CVX - Earnings call transcript Q1 2018

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Operator

Good morning. My name is Jonathan, and I will be your conference facilitator today. Welcome to Chevron's First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session and instructions will be given at that time [Operator Instructions].

conference being this reminder, a call recorded. is As conference to Officer the will Chevron now President over the turn Financial I Vice call and Ms. Corporation, of Chief Pat Yarrington. Please ahead. go

Pat Yarrington

Welcome conference Jonathan. Thank quarter Chevron's webcast. earnings you, call to and first

role Mark Investor Borduin the of Vice transitioning who joining on are Midstream, On Frank Relations. are a Also President the Policy. currently Nelson, call today of & Mount with of me us call General is Manager Strategy and in Wayne

slides that the available on We site. to will are Chevron's Web refer

get started, estimates, the X. we that statements. please Before Slide this be review presentation projections, We reminded contains cautionary you forward-looking on that statement here and other ask

and Turning items first Earnings billion. third exchange diluted an our to GAAP performance. foreign the share. of since appendix and overview XXXX were $XXX. were financial were this above can A in strongest foreign presentation. to items reconciliation $X.XX our The other quarter and exchange This also is per Slide when Brent excluding Company’s quarter $X.X be special result X, found $X.X an prices of earnings non special billion of earnings or measure

billion. operations For Brent Cash from $XX was price for $X the per the flow quarter barrel. averaged quarter, current

XX.X% working of quarter and Excluding $X.X headline a which billion, cash debt stood operations at $XX ratio billion. from net end, of was effect, capital flow At approximately balances a XX.X%. debt resulted debt ratio in

dividends. billion paid we in During yield $X.X quarter, currently the X.X%. first We

Turning to Slide X.

across grew capital XXXX, construction the were billion billion. than impacts by we on and major drive approximately recent excluding analyst billion meeting. $X.X growth capital quarter first affiliate affiliate capital flow, operations, average $X.X partially We realizations earnings. improved capital projects than excluding higher were equity million from $X our high-margin free cash results Cash our XXXX. to to dividends under capital Positive XX% portfolio. equity were approximately track and from $X The billion complete Cash our continue are XXXX $XXX $X.X on cash that lower in billion, expenditures offset strong efficiency quarter working volume or to about as effects, generation of deliver was for quarter flow guidance our working the effects, below

proceeds Assets minimal. held quarter the within were

with sales Southern anticipated $X the However, Africa April of the in of billion on Hills this Elk remain proceeds and closing billion later $X year, business of of sale to for transaction in we asset our downstream track the the closing XXXX.

to Turning X. Slide

aware, to models. unevenly working impact These quarter, throughout degree impacts you pattern business by impacts capital of of transitory. from year. your this As many effects capital you uneven our many are working the are of a exclude large Because

seasonal working majority prices both the first compared inventory times Normally, be while this drawn are year. today, and the average released This benefit pattern receivables is and by the a they partner pattern. expect where may If of the uneven be year’s billion third to to fairly of well JV result quarter hold is second of first no We generally by anticipate as reason tax payments. quarters the to builds and consumed at the XXXX. and the expected throughout levels this timing residual draws to prior pattern and capital is The remainder chart decade However, times is price impacts The higher consistent cash to fairly we as be most the related during production higher different. capital the cash $X.X working from from of a average of the is working demonstrates year-to-year. quarterly quarter, quarters. variation consistent our capital X been in followed has to The shown. fourth X and in penalty

Turning X. to Slide

lower U.S. sale quarter approximately Indonesia quarter XXXX primarily the from million First first absence XXXX. geothermal the million on items, to swing exchange, $X.X the between the timing billion of periods than in around Canadian higher higher decreased of assets in and the million, special Special exchange, assets. corporate and of and increased foreign periods. absence primarily foreign from swing by $XXX gains other items. between earnings listings. prior of due between first The quarter Downstream million. was and the about results year's increased items XXXX in mainly exchange volumes our earnings, favorable items an impacts XXXX with periods, asset effects by A unfavorable decreased improved foreign excluding earnings, first our $XXX sale of result the segment tax were by upstream largely Upstream special impairment, $XXX earnings variance $XXX quarter the coupled excluding the realizations mostly

to guidance the previously annual results As like our billion other segment net be for ratable. we non quarterly indicated are is charges, so $X.X in

as beautiful to chart This compares XXXX so first for of a quarter Turning now do X, XXXX. I Slide fourth results say quarter the myself. with

million absence quarter results U.S. tax reform XXXX were the Special the items decreased gain, of billion. approximately by $XXX fourth between $X mainly fourth higher quarter. First approximately earnings than quarter from periods the

