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MIKE WIRTH, CHAIRMAN AND CEO OF CHEVRON IS INTERVIEWED ON FOX BUSINESSPolitical Transcript Wire; Lanham [Lanham]. 19 Dec 2022. MIKE WIRTH, CHAIRMAN AND CEO OF CHEVRON IS INTERVIEWED ON FOX BUSINESS DECEMBER 19, 2022 SPEAKERS: MIKE WIRTH, CHAIRMAN AND CEO OF CHEVRON MARIA BARTIROMO, FBN ANCHOR [*] BARTIROMO: Want to talk about the impact and a practical energy policy right now with the Chairman and CEO of Chevron, Mike Wirth is with us. Mike, it's great to see you. Thanks very much for being here this morning. WIRTH: It's good to see you, Maria. Good morning. BARTIROMO: Well, we've seen a year and a half of attacks on fossil fuels, attacks on oil companies, but you are pursuing what you are calling a balanced strategy on energy right now. You've actually made a sizable investment at the company in renewables. But you're not demonizing renewables, you're not demonizing petroleum. Tell us what you believe a practical energy policy should look like for the United States, as it relates to national security as well. WIRTH: Maria, the conversation about energy has become very polarized and it's very difficult to find balance in the center. And I think we need a pragmatic conversation that recognizes there are three things that really matter when you talk about energy. First of all, energy needs to be affordable, because it supports economic prosperity. Second, it needs to be reliable because energy security and national security are linked. And then third, it needs to be ever cleaner. We need to respect the fact that people want to see the environment taken care of. And so, we need to balance our approach to energy, certainly as a company and I think as a country. And that's what we try to do. BARTIROMO: Well, I mean, that's not what we're seeing right now, because you've got a lot of attacks on Chevron, Exxon, really the entire space in the oil industry. You're one of the largest refiners in the state of California right now, for example. And California is proposing higher taxes. They want a windfall tax. They want a penalty put on oil companies if you're making excess margins. Tell me what kind of impact something like that has on people's ability or willingness to invest in energy to result in that balanced strategy that you refer to. WIRTH: Well, these tax proposals would nothing to bring more supply to market and lower prices. In fact, the risk is that they could do the exact opposite. We've seen this tried before. It didn't work in the 1970s and the 1980s. And it wouldn't work today. Typically, if you want less of something you raise taxes on it. If you want more something, if you want more supply of gasoline, you don't raise taxes on it and discourage people from investing in bringing more supplies to the market. So, these policies haven't worked in the past. They won't work today. That's why we need a balanced conversation, a pragmatic discussion about what really will bring more supplies to market in order to bring stable prices, which is what the economy would - you know - would benefit from. BARTIROMO: At the same time the conversation around leases keeps coming up. The administration says there are 9,000 leases out there. But I want to zero in on the permitting process because the permitting process is where you see all the bureaucracy. Are you able to get the permits required to actually grow production in America? WIRTH: Well, I don't know anything about this 9,000-lease number. I don't know where it comes from. We don't have anything even approach a fraction of that. When we get a lease, it just begins a process where we have to acquire a number of permits and that's to do work just to access the possible, you know, geology and potential for energy production from that lease. And so, there are permits required in that phase of the process. And then if you actually want to go and explore for oil, there are additional permits that are required. And then to actually develop it, there are further permits required. These things can take a long time. They can be challenged in court. And it is a very bureaucratic process. The idea of permitting reform, which has received a lot of discussions lately, actually for all types of energy infrastructure, is a good idea. And I think it would be good for our country in order to encourage investments in infrastructure of all types, to find a way to have a proper permitting process that does protect the environment and ensures work is done safely but doesn't allow people to delay endlessly these kinds of investments. BARTIROMO: So, are you - do you feel like you could be passing up important opportunities for the company and for America because of all of this pressure? I want to get your take on Chevron's 2023 expenditures announcement, that you are going to be talking about right now, because some analysts have said, look, with an arbitrary budget, you know, $17 billion, $15 billion last year, does that put you in a box whereas you have to pass up opportunities which could have been incredible opportunities, not just for Chevron, but for the country? WIRTH: Well, Maria, we have to remember we are just still coming out of a pandemic where demand for our products collapsed. And activity in the industry contracted to reflect that. Our spending this year, in 2022, is up nearly 50 percent versus 2021, including all acquisitions and organic capital spending. Our budget for 2023 will be up another 25 percent for organic capital investment versus where it was this year. And so, we're seeing significant increases in our activity, much of it in the United States. It's the country where we have the single largest allocation of capital to development and we are pursuing projects that we think are good for the market. We've indicated we'll grow production at an average compound annual growth rate of 3 percent over the next several years. And production is up this year. So, we are pursuing good opportunities in conventional fuels and we're growing our renewables business at the same time. So, we feel like we're investing at an appropriate level to do our part to meet this demand. BARTIROMO: And you just - you're making historic investments in the Permian Basin, which is a huge opportunity for America. I just spoke with Texas Congressman August Pfluger, that is his district, the Permian Basin. And he was very concerned about the strategic petroleum reserve and its current levels. Here's what he just told me. Watch. (BEGIN VIDEO CLIP) REP. AUGUST PFLUGER (R-TX): Well, let's put this in perspective, the Strategic Petroleum Reserve has over 700 million barrels that is only to be used in a case of an emergency, maybe a storm, maybe a conflict, geopolitical conflict. Not a political emergency like he used. We're down to 300 and maybe 80 million barrels. In perspective, the United States uses 20 million barrels a day, that's our demand, and he's going to put 3 million barrels back. I mean, this is kind of a joke. (END VIDEO CLIP) BARTIROMO: So, what about that, Mike? And tell me about that historic investment in the Permian Basin. Why is that region of the country so critical? WIRTH: Well, the Permian Basin is one of the largest deposits of oil and gas resources on the planet. It's right