presented on Slide 2. Now, I will turn it over to Mike.

[Michael Wirth, Chairman & CEO at Chevron]

Thanks, Jake, and thank you everyone for joining us today. Chevron delivered another year of strong results in 2024. Which achieved record production both globally and in The United States and reached key milestones that are expected to underpin years of future cash flow. This includes outstanding performance in the Permian, exceeding expectations with production growth of nearly 18% from last year, delivering key project startups in the Gulf Of America, fully integrating PDC Energy, expanding our position in the DJ Basin, optimizing our portfolio through asset sales and swaps that maximize long term value, including completing WPMP and achieving first oil at the future growth project at TCO last week. We also returned a record $27,000,000,000 in cash to shareholders through dividends and buybacks.

[Michael Wirth, Chairman & CEO at Chevron]

Over the past two years, we've repurchased $30,000,000,000 and reduced our outstanding share count by 10%. We continue to build our new energies business and complete projects to lower the carbon intensity of our operations. In 2024, we sold over 20000000 barrels of bio based diesel and advanced foundational projects in CCUS and hydrogen. We also completed projects designed to abate over 700000 tons of CO2 emissions annually. Now I'll turn it over to Hemer to go over the financials.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Thanks, Mike. Chevron reported earnings of $320,000,000,0.0 or $1,.84 per share. Adjusted earnings were $360,000,000,0.0 or $2,.06 per share. Included in the quarter were special items totaling $110,000,000,0.0 related to restructuring and impairment charges. Foreign currency gains were $7.20,000,000 dollars Full year organic CapEx was aligned with our announced $16,000,000,000 budget.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Inorganic CapEx of $5.30,000,000 dollars related mostly to lease acquisitions and new energies investments. We maintained double digit returns with adjusted ROCE of 10.5% for the year. Compared with last quarter, adjusted earnings were $900,000,000 lower. Adjusted upstream earnings were impacted by revisions to asset retirement obligations and timing effects, including year end inventory valuation. Adjusted downstream earnings were lower due to softer refining and chemicals margins and timing effects.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Chevron's cash generation continued to position the company for long term success while rewarding shareholders. In 2024, we invested capital efficiently, growing production by 7%, generated nearly $8,000,000,000 in proceeds from asset sales, sustained our long track record of dividend increases and repurchased 5% of shares outstanding and maintained a strong balance sheet ending the year with a net debt ratio of 10%. Chevron's long standing financial priorities have created value for shareholders. They have guided our actions through multiple commodity and investment cycles and will continue to govern how we allocate capital. Over the past five years, we've grown our dividend faster than the S and P five hundred and nearly double the rate of our closest peer.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Today, we announced a 5% increase in the dividend, marking the thirty eighth consecutive year with an annual increase to dividend payment per share. We're committed to capital discipline. Only the most competitive projects in our portfolio will get funded. Where assets don't compete for capital, we have a history of generating value commercially. The balance sheet is in excellent health with net debt below our historical levels.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

We've repurchased 17 of the last twenty one years and intend to maintain a buyback range of $10,000,000,000 to $20,000,000,000 per year depending on market conditions. Compared to our peers, we're delivering growth with less capital and returning more cash to shareholders. In the past three years, we've returned $75,000,000,000 in cash to shareholders via dividends and share buybacks. Now I'll hand it over to Mike to cover our near term outlook.

[Michael Wirth, Chairman & CEO at Chevron]

Thanks, Neumar. Chevron is in a strong position today with near term catalysts that are expected to drive the company to even better performance in 2025 and 2026. Our objective is unchanged to safely deliver higher returns and lower carbon. In the next two years, we plan to achieve industry leading free cash flow growth, further strengthen our portfolio, including the expected completion of the Hess transaction in the advanced opportunities in renewable fuels, hydrogen, CCUS and power, while maintaining cost and capital discipline. It's important to note that the guidance provided today excludes Hess.

[Michael Wirth, Chairman & CEO at Chevron]

We continue to be very confident in Hess' position in the arbitration. We plan to host our next Investor Day with a longer term outlook after we close the transaction later this year. Chevron is poised for industry leading free cash flow growth. We expect to add $10,000,000,000 of annual free cash flow growth in annual free cash flow in 2026 led by growth in advantaged upstream assets. With additional production from FGP and a further reduction in affiliate CapEx, we expect a sustained increase in distributions from TCO going forward.

[Michael Wirth, Chairman & CEO at Chevron]

In the Gulf Of America, where we produce some of the highest margin barrels in our portfolio, we'll have additional growth as anchor and whale continue to ramp up and we bring Ballymore online. And in the Permian, we're focused on operational efficiency and free cash flow, positioning the asset as a core cash generator for the company. We're also executing plans to deliver stronger results across the entire portfolio, including cash savings from our targeted $2,000,000,000 to $3,000,000,000 reduction in structural costs and improved returns in our downstream and chemicals businesses. At TCO, we achieved first oil at FGP last week. This important milestone is a result of consistent disciplined execution by the project and operations teams.

[Michael Wirth, Chairman & CEO at Chevron]

Our focus remains on a safe and reliable ramp up of the plant. FGP adds 260000 barrels of oil production capacity to the existing plants. We expect to achieve full production rates, 1000000 barrels of oil equivalent per day within the next three months. With $70 Brent expected free cash flow to Chevron is $5,000,000,000 in 2025 and $6,000,000,000 in 2026. This includes fixed loan repayments and quarterly dividends.

[Michael Wirth, Chairman & CEO at Chevron]

We're proud to bring this large complex project online for the benefit of our shareholders and The Republic Of Kazakhstan and look forward to future collaboration to maximize the long term value of the Tengiz Reservoir. In 2024, execution efficiencies led to strong well and base business performance, helping us achieve another record for Permian production. Over the last five years, we've delivered compound annual growth of 16% while continuing to capture efficiencies. Through optimized pad and drilling designs and completion improvements like triple frac, we're able to achieve these production levels with 40% fewer company operated rigs than our plans included just a few years ago. We expect production to reach 1000000 barrels of oil equivalent per day in 2025 and plan to moderate growth in CapEx to drive predictable and durable free cash flow generation.

[Michael Wirth, Chairman & CEO at Chevron]

Our Permian portfolio delivered superior returns due to royalty advantaged acreage across all of the sub basins, which add to both the top and bottom line. We're continuing to develop and deploy technologies to enhance efficiencies and recoveries. We're leveraging our strengths in advanced chemicals and stimulation and scaling them across our shale and tight portfolio. Our world class upstream assets provide further growth opportunities that are poised to deliver value for decades. In the Gulf Of America, where we expect to grow production to 300000 barrels a day, We achieved first oil at the anchor and oil projects and Ballymore is expected to come online around the middle of the year.