The earnings items excluding quarters, and CPChem, special about billion increased between the in corporate quarters. favorable a improved increased of higher tax realizations by and excluding corporate between higher marketing While since listings reflecting along expenses. and reflects with foreign from Upstream $XXX quarter swing impacts and primarily in $XXX special swing exchange, largely variance other due fourth earnings to reflecting by periods. items items and exchange Downstream along exchange, lower in foreign operating a charges improved lower XXXX million hurricane absence by earnings the result the segments foreign depreciation margins. million, $X.X around impacts mainly with refining between

Slide X. Turning to now

online, with coming such level Wheatstone, XXXX X shale for to and XXXX. and project an as per First assets. and quarter is tight continued our continue of major increase represents production was ramping production in quarterly range Growth our day, average company. Hebron growth This and Stamped high capital million X.X% up X.XXX guidance production expected XXXX Wheatstone an Train over barrels during all-time within for the

quarter, asset second In and During impact of impact the activity XX,XXX in per the Republic of of mainly sale from Congo Democratic was second production We’ll we negligible. to around asset day, quarter, recent the the plan Hills barrels quarter. sales the transactions. our quarterly forecast Elk turnaround our the also start on

production the barrels Delaware and in Nigeria, Base impact of by Midland reduced production and production production as guidance quarter barrels from was the day. South U.S. unchanged X.X% from midcontinent, day. first quarter a asset rising the XX,XXX reduced increase of barrels year as of the cost a a by day to effects as X% including in XXXX Gulf lower Basins prices an over XXXX, and of Entitlement such growth X, production started or Mexico day day projects X% the of Natuna XX,XXX spend at full first the XXXX up Permian. Sea, were Our net reduced On and day, increased a and XXX,XXX Slide due impact to Major XXX,XXX wells, barrels. growth barrels Shale by new excluding to XXX,XXX asset ramped Gorgon in production mainly XXXX. The Wheatstone. XX,XXX remains a barrels declines in Gulf increased mainly sales. those a barrels tight capital and and recovery we Mexico production sales, projects, multiple

Wheatstone to Turning delivered performance and reliable Gorgon Slide the and in XX, strong first quarter.

and XX,XXX Gordon net of strong Wheatstone. equivalent advantage per LNG take and was spot barrels of averaged condensate which from four were per day it oil XXX,XXX XX well and Asia oil prices, First per linked as LNG the day able of over from quarter. shipped $XX BOE rising cargoes, barrels production for price, oil equivalent quarter to as We

are to We continue the more running our quarter boost yielding has is tune and capacity. reliability to well. Wheatstone favorable X% Gorgon production And enhance than than plants first been previous best Train X efforts results. fine quarter. higher These

end pit the planned trains. other Train on modifications on begin commissioning expecting have start progressing a to ongoing. stop to work X two is improvement we to And third month X Gorgon made late have quarter. and and Train that gas Dom in the shortly activities replicate expected for We up up warm start in this is The production well quarter. we’re expected ready performance LNG is next are Wheatstone be

Turning XXX,XXX about Permian. in tight Permian production barrel a and relative to up to XX% the quarter shale quarter the year. last was or the same day first

unconventional of through Permian annually to growth XX% we forward, XX% forecast XXXX. Looking

$X billion plus All of capital this end. X% from premised our $XX on rigs spend. of to XX business billion NOJV March, shale nine guided properties approximately tight net company-operated we growth to base on at annual year XXXX running and through by X% In annual and to is

to next running company-operated stand expect our up month. XX We are currently rigs XXth and rig

transactions. approximately negotiation. nine executed We also others deals, the we in through under continue land creating We swapping several XX,XXX quarter, first have and acres value

laterals as environment. other and Midstream macro As Mark. insight. our capacity, well the Group Mark Permian provide these on will as longer additional laterals. high-value to Over up some about you often our takeaway you know, We questions get and industry enable questions heads Strategy

Mark Nelson

Pat. Thanks

differentials, As Pat and about mentioned, and these we the LNG questions oil long-term Permian related demand. get days market supply

differentiates chain continue we So with story. value the turning let’s to the the head business. XX, Chevron to many customer Permian in Where from optimizing Slide believe well from

barrels. starts advantage and our time with of to and any our value model, in with the continued point land know, position place ability those at each factoring the you with ends barrels As knowledge market our appropriately and

and negotiating For move enough multiple proactively example, market and and widened; and and molecule. to by recent goal with competitive each said, rates; price transportation the highly we’ve demands capacity preserved market Permian Simply every return crew Basin our flow world avoid meet differentials on by centers; for Midland is have export to batching barrels product capabilities. to secured the in markets margins to maximize discounts; the our best blending procuring accessing

often meeting as of is supply-demand that asked would view, detailed and expect, and question risks what the Slide is in evaluate the in and on play to energy In our oil demand to is in use does our that analysis growing external developing internal you we business. opportunities Another world's associated XX. role come. decades reflected the And point scenarios

management scenario demand in to similar the flatter longer and supply a view to continue scenario. market these in assessments, another supply independent our grow liquids forecasts. at number IEA cost points of prices, need the And the the liquids continues well-positioned the we’re We higher given run-up we in oil upper believe to for be new believe exist always the future, and is our Despite incremental policies macro bottom realistic one is will believe a will of view foreseeable win demand showing curve. continues right. to chart right this of are recent of in for Our any today environment and that in matter. assessments, independent to in signpost, We illustrates capital advantaged of The end most we view. discipline, the portfolio. any Reinforcing

