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Mike Wirth didn’t beat around the bush Tuesday: Chevron Corp. won’t go carbon neutral anytime soon.
Wirth, chief executive officer of the second-largest U.S. oil company, called the goals set by many European rivals “aspirational.†Instead, he said, Chevron will take a more realistic path for a major producer of fossil fuels with “concrete actions†to reduce carbon emissions within its own operations.
“We’ve not set long-term targets that we’re not exactly sure how we will get to,†Wirth said in an interview with Bloomberg TV. “Our approach has been, get on the path, start taking actions, set short-term accountability metrics, make progress and start marching in that direction.â€
By contrast, BP Plc last month committed to being carbon neutral by 2050, while Royal Dutch Shell Plc, Repsol SA and Eni SpA have pledged to make large reductions in carbon emissions over the long term. Those promises have won favor with environmentalists and investors. But, according critics, the companies have avoided the difficult truth that no large oil major has yet worked out how to produce carbon-free energy and also turn the big profits associated with oil and gas.
Still, Chevron’s modest climate goals could signify of a lack of ambition, said Jennifer Rowland, an analyst at Edward Jones. “For a business that measures not in years but in decades, you have to question, are they doing enough?â€
At its annual investor meeting in New York on Tuesday, Chevron committed to financial targets for the next five years and outlined projects for the next decade. Its targets for “lower carbon intensity†emissions end in 2023.
Wirth’s comments could be a reality check for executives thinking they can have it all. The world’s supermajors are among developed markets’ most prodigious dividend payers. So far, solar, wind and battery storage projects haven’t shown they can fund such payouts over the long term.
At some point, oil and gas companies face a choice, according to Wirth. He said shareholders’ top priority is seeing improving returns in Chevron’s oil and gas business, and the company responded Tuesday by promising to shower them with $80 billion in cash over the next five years.
“If we do things that are only good for the environment and not good for shareholders, that’s not sustainable,†he said. “If we do things that ignore the environment and are only good for shareholders, that’s not sustainable either. It’s finding that intersection — that is the challenge.â€
Both long-term aspirations and short-term targets are needed to reduce emissions to net zero by mid-century, according to Kathy Mulvey, a campaign director at the Union of Concerned Scientists. That is what the Paris accord says the world needs to prevent catastrophic climate change.
“It’s totally legitimate for people to focus on how to get to these targets,†she said. It’s hard to give Chevron the “benefit of the doubt†when its own goals are so limited.
Like Exxon Mobil Corp., Chevron isn’t concerned about peak oil demand, because a surging global population will need all forms of energy, including oil and gas, many decades into the future, Wirth said. Companies with the lowest-cost assets will be the ones to produce those fossil fuels and Wirth said he is positioning Chevron to be in that category.
European energy companies expect that renewables will become a greater part of their overall production over time.
Chevron will only invest in renewable energy to “support†its oil and gas business for the time being, according to its presentation at the conference. It will continue to invest in novel early-stage technology that could replace oil and gas over time. Its previously announced emissions targets refer to intensity, meaning pollution per unit of energy, as opposed to total emissions, allowing oil and gas production to rise over time.
“It’s the dual challenge of more energy for a growing world and reducing the carbon footprint,†Wirth said. “People are going about it a little bit differently. I don’t think that’s a bad thing.â€
Source: Bloomberg
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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