[Michael Wirth, Chairman & CEO at Chevron]

In Western Australia, our discovered resource has the ability to keep our LNG plants full for decades. Last month, we announced an asset swap that will increase our equity in Wheatstone, which enables long term asset development and monetization. In West Africa, we have a queue of low cost developments that are expected to sustain production for many years. We recently extended leases in Nigeria and had a shelf discovery that will tie back to existing infrastructure. In Angola, we achieved first gas at the San Yalene gas connection project and we plan to bring online our Savindola development later this year.

[Michael Wirth, Chairman & CEO at Chevron]

In Eastern Mediterranean, we have a significant resource position we're continuing to unlock. Expansion projects at Leviathan and Tamar are expected to come online through the end of the decade. Turning to our Downstream and Chemicals businesses, we're focused on operating reliably and efficiently while executing competitive projects that extend our value chains and capture market synergies. The recently completed expansion at our Pasadena Refinery enhances our integrated value chain by running more Permian crude, supplying more products to our regional marketing business and expanding synergies with the Pascagoula Refinery. Our petrochemical growth projects in The U.

[Michael Wirth, Chairman & CEO at Chevron]

S. And Qatar are more than 50% complete and are expected to contribute to further cash flow growth beyond 2026. Both projects are feedstock advantaged, have competitive cost structures and are well positioned to serve growing demand. We have several projects in our new energies business that are expected to achieve key milestones in the next two years. In renewable fuels, we're in final commissioning of the Geismar renewable diesel expansion.

[Michael Wirth, Chairman & CEO at Chevron]

And at our Mungi joint venture, construction continues at the new oilseed processing plant in Louisiana, increasing our exposure across the renewable fuels value chain. We're working towards startup of the ACES green hydrogen project in Utah later this year, which will produce hydrogen from water and excess renewable power and store it underground for dispatchable lower carbon power generation. The project is 1 of the world's largest hydrogen storage projects and will have over 200 megawatts of electrolyzer capacity. In carbon capture and storage, Bayou Bend is working towards a fee decision for the offshore project and we're also developing plans to capture and store CO2 from our Pascagoula refinery. Earlier this week, we announced plans to jointly develop scalable, reliable power solutions to support growing energy demand from U.

[Michael Wirth, Chairman & CEO at Chevron]

S. Data centers. Chevron is positioned to participate in this growth and generate competitive returns through integration with our U. S. Natural gas business.

[Michael Wirth, Chairman & CEO at Chevron]

Experience in building and operating nearly 5 gigawatts of reliable behind the meter power and expertise in technologies that can help provide a pathway to reduce greenhouse gas emissions over time. We've secured slot reservations to purchase 7 natural gas fired turbines from GE Vernova with deliveries beginning and we're advancing site selection and engineering work while engaging customers. We look forward to sharing more as our plans develop. I'll hand it back to Ymir to close out our guidance for 2025 and 2026.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Thanks, Mike. In the cyclical commodity business, capital and cost discipline always matter. Chevron's CapEx and affiliate CapEx budgets reflect our commitment to capital efficiency, while funding a balanced portfolio of short and long cycle investments. Organic CapEx is expected to remain within our $14,000,000,000 to $16,000,000,000 guidance range. As spend in the Permian and Gulf Of America comes down, capital will flow elsewhere within the portfolio to support continued growth.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Affiliate CapEx is expected to trend down further as investments at TCO and CPChem come online. We're targeting $2,000,000,000

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

to

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

$3,000,000,000 in structural cost reductions by the Work is underway to deliver these savings through asset sales, scaling technology solutions such as expanding the use of robotics and changing how we work to improve efficiencies. We're executing our plans to lower absolute costs while delivering growth. Last year worldwide oil equivalent production was the highest in our history benefiting from a larger position in the DJ Basin following our acquisition of PDC Energy and nearly 18% growth in the Permian. Excluding asset sales, we expect production to grow around 6% annually through 2026. In 2025, we expect growth to be weighted towards the second half of the year as key projects in Tengiz and the Gulf Of America come online and ramp throughout the year.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

We're excited about the year ahead. We're focused on delivering growth across advantaged assets and value chains while reducing absolute costs, starting up profitable new energy projects and advancing new behind the meter power solutions and continuing to reward our shareholders with higher returns and a differentiated value proposition. I'll now hand it off to Jake.

[Jake Spiering, General Manager of Investor Relations at Chevron]

That concludes our prepared remarks. Additional guidance can be found in the appendix to this presentation and the slides and other information posted on chevron.com. We're now ready to take your questions. We ask that you limit yourself to 1 question. We will do our best to get all of your questions answered.

[Jake Spiering, General Manager of Investor Relations at Chevron]

Katie, please open the line.

[Operator]

Thank We'll take our first question from Burch Burtaria with RBC.

[Biraj Borkhataria, Analyst at Royal Bank of Canada]

Hi. Thanks for taking my question. And firstly, congrats on getting FGP online. It's a big project. So I wanted to ask about some underlying cash flow excluding working capital.

[Biraj Borkhataria, Analyst at Royal Bank of Canada]

This quarter, at least versus our model, the $530,000,000,0.0 was quite a bit away off what we expected. So could you just walk me through how I should think about any 1 offs in there and help me understand what the sort of underlying basis should be as we think about 2025? Thank you.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Hi, Biraj. Thanks for the question. You're right. Cash flow excluding working capital was impacted by some non recurring and accounting items this past quarter. So let me step you through the big ones.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Maybe the first is we recognized some tax charges and earnings related to our recently completed Canadian asset sale and that was around $150,000,000,0.0 It's important to note that these tax charges are offset in working capital. But if you exclude the working capital when you're looking at cash flow, you're still going to see that tax charge. So that's a big 1. That's the main 1. The second one is we also recorded some charges in the quarter that for earnings we had identified those as special items.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

We disclosed them back in Dec. 0 in our capital release. However, we don't make the same adjustments for these items in cash flow. So you're seeing some of that flow through to the bottom line and that's about a $500,000,000 headwind. Beyond those 2 items, we did have some other impacts, the combination of affiliate distributions, some unique commercial activity and that's another $500,000,000 So when you add up the 3 elements, that's about $250,000,000,0.0 to take into consideration for the cash flow this quarter.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

So if you got any additional questions on those pieces acknowledging they're a bit unusual this quarter, I mean, Jay can follow-up with you after the call and show you how everything flows through. Thanks.

[Operator]

We'll take our next question from Paul Cheng with Scotiabank.

[Paul Cheng, Analyst at Scotiabank]

Thank you. My when we're looking at your next two years, I think you have a really good outlay and I think the investor is comfortable. I think the question has always been talking about longer term, say, by the turn of the decade, I mean, what you're going to do if we put half asset aside. And in here, can you talk about your opportunity set you already had the investment for example? I believe there's a lot of discovery you guys have made in Nigeria, in Angola, but where are we in terms of bringing those that to the fruition and having the project coming on stream, what we need in order for that to become a reality and how big are those opportunities there?