LNG the LNG latest Page with as the new Wood XX basin. the projects view, ramp both than the in to last stronger graph LNG Highlighting demand and market Atlantic Pacific Turning and supply Asian the short North oversupplied to anticipated. term projections continue reflects market however, China especially was forecast. that from this up in LNG demand, is winter in the macro their becoming Mackenzie

fact, imports up up LNG with was gas demand Chinese XX% In XX%. year-on-year XXXX

with air in by pollution. sustainable growth mostly this switching and mandated may gas government applications the to to Chinese demand rate While reduce coal appear residential the moderate, industrial drivers

those Creek should is So opportunities this And the debottlenecking competitive will expected supply a the fit and where nicely. of Gorgon the open rebalance to next the LNG Only and market middle capacity gap Wheatstone decade. most cost with very to before projects we’ll you, move will that, will disciplined we’ll and generate with that Pat. very this turn I'll be and top over only in our space back projects competitive able it be investment, we returns. to With forward fund

Pat Yarrington

how demonstrate close those of would messages security XX. analyst our delivering our and commitments. to reiterate this I like some key out from me Slide here we’re meeting on on Let to recent

in in guidance. previous with our first First, access dividend and continues our improvement cash of XXXX commitments. and the expenditures from operations, cash excluding well quarterly is quarter, capital capital, flow working line billion cash was generation trend In $X.X

portfolio. program, highest to executing a in C&E return we capital are our projects allocating compete Second, the that disciplined

of the all all Third, delivering time full from on that year a business our Fourth, day the every our very added importantly, to for maximize million we the per well XXXX an portfolio shale within by an returns day, Permian ahead X.XX but barrels to recent dividend molecules. And we of we financial And guidance. the and we grew one to Year-over-year, tight cylinders. stream production high X.X% XXX,XXX number share leveraging lastly guidance. on production have and X%, is trending in trending on here, achieving by mid barrels the per quarter we’re advanced shareholders. priority delivering Basin company increase

remarks. the we and our limit So Please now of queue question have ahead open get prepared that to necessary. to our if your up we’ll all that take are Jonathan, please. And follow and I one Mark to certainly answered. concludes questions. one mind try and keep try yourself go in full questions ready to a do and best lines to And

Operator

you Instructions]. Thank [Operator

the from line Jason Our Gammel of question first from Jefferies. comes

question please. Your

Jason Gammel

potential cash the Pat, just really that moving great Chevron quarter demonstrating has of forward. terms in generation

is where to us what share fairly tight we that flow. the we’re to you a buybacks. programs, actually repurchase a potentially to guess want you to begin to need the range, get within about would program? discretionary balance capital I so you disciplined, In obviously, sheet high do question with quality about potentially see And be it’s cash what it would leads And

Pat Yarrington

and thanks for the for the thanks acknowledging quarter. good question Jason,

messaging the I proposition it six just or We offered that those commitments, actually to said fundamentally of ago. have little from is we really sheet, we sustain changed time, few the at turn cash a see all is you it’ll priority; we the program. number prices satisfied our a part we We two; particular bit. a this do number leading into business the and at short believe wanted said I’m think surplus number wanted is point as and is flow in value materialize. growth weeks share Once that dividend around see shareholders It repurchases what one, past. we is we’ve time, said to And haven’t other share balance the fourth in say, three; repurchase that so cash.

share you three the had XX last prices only crisis, As there XX repurchases out and know, the the in and have then during last them we years collapsed. of we when financial years stopped

fashion. the days. so very to want much circumstances very these part in a of it's much if -- a we So that, when of to we permit the do part And our re-inaugurated thinking able sustainable be

Jason Gammel

cost Gorgon be Maybe the competitive? you those at low for mentioned even Mark. end Mark portfolio that expansion stack. projects. the LNG just the you specifically even of as curve be my debottlenecking guess be trends follow potentially at to would the and And see the in I supply towards of one Wheatstone might in Do referring anything I would else

