Couple of quarters back where a number of those things were a challenge. And the current quarter, we saw really good performance. Last thing I might mention, which might be implied in your question, you see some talk about the takeaway capacity out of the basin and are people constrained, is that impacting particularly gas prices more than the other commodities. We’re covered on takeaway capacity out of the basin on oil, NGL and gas well out into the future. And so we’re not exposed to any in-basin discounted pricing as a result of that.
Operator: We’ll go next to Nitin Kumar with Mizuho.
Nitin Kumar: Mike, I just wanted to maybe get an update on Venezuela. There were some reports that a administration is reinstating some of the export bans on that country. Specifically said that Chevron was not included, but just your thoughts on sort of the future of oil production and exports from the country and how it would impact Chevron?
Mike Wirth: Yes. Thanks, Nitin. So you might recall that the Department of Treasury and OPEC, a division within treasury, has issued a couple of different, what are called general licenses for operations for companies in Venezuela. There’s one called General License 41, which primarily pertains to our position in the country. There’s some specific licenses as well that kind of go along with that. And then there had been a second one that was issued subsequently called General License 44, which applied more broadly. That’s the one where the administration has announced some changes. And those don’t really impact us. There have been no changes to GL 41. And so we’re not really affected by the news you’ve read about recently. I’ll just remind you, we’re not putting new capital into Venezuela right now.
All the spending is really self-funded from the cash from operations. We’ve been lifting oil and bringing it to the U.S., which has been helpful for the U.S. refining system, not just ours but others as well. And since that license was issued now a little bit more than a year ago, we’ve seen production at the joint ventures that we’re participating in increase from about 120,000 barrels a day at the time that, that license was issued to about 180,000 barrels a day now. So that’s an update. There are some — maybe it might be worth reminding just how the financial side of that works because it’s a little bit different than some of the other parts of our production. So Eimear, do you want to touch on that?
Eimear Bonner: Yes. Nitin, just as a reminder, for Venezuela, we do cost accounting, not equity accounting. So Chevron is not recording the production here or the reserves. We record earnings when we receive cash, and that shows up under other income and income statement. Just to put this into context, in 2023, the cash was modest, probably less than 2% cash flow from operations.
Operator: We’ll go next to Jason Gabelman with TD Cowen.
Jason Gabelman: I wanted to ask about the divestment program. I know when the Hess deal was announced, you discussed $10 billion to $15 billion. But given that’s in a bit of a holding pattern here, I’m just wondering what you expect the cadence or the target for divestments to be. I think historically, you’ve done about $2 billion a year. So that’s not too far from what the guidance was with the Hess deal. Just trying to try and lay those two numbers and getting a sense of what the divestment program could look like while that deal is in bit of a holding pattern. If you could just remind us the assets that have been discussed in the market, that would be great. Thanks.
Mike Wirth: Yes. Yes, sure. Happy to do that, Jason. So the first thing is you’re right. We’re always high-grading our portfolio. And it’s not because we need the cash. We even already covered the strength of the balance sheet. But it’s really to set value to optimize our portfolio. We find times there are things that don’t compete for capital in our portfolio and they fit better with somebody else. They tend to be early-in-life assets. We were at Rosebank and divested that a few years ago or things that are much later in life and might fit better with somebody who works those kinds of assets. Over the last decade or so, 2012 through 2023, we divested about $35 billion worth. Our long-term history has been about $2 billion per year, maybe 1% of our capital employed, give or take.
And our guidance for this year is 1 to 2, so it’s pretty consistent with history. We did say that upon the closure of the Hess transaction, we’re going to add some assets that are going to be highly attractive for capital investment. And that means as you look through the rest of the portfolio, if we stay capital-disciplined, there are probably some things that we might otherwise have invested in that now we would choose not to. And so that’s where the 10 to 15 guidance came from. That would still stand upon closure. The things we’re doing now are things we would have done in the normal course. And so they’re not really related to high-grading post the Hess addition. The things that are in the public domain, we talked about Myanmar, which we exited as of April 1.
We’ve announced that we intend to exit the Congo, and we’ve got a deal there. We expect that to close before the end of the year. We have talked about our position in unconventionals in Canada, in Kaybob, Duvernay, which is a nice asset, which has some growth opportunities, but it may be a better fit for others. So we’re looking at alternatives there. And then also the Haynesville, we paused our development activity in the Haynesville last year, and that’s another one that we think may fit better with others. So I think those are the ones that are out in the public right now, Jason.
Operator: We’ll go next to Bob Brackett with Bernstein Research.
Bob Brackett: Given the launch of Future Energy Fund III, can you give us a thought of what you saw success cases coming out of I and II that caused you to move to III? And maybe compare and contrast how you do it yourself in-house solar to hydrogen, for example, versus where you might see third parties to try new technologies.
Mike Wirth: Yes. So I appreciate that. This is one that we probably haven’t talked about with investors as much as some of the other parts of our business. Funds 1 and 2 were smaller, $100 million, $300 million. And they’re not actually fully subscribed yet, but they’re getting there, which is why we announced fund #3. We’ve been in the venture investing business for 1/4 of a century, so going back to the late ’90s when we first set up our venture investing organization. And in the Future Energy Funds, which are those that are really need on energy transition themes, through Funds 1 and 2, we’ve invested more than 30 companies already. We’re collaborating with 250 or so other co-investors in these companies. We can serve as a pilot bid for their technology so we can help them bring things from the lab and kind of bench scale out into the real world.