[Paul Cheng, Analyst at Scotiabank]

Thank you.

[Michael Wirth, Chairman & CEO at Chevron]

Okay. Paul, thank you. Yes, you're right. What we laid out today is a more detailed look ahead for the next two years. And as you rightly note, there's a lot of significant growth.

[Michael Wirth, Chairman & CEO at Chevron]

We wanted to provide you more confidence and visibility on that free cash flow growth. And frankly, it continues to be de risked every day. Here during the month of Jan. 0 with the whale startup and the FGP startup, 2 significant events that really derisk that. And so that was the primary objective is provide transparency and confidence in that.

[Michael Wirth, Chairman & CEO at Chevron]

And I will set Hess aside, but I'll just acknowledge that we look forward to closing Hess, which will make a strong hand even stronger. If you look out beyond the there are a number of things that are going to contribute to continued free cash flow growth. We've got 2 big chemicals projects that are under construction that will come online '20 07/00 time window. We've got projects in the Eastern Mediterranean in the near term for both tomorrow and Leviathan that will come on towards the end of this year and be ramping into 2026 and beyond. And then we've got further work underway, particularly at Leviathan for yet another expansion in the Eastern Mediterranean.

[Michael Wirth, Chairman & CEO at Chevron]

I would expect Argentina over the back half of this decade to begin to grow at a rate that's stronger than what we've seen thus far, contingent upon continued progress in policy and kind of government stability and macro environment stability there, but the signs there have been encouraging and positive. You mentioned West Africa. There's a number of opportunities. I talked about a discovery on the Nigeria shelf, Sanya Aline Gas, South Endola. We have a number of other very attractive prospects there.

[Michael Wirth, Chairman & CEO at Chevron]

We haven't really gone below 10000 feet to produce yet in that region. We picked up additional acreage offshore Angola, Three new blocks that are undergoing seismic work right now. And we haven't talked a lot about West Africa in recent years given so many other things within our portfolio, but that has a lot of running room left ahead of us. Venezuelan partition zone, huge, huge resource positions. We've been moving thoughtfully for particular reasons in each of those locations, but those present long term opportunities that are captured and can become very attractive.

[Michael Wirth, Chairman & CEO at Chevron]

And we've got a really nice exploration portfolio in West Africa, South America, The U. S. Gulf, Eastern Mediterranean that we expect to provide further resource opportunities. We've got technology that can unlock things. And And of course, a large low decline base that we can sustain with very competitive capital investment and good underlying growth rates.

[Michael Wirth, Chairman & CEO at Chevron]

So we've seen outsized growth here in recent times, right? Last year's growth 7%. We're guiding to a 6% CAGR for the next couple of years. That's probably not a growth rate that anyone would expect to continue, but there are plenty of opportunities out there in the 2027 and beyond Q. We'll sort through and fund the best of those within a tight disciplined capital budget.

[Michael Wirth, Chairman & CEO at Chevron]

Thanks, Paul.

[Operator]

We'll take our next question from Neil Mehta with Goldman Sachs.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Yes. Good morning, Mike, Emer and team. Just wanted to better understand the Power business and the announcement from earlier this week with G or Nova. Mike, you've talked a lot about power being a tricky business and Chevron seen that firsthand over the last thirty years at different points, but in wanting to ensure that you're staying true to your core competency. So how do you think about playing in this ecosystem and ensuring that you de risk it so that you can preserve the upside?

[Michael Wirth, Chairman & CEO at Chevron]

Yes. So, Neal, I would tell you, you should think of this as being aligned with what we've said we were looking to do, which is leverage our strengths to advance lower carbon energy solutions to meet demand growth in the world. We operate nearly 5 gigawatts of reliable and at scale power today at Gorgon, at TCO, in refineries. We know how to build and operate large scale power generation and integrate it to a core customer. We know how to operate these assets very, very well.

[Michael Wirth, Chairman & CEO at Chevron]

We've got technical capabilities that are required to do this. In The U. S, we've got a very large natural gas position. And we've been diversifying some of our gas markets with some LNG off tank. And this allows us to backstop power investments for premium customers.

[Michael Wirth, Chairman & CEO at Chevron]

We have said we didn't envision ourselves as a merchant power player and we still don't. Building power to sell into the grid and just generate merchant power is probably not going to deliver returns competitive with our portfolio, but a high reliability at scale offering that's delivered rapidly is something that's in high demand from customers right now. You can see PPAs that have been done for things like recommissioning nuclear facilities that give you some sense of the value that these have for customers. And we've been engaged in discussions with the hyperscalers for a year or more to understand what they're looking for and understand whether or not that's something that we can deliver on. And we think that it really does make good sense for us where we get 7 of GE Vernova's largest turbines with reservation slots for delivery beginning in and then into 2027.

[Michael Wirth, Chairman & CEO at Chevron]

And would expect to be on the front end of what will be a real surge in power demand in this country. And importantly, the last thing I'll say is, I think most of the people on the call are familiar with the challenges that the grid in this country faces right now in ensuring we keep supply of electricity reliable into the economy as it stands today. Doing this off the grid and behind the meter doesn't further tax an already taxed distribution infrastructure and it doesn't put this investment cost into the rate base and drive up costs for consumers as well. So we think this is something that's good for America. American energy abundance can help ensure AI leadership.

[Michael Wirth, Chairman & CEO at Chevron]

It's good for the public. It will create jobs and it will help to keep rates from rising and it's good for the big customers. They're looking for reliable and fast solution to deliver this power and eventually lower carbon options to reduce carbon intensity. Thanks, Neil.

[Operator]

We'll take our next question from Doug Leggate with Wolfe Research.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

Thanks. Good morning, guys. Thanks for the opportunity to ask Mike. I did warn Jay come out of Part A and Part B, so it's technically 1 question, but hopefully you can do it. I'll assume he blessed it.

[Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research]

So the incremental disclosure on the bridge to 2027 is really, really helpful, but I wonder it's never enough obviously, but I wonder if you could just benchmark that against what you gave us in February 2023, I guess, under similar conditions. So what is the incremental 10 including the debt payback? What does that look like in 2027 versus I guess what you gave us before? And the Part B is obviously Tengiz is the big story here, but a couple of days ago, I think the Kazakh government were on the wire is actually talking about contract extensions, which is great news for you potentially, but on better terms. I was just wondering if there was any color you could offer on that.

