To Chevron’s critics, who range from Just Stop Oil protesters to the governor of its home state and the president of the United States, the $300 billion (€282.4 billion) US oil and gas major exemplifies an industry recklessly promoting products it knows are warming the globe while greedily pushing up petrol prices.
But to its chief executive, Mike Wirth, the business he joined 41 years ago is “selling a product that has changed the quality of life on this planet. For the better.”
Speaking in the weeks before Chevron agreed to buy US oil and gas producer Hess Corporation in a $53 billion deal, Wirth said his company would seek to engage with critics “to be part of the solution”. But he added: “That can’t deter us from what we do.”
Chevron’s culture was “grounded in integrity and a deep belief in doing the right thing”, Wirth said, with steady conviction. “We are not selling a product that is evil. We’re selling a product that’s good.”
Wirth has chosen to run one of the world’s largest oil and gas producers at a time when scientific consensus is pointing more clearly than ever to the role fossil fuels play in heating that world. That makes running an energy company in 2023 a singular leadership challenge.
The prospect of winning over big oil’s antagonists looks remote, and the bodyguard travelling with Wirth is a reminder that the opposition he faces is not just rhetorical.
“I think of the CEO position as being a weight-bearing position,” Wirth said. Rather than cave in to the pressure, the 63-year-old recently extended his term, with Chevron’s board waiving its mandatory retirement age so he can keep running the western world’s second most valuable oil company.
The rest of his tenure looks set to feature a reshaping of Chevron’s industry, as highlighted by rival ExxonMobil’s recent $60 billion bid for Pioneer Natural Resources, which preceded Chevron’s Hess deal by less than two weeks, and continued disputes over its environmental responsibilities.
As peers such as BP and Shell tout more aggressive transitions to a lower-carbon future, Wirth set out the message that lower emissions matter, but should not come at the expense of an affordable and reliable energy supply.
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His blunt response to an International Energy Agency forecast that demand for fossil fuels will peak before 2030 was: “I don’t think they’re remotely right... You can build scenarios, but we live in the real world, and have to allocate capital to meet real world demands.”
Energy security, energy affordability and lower emissions were “in tension with one another”, Wirth admitted. But he said he was working on the basis that Chevron’s core products will be in demand for decades to come.
The people that really do the hard work are the ones that I try to spend time with because I learned how important it was to show your respect for them
— Mike Wirth, Chevron
What that means, in practice, is that Chevron will spend just $2 billion of its $14 billion capital spending budget on lower-carbon investments this year, because such bets offer lower returns.
Like Exxon, it was bulking up in fossil fuels even before the Hess acquisition, announcing a $6.3 billion deal in May for oil and gas producer PDC Energy.
[ Exxon and Chevron profits slide from record highsOpens in new window ]
Despite headlines suggesting that an environmentally conscious new generation is turning its back on the oil business, Wirth said Chevron was having no problem hiring. He reminds the company’s people “every single day” that they “help make the world better”.
Wirth was born in Los Alamos, New Mexico, where his father worked in the National Laboratory, a federally funded research and development centre, before moving the family to Golden, Colorado, to become an executive at Coors. In one summer job at the brewer, Wirth found himself making ashtrays, and realised what loyalty his father inspired by talking to people on the production line.
On site visits now he makes a point of talking to “the operators, the mechanics, the people who work with their hands”, he said. “The people that really do the hard work are the ones that I try to spend time with because I learned how important it was to show your respect for them.”
Wirth also credits school football and basketball coaches for instilling in him values of hard work, discipline and teamwork. One coach pushed Wirth to do things he did not think were possible, including running up and down Lookout Mountain, a more than 7,000ft peak overlooking his hometown.
It taught him “the power of believing in somebody and seeing something in somebody that they don’t see in themselves”, he said.
Wirth now leans on the advice of three former Chevron chief executives, who all live within five miles of his house. “These guys have lived through the fall of the Soviet Union, multiple recessions and wars and embargoes and terrorist attacks,” he noted. Over regular lunches, he grills them on the lessons they learned from such crises.
