Tuesday, during an appearance on CNBC’s “Squawk Box,” Chevron CEO Mike Wirth downplayed the possibility of a recession.
He did acknowledge, however, that growth was slowing.
“Does that mean you don’t think we’re headed into a recession in your plans at this point?” “Squawk Box” co-host Becky Quick asked.
Wirth replied, “You know, there’s no signs that we see at this point that we’re in or close to a recession. There are signs that growth may be slowing. And again, we have to always be prepared for that. But ours is a long-cycle business. The capital we put to work in our business isn’t there for just a few years. It’s typically there for decades. So we really have to take a longer view and not get buffeted too much by short-term market movements.”
Wirth also touted recent deal President Donald Trump made forcing secondary tariffs on Venezuelan oil, in response to pushing back on Chinese and Russian influence while keeping domestic energy prices low through U.S. companies, including Chevron.
Later in the segment, Wirth discussed his efforts to increase production in the Gulf of America.
“Mike, let me ask you a little bit about some of the production that you all just announced domestic projects, because that’s been a huge push for the administration,” Quick asked. “There is a question about how much sense it makes at lower energy prices. We had Dan Yergin on yesterday, and he said that around $60, many of these investments don’t make as much sense for the major oil companies. You all just announced yesterday about oil and natural gas production just starting from the Ballymore project in the Gulf of America. What is the break even price for that? When does it make sense? When does it not? Because deep sea production is not cheap.”
“Yeah, so you can think about U.S. oil and gas production kind of in two different categories,” Wirth responded. “One would be offshore like the project we announced yesterday, our third start-up in the last eight months in the deepwater Gulf of America. We’ll take our production up 50% between 2025 and 2026 out there. So 200 to 300,000 barrels a day. These are projects that were started many years ago. The one we started up last August, a discovery from 20 years ago, Ballymore, which we started up yesterday, a discovery from seven years ago. So they take time to bring these online, and you don’t pull back on these projects because of a short-term price cycle. The other area of production in the U.S. are the onshore unconventional, so think the Permian Basin, and there you do have shorter cycle activity. The wells tend to have peaky and then kind of fast declining production. There’s a lot of them. And so that’s what we saw during COVID.
He added, “We saw activity slow down and production respond more quickly. I think that’s an area where if we were to be at a $60 price or even lower, I do think you’re likely to see activity pull back in this sector, and I think you’ll see the production response over a few months. It won’t happen faster than that, but I think that’s really what we should watch. Not so much the deep water activity.”
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