[Michael Wirth, Chairman & CEO at Chevron]

Yes. So, Hemra, why don't you talk about free cash flow for 2027 and then I'll take the concession.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Yes. Thanks, Doug. The short answer is it's aligned with the previous guidance. So we're really reaffirming that guidance. Obviously, since then there's been some puts and takes on the portfolio side.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

We've added PDC since our last guidance. We've divested some assets as well, primarily Canada. There's been some price assumptions changed, but we do have growth laid out today out to 2026 and we see growth beyond that. We've got the CP Chem projects that will be online around that time. We'll have some Eastern Med brownfield projects and tomorrow in Leviathan that will come after 2026.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Talked earlier about the Argentina potential there and the power potential. And then in addition to that, we've got the $2,000,000,000 to $3,000,000,000 of structural cost reductions that are underway. So the short answer is it's aligned, but maybe many of the projects that we talked about a few years ago have also been derisked since then. So we'd expect to provide the 2027 outlook later on the year.

[Michael Wirth, Chairman & CEO at Chevron]

Okay. Yes, on the concession, Doug, we're still focused on ramping up safely and reliable. This is a really important milestone and it signals moving to the next phase in the life of that field. And so we're absolutely laser focused on getting that right. Early performance has been very stable and very encouraging.

[Michael Wirth, Chairman & CEO at Chevron]

As we get through the ramp up to see the plant and reservoir performance, we'll then be able to really turn our focus to the future. This is a world class asset. We've got a long proud history in Kazakhstan and with the TCO partnership. And we certainly would like to extend the concession, but it has to work for everyone. It has to work for the Republic, it has to work for our company and our shareholders, it has to be competitive.

[Michael Wirth, Chairman & CEO at Chevron]

These things take time. These are complex contracts, complex negotiations and we'll keep you posted as that evolves over time. Okay. And that was a clever way to get to completely unrelated questions in Doug. So if Jake's blessed that I better have to talk to Jake about the ground rules in the future.

[Michael Wirth, Chairman & CEO at Chevron]

Let's go to the next question.

[Operator]

We'll go next to Devin McDermott with Morgan Stanley.

[Devin Mcdermott, Analyst at Morgan Stanley]

Hey, good morning. Thanks for taking my question and for detailed update today. Mike, I wanted to ask you about policy. There's been in The U. S.

[Devin Mcdermott, Analyst at Morgan Stanley]

Now a series of energy related executive orders over the past week. I was wondering if you could talk through how this might impact some of your oil and gas operations, especially given the large presence you have in The Gulf and then new energies opportunities. And we think through the flurry of news flow over the last week, there's also been some headlines in your Venezuela license. If you could address that as part of the response, I'd appreciate it. I know a lot to unpack there, but would love your thoughts.

[Devin Mcdermott, Analyst at Morgan Stanley]

Thanks.

[Michael Wirth, Chairman & CEO at Chevron]

Yes, that is a lot, Devin. Following up with Doug's up. Yes, but they're all related for you. So let me start kind of at the highest level. For years now, I've been calling for a more balanced discussion about energy.

[Michael Wirth, Chairman & CEO at Chevron]

We're finally beginning to see it. We're seeing economic prosperity, energy security and environmental protection all being brought together. And in the past, really the dialogue skewed toward environmental protection and much less toward the others. And I think it's a welcome change to see this reflected. It's a conversation that now recognizes oil and gas are a vital part of the energy mix in this country and in the world, which is a reality that we all need to acknowledge.

[Michael Wirth, Chairman & CEO at Chevron]

And it's good to see an administration that is intent on leveraging and encouraging American energy abundance for the benefit of our economy, for the benefit of our security, for the benefit of our allies and intends to do that in a way that also provides environmental protection. So I think it's a more balanced approach. I think it's a welcome approach. And the specifics still remain to play out. Many of these executive orders direct agencies to review things, to look at actions that can be taken.

[Michael Wirth, Chairman & CEO at Chevron]

And so actual actions, I think, for the most part still remain ahead of us, but I would expect them to encourage more access, for instance, more regularly sales. There is building bipartisan support for permit reform, which is very necessary, not just for our industry, but for many other industries, where it's become so difficult to build things here in The United States. And so I think it's a welcome reset and 1 that our country will benefit from. I can't say much more about anything. Venezuela is an issue that has been around for quite some time during the first Trump administration, during the Biden administration.

[Michael Wirth, Chairman & CEO at Chevron]

And now again, in the second Trump term, sanctions exist on Venezuela. We're the only U. S. Company on the ground there. We're focused on keeping our people safe, ensuring that assets operate in a way that protects the environment and complying with all the laws.

[Michael Wirth, Chairman & CEO at Chevron]

We don't set policy, we comply with laws and we engage with the government to help inform them of the potential impacts of policy choices and we'll continue to do so. Thanks for the question Devin.

[Operator]

We'll take our next question from Stephen Richardson with Evercore ISI.

[Stephen Richardson, Analyst at Evercore]

Hi, good morning. Mike, I was wondering if you could talk about the position of the Permian in the portfolio. You've got this million barrel a day target out there that looks like you're going to hit if you haven't already hit it pretty soon. And I know there was a previous target in the last Analyst Day that was a little higher than that. Can you maybe just talk about the right amount of in the portfolio?

[Stephen Richardson, Analyst at Evercore]

And do we think about the Permian and the DJ? Do we think about it relative to the total is it production? Is it decline curve? How do you think about the right amount of unconventional for the size of the corporation over the next couple of years?

[Michael Wirth, Chairman & CEO at Chevron]

Yes. So let me start, really pleased with our team in the Permian and the performance again in the We delivered 992000 barrels a day in the We were over 1000000 barrels a day in Dec. 0. For the full year, we saw growth of 18% and really, really strong performance across all aspects of the Permian. And we expect to continue to grow even as we've now passed our peak investment and we've started to bring capital investment down.

[Michael Wirth, Chairman & CEO at Chevron]

We still expect to see 9% or 10% production growth in 2025, something a little bit less than that probably in 2026. And we're headed towards a lower rate of growth. And at some point, you can't grow a position like this infinitely. That was the criticism of the industry last decade is companies only focused on growing and they never focused on generating free cash flow and returning to shareholders. And that's always been our plan to do just that.

[Michael Wirth, Chairman & CEO at Chevron]

So we'll have an asset that will produce something over a million barrels a day for many, many years into the future. And as we can maintain that with a lower rate of capital investment than we've required to get to where we are, that really opens up the free cash flow off of that asset. So, we are very pleased with that. We've got 400000 barrels a day give or take now in the DJ Basin, which is kind of in that plateau phase where we can draw free cash flow off of that. We close Hess, there's another couple of hundred thousand barrels a day in the Bakken.

[Michael Wirth, Chairman & CEO at Chevron]

You bring Argentina in and now you're talking 1700000.0 barrels a day or so. And this year we produced 330,000,0.0 in change. And so it's kind of 50% of the portfolio. And the nice thing about that is at very modest CapEx, you can hold that production flat for quite some time and use that as a big cash generator. And so that is the intent.

