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00:00I always love when news happens I get to ask you about these conferences and this news is actually an activist investor but a little bit reverse its Strive. Strive Asset Management is now being called the anti ESG activist investor basically saying get rid of the ESG promoting shareholder friendly attitudes and just pump more oil. What do you think about something like that right now. Well we just received a letter from Strive. Yesterday I had a chance to go through it. And look we have investors with points of view on all aspects of our business. And certainly they've put forward some some strong opinions on some things. We engage with all of our shareholders and look forward to doing the same with strive to understand better what what they think. And it always helps inform us and make us better. What I do though find it interesting is that it comes at a time when Europe and the question is there on energy is can you have energy security and green goals at the same time. And that's where I find it interesting about this activist investor right now. Well Alex one things I've been trying to call for is a more balanced and pragmatic conversation about energy. There are three things that really matter when it comes to energy affordability because that underpins economic prosperity energy security because energy security equals national security and protecting the environment. We have to have a conversation that recognizes all three of these different parts of the world. The balance among them may be different but you can't over index on just one of those and really have a stable and sustainable system going forward. And so I think that's an important conversation to have engagements with people that have these points of view to help us have that more balanced conversation to that point in saying in Europe for a moment. Obviously LNG Europe needs it very badly. Howard some of the ways that Chevron can help deliver that LNG. You recently signed a deal in June to buy some LNG from Venture Global and Senior. What else are you looking at. Well we've had a couple of deals to bring gas that we produced in the US through liquefaction facilities and move that to Europe. We currently supply LNG to Europe from West Africa Angola Equatorial Guinea. And we have a position that came for us with novel the Noble Energy Acquisition in the water offshore Israel and the Eastern Mediterranean which currently only supplies regional markets in the Middle East. We're working on potential expansion investments there that could also provide liquefied natural gas supply into Europe. So a number of different opportunities we're advancing. What else are you looking forward to now. Any other opportunities joint ventures bolt ons. Anything else is in the pipeline in relation to that in relation to LNG. Well our operations in Australia primarily supply Asia although some of those flows can be redirected to Asia can switch to different sources of fuel for their power system. And and so we're working with our customers in Asia. We have discretionary cargos as well that we can feed into Europe from Australia. I you see the Yemeni market evolving in the energy space for LNG or for oil or NAT gas if you team it an enormous acquisition by point 2 billion in the Marcellus. How do you see the world right now from your lands when it comes to mergers and acquisitions in energy. Well commodity prices have have cycled back up which allows small companies I think to relieve some of the pressure they were feeling through the depths of the pandemic. They can think about transactions as opposed to just survival. A deal like the one we just saw with a duty which consolidates a position in a basin where they're very strong and provides real synergies operational synergies and corporate synergies makes sense. We've seen deals like this in the DGA base in the Permian. We could see we could see more of that activity as we go forward. What's so interesting though if you take a look at the price though for oil for example we have OPEC cutting production and oil prices are down 6 percent in two days. What is up with the oil market right now. Well I think in the near-term markets are factoring in the prospects of recession. Certainly the situation in Europe as as winter comes. We're seeing monetary tightening in the US and some economic slowing in the US. And of course China has a lot of their economy under various Covid restrictions right now. So in general I think there's a concern that demand growth may be softening. And I think we're seeing that weigh on commodity markets in the near-term. I think in the longer term we continue to focus on the supply side of the equation as we come through the next few months. Will there be sufficient supplies to meet demand as we move into next year. So let me bring that up because I feel like the conversation six months ago was the world needs more U.S. oil in 2023 and the U.S. has to produce it. Is that still the conversation when we have these recession concerns. Well you know in our business we have to look through near-term cycles. It's a long term business. Our company's been around for. For us our like also. Well we've got a short cycle production that is short cycle from you know drilling the well to bring the reduction on but then that production is in the market for the long term. And so we really look through these economic cycles to long term fundamentals. I think the U.S. is an