Mark Nelson

around the the refineries, of opportunity there have for we career seeing course my perspective, And of the spent I extra at having of part considerable exciting most demand debottlenecking. think wouldn't the price. probably trains Asia opportunity I size that in as both is and LNG amount the to about for be from And thinking from us ramp-up that we’re much thing the to of moving premature world. it’s us underestimate

the focused we’re up, in So leveraging ramp Australia. our into efficient in existing the on building operation way infrastructure

Operator

you. Thank

next comes Paul Cheng Barclays. the from Our of question line from

question please. Your

Paul Cheng

I have two questions.

what’s that? well is your market. that the And is been the have selling for Mark. is LNG according And one couple takeaway first the the guys what think to become of to Permian want to whether is in if one. marketing I have you also that conversation your the to issue. the the gas. on first already How and some customer the the people this on Permian current talking trying I as what your oil both production have may Have are to next So start actively or bid/ask gas heard locked-in with additional see second inside what's for we you basin May the quarter? in differences, years? is any? that's an Want there view see much from capacity handling plan? you about sufficient market And day growth them

Mark Nelson

Permian I'll capacity question -- your as can about the at high takeaway I’ll level imagine. Thinking answer you address and

today, maybe all advantaged portfolio with off-take and comfortable goes that way positions equally very We’re back the and disciplined importantly, it our developments. to

up and we us partnering production. it our keep companies on that So strong we then get with to And with investments, value competitive by allows projects execute that infrastructure is compete as activating And rates. do the our highly and infrastructure our capital frankly we lowest chain quite written possible in might mentality. not driven that our view a portfolio which at they

position tightness forward. moments hit length, our but moving we will of We and like

Paul Cheng

How about gas handling? the

Mark Nelson

gas gas streams to all with in a the perspective, drive oil, position the you three so NGLs we’re flow across oil three flow know, again, So assurance we Permian. all all comfortable from the looking And but economics, today. must And have streams as and tends our forward.

Paul Cheng

a as -- basin you whole do the you But will problem, not Chevron? a if have

Mark Nelson

the and and some part of challenges. chosen LNG know, largest temporal question, sustainable reliable go we as of about to reliability wanting continues marketing the From some you as the would your problems in a you that you see experiencing have same all the But portfolio as of in be read the perhaps and region competitors Permian, will have general, -- or basin that either temporary. can most on On would business the natural that we’ve those those customers -- expected. see type solve And who have contracts. only have long-term of news, discussions problems. we’ve discipline most the with the as we certainly perspective, price don’t have We do a best advantage world, in same that those

and of been operating them in continuing we’re reliability challenges. the to with helping that their seeing our able flexibility customers deliver we’ve like to So some

strong. perspective, relationships very we see our remaining those from So

Operator

Thank you.

from Mehta line comes question Goldman next of Sachs. the Our from Neil

Your please. question

Neil Mehta

My question is the first to related just across inflation cost portfolio.

international signs early cost seeing you're of U.S.? If any comment specifically increasing, versus

Pat Yarrington

by so not we’re pressures I the stopped, and enlarge cost of of market. the probably leveling declined have limited rest it’s to cost the out the Permian The but of the as rates and the we -- probably world, some pressures have really the and material more that unconventional rest think see that have to world U.S. same been beginning have future there. though you’re seen

the beginning acknowledge in we’re and followed. though actually strategies see there. So protected been And year, to are out has we like that see have having you advance. line around this in it. well rig services you’re the a of that again and XX of well that a all is to long the I’d we’re cost cost arrangements contract contracting beginning take moment the our Whereas tension it made little we’ve a allowed this Permian, one of largely structure planned us and of increases. Permian that to because program to benefits disciplined It’s in

have two of that’s we or have either costs, or indexed spending so cost about built And our containment year occurring them. into prices at thirds capabilities known this

Neil Mehta

decade. do next company out one into portfolio And want harvest view you’re how replenish get And that because drive the taking next our the in capital that hear much guess the the just early the next growth narrative, But team cash as what the now, the there approach projects to when of of going is wedge not enables to the on fear decline. and out And couple are your is just you respond ultimately aggressive push of on a that flow back management the market. that offset that we’re mode we the a years. will that go over you things under-investing, right in I to the question peers you it’s of people comfortable spend is more to is follow-up around one has but company

Pat Yarrington

opportunity, after can is back slide resource think a I and sake, modest had for a that relatively attractive volume. have XX very We development be And is at capital the we’re would years we tremendous volume investment of volume primary after a growing we’re that thing showed say program. XP I in portfolio developed here. that growth growth March resource not

coming feel between about we FGP TCOs and of And -- the So unconventional comfortable into we growth we sight see portfolio in have. the very project individually, online. that now TCO then the the WPMP in got line XXXX, first And we've XXXX. production

on next sight we’ve the growth several of good a and that for growth years, portfolio allows beyond line got frankly So that. very

Operator

from Bank you. And the question line of our Leggate Thank America. comes from next of Doug

Your question please.