[Michael Wirth, Chairman & CEO at Chevron]

There's always the prospect that we see technology breakthroughs. We're working on improved recoveries that if economic could open a new phase of growth. And I don't want to predict that, but I certainly wouldn't want to rule that out. And so as we continue to get better and better at this and develop technologies to improve recoveries, we can extend the plateau, we can raise, we could raise plateaus, But this is a highly economic asset that is a core position that will generate production and cash long into the future. And of course, in the Permian, the royalty advantage that we have is kind of icing on top of that cake.

[Michael Wirth, Chairman & CEO at Chevron]

And so that's how we think about it. I can't give you a magic formula, a percentage, but it's like I said, it's approaching 50% of our overall production, which is a significant piece. Thanks, Steve.

[Operator]

We'll take our next question from Jason Gabelman with TD Cowen.

[Jason Gabelman, Analyst at TD Cowen]

Hey, thanks for taking my questions. I wanted to ask about the TCO distribution and I appreciate the detail between and this year. The $5,000,000,000 and $6,000,000,000 for $25,000,000,000 and $26,000,000,000 billion dollars is that similar to the $4,000,000,000 and $5,000,000,000 respectively that you guided to previously just at a higher price deck? And further to the distribution, it looks like based on TCO's own filings that their operating expenses from 2022 to 2023 have gone up about $5 a barrel. I'm not sure if that's related to the Russian war or something else, but I wonder if that increase in OpEx is contemplated in your free cash flow guidance for TCO or if that's something you expect to come back down?

[Jason Gabelman, Analyst at TD Cowen]

Thanks.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Jason, yes, thanks. I can talk to that. The free cash flow inflection that's coming with which is actually upon us now that the asset is started up. So we shared in the slide $5,000,000,000 for 2025 and $6,000,000,000 for 2026. What's contributing there is obviously the production, but also the affiliate CapEx is coming down.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

So with the project completing, and the affiliate CapEx is reducing significantly and so that's resulted in the free cash flow. We also anticipate that as the plant gets ShoeGuide and the safe and reliable start up completes that they'll be focused as well on operational OpEx and optimizing that given the new base business of 1000000 barrels a day that they will have. So that can move around a little bit during the year, but generally, we have OpEx coming down there too. So those are 2 things that are contributing to the free cash flow in addition to the production.

[Jake Spiering, General Manager of Investor Relations at Chevron]

Thanks, Jason.

[Operator]

We'll take our next question from Alastair Sim with Citi.

[Alastair Syme, Analyst at Citigroup]

Thanks, Joaquin. I just wanted to ask about in Bolivia. If you've got a good sense of why that first exploration well failed and whether you've seen enough to make you want to go again in a different location?

[Alastair Syme, Analyst at Citigroup]

Thank you.

[Michael Wirth, Chairman & CEO at Chevron]

Yes, Alistair, the first well was the first well. And in exploration, you learn that oftentimes particularly in a new relatively new basin, you need a lot of information. So each well is actually what you're targeting hydrocarbons. The real objective is to learn and a failure to learn would be a failure of the well, a failure to find oil and gas happens more often than not. And so, we have a very large position on 2 different blocks in the Orange and the Wallace Basins.

[Michael Wirth, Chairman & CEO at Chevron]

As people are well aware, others have found some encouraging things on their blocks. And so there's a working petroleum system that exists there. And we're very pleased with the information that we learned. And it does inform future activity. And it helps us understand the geologic history of that part of the basin, which is fundamental to understanding how the depositional of structures and geology evolved.

[Michael Wirth, Chairman & CEO at Chevron]

And we'll use that to inform future activity. We are it's not enough if I heard your question correctly, it's not enough to say we're not interested. It's enough to say we continue to be interested. The other thing I'll just tell you is that the well went down very fast. The cost was much lower than some of the other wells we've seen in that area.

[Michael Wirth, Chairman & CEO at Chevron]

And so I think the other encouraging thing that we learned is that the drilling environment there is 1 that we can execute very well in and keep future exploration wells in a very cost effective manner. So we'll talk to you more as we evaluate the next steps in both of those basins and continue to evolve our program.

[Operator]

We'll take our next question from Betty Jiang with Barclays.

[Betty Jiang, Managing Director at Barclays]

Good morning, Betty.

[Betty Jiang, Managing Director at Barclays]

Good morning. Thanks for taking my question. I want to go back to the Power Venture. I want to ask about how do you think about the capital commitment for Chevron related to that venture? It is really impressive that you were able to secure these high demand turbine spot.

[Betty Jiang, Managing Director at Barclays]

So have all the deposits for them being made and just how much equity capital would you be willing to put into it? Thanks.

[Michael Wirth, Chairman & CEO at Chevron]

Yes. Thank you, Betty. It's still early days and we're not providing public details on some of the specifics of the joint development as we move into the next phase of site selection and engineering and the like. We have secured the slot reservations with payments and those are again terms that are confidential. We won't have 100% of this.

[Michael Wirth, Chairman & CEO at Chevron]

It will be funded through partners and other investors. And we'll provide more detail at a time that's appropriate on that. The 1 thing that I do just want to call out is, we haven't changed our CapEx guidance. And so this will be done within the CapEx guidance that we've issued. We intend to develop opportunities that are competitive with other things in our portfolio.

[Michael Wirth, Chairman & CEO at Chevron]

And here, you've got the benefit of scale. We've got an early position in the queue. Gas turbine generators are seeing upward price pressure and so it's better to be early in the Q than later in the Q. And so we'll be focused on capital efficiency here and developing a project that delivers value for customers and delivers value for shareholders. So stay tuned for more details as things evolve later this year.

[Operator]

We'll take our next question from Ryan Todd with Piper Sandler.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Good. Thanks. Maybe if I could ask 1 on the Gulf Of Mexico or Gulf Of America or whatever we're calling it now. You've now got 2 of the 3 projects online for the 2025 and 2026 time period with Ballymore coming soon. What have you seen in terms of reservoir performance so far?

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

What have you learned in terms from these developments both on the I guess on the subsurface and on the facility side and how does it inform kind of future potential for you in the basin?

[Michael Wirth, Chairman & CEO at Chevron]

Yes. Thanks, Ryan. The short story is the wells are performing very well. We've got 2 wells on line at Anchor. We've got a third well that we expect to come online in the On the fourth and fifth wells, we've got top holes drilled and the top hole section drilled and we got remaining drilling and completion work ahead of us, a fifth well in So we are able to drill and complete in this pressure and temperature regime, which is a new 1 for the industry.

[Michael Wirth, Chairman & CEO at Chevron]

Reservoir performance frankly is at or above expectations. And so we're quite encouraged. On whale, I would refer you to the operator for specifics and let them update you on that. And Ballymore, as I mentioned, online here mid year. And so we'll update you as we see performance out of that.

