‘PAY ATTENTION’: Big Oil boss warns over prices, market impact

‘PAY ATTENTION’: Big Oil boss warns over prices, market impact

welcome back Exxon Mobile is trying to stop a planned merger between Chevron and hes that deal expected to close within the next year I spoke with Chevron chairman and CEO Mike worth here yesterday at the milen global conference this is a good deal for shareholders of both companies it’s a good deal for the industry it’s a good deal for the country of Guyana and we’re very confident that the deal will will close we’re working our way through the FTC process which we expect to be concluded by the end of this quarter shareholder vote at the end of this month and then we’ve got a contract issue with one of the other partners that uh will be resolved through arbitration and that’ll take a little bit longer so I want to really get your take on what has brings you obviously Guyana is a huge project the biggest and that’s the Superstar of that deal but tell me what else H brings to the table for Chevron well I’ll start with the people a really good quality people and a culture that aligns with our culture and it’s a tribute to uh John Hess and the hes family to have created a company that has such a commitment to safety uh to Integrity uh to protecting the environment and doing the right thing so great people uh they’ve got a great portfolio of businesses so we’ve got some complimentary businesses in the the Gulf of Mexico they’ve got a strong position in North Dakota where we don’t have anything and U and then of course guyana’s a tremendous asset as well so it’s people it’s technology and it’s these great assets and it’s the combination will create a premier Energy company that’ll be good for our country it sure would I want to get your take though on what Exxon is saying about it they claim they have first right of refusal they’re trying to stop this deal what do you want to say to Exon given that they have their own partnership right now with h as does Ceno yeah we we you know worked uh and H worked to uh to try to understand exxon’s concerns and address them for for a long period of time before uh you know before this went to arbitration and we thought we were making progress and being responsive to their concerns they then concluded that it was better to put this through the arbitration process and so those discussions have come to an end and um and we’re really now headed towards uh resolution through through arbitration and because of that arbitration case on Friday has said that this deal is likely delayed until at least 2025 is that what you’re expecting yeah it’s hard to to know exactly what the timeline will be because that’s set by the arbitration panel and the arbitration process uh we’re hopeful that it’s faster than that but ultimately that’s something that we have some measure of input to but certainly not control of tell me what drove the most recent quarter uh we had really strong performance uh operationally uh largest production in the history of our company and in the US up 35% year on-ear uh which led to strong financial performance our eighth quarter in a row over5 billion in um in earnings and uh and and distributed over5 billion to shareholders for the n9th consecutive quarter so uh strong operational performance financial performance and strong returns to shareholders and shareholders want to know that the dividend and the BuyBacks will continue what are your expectations dividend was increased 8% earlier this year making 37 consecutive years of dividend increases uh over the last two years we’ve distributed 177% of our market cap back to shareholders through dividends and share purchases and we’ve got a history of prioritizing those and I think shareholders expect that to continue Mike let’s talk about the growth away from this deal I know you’ve got your enormous project in Kazakhstan that expiration is coming up right uh the you have to renew it concession uh runs for another almost 10 years it expires in 2033 we’ve got a large project underway right now to take production from 650 or 700,000 barrels a day to a million barrels a day we’ve begun the startup of that with some significant um news this last quarter uh about uh compression and conversion of the fields to operate at lower pressure uh on our way to a full startup of that incremental capacity in 2025 so uh it’s an important part of our business and important Supply uh to Europe and to the world what’s Plan B if the H deal does not does not happen for you well we had a really strong portfolio X hes so the hes deal makes us even stronger but we’re delivering uh 10% compound annual growth in free cash flow over the next several years a 3% compound annual growth in production uh driven by the peran driven by some other Shale Assets in our portfolio projects in the deep water Gulf of Mexico one of which is scheduled to start up the middle of this year and then several that will follow that big position uh in the Eastern Mediterranean uh offshore uh Israel so we’ve got a number of other assets that are that are delivering growth and the the combin with h only strengthens our Casal longer into the future not only to the end of this decade but well into the next Mike I’m glad you mentioned Israel because obviously we’ve got two Wars underway Israel and Iran are this close to a wider conflict how do you view that in terms of the potential for upsetting production well we’ve we we did see some impact on our supply of natural gas into Israel during the early days of the conflict we now have both platforms online and are meeting all the needs not only for Israel’s domestic Market but also for Jordan and Egypt where the the gas goes as well so uh right now U we’re we’re operating well uh we’ve seen disruptions to shipping in the Red Sea uh we’ve had some disruptions last year uh in the uh in the the Arabian Gulf and so the risks in a situation like this are that uh through some sort of a an escalation a miscalculation uh that you could see impact on physical Supply in an area that supplies so much of the world’s oil and that’s uh that’s a real concern it’s a real concern and I think it’s the reason that many people expect oil prices to stay elevated what’s your expectation you know it’s really hard to predict oil prices uh we prepare for volatility we’ve got a balance sheet that allows us to withstand a period of very low prices for a long period of time uh right now we’re seeing prices that have been kind of in the 80ish $ 80 to $90 range here for for quite some time mark Market are relatively balanced demand growth is strong last year was all-time record demand we’ll see demand grow again this year so uh the the end of the oil age is not yet upon us um and in fact it’s important that we continue to meet that with with new production which is uh certainly what we’ve been doing uh in the short term these risks due to geopolitical events are uh are things to pay attention to because they could impact markets how would you characterize demand globally right now continuing to grow we’re seeing demand growth in the US we’re seeing demand growth in Asia uh Europe uh less so uh but you know the US and Asia are really the two two big drivers of of global oil demand and demand growth and U look the US may not be growing as fast as it was a year ago but it’s still growing uh China has recovered from where it was a year ago and and looks to have stabilized and so you know Global demand was up about 2 million barrels a day last year uh year on year this year we think it’s going to be up about a million and a half so still strong growth grow in in oil demand we’ll have a lot more with Mike worth we will have part two of my interview with the chairman and CEO of Chevron tomorrow right here join us for his commentary on US policy and oil prices longer term that’s tomorrow right here on mornings with Maria

Chevron Chairman and CEO Mike Wirth talks the Hess purchase, latest earnings, new oil production projects and the future of the natural gas market in a wide-ranging interview on ‘Mornings with Maria.’ #FOXBusiness

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