He said his own leadership of Chevron is defined by “capital discipline”. Wirth, who has a degree in chemical engineering from the University of Colorado, led the company’s refining business before becoming CEO, where tight margins mean “you have to watch every penny”.
He took charge at the end of a decade-long shale investment boom in the US and soon applied the brakes on spending. One of his first big decisions was to walk away from a $50 billion-plus takeover battle with rival Occidental Petroleum for Anadarko Petroleum. “I told people we want to win in any environment but we are not going to win at any cost,” he recalled.
It was a prescient decision. Soon after, the pandemic struck, oil prices collapsed and a debt-laden Occidental was plunged into crisis.
Since then, Wirth’s cost controls and surging oil prices following Russia’s invasion of Ukraine have turned Chevron into a cash-generating machine, with returns on capital employed more than double what they were in 2018. After almost $70 billion in dividends and buy-backs since he became CEO, its shares have outshone big European rivals.
We have never deceived anybody. We have been part of that [climate] discussion all along but we didn’t know something and say ‘Oh well, wait, we are going to mislead people or we are going to not talk about this’
— Mike Wirth, Chevron
That capital discipline created the backdrop for Chevron’s latest megamerger. The deal was announced in the weeks after Wirth spoke to us in September, but he had at the time hinted towards the possibility of further acquisitions: “Could it happen? I think it probably could.”
Wirth also cautioned, however, that big dealmaking was “more difficult today”, highlighting that companies were better run than they were when Chevron bought Texaco for $36 billion in 2000, so acquisitions offered fewer savings.
“The regulatory issues become more germane as you get to larger and larger deals,” he noted, adding: “Big companies are complicated to run; they’re really complicated to put two of them together.”
[ Big Oil needs to cut production by 50% to hit climate targetsOpens in new window ]
Chevron’s decision to prioritise profits and continued oil production over decarbonisation has made it a target for progressive politicians, climate litigants and campaigners.
Last month, California – the state where Chevron is headquartered – sued the company and several of its competitors, claiming they had deceived the public for decades about the environmental harm fossil fuels were doing. California’s governor, Gavin Newsom, followed up with a potshot at Wirth.
“Decent guy, I’m sure – or I thought, before we filed the lawsuit and I finally understood more than I did before we put together all the evidence,” Newsom remarked.
Wirth denies the lawsuits’ claims. “We have never deceived anybody. We have been part of that [climate] discussion all along but we didn’t know something and say ‘Oh well, wait, we are going to mislead people or we are going to not talk about this’.”
Last year Wirth sparred with President Joe Biden, who complained about energy companies “making more money than God” – at consumers’ expense – after Russia’s invasion of Ukraine. “He’d written... a public letter to me and some other CEOs that I felt was inaccurate and I wanted to set the record straight,” Wirth explained.
But he has bucked a trend among CEOs to speak out on polarising issues from abortion to transgender rights. Doing so could divide the company’s more than 43,000 employees, he reasons, many of whom work in progressive California or conservative Texas.
“I’ve avoided speaking up because I’d be speaking on behalf of part of my workforce, and in opposition to another part of my workforce. And my role isn’t to weigh in on election laws, or bathroom policies, or gun laws,” Wirth said. Most of these issues “are things that companies aren’t there to adjudicate”.
Chevron’s extension of Wirth’s tenure was a divergence from succession planning orthodoxy, which he defended as avoiding the distracting “guessing game” a fixed retirement date could have started. His predecessors typically served for about a decade, he noted. That would take Wirth up to 2028.
Asked what he wanted his legacy to be, he replied, “I hope they say, ‘Hey, he was a decent leader who cared about the people and cared about the culture and moved the company forward in a world that’s moving forward’. I don’t have a deep kind of a statement on legacy.” – Copyright The Financial Times Limited 2023