[Michael Wirth, Chairman & CEO at Chevron]

But it's very encouraging. The Gulf Of we're calling it Gulf Of America, it's the that's the position of the U. S. Government now. And there's a lot of running room out there.

[Michael Wirth, Chairman & CEO at Chevron]

We're a large leaseholder. There's a lot of acreage that is prospective for tiebacks. There's also acreage that is prospective for greenfield developments. We've brought costs down significantly. We've advanced technology to operate in different pressure regimes.

[Michael Wirth, Chairman & CEO at Chevron]

And I think this will be an important producing basin for our country for many, many years to come. Thanks, Ryan.

[Operator]

We'll take our next question from John Royal with JPMorgan.

[John Royall, Analyst at JPMorgan Chase]

Hi, good morning. Thanks for taking my question. So I was wondering if you can just talk about your operations in the Eastern Med today and just an update there. We've obviously seen a significant improvement in the political situation in that part of the world and there are no guarantees that's forever. But as Mike mentioned, you do have some project growth that you're working through there.

[John Royall, Analyst at JPMorgan Chase]

So maybe just an operational update on how you're feeling about your position there and the risks as you see it today?

[Michael Wirth, Chairman & CEO at Chevron]

Yes. So first of all, we're really pleased to see tensions diminishing in the region and hopefully a lasting piece for the people there. The headline is there's no real change to our plans, John. We expect projects that are in execution at both Tamar and Leviathan to come online by the end of the year or into There was a pipe lay vessel that was demobilized during kind of the height of the conflict. That vessel will be remobilized here during the first half of this year to complete the work that it had underway.

[Michael Wirth, Chairman & CEO at Chevron]

So the next leg of growth after those 2 projects would be a Leviathan expansion. We're currently in feed for that. It would be a significant growth in production for Leviathan, still work to be done. But that's a project that would come online towards the end of this decade and continue to step up the production on that asset significantly. So despite all the activity we've seen in that region, we'll see production up by 25 over the next two years and something closer to 50% by 02/30.

[Operator]

Thank you. We'll take our next question from Jean Ann Salisbury with Bank of America.

[Jean Ann Salisbury, Managing Director at Bank of America]

The ramp is basically tracking to your expectations or even exceeding them and when you might have any more to share about potential debottlenecking potential?

[Michael Wirth, Chairman & CEO at Chevron]

Jeanine, you came off mute partway into your question and you're I caught the part about ramp and debottlenecking. Were you asking about FGP?

[Jean Ann Salisbury, Managing Director at Bank of America]

Yes.

[Michael Wirth, Chairman & CEO at Chevron]

Okay, good. Yes. So look, we're a little bit more than a week into this at this point. And so it's very early days. But I will tell you the operations have been very stable.

[Michael Wirth, Chairman & CEO at Chevron]

This is a big complex process operation with crude stabilization, some fractionation, obviously the high pressure sour gas injection and temperatures and pressures that are significant. And so, seeing stable operations is very encouraging. We have seen production step up. The well deliverability has been very strong and we've completed all that work last year, but the field performance has met or exceeded expectations. And we feel good about what we see to this point in terms of stable and reliable operations.

[Michael Wirth, Chairman & CEO at Chevron]

We'll step things up gradually to be sure that we maintain that stability and reliability. We still have very significant exclusion zones in place, for instance, to minimize the number of people that are in a plant that is just beginning to operate with the H2S concentrations that we see there. And so we'll be methodical and very deliberate in raising the production levels up to full capacity. But early indications, I would say, are all positive and any things we've encountered are well within the range of what would be normal startup things that you see in a plant like this. So more to follow.

[Michael Wirth, Chairman & CEO at Chevron]

Debottlenecking is probably a question for the future. We're really focused on getting the most we can out of this plant right now. And so we'll update you on that. I'm sure certainly on the next quarter call, we'll have a lot to say about performance at FGP.

[Operator]

We'll take our next question from Lucas Hermann with BNP Paribas, Exane.

[Lucas Herrmann, Analyst at BNP Paribas]

Yeah. Thanks, Mike, Eema. Thanks for the opportunity. Really just a point of clarification, Mike. You talked about the transaction with Wheatstone or around Wheatstone with Woodside.

[Lucas Herrmann, Analyst at BNP Paribas]

You mentioned that you talked about better position to monetize. When you talk monetize, do you mean monetize the resource that you have? Or do you also imply monetize the facility, I look to take capital out of it in some way with potential insurance pension fund. And if I might just ask 1 other question. In essence, when you talk about returns in the Power business, do you think about returns volatility adjusted or naked for want of a better phrase?

[Lucas Herrmann, Analyst at BNP Paribas]

Thanks very much.

[Michael Wirth, Chairman & CEO at Chevron]

Yes. Thanks Lucas. Look, on Wheatstone, we're really talking about monetizing resource over time. And we're going to acquire not only Woodside's interest in Wheatstone project, but also in Julimar Barnello. And we'll hand over to them our interest in Northwest Shelf and some other smaller related things.

[Michael Wirth, Chairman & CEO at Chevron]

We've got high expectations for the Carnarvon Basin for many decades to come. We've had a strong exploration track record out there. We've got a tremendous amount of resource and optimizing that resource through both Wheatstone and Gorgon in a way that's economic, that keeps the plants full, that's good for Australia, good for customers is important. This gives us more control over that and a bigger stake in that. And so that's really the primary driver.

[Michael Wirth, Chairman & CEO at Chevron]

We're not contemplating bringing in a pension fund or anything like that to sell down our position there. The second question or the second part of your question was about returns in power, yes. Look, we have volatility in our oil and gas business. We have volatility in our refining and marketing business. We would look to have put in place PPAs that work for customers and work for us.

[Michael Wirth, Chairman & CEO at Chevron]

And as a large natural gas producer, we obviously have natural gas supply. We've got natural gas commercial capability across the value chain. And so we can use that to help manage exposure and volatility for our investment potentially for customers if that's what they're looking for. But it's very similar to how we encounter volatility in other aspects of our business and we'll look at it in a way that is consistent with how we look at other things that have associated volatility. Thanks Lucas.

[Operator]

We'll go next to Josh Silverstein with UBS.

[Josh Silverstein, Managing Director at UBS Group]

Hey, good morning guys. Maybe just into the refining and chemists business, we're clearly in a weak price environment and margin environment right now. Other than maybe improving the product slate and doing some cost reductions, are there things that you guys could use countercyclically to improve your leverage to the recovery, maybe bring forward some projects or turnaround to fire some other assets that might be financially challenged, anything like that? Thanks.