And I’ve visited last year, one of our carbon capture pilots in San Joaquin Valley with a company that’s got some really interesting technology to help us improve the efficiency, reduce the cost for carbon capture. And so we’re looking at things like industrial decarbonization, hydrogen, emerging mobility, energy decentralization, the circular carbon economy. And what we’re really looking to do is support innovation in things that we probably aren’t doing within the company, within our own R&D or scale up. As you mentioned, the projects in the Permian Basin or in the San Joaquin Valley, the solar to green hydrogen is using established technologies that are well proven. What we’re doing in our venture investing is trying to develop these new technologies, new materials, new novel ways to integrate AI and other kinds of technology systems to help solve some of these problems.
And hopefully, we find things that will help our business and help the world. Last thing I’ll say is over the 25 years, we’ve more than earned our money back in our return on our investment. Not every one of these companies is successful, but we’ve seen a lot of technologies move into our business. We’ve seen a lot of the companies become successful. And there’s a lot of innovation going on out there. This allows us to leverage ourselves into smaller start-up innovation that we might not otherwise see. So it’s been a very, very positive for us, and we’re excited to announce the new fund.
Operator: We’ll go next to Roger Read with Wells Fargo.
Roger Read: Can we talk a little bit about Eastern Med? I know at one point, operations shut down. It sounds like everything is back up and running. But also you would kind of tie that into Egypt a little bit, where there’s been some exploration talk and in the government trying to do some things to improve the overall investment, I guess, environment there.
Mike Wirth: Yes. You bet. So first of all, we are back in full operations in the Eastern Med. Tamar was down for about a month at the very beginning of hostilities. But we’re excited about the opportunities there. Just to remind you, we’ve got the two existing platforms, Tamar and Leviathan, in service. And we’ve really structured our development plans there to focus on capital efficiency, higher returns, to the earlier answer, things we’ve got to compete for capital in our portfolio. Since we’ve closed on the Noble acquisition, we’ve increased production at Tamar and Leviathan by more than 10% just through debottlenecking and reliability. We’ve sanctioned projects at both of those that are currently in progress that will increase production by another 40% over the next couple of years.
And we’re looking at larger expansion, particularly for Leviathan, where we’ve got a number of concepts that are being evaluated. Obviously, in the current environment, we’re moving carefully with development of those. You mentioned Egypt. We’ve got a discovery at Argus. We expect another appraisal well there in late this year or early next year to better characterize the field and refine our development plan. We’ve got a number of other blocks that have not been drilled yet that we shot a seismic on. And we plan to spud a well in Block 4 there before the end of this year. And so it’s an area that I think has got real prospectivity. As you look at growth in both the near term, what the projects I mentioned and then the longer expansion of existing and exploration prospectivity, it’s a part of our portfolio that I expect us to see growth from over the coming decade.
Operator: We’ll go next to Lloyd Byrne with Jefferies.
Lloyd Byrne: I know we’ve covered a lot of ground this morning. We talked about the Permian productivity, which looks really good. But could you just touch on the DJ? And that production looks stronger than we expected. And then also any political risk you might want to comment on out there?
Mike Wirth: Sure. So yes, first quarter production in the DJ was above 400,000 barrels a day, kind of higher than what our long-term guidance is. A lot of fourth quarter ’23 wells put on production there. You’d typically expect some weather-related downtime in Colorado over the first quarter. We saw some of that but less than what we had planned for, so production was good. Second quarter, there’s maybe some minimal impacts that we expect from a third-party gas plant that’s had an outage. But continued strong performance there thus far in the second quarter. These are high cash margin, low-breakeven barrels that we’re really pleased to have in our portfolio. If you go back a few years ago, we didn’t have anything in DJ. We were not talking 400,000 barrels a day of production there.
We plan to hold our plateau there around 400,000 barrels a day, and it will fluctuate a little bit based on the timing of bringing new pads on and completion of wells, et cetera. But it’s a really strong asset for us. Let me talk about the projects and kind of the operating environment a little bit, and then maybe I’ll have Eimear just touch on PDC and the benefits of that. But Colorado is a state where energy is an important part of the economy. And I grew up there. The environment is very important to the people and the state as well. And I think their goal has been to be a leader in responsible development and to recognize the important economic contribution that our industry makes to the states. I’m confident that will continue to be the case.
We’ve got good relationships with members of the legislature, with the executive branch, with the governor. And as the largest oil and gas producer in the state with over 1,000 employees who live and work there and we were a significant investor there. We engage broadly within the community. And I think there’s a recognition that responsible development in Colorado is what everybody wants and what we are committed to. And there can be some noise around ballot proposals. There can be some noise around legislative proposals. But we’re confident that the state is interested in working with us to be a responsible player for this to be an important part of the economy. Eimear, maybe PDC, some of the benefits, just so people are reminded of that.
Eimear Bonner: Yes. It’s been about 9 months since we closed with PDC Energy. We’re really pleased with the progress that we’re seeing on the synergies. On the CapEx side to-date, we’ve captured $500 million, which is $100 million more than what we had initially guided to. We’re also seeing capture on the OpEx side as well. So we’re nearing $100 million there. The teams are continuing to integrate it. We’re bringing the best of the both companies together and building a development playbook focused on optimizing returns in the basin. We’re realizing strong free cash flow from these assets. So we’re ahead of pace for the incremental $1 billion in annual free cash flow that we guided to.
