Chevron CFO issues stern call for improved performance as shares trail peers

(Bloomberg) — Chevron Corp. CFO Pierre Breber criticized employees for failing to deliver on several key performance metrics in 2023, a year in which Chevron's shares tumbled 16%, a steeper drop than its industry peers.

“We can — and must — do better by focusing on what we can control,” Breber said in an email to staff earlier this month seen by Bloomberg. “We’ve delivered industry-leading performance before, and we will do it again with consistent and disciplined execution.” 

Chevron shares have tumbled 16% this year, a steeper drop than its supermajor peers. The oil giant has faced a multitude of operational difficulties, ranging from refinery disruptions to lower-than-expected production in the Permian Basin to the threat of strikes in Australia. In October, executives revealed yet another cost increase for its $45 billion Tengiz project in Kazakhstan and said it would come online later than expected.

“Upstream production, refinery availability and carbon abatement projects are all below plan,” Breber said. “Chevron is next-to-last among our peers in improving earnings per share on a three-year rolling average.”

The unusually blunt message, which made no mention of the holiday season, comes around the time Chevron typically pays bonuses. The company also recently agreed to buy Hess Corp. for $53 billion. While no job cuts have been announced, Hess, like Chevron, has a large workforce in Houston. Hess’s key asset is a 30% stake in Guyana’s massive oil development, which is being operated by rival Exxon Mobil Corp.

“Chevron is a performance-driven company and recognizes that we have not been performing to our potential,” the company said in an emailed statement. “This was an internal employee communication to drive continued focus on improving Chevron’s performance and is not an update to the guidance provided during the company’s third quarter 2023 earnings conference call.”

Chevron’s problems have been compounded by better performance among its peers, especially Exxon and Shell Plc. Exxon’s marquee Guyana project rapidly is expanding output of low-cost barrels while the company’s $60 billion purchase of Pioneer Natural Resources Co. will help it leapfrog Chevron in the Permian. Shell Chief Executive Officer Wael Sawan’s plan to spend more on oil and gas and less on low-carbon lines of business has been well received by investors. 

Breber, who will retire as CFO in March, said Chevron has the right strategy, assets and “the most talented and dedicated workforce in the industry.” But employees must be “consistent and disciplined” in how they apply internal standards, “prioritize the most important work, and deliver predictable performance.”