[Michael Wirth, Chairman & CEO at Chevron]

Yes. Having spent a good part of my career in that business, margin pressure is a familiar friend, I guess I would say. And it does spark innovation and there's nothing like feeling kind of sharp end of the stick to make people continue to find ways to find a little more flexibility in your feedstocks, improve your operating reliability, your cost structure, make sure you've got all the right handles for product optimization into the market via different products, via different channels to go to market and customer relationships and the like. And so, I think we'll be looking to do all of those things, but we should be looking to do all those things when margins are good. And we certainly are looking to do those when margins are difficult.

[Michael Wirth, Chairman & CEO at Chevron]

I would point to the fact that we're now increased capacity to run light oil at our Pasadena Refinery. This is a good example of that. So we can integrate some of our upstream production that we may get a better net back on it versus exports, for instance. We'll produce products that can move out into our marketing channels where we might otherwise be reliant on others to supply some of our market needs. And we can integrate intermediates with the Pascagoula refinery.

[Michael Wirth, Chairman & CEO at Chevron]

We can optimize during turnarounds and storms and other market conditions by thinking of those 2 as a system. And so we'll continue to look for opportunities like that, which are capital efficient ways to increase your flexibility and ability to control your own margin outcomes in the downstream.

[Operator]

Thank you. We'll take our next question from Paul Sankey with Sankey Research.

[Paul Sankey, Analyst at Sankey Research]

Hi, Mike. Thanks a lot everyone.

[Michael Wirth, Chairman & CEO at Chevron]

Nice to hear you're back on the call, Paul.

[Paul Sankey, Analyst at Sankey Research]

It's a pleasure to be back, Mike. It's a pleasure to be bold. I had a very quick 1 just about potential corporate actions. But the big idea was I was looking at your CapEx and that 14% to 16% range. I was just wondering what the chances are of you getting towards the lower end of that range because it strikes me that you could differentiate yourselves with lowering CapEx and falling CapEx over the coming years.

[Paul Sankey, Analyst at Sankey Research]

And further to that, I was wondering, do you think there is potential, for example, for you to cut upstream CapEx once Hess is completed? How would that work out? Secondly, the volatility of your results, I was wondering, are you under invested in refining? Do you think that's been an issue? And then the wild card was the potential for mega deals, the exact opposite under Trump and whether or not it might be an idea to go really big as opposed to continuing to sort of try and shrink?

[Paul Sankey, Analyst at Sankey Research]

And then the final element to the CapEx question was, if you're doing this AI gas fired power, does it did you cut back what are the areas that you're cutting back CapEx that presumably are now less attractive under the Trump guidance such as it is? Thanks.

[Michael Wirth, Chairman & CEO at Chevron]

All right. Well, you have clearly tipped Doug Leggate in terms of getting the most questions into 1. So making up for some lost time, Paul. Okay. So let me tick through those quickly.

[Michael Wirth, Chairman & CEO at Chevron]

$14,000,000 to $16,000,000 is a range. Last year, we were at the top end of the range. This year, we're at the middle end of the range. Yes. Could we be at the low end of the range?

[Michael Wirth, Chairman & CEO at Chevron]

We could. And we'll make that call based on the opportunity set, the competitiveness of those, our view on the market outlook. The real message here is, I think you can depend on us to remain very disciplined and we're getting more for every dollar we're spending. I mentioned earlier, the Permian is growing with 40% fewer rigs and our plans contained just a few years ago. We're growing at a 7 rate last year, 6% CAGR the next couple of years.

[Michael Wirth, Chairman & CEO at Chevron]

The infamous porcupine charts show that at the time we were spending a lot more capital, we weren't delivering that kind of growth. So we become more capital efficient and we have to continue to look for ways to deliver energy at lower and lower capital investments. Are we underweight in refining? We've always been more skewed to the upstream. If there are if the right opportunity were to come along in downstream or in chemicals, you'd always look at it.

[Michael Wirth, Chairman & CEO at Chevron]

In those segments, 1 of the ways you derisk your position is by not overpaying. And so, we're always attuned to opportunities out there would have to fit our criteria, which really are assets that have scale, flexibility, can operate very efficiently, would integrate into good market positions. So there's a set of criteria that we would apply to that. I'm not going to speculate on mega deals, whatever that means. And then, look, the AI investment is the power for AI is going to fit into the portfolio like other things.

[Michael Wirth, Chairman & CEO at Chevron]

The CapEx on that is manageable for sure and it's spread out over time. It's not a 100% equity on our part and it will have to deliver competitive returns. And so will it displace something? Will it cause something else to maybe be pushed out in time? How we prioritize those things as part of running our business each and every day?

[Michael Wirth, Chairman & CEO at Chevron]

And so we've got a queue of investments that we're constantly working on. We should not fund all of them. We should only fund the best of them. And this will go into that same process and be optimized within the overall set of investments that we're advancing.

[Operator]

Thank you. We'll take our next question from Nitin Kumar with Mizuho.

[Nitin Kumar, Senior Analyst at Mizuho Financial Group, Inc.]

Good morning, everyone. And thanks, Mike, for taking my questions. Congrats on starting TCO. I just want to touch on the cost structural cost reductions you've talked about. Could you break that $2,000,000,000 to $3,000,000,000 between your upstream and downstream a little bit?

[Nitin Kumar, Senior Analyst at Mizuho Financial Group, Inc.]

You were talking earlier about the margin pressure in downstream. And then as I look at Slide 10 and the trajectory of those savings seems like they're a little bit weighted towards 2025. So are they more related to asset sales or are there other things kind of in the remaining businesses that are helping?

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

Hi, Nitin. I'll take this 1. Yes, the $2,000,000,000 to $3,000,000,000 structural cost reductions, you'll see them across all segments. So let me kind of break down the focus areas for you a little bit. The first focus area is around asset sales.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

So you're right, we'd expect to see some reductions this year given the asset sales last year in Canada, for example. So we will see some of those portfolio impacts in 2025. And the second focus area that we have looks at kind of changing how we work. So we're looking at standardizing work that we do and then thinking differently about where we do that work. And that will impact the downstream segment, that will impact the upstream segment.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

So we're looking across all the businesses. An example there would be how we design wells for certain asset classes. Is there a way to do that more in a more standardized fashion and a more centralized fashion? So that's the second focus area and work is underway on that. So I think you should expect to see savings come through 'twenty five and 'twenty six.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

And then the last 1, maybe the 1 that I'm very excited about is the technology focus area. So this is where we're looking at using technology to do work completely differently. So we mentioned in the presentation the robotics example, but there's a lot a long list of examples that we're deploying today, whether that's drones to inspect our facilities, digital twins to plan our turnarounds, AI to look at reducing cycle times for exploration subsurface work. The technology focus area will also deliver savings. So in terms of the profile, 2025 between $150,000,000,0.0 to $2,000,000,000 and then $26,000,000,000 you should see $2,000,000,000 to $3,000,000,000 come off then.

