Michael Wirth: The headline here is no change to cost and schedule. I think that’s really important. In the second quarter, we made really good progress. As we said, 98% project completion and commissioning is essentially two-thirds complete. In the second quarter, we achieved mechanical completion of the three GI, gas injection, facilities and got fuel gas into the flare system, which is very important to enable an on-time startup of FTP. In the quarter that we’re in now, the third quarter, we expect full mechanical completion of the Future Growth Project and, also, a turnaround at one of the Komplex Technology Lines, or KTLs, will begin a lot of work and start up on utility systems, boilers, steam system, other utilities that are required for startup of the pressure boost facility, which is the key driver of WPMP, which enables us to convert from high pressure to low pressure across the field.
Once that turnaround is done in the third quarter and you will see some production impact. I think Jared guided to that. We expect to have two of the four big pressure boost compressors online, which allows us to begin the conversion of metering stations from high pressure to low pressure. And that will initiate – we’ll get that started at the end of this year. It’ll take 10 to 12 months for all of those conversions to occur. There will be turnarounds next year as well, two more turnarounds, one at SGI and another one in one of the KTLs. And all of that is part of a very carefully choreographed sequencing of turnarounds and startup activity that will bring the full field, so the 1 million barrels a day for 2025. So, as we indicated at our Investor Day, what you’re going to see in 2023 and 2024 is the normal turnaround activity interlaced with all of this project startup activity.
This is not as simple as bringing on a new portion of the field. We’re really reworking the entire gathering and producing capacity of the field. And so, it’s quite a complex series of activities to execute all of that. And so, the production reflects that. And we put, I think, a chart to kind of give you some guidance for both this year and next year.
Jake Spiering: Slide 10 from our set has annual production, 2023, 2024, 2025. Yeah, no change in that guidance.
Operator: We’ll go next to Neil Mehta with Goldman Sachs.
Neil Mehta: I want to stay on TCO. And while there will be a volume inflection in 2025, there’s probably going to be a free cash flow inflection in 2024, just as affiliate CapEx rolls off first. And so, can you talk about the cadence of that and how it manifests itself in terms of dividends?
Pierre Breber: Yeah, we’ve been guiding – Neil, this is Pierre – to the clean year because that’s the $5 billion of free cash flow, $60 Brent in 2025. And, of course, we’re guiding to free cash flow, because as you recall, it’s not just dividends, it’s also repayment of the loans and the co-lending that we have done along the way. And the profile of those loans are disclosed in our SEC filings. Exactly to your point, you’ll see a build towards that just as the CapEx has rolled off. It was not that long ago we were investing $3 billion to $4 billion a year our share into the project and that’s down to $1.5 billion or so this year and will continue to trend down. So there’s that inflection point. What’s also being managed, of course, are commodity prices and those vary.
And as we’ve said, TCO continues to be conservative in managing its balance sheet, so it’s been holding more cash on the balance sheet. As the project gets closer to the end, as we’ve demonstrated that TPC is running very reliably now for almost a year-and-a-half, we expect some of that cash to come on. So I can’t get in front of the board of directors of TCO. It’s a separate company that we are a shareholder in. But we expect, as we said, a much bigger dividend in the fourth quarter than we saw in 2Q. And we expect to see a release of some of that surplus cash that’s been held on the balance sheet. And that’ll continue over the next couple of years as we head into that $5 billion of free cash flow in 2025. And maybe the last thing, Neil, you know that TCO has really good price sensitivity.
So I’ve seen yours and other estimates, at 70% or 80%, the cash flow is even stronger.
Neil Mehta: The follow-up is just on the return of capital. I think while you have a big buyback range, a lot of market participants have kind of viewed your $17.5 billion dollars as the P50 outcome in any reasonable commodity price environment. And so, thinking less of it like a flywheel and more as sort of a relatively fixed number unless commodity prices go wacky. Just any thoughts on that statement and whether you’re trying to give us a little bit more surety around that number as opposed to a more volatile number.
Pierre Breber: The range, Neil, is tied to the upside/downside cases that we showed at our Investor Day, roughly, right? So, there’s $10 billion to $20 billion. So you’re right. It’s a wide range because it reflects a wide range of prices between that upside case and the downside case. And of course, in between, there’s a sort of a mid-cycle case. And as a reminder, that downside case gets to $50 in a couple of years and stays there for three years. So that is a real downside case. And that’s what the low end of the buyback range is notionally tied to. The upside case is a case that’s not too different from what we’re seeing now. It averages about $85 over the five year period. It trends down to $70 towards the end of that period.
And that’s why you’re seeing a buyback very close to the top end of the range at the $17.5 billion dollars. So it’s certainly a signal that, as we look out over this commodity cycle, and again, we think of the buybacks as being steady across a cycle that we feel good about it. So we said we could do a much larger buyback, but that would be not steady, and we don’t want to be procyclical. We’re trying to be across the cycle. And so, yes, when we guide on buybacks, we’re guiding with the intent of maintaining it for a number of years across the cycle.
Michael Wirth: Neil, I would just add, you see in our second quarter results that our net debt remains very, very low. And we’ve indicated multiple times that we don’t have a problem gearing back up and putting more debt on the balance sheet to get back towards the range that we’ve guided to through the cycle in order to sustain a very steady share repurchase program.
Operator: We’ll go next to Steven Richardson with Evercore ISI.
