The Chevron Corp.’s acquisition of the Hess Corp. and its ability to return more than $5 billion to its shareholders during the third quarter had Chairman-CEO Mike Wirth optimistic about the fourth quarter and the first half of 2024, although he was disturbed about Israel’s war with the terrorist group Hamas.
“I want to start by acknowledging the tragic events in the Middle East,” Wirth said from San Ramon, Calif. “We are deeply saddened by the loss of life and our hearts go out to those affected by the war.
“We continue to prioritize the safety and well-being of our employees and their families and the safe delivery of natural gas.”
In his third quarter financial report Wirth said the Hess transaction should close during the first half of next year.
“We continued to make progress on our objective to safely deliver higher returns and lower carbon by returning more than $5 billion to shareholders for the sixth consecutive quarter, delivering a return on capital employed greater than 12 percent for the ninth consecutive quarter, investing in traditional energy by closing the PDC Energy acquisition and investing in new energies by acquiring a majority stake in a green hydrogen production and storage hub in Utah,” he said.
“Earlier this month we released our Climate Change Resilience Report, which details our approach, actions and progress in reducing carbon intensity and growing new, lower carbon businesses.”
Wirth said Chevron’s Tengizchevroil (TCO) project in Kazakhstan was progressing nicely.
“The planned turnaround was completed ahead of schedule, the reservoir is performing well, the plant remains full and we expect a higher dividend in the fourth quarter,” he said. “TCO has achieved mechanical completion at the Future Growth Project.
“We now forecast the Wellhead Pressure Management Project, which is the field conversion from high pressure to low pressure, to begin start-up in the first half of 2024 and continue through two major train turnarounds. The FGP is expected to start up in the first half of 2025 and ramp to full production within three months. Total project cost is expected to increase between 3 to 5 percent.”
Wirth said the TCO should produce over one million barrels of oil equivalent per day in 2025.
Chevron Chief Financial Officer Pierre Breber reported “another quarter with strong earnings, cash flow and ROCE.
“This quarter’s results include two special items, a one-time tax benefit of $560 million in Nigeria and pension settlement costs of $40 million,” Breber said. “Despite restrictions during the PDC transaction we were able to repurchase well over $3 billion in Chevron shares.
“Cash balances ended the quarter near $6 billion, a little above what’s needed to run our businesses. Adjusted third quarter earnings were down $5.1 billion versus the same quarter last year.”
He said adjusted upstream earnings were roughly flat as higher prices and volumes were offset by unfavorable discrete tax charges and negative timing effects due to the rise in prices.
“Depreciation, depletion and amortization were both higher in part due to the addition of PDC legacy assets for two months in the quarter,” Breber said. “Third quarter oil equivalent production was up six percent over last quarter primarily due to two months of legacy PDC production.
“The Permian, excluding legacy PDC, was down two percent due to lower non-operated production. Company-operated production was flat with the second quarter.”