here in the United States, largely in Texas, some in New Mexico. And in an area where our industry has decades and decades of history, so we know the geology well. There's infrastructure that serves that area. It's close to refining markets and it's a great strategic asset for our country to have energy, you know, independence or energy strength in a - in a field like that, that can really underpin economic activity here. So, it should be used wisely. It should be developed properly. It can be developed safely. And our company and others are in the process of doing that right now. Some of that production can, in fact, go back into filling the Strategic Reserve, which has been drawn down, as you mentioned, at the top of the segment, considerably over the last period of time and is at a level that is the lowest in nearly four decades and should not be drawn down further. BARTIROMO: Yes. Well, and that is the concern, certainly. But at the same time, you are walking this balance of investing in renewables, as you just said, but also investing in the growth story that is Chevron. I want you to walk us through the growth story because you've got - you know - and by the way, the market wants to see Chevron grow, but not too much. They want to make sure you are tight with capital and have a disciplined strategy. Can you talk to investors for a moment right here? Are you going to continue this tight and disciplined strategy to pay dividends and buy back stock? WIRTH: Maria, we have been, for years, focusing on capital discipline, cost discipline and investing in only the best opportunities to bring new energy to market. Our dividend has been increased for 35 consecutive years. Our dividend matters to our shareholders, who are teachers and firefighters and retired union members. We invest capital to grow our business. I mentioned we're growing at 3 percent per year at a capital budget in 2023 that will be $17 billion. We are maintaining a very strong balance sheet, in a commodity business like ours, where prices go up and then go back down, you need to have financial strength, which we do. And then when we have cash beyond that, we will repurchase shares, which is another way to return cash to shareholders. We've done that for 15 of the last 19 years. So, we can do it all. We've got a great portfolio. We've got great people. And they've executed through the pandemic and continued to lever performances as good as any in our industry. BARTIROMO: And even the - with a strong balance sheet that you have, still there are worries about the pressure from the finance industry. I mean, HSBC just said we're not going to invest in any new oil and gas projects. Do you feel that pressure? Because I spoke with the attorney general of Utah last week on this program, Sean Reyes, and he was on with me yesterday, on "Sunday Morning Futures," on this fight against ESG. He's what he said about that. Watch. (BEGIN VIDEO CLIP) SEAN REYES, UTAH ATTORNEY GENERAL: We asked the - that furk (ph), make sure to hold Vanguard accountable. And amazingly Vanguard took a step back and I think sent a signal to other large asset managers that they have to think twice or even three times about the consequences of these activists, progressive, ESG policies. (END VIDEO CLIP) BARTIROMO: Mike, do you think we're seeing that take hold increasingly, investors understand, sure we all want a clean climate, but it doesn't happen overnight. WIRTH: I do think we're seeing that conversation evolve to one that recognizes some of the realities that we were talking about earlier today. The energy system is massive. The solutions will require technology that can scale, human ingenuity that can scale, capital markets that can scale investment into a wide arrange of technologies that will ensure reliable supply into the future and also a lower carbon supply into the future, but it won't happen quickly. It will occur over decades. And I think the discussion that we engage in is beginning to reflect a greater recognition of those realities. BARTIROMO: Yes, I totally agree. I think people are recognizing what is - seems very obvious, that you are pursuing a strategy with both focuses on renewables as well as petroleum. Talk to us further about the growth story because there's one issue, I guess, that is out of your hands. And that is your pipeline that runs through Russia. I'm talking about the Kazakhstan Project. And, of course, it's supposed to come online in 2024 and that would be a huge change in cash flow, but it relies on this pipeline that runs through Russia, as Russia is creating death and destruction in Ukraine. How are you feeling about the Kazakhstan Project? WIRTH: Well, it's a very important country to global energy markets. Kazakhstan is the largest land-locked country in the world and it's a large energy producer. And so, some of those supplies, a good portion of those energy supplies actually do flow through a pipeline to the Black Sea, to a port on the Russian seacoast there. It's got a history over the last couple of decades of being a very reliable source of supply. And it's one that I think customers around the world, in Europe and Asia, in markets that depend upon that production are very - are very focused on. And to this point, it has not been impacted by the conflict. It has not been impacted by sanctions. And I think there's been a concerted efforted on the part of governments around the world to work with the Kazak government to ensure that that supply, which is very important, in today's environment particularly, is maintained in a stable position so that it can help meet the energy needs today. BARTIROMO: Mike, Chevron recently also announced a final investment decision for the expansion of Israel's Tamar Natural Gas Project. Tell us about that. The company says it could be a key for Europe as this war plays out. WIRTH: There are two fields in the Mediterranean Sea, offshore Egypt. One called the Tamar, another one called Leviathan. Both of which we are working for expansion. These are very large natural gas fields, and they currently supply the market in Israel and then also regional markets, like Jordan Egypt, and have the potential to underpin supply into Europe. And so, we're working to advance projects to grow production out of those two fields to meet those local markets and then hopefully to also get some supplies into Europe. We took a decision earlier this month to put a new flow line in, to enable more production from the Tamar fields, to get to its platform and production center as one step in what will be a series of those types of investments that we expect to make in the coming months and years to help with regional energy supplies and natural gas. BARTIROMO: Yes, I mean, the shale business also less capital, and yet also quite rewarding. Mike, I want to thank you for walking us through your policies. I know you've got three ways to invest in sustainability and renewables, but you're also pursuing the growth story that is your bread and butter. We appreciate you joining me this morning, Mike. WIRTH: Maria, it's really good to be with you. BARTIROMO: All right, Mike Wirth joining us this morning. Chairman of Chevron and CEO. END |
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