Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 31, 2026 · Beat 6 of last 7 quarters
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Chevron's Project Kilby with Microsoft represents a major milestone in the AI infrastructure buildout, providing a multi-gigawatt, firm, behind-the-meter power solution that addresses the critical constraint of reliable electricity for data centers. The 20-year take-or-pay structure and mid-teens returns demonstrate a viable model for oil and gas companies to participate in the AI power demand surge, potentially opening a new revenue stream for the sector.
Chevron reported adjusted EPS of $6.06, beating consensus, on revenue of $70.1B. Production grew over 200 kboe/d QoQ to a record U.S. level of ~2.1 MMboe/d, with TCO and Australia at or near full rates. The company achieved $3B of structural cost savings six months early and delivered $1.5B of Hess synergies, 50% above target. CFO ex-WC was $19.7B, and net debt to CFFO improved to 0.6x. The company also signed a landmark 20-year power agreement with Microsoft for Project Kilby.
Management reaffirmed 2030 objectives of 2-3% annual production growth, >10% adjusted FCF growth, and >3% ROCE improvement at flat prices. They expect to finish 2026 at the low end of the $18-19B organic capex range, driven by 25% lower capex per barrel in shale and tight. Project Kilby is on track for FID later this year, with a 20-year take-or-pay PPA with Microsoft for 2.67 GW of behind-the-meter power, and management sees a repeatable model with advanced discussions on additional projects. They also highlighted progress on TCO debottlenecking (capacity raised to 320 kbpd) and continued capital discipline across growth options.
“We achieved our structural cost reduction target 6 months early, with $3 billion of annual run rate savings since 2024. Hess synergy benefits have also been delivered also 6 months early.”
on Cost and synergy achievements
“While many data center power projects have been announced, few have secured long-term customer commitments for behind-the-meter power and only 1 is at multi-gigawatt scale, Project Kilby.”
on Power business differentiation
“We're never satisfied and never done. And we will continue to look for ways to lower costs to drive lasting value.”
on Cost discipline
Can you talk about TCO performance and any learnings on debottlenecking, and the current situation at the CPC pipeline?
Mike Wirth noted strong TCO performance, up 170 kbpd QoQ, with affiliate distributions of ~$3B. Eimear Bonner confirmed the third-generation plant's nameplate capacity increased from 260 to 320 kbpd, raising total feed processing capacity to slightly above 1 MMbpd. On CPC, both SPMs are in service, the third will be available in Q3, and mitigation includes shipping across the Caspian, rail, and storage.
How are you thinking about the different components of the shale and tight portfolio, including capital efficiency, the Bakken, and Vaca Muerta?
Mike Wirth said the portfolio produces ~1.7 MMbpd, with common management driving efficiencies. Eimear Bonner noted Permian capex is expected below $3.5B this year, a 25% improvement in capital efficiency, and the company expects to finish at the low end of the $18-19B range. In the Bakken, laterals are 28% longer and production is maintained with one less rig.
Could the Permian go back to growth post-2030?
Mike Wirth said the Permian could grow 100%, but the focus is on free cash flow and efficiency. He outlined three growth buckets: enhanced assets (shale, Guyana, Eastern Med, Argentina, West Africa), announced business development (Libya, Suriname, Namibia), and special situations (Venezuela, Iraq, TCO concession). He emphasized capital discipline and value over growth.