Doug Leggate

as go I’m quickly. up if back take question just will I to So back buy open a very my well Pat. again, with that I going afraid I’m to may two

quarter-to-quarter. philosophically, around guessing Just you'd want chop not I'm buybacks something are to

to function you what a thinking be to tax that sheet, ratable? this? level program, and payments would going So I'm whether comfortable of so I with would cash would management balance level see seeing on get we’re need of need -- point of we're my quarter-to-quarter on. the commence comfortable about you guess what a And be is ready question what is to cash charges what to assuming say At be to okay, to buyback and now interest

Pat Yarrington

clearly, it’s this get surplus I have on of -- to thinking I quantification But point, to hard don’t sustainability want in of at we to don’t put cash a want I would on internal generation. mean the have view this. because a ahead this to

$XX say, hovering Beyond we we that rate in billion $XX as at the program sheet dividend. reasonable the want is a that moment. to our anticipate fund, to balance billion around growth you price very beyond capital And

of may when view sustainability, have And to over So quarter we quarter quarter next year. say I third the mean have out, to a I a this just really series but don’t I be to mean of sustainability.

be the available, concept you have are the cash would them some because of you price And who program, when your in high. share in favor available. have the do repurchase average the when share repurchases, in, cost shareholders to because do average like that have we is dollar of of cash So you able to stock that not we only

program. mitigate that is that a share having way the repurchase by sustainable we very can So

cash it medium down around So of firm longer-term or generation, the comes I’ll that. really the to capability term generating say expectations and

Doug Leggate

dividend So takes priority guessing said I a you’ve previously… a am as

Pat Yarrington

Absolutely.

Doug Leggate

U.S. in my you Can of comments Because So was tremendous the about of the look a couple there Street what And quick Obviously, through just relative in had is quarter presentation, expecting. is one. you follow-up a a to when there both international. I'll liftings that other, issues terms was? about there. And timing and there it little talk just you bit versus Thanks. a some sales production? leave favorable were what in

Pat Yarrington

Yes, were for quarter, the I lifted. actually mean first we slightly under

think variance position So stance. a between modes just prior the quarter, the versus I of this it’s quarter very

if of go that part recall and to or DD&A think your forward, I really obviously allows to, we the depreciation. ratio might to lower you earnings improvement highlighting you particular that XXXX replacement earnings had reserve XXX% be back in you And the in barrel. per relates speed as you rate

Operator

Thank you.

Our line next Morgan. JP from of Phil question the from Gresh comes

please. question Your

Phil Gresh

growth a the follow-up through just of Neil's outlook around is First bit XXXX. to a question

of rolling peer cash Mexico Gulf in versus $XX do with sanctioned where the about rigs think that of You off to a this do yours Wheatstone place go something be other think a you flow and where assuming promised. XXXX where have CapEx some year, How you're capital wedge through that cap that do after things. a going about keep spending say adding -- might in will some just breakeven like between project proposition? you as extra more of How Permian

Pat Yarrington

the about development We in I sticking lower opportunity that operating think the feel there out Permian. rig think of small particular really costs, other pre good be the focus that and would for out engineering efficiency If about there’s a really it money to could be asset. of good perhaps primary area Mexico. program incremental really revenue where of Gulf XX there costs to that, spent, getting maximize streams that fees, work and I pre lower so us, appraisal we will areas the be in still think of around

areas that look I Tigris, we Whale, I that further to there of guess the and of Marcellus up where around potential We areas interest capital should have could I likely than in investment. four Anchor, like could that do and and/or the would Kaybob areas other say, mention potential be additional and also evaluation. interest would other should shales areas -- Ballymore Duvernay, so development activity in so the pick Vaca Permian, those Muerta,

Phil Gresh

just question on… And one

Pat Yarrington

thing misinterpret working have go regard that here. of but sort got with that I would do very people am what ratable development to the any we Can do so we multiple deepwater, I one be and that just We of be opportunities we mention pacing back saying on disciplined evaluate, and can there. very would

Phil Gresh

commitment billion the So to $XX the cap.

Just one the question on quarter.

about I you're One versus half year. the distributions, affiliates' of mentioned at a reported just levels. higher headwind your deferred their of quarter these flows was headwind earnings entire to a peers a which is the from wondering, from flip price on tax expecting in cash headwind billion tailwind for you the $X in

deferred you played Just as curious expected. out tax if

Pat Yarrington

get my of would timing out $X.X billion as there I I expecting. in as of the working given little capital the would is capital if back to depreciation. of influence will -- remarks. we a place In billion we out say directionally you March as $X.X of deferred and as bonus it overall headwinds, in set you We regard might when rather tax were did this say played have mentioned guidance you as for bit to service I in when had headwinds at where said I hold But working nil, be that prices penalty if today, are a year. they would I time prepared be the the had felt expect,

say you an gave the activity do reserve us range to that every -- to want that hard for I back come update. predict certainly think want towards right quarter I to the end may give trending So of and so is you I the though, this towards very and higher to you. will

Operator

Thank you.

next Our line Company. Baber the comes Guy of and question from from Simons

Your question please.