[Eimear Bonner, VP & Chief Financial Officer at Chevron]

So in total $2,000,000,000 to $3,000,000,000 structural costs off of 2024 basis. Thanks.

[Operator]

We'll take our next question from Bob Brackett with Bernstein Research.

[Bob Brackett, Analyst at Bernstein]

Good morning. A question about the Permian. Clearly, you've laid out a disciplined model there to release cash flow, but you're uniquely positioned in that you have JV partners plus the royalty interest. You probably have the best view of the landscape. What are you seeing there in terms of discipline from the other operators?

[Bob Brackett, Analyst at Bernstein]

And is that a trend that's going to continue?

[Michael Wirth, Chairman & CEO at Chevron]

Yes, Bob. It's interesting because of our large mineral rights position, we not only get the financial advantage that accrues through that, but we also get the information advantage. We have a position in 1 out of every 5 wells in the Permian. And so we see a lot from our NOJV partners and most of that activity is really through 5 good companies, companies that you all know and cover.

[Michael Wirth, Chairman & CEO at Chevron]

And so you've got visibility into what they're doing via what they say we do from seeing FVs for funding and the like. And I would say people are sticking with their plans. And I think everybody's seen the kinds of things we are, which is productivity, efficiency, gains, and continuing to look for innovation in lateral length and completion techniques and proppant loading and proppant to water ratios and all the rest of it. And I don't see anybody that is kind of heading back to what the industry was doing a decade ago, which is kind of throwing all the cash right back into growth and stepping away from what they've now established, which is a more balanced return oriented strategy. And so I can't speak for others.

[Michael Wirth, Chairman & CEO at Chevron]

You'll have to ask that question specifically to other companies. But at least what I see would be a continuation of what we have been seeing is the way I would describe it.

[Operator]

We'll take our next question from Neal Dingmann with Truist.

[Neal Dingmann, Managing Director - Energy Research at Truist Securities]

Good morning. Thanks for getting me in guys. My question, really Mike, is just on the downstream segment. It looked a little bit weak last quarter sequentially and year over year. And I'm just wondering, was that more driven by I know you had more turnarounds and you talked about having about 25% less of those this year or is it just continue to see more, I'd call it macro pressures there?

[Michael Wirth, Chairman & CEO at Chevron]

It was a weak fourth quarter. There's no doubt about it. Margins were off. There were some turnaround effects. We also had some significant inventory accounting effects that rolled through the downstream segments.

[Michael Wirth, Chairman & CEO at Chevron]

And some of the impairments that we took charges for hit downstream on a proportional basis. You see them much more than you would see anything in the upstream. And so I'm not going to call it a perfect storm, but it was a quarter where there were a lot of things that all went in 1 direction and it was a negative direction. And so can't affect margins. We can certainly affect turnarounds.

[Michael Wirth, Chairman & CEO at Chevron]

You've already seen that next year's a lighter turnaround schedule. The impairments are 1 off charges and the inventory accounting is a function of LIFO layers and prices and inventory levels. It's complex equation. So I wouldn't assume there's anything structurally in that business that says it's deteriorating, but you have these quarters every now and again in that business.

[Jake Spiering, General Manager of Investor Relations at Chevron]

Thanks, Neil.

[Operator]

We will take our last question from Jeff Jay with Daniel Energy Partners.

[Geoff Jay, Partner at Daniel Energy Partners]

Hi, all. Hey, Mike, I

[Geoff Jay, Partner at Daniel Energy Partners]

was just kind of curious about Argentina. I mean, clearly with Malayan office, it seems like a much friendlier place to do business. You mentioned it earlier. How do you see the politics and the opportunity set changing down there?

[Michael Wirth, Chairman & CEO at Chevron]

Yes. Thanks for asking. It's an area that I am encouraged by. We've got a very strong position in the Vaca Muerta, both in Loma Campania in the South and El Trapiel in the North. The geology works very well.

[Michael Wirth, Chairman & CEO at Chevron]

We're very pleased with what we've seen and we've had a, I would say, moderate pace of activity, more history down in the South at Loma Campania, but encouraging over the last couple of years at El Trapiel in the North. I'm also really pleased to see the situation in the country improving. We've seen inflation come down significantly. The banking system has stabilized. There's progress towards reducing and removing capital controls.

[Michael Wirth, Chairman & CEO at Chevron]

President Malay is a reformer and he's got a serious agenda that would make the country more investable for foreign investors. And we're very encouraged by what he says and we're encouraged by what he's done thus far. I think there's more to come and certainly he's made great progress thus far. So we are hopeful that he'll continue to do so and that we will see an environment that increases our confidence in putting more capital to work there. So we're engaged on the ground.

[Michael Wirth, Chairman & CEO at Chevron]

And right now, we're taking a look at a midstream opportunity on a pipeline that could help us with exports to a good deepwater export terminal. So I will continue to update you on developments there, but you're right. And we've seen encouraging signs, I guess, in Argentina in years gone by and then things kind of move to the other direction. So we'll be watching to see if this seems to be a more durable set of reforms and that would certainly be an important signpost for us. Thanks for the question, Jeff.

[Jake Spiering, General Manager of Investor Relations at Chevron]

I would like to thank everyone for your time today. We appreciate your interest in Chevron and your participation on today's call. Please stay safe and healthy. Katie, back to you.

[Operator]

Thank you. This concludes Chevron's fourth quarter twenty twenty four earnings conference call. You may now disconnect.

Participants

Executives

• Jake Spiering, General Manager of Investor Relations
• Michael Wirth, Chairman & CEO
• Eimear Bonner, VP & Chief Financial Officer

Analysts

• Biraj Borkhataria, Analyst at Royal Bank of Canada
• Paul Cheng, Analyst at Scotiabank
• Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs
• Doug Leggate, Managing Director - Senior Research Analyst at Wolfe Research
• Devin Mcdermott, Analyst at Morgan Stanley
• Stephen Richardson, Analyst at Evercore
• Jason Gabelman, Analyst at TD Cowen
• Alastair Syme, Analyst at Citigroup
• Betty Jiang, Managing Director at Barclays
• Ryan Todd, Senior Research Analyst at Piper Sandler Companies
• John Royall, Analyst at JPMorgan Chase
• Jean Ann Salisbury, Managing Director at Bank of America
• Lucas Herrmann, Analyst at BNP Paribas
• Josh Silverstein, Managing Director at UBS Group
• Paul Sankey, Analyst at Sankey Research
• Nitin Kumar, Senior Analyst at Mizuho Financial Group, Inc.
• Bob Brackett, Analyst at Bernstein
• Neal Dingmann, Managing Director - Energy Research at Truist Securities
• Geoff Jay, Partner at Daniel Energy Partners