important supplier of energy. It's the largest exporter of oil of LNG products into the world. And at a time when the world is tight it's important that U.S. supplies not only meet domestic needs but also support international markets and customers. So do you think we're in need more U.S. oil next year. I think we'll see more U.S. oil next year. We're certainly seeing growth this year were growing seven eight hundred thousand barrels a year likely over the course of this year will finish somewhere in the neighborhood of 12 million barrels a year not far off of all time highs. I think you'll see that growth continue in the next year. Certainly our production in the U.S. is up 7 percent first half of this year versus first half of last year. We intend to grow our Permian position from 700000 barrels a day today to a million barrels a day in 2025. So that means we'll grow next year and the year after and the year after that. I'm speaking of when we spoke a few months ago we were talking about your cost profile for 2023. How many more visibility into what those costs will look like in 2023. And is that slow your ability to grow U.S. production anyway. I don't have a final view until 2023 because we're in our final business planning process right now but we tend to plan our work well in advance. We're managing this year's inflationary pressures very well. We've anticipated a certain amount of inflation that we work closely with our service providers and suppliers to give them visibility into the work we have out ahead. And I would expect that we'll continue to see some upward pressure in the coming year. That's something that we can manage that will change our kind of thing. What we're seeing right now is probably mid to high single digits. And we can manage that within our overall budget. It won't drive budgets outside of our guidance range. It's about managing in terms of buybacks. So if I get this right on an annualized basis for the third quarter you're already at 15 billion and buybacks for annualized rate. And I'm wondering can I interpret that to be the standard going forward. That's going to be the thing 15 billion buybacks. Well we set a range of between five and 54 but is it really going to be 15. Well in this environment 15 is is where we are. I would expect us to continue at that rate. We've got strong cash flows. We've got a very disciplined capital program. The balance sheet is frankly probably under levered and we intend to sustain our buyback through the down cycles. And the upside will not be in the market only when conditions are strong. So we're at 15 billion until advised otherwise. Mike it's David Westin back here in the studio. Thanks so much for being with us. Whatever your plans are and I understand that long range plans. Is there anything Washington could do that would make a difference one way or the other. We heard from President Biden that you all should be pumping more than it's up to you you CEOs because you're not having as much. We hear from people on the other side that in fact there's a lot of restrictions that could be lifted. What's your perspective. Well David. There are mixed messages. And look the industry is responding to market signals. We're seeing production grow strongly in the US. This year we're coming out of a very sharp downturn through the pandemic. There are very real constraints on services and the capacity to support growth efforts. And as I mentioned our growth up is up strongly year on year 7 percent in oil production 10 percent in refined product production versus first half of last year spending including an acquisition that we did as of 80 percent or first half of the year before. So we're we're doing our part. But the mixed messages that we get out of policymakers do make it challenging to invest. The one thing that I think is very important that I'm hopeful for is that we see substantive and meaningful reform to permitting in this country that enables us to build infrastructure not only in our industry but power transmission infrastructure renewable power generation. It's difficult to permit infrastructure in this country of any type and to build it in substantive reform would be a very meaningful step forward. Exactly Mike which takes me to my question which is as you know as part of that Infrastructure Reduction Act there was an agreement made with the West Virginia Senator Joe Manchin basically for a bill to be put forward this fall to reform to the point as far as you know where that bill would that make a material difference in Chevron's plans. Well we haven't seen proposed legislative language so it's it would be speculating on something that I really really haven't seen. What I would say is if we had material reform what it would do is it would send a signal to the industry to invest to invest in infrastructure to invest in production with the confidence that we actually could we could execute those those investments. And so I think it would be a very positive signal. I can't tell you how it would impact our plans until I see some specific language.

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Chevron CEO Wirth on Strive, Oil Markets and Permitting

Chevron Chair and CEO Mike Wirth comments on activist investor Strive calling for a "post-ESG mandate" for Chevron and discusses the outlook for M&A activity and the state of global oil markets with Alix Steel and David Westin on "Balance of Power." (Source: Bloomberg)

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