Guy Baber

all Pat, that better to I wanted affiliate at when is gave and dividend framework I given billion flow And little working flow commodity price. pre-work typically here Day but to the you capital $X.X understand the cash bit, than be cash adjust a seemed XQ Analyst we stick in seasonality the timing. the weaker for on the downstream

you check. given need So internally? better versus sticks drivers plan. the the confirm outperformance the And wondering wanted higher some to if still all those of internal you just then a levels with little flow. just isolate than at a Brent to do hold here, bit? out cash all have sensitivities or that rethink What these I you as of I that could was we general to expected And Do key

Pat Yarrington

I’d say the very models quarter a your basis first to quarter, for say into build that and it’s really forward. a Guy, you was would I going good clean

I we we are that a running perhaps guidance little on ahead gave. think the bit

first than Bren benchmark And sensitivity think we given is where quarter that on the earnings good there. little dollar had XXX about that. is flow of -- from on on a improvement for you I less it’s a earnings, cash

Guy Baber

then Mark. had I And a follow-up for

barrels day that and up to from case tallied we've or little started place about in barrels about long So around from the talk a average per so. macro X cycle base year that the what about capital million to you last high maybe million to years? day over capacity few appreciate XXXX a So only the from drops this project a taken are of XXXX major When here. X XXXX up on XXXX, investment for then view Can that's on think your you expectations just a oil landscape industry the level. decline bit

few side might similar? Chevron the Do see show view do to -- in that see next over beginning supply/demand balances? is on up And industry So a see you emerging supply the gap something the years? when for you oil you the

Mark Nelson

So around where of back markets in the fact unplanned we hit a and perspective, of world curtailment or the the fairly rebalanced to planned and first surprised certain demand; demand on the short-term that's in a has most top countries geopolitics. obviously, from on space upside; some folks solid or effective declines folks,

short-term for all So price that’s support today.

on business We’re not prices. designing our these

projects. as And business investments a we at driving from coming cycle And as short where industry, do the longer not I coming well for from large an practiced forecast we’re we assumptions. large We’re our activities. for versus as time lower that, think do production we’re a

So industries end would to deal expect in supply over range our to to the a tight assumptions. we of perpetual fairly I the have time those stay with we’re design a that in. and we’re lower But business prices that’s going

Operator

you. Thank

next comes the Weil. Fernandez from Blake line of Our Howard from question

Your question please.

Blake Fernandez

Pat, that. level actually I I to -- was back on would guess oil you there from you’ve that? an TCO. equity what wanted to thinking go addressed specifically headwinds, is begin I mentioned getting price that had affiliate the start Is you distribution and

Pat Yarrington

distributions. get a course requirements that’s by still Chevron’s multiple is will of is take was basically folks; do really we declaration; a really look solely it’s they funding dividend at partnership has the one can and a partnership look the determination review partnership the are been; council. a take they take and a they what what made in interests development; It the can they Blake, year; the but times dividend look the It cash -- what for do are, they project do year, couple dividend during at under the that at not do a council. council Actually partners the that a that’s and control; to dividends year; they generation negotiate and can

Blake Fernandez

depending do? like could flexibility what So is there it and some oil sounds potentially increase on prices

Pat Yarrington

Chevron. a well. we this dividend a dividend expectations last it’s Again, as we are had is, for year year, that control uniquely anything not Theirs within

Blake Fernandez

the in acres that was were of it Permian The the just swap. take transacted, second being XX,XXX question, sounds I'll Mark But the it like on advantage call. a

confirm that But really come those transactions of done. to and I had fruition just acreage to lot impression changed the guess overall. I that position were you was all hasn't I already your a under wanted So

of still marketing are So in you process coring and the up?

Mark Nelson

execution So you’re would to be my looking perspective, space. talked to in expect that created that swaps fact, in get our the for potentially looking about. And believe we right, were we that more we there’s mostly in marketplace. in discussed future disciplined the that’s in never done, won’t regard you for in answer longer saw, this considerable From the transactions laterals ways and I would stop and materials value

Pat Yarrington

trying hard both would just parties I often Swaps put you’re just add. because are to together optimize. to And

bit to a come may to longer take duration fruition. So they little

Operator

Thank you.

