Sam Margolin: The question is on the cash balance. It looks like, nominally, it’s drawn down, but it feels there’s some inputs that would theoretically help it rebuild in the second half. You’ve got working capital and I think TCO is going to pay a dividend in third quarter. And PDC had a very front loaded capital program too. So, that’s coming on with free cash flow. So just wondering about the cash balance and how you think about the level or if we’re going to be in a rebuild phase for 2H?
Pierre Breber: Well, the direction that it goes depends, of course, on commodity prices and margins and a number of other factors. You’re right, our cash levels have come down, in part due to working capital outflows, timing of affiliate dividends. And we’ve also paid down some debt. We’ve been, I think, very clear that we don’t want to hold surplus cash, certainly not permanently, that it’s where the cash goes in the short term. But, over time, that cash is going to be returned to our shareholders in the form of this growing dividend and ratable buyback program. So we need only about $5 billion to support our operations. We’re nearly $10 billion at the end of the second quarter. So that’s more than sufficient. We have access to lots of liquidity.
We don’t have any commercial paper now. Again, we’ve been paying down debt. So that’s the more economically efficient way to manage the balance sheet if we get there. And whether the balance the cash balance goes up or down again depends on all the inputs and outputs that we’ve been showing. We’re guiding towards the net debt, as Mike said. The net debt is well below the low end of our guidance range. So, we look at all those factors. And again, if cash balances head down to $5 billion, that’ll be adequate to cover the operations. On working capital, our pattern the second half of the year is that we tend to see some draws on it. But we’re certainly not going to recover from what we’ve seen this first half of the year. A big portion of what we saw in the first half of this year on working capital are really tax payments tied to earnings last year.
So you can kind of think of those as being offset from last year where we had that favorable working capital environment. So, there’ll be ups and downs along the way. Over time, working capital tends to average out over zero. But these are just timing effects. We look through them. We knew we had taxes due. And so, that’s all part of the planning as we look at the balance sheet.
Jake Spiering: Sam, I guess that we’ve guided to a TCO dividend in the fourth quarter. We do not expect a dividend in the third quarter.
Sam Margolin: Sorry, I must have misread that remark. The follow up is actually sort of on the organization. It’s a follow-up to Steve’s question earlier. But Pierre had spent some time in an ESG role and the low carbon role. And the incoming CFO is coming from a role where there was a lot of work on the ground on the low carbon front, on the technology side. And so, Chevron has this really interesting sort of marriage between finance and low carbon that I think is differentiated when you look at some of the peers. And so, the question is, as we make progress through the low carbon development, do you feel like you’re embedded in the highest return areas? Or are there other ones where capital is going to maybe pivot? And I think that ties into carbon capture too because that seems like a place where the incentives are pretty transparent?
Michael Wirth: I think your question started with people and ended up at our kind of investment priorities in new energies. Look, across the entire leadership team, we’ve got a commitment to driving higher returns and lower carbon, and people move through different kinds of roles. But this is part of every role in the company today. So, it’s a part of the business, it’s something we’re committed to. Our focus is, as we’ve said before, it’s on things where we can leverage our unique capabilities, assets, value chains, customers, to create sustainable, competitive advantage in these new energy businesses. It’s why we’ve not gone into wind and solar on a merchant basis because there’s others that can do that and we don’t want to really bring anything unique there.
Our renewable fuels business today is profitable and generating cash. We expect to start up the Geismar expansion and be producing more renewable diesel next year. So, that’s a business today that is economic and attractive, and we continue to grow, particularly back into the feedstock side. We announced an acquisition this last quarter of a small company that’s got some interesting feedstock technology. Carbon capture and storage, obviously, is being built. We do it today in some assets. But as a business, we’re building out Bayou Bend. I talked about, we’re working on projects in other parts of the world as well. And we do believe that, with the right technology, the right business model and policy environments that there is an opportunity there.
Other things that we’re working on, hydrogen is one that’s both electrolytic hydrogen and then traditional hydrogen paired with carbon capture and storage. In the US, the IRA incentives can certainly support the development of business models there. So I think we’ll stay consistent with this. We’re always looking at new technologies, but the area we focused on is the primary area you should expect to see us investing.
Operator: We’ll go next to Jason Gabelman with TD Cowen.