Bank. from next Deutsche comes line Our question Ryan the of Todd from

please. question Your

Ryan Todd

timing have Maybe about about completions congrats issues quarter-on-quarter how you of quick trajectory the was and there, some bit may out talk to blown drove Permian. that number the obviously, the Midland Permian, a going by here. a of differential there performance in I first you Can areas, forward? But -- what think great drivers it the the think one quarter, of Whether on of from strong particularly guys on little particular yourselves all a the there. some are

Pat Yarrington

put had at on we basically quarter, large several end we a XXXX. increase in of the the because Ryan, very wells tail production

saw And there last make that can point be can can it would is the be be the also production increases NOJV that lumpy, increased I lumpy. we -- We show activity. that

have is from would think ratable something increase to So that I quarter necessarily or that repeatable you the fourth necessarily. be wouldn’t first

Ryan Todd

talked And you into positioning about your situation. maybe about how or you of potential the envision, attractiveness think of then maybe take the any you it? would relative haven't And Can investments bit about -- IMOXXXX. we talk how about advantage little whether a to think you

Pat Yarrington

the we’re answer is well position Chevron’s think that short placed, well pretty I really positioned. is

in us what think hard the a a produce can fuel well do We we and and midstream as more what be around trading refining an as out to than refineries a oil. will It’s little U.S. situation market fact the course over much distillates we complex we optimize think the fuel from that as we really impacts in standpoint, don’t exposure got pretty good have we’ve position. understand capacity we’ve got some capacity are. exactly unstable oil rationalizes puts We the this of have But We there that produce Asia. here the

we in with tagged there So going single what compliance. be that’s is unusual the continue going actor an industry various of sense to taken there. It’s to the actions be by parties monitor the to are no regulation the response what is and

ways that the can multiple part refiners. there's the So compliance can on shippers occur of or occur, it the on the occur part that can of

little it’s will to how compliance take understand So exactly a hard place.

Ryan Todd

meaningful this to capital point, any envision you projects? wouldn't driven But at the deploying guys

Pat Yarrington

not. No we would

Operator

Thank you.

next Roger of Wells Fargo. Read line question from Our from comes the

Your please. question

Roger Read

since on I've in got here. Jumping Mark Pat you, and

in between How your about think capture and off should concerns Pat, head else? somewhere but the could is through about differential I'm the Permian. does past it number a to so we exists as the Gulf maybe As we upstream ability your about flowing or the in flow to realization that we'll Coast realizations is look quarters it at coming overall that through think asking, Just see and there, part it thinking whatever trying the business? weak, reason is The fine.

how it your flow on does So business? upstream through

Pat Yarrington

the through upstream, upstream come would It realizations.

Roger Read

it pipeline in commercial whether upstream it’s other whatever So side? capture, the or stay all

Pat Yarrington

correct. That’s

Roger Read

there bit Mexico you And the just non-OPEC here. flatter the gears switching then wise, since be supply little the the longer with a looks put chart like some curve, Price money opportunities. in deepwater of about you’ve of Gulf up earlier talked would deepwater it

as an studies moving forward So how on various comfortable do projects? you're your complete with FID you you think about when those

Mark Nelson

priorities perspective allocation. about our capital from So it’s in

on of high projects, project say can short to I’ve makes have have of of it’s us and higher having what economics, improving with with target idea Pat, investments, you cycle changing when it And a to the group to be So Jay and so add consider. brought that’s forward. But strong a portfolio a the the times, to returns, other all for compete outcomes would making the that? Johnson developed numerous of be engineers you good return you news amazing heard unconventional

Pat Yarrington

obviously found and facilities just development tie would deepwater, cost can get to down greenfield fully we’re keeping the facilities, But loaded a be existing is working here. say, So extent I would opportunity And existing we’ve there is that stronger. to drilling significantly. that there obviously reservoir of economics the infill first got to a the new

surface along build on with design the So standardizing industry one subsea on facilities, many, standardizing kit.

facilities, to awful a the capital peak that production longer efficiency, would now subsea see deepwater so have also But we in perhaps we an materialize for FID. to but can before be the the to be lot an we There’s mode the would where position development best designing take area think just production a down. continue we do actually cost in laterals. that We’re not to we here get in

it’s point one making opportunities this a I’d in good have And progress. there We of particular we’re going to to top are say say have that I rise time. to is at the nice activity But which really and evaluated, being first. number underway can’t

Operator

Our line next the Jothilingam from Paribas. BNP Theepan question from Exane of comes

Your please. question

Theepan Jothilingam

of the it arbitrage? that have you. would to be. let's from through to two terms And that back of performance. just sustainable Wheatstone Could of Thank coming been talk in produce us you at of to, both just some Could it actually, pricing how there question contracts terms long-term one remind Just capacity? volumes you volume Is production to in those that follow-up the nameplate Gorgon, question projects? above on or all about, is say, a LNG optimize and opportunities some

Pat Yarrington

I pick order reliability. would to these been taking stops say, we and the in and time improve effort have spending

think there’s capacity over Gorgon, expand more at and efficiency. time debottlenecks more through do capacity we opportunities example, For gain to gain and

think efficiency I Wheatstone, certain Gorgon to and term committed and So about get investments those willing to of us. available terms that be And contracts those. we’re to will on today. activity reliability term under to in Longer make XX% we’re the long for now debottlenecking contracts,

Theepan Jothilingam

remaining terms particularly profit… it of Was or quarter charge in or other good that XX% trading

Pat Yarrington

a No, it was quarter. good

terms good a of In spot so cargoes, very from on quarter about it standpoint. spot spot $XX the Asian were and a was average prices

Mark Nelson

production. XX% that’s of our So only remember,

Operator

you. Thank

and question Our the of Margolin comes Cowen Sam next from Company. from line

please. Your question

Sam Margolin

co-lending flow. or Chevron that about think there still past a what I question affiliates. found keep I we the to would say a thanks some congrats I would spending well. be the a functionally of program the know the would my question but from cash might I just call around as operating didn't like factor Is capital mechanics has And in is if remiss be that as that conversations you than uses level more efficient Frank, that? tight, recall affiliate first and exclude

Pat Yarrington

able where previously. a be Tengiz it’s price assure of now with But the maybe XXXX. won’t partners project they we you share are back to they at have not fact fund obviously, environment. And for level, materialize of project, be The specific XXXX. the we to requirement have back co-lending the being the XXXX, the of really mind. your in project. requirement was and prices and coal level, inaugurated able for c-lending. in is if all With at through of the co-lending have their always lower was no this stay any co-lending, to the something whether that co-lending to point this that’s So the in and the had today something this there’ll should Right clear prices point lending that It’s allow

price XXXX environment. So certainly it investment and of been into upon se. XXXX ramp projects, really but peak up project has the prices strong TCOs been has the been the spend and per have so and what be years of on spending dependent far XXXX a for

Sam Margolin

of because guess a And market, both lot And on independents. your think it's then LNG customer you on given is playing globally, Texas an partner not more come how markets see of with part my the view or are of little Mark a I as about up with that a do Pat. among just, to the the operator, follow-up LNG resonate respect for critically maybe a basin solution? West gassier, thinking I particularly the that and it's role, areas comments U.S. in in a maybe if Delaware Permian takeaway, Permian the the is The

Mark Nelson

our growth of have Wheatstone macro that to other coast taking compete Asia. from in region, our some And the has in options consider but in see perspective, Gorgon, it We to from such an And prices world of landed the in. start watch the landed do. Gulf to you'll occur or that the in price -- what to Asian you'll a in given have the Obviously, all in Asia. advantaged of investments LNG assets with Australia see people from the we’ll company we’ve certainly perspective. further got length base position Well, Gulf that in compete around will with start care others

Operator

you. Thank

last comes the Rob West from Our question line Redburn. from of

please. question Your

Rob West

back about over you quarter. go in Pat, was earlier, Permian the the surge to to something the like production said I'd in which

to And the were whether you whether drew my well can down that in they still completions. say you was quarter the over mind or of You follow-up attributed inventory your more building. DUCs put

That's in follow-up. the terms trying sustainability Just I've of rate? of growth to got a assess one. first that the Thanks.

Pat Yarrington

as I a being think during you But there the it have to was quarter. in modest. modest think DUCs about reduction

Rob West

bottlenecks not The second those? one of got other think, think gas the say can is about on that so, Indonesia particular And still so If this the it's I there? the you about you where really an Is know week project project wondering -- if that project you I what's in one to is have, the pipe. peers was holdup topical. I timing need your anything that you’ve And stage extensions. And sanctioned early I so right? overcome a gas is resolving license on right,

Pat Yarrington

recapitalize; we’re at It’s has I a the probably way point months; the we underway particular last to for called in And project. that concept, Gendalo-Gehem have a work or best time. the on the to reworking trying guess than just it; say is development development been concept, fact more new effort year a several in

here. is Indonesia also of extension So of of to also would work regard an is government contract -- that express expression with to progressing we’ve say the on that. extent And deliver But we've the interest concession. element I the an

project So well to the the fiscal sure gives make long terms the it’s to sure make as lift contract return that project. of we want as and us combination a development want we the high that

Rob West

you thank details. for those Okay,

Pat Yarrington

and here. interest you. on your to the I us that Okay, everyone’s to We back closes think like certainly thank today. would Jonathan, off Chevron, appreciate I call everybody in participation.

Operator

earnings conference Ladies gentlemen, Chevron’s XXXX this and concludes call. quarter first

now You may disconnect.

Chevron (CVX) 27 Apr 182018 Q1 Earnings call transcript