CVX - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Jonathan, and I will be your conference facilitator today. Welcome to Chevron's Third Quarter 2018 Earnings Conference Call.

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

Patricia E. Yarrington

morning earnings you, conference Good Chevron's Welcome third quarter call and right. Jonathan. thank to All and webcast.

with & Borduin, call Vice Relations. the me Pierre are On Breber, President, Downstream Manager Chemicals; General Wayne and of Investor today Executive

the estimates, refer are that on forward-looking ask and projections, before and to website. reminded that that available please we the shown get other Slide started, We be Chevron's cautionary you this But slides will on I presentation statement review contains X. statements

diluted Turning an performance. per partially now billion since write-off, company's share contract $XX.X of The the year totaled Southern highest $X.XX a share. $X overview company's a than a per XXXX. billion $X period quarter year-to-date ago $X earnings third period million. were settlement, impacts or same than marketing This year and $X.XX a the Slide same gain million recorded of were unfavorable $XXX billion African and to earnings X, the is billion The our higher is more per third quarter by financial sale This quarter or than the diluted were earnings our a These nonrecurring share. the $XXX impairment, assets. and of The higher ago. offset which was on included refining an project this

were A measures of reconciliation presentation. quarter million. special exchange $XX to for found be can non-GAAP the in and foreign Foreign other exchange the losses this items, appendix

quarter billion. totaled Cash from $X.XX share. items special flow $X.X $X.X impacts, and the billion for these foreign or earnings Excluding exchange operations per was

a prices billion. and nearly giving continued $XXX grow at more effects, highest debt $X has $XX barrel. was cash in back billion, ago. crude flow totaled averaging the in $X.X Cash from flow operations XX%. quarter billion, a capital from were to ratio operations than approximately quarter-end of balances years, Brent been debt Excluding flow Year-to-date billion the stood it when us $XX.X cash third five from per year operations about working about was At

third quarter shares We during dividends billion in we million the quarter. During $X.X currently repurchased we yield of $XXX paid X%. our the and

Slide to Turning X.

dividends quarter included working higher third-quarter Cash of and to operations, operations, $X.X increased excluding growing On U.S. excluding free in billion capital year-to-date. capital volumes flow were Through flow This realizations than pension earnings. effects billion capital, result, deferred $XX.X $X.X year-to-date. from billion, expenditures the for $XXX billion quarter and affiliate working U.S. $XX.X and billion and the less in upstream. reflecting $X.X billion. for effects, cash $XXX billion The in $XX at million the to affiliate on excluding the Meeting discretionary working communicated normalized Brent, $X.X approximately capital first Analyst the totaled equity we a are from deliver for cash three guidance March. contributions, track cash in income basis, the Our taxes, generation quarters million $X.X $XX our cash of and international year, billion flow year-to-date

through cash a Turning our quarter. the sources of to and Slide X, of uses now view

to We shareholders. of to growth are our maintained four paying delivering by financial on $X.X dividends our in commitment competitive all We cash priorities. billion our out dividend

strengthened XX%. the in billion, lowering fund at And $X.X debt reasonable by return share to paid program our repurchase a third pace. sheet to returned and million quarter of our further to continue surplus commenced shareholders. highest finally, We and debt we projects We balance cash down our $XXX our ratio

of Southern the Danish $X.X and UK. divestment our provide purchase on our tax to XX% west XX% an the business. African in sale like Rosebank optimization the non-operated interest of and sale the Consortium the billion, sale including Most sale in agreements marketing Through the third refining I'd in recently, update we interest of X, our of Slide the our portfolio and project asset efforts. before quarter. of We on Now received proceeds signed Shetlands Underground including

Sea marketing addition, continue assets. In UK North process Central we the of our

with on period portfolio transaction. billion from we track are focused good billion progress year-to-date to made generate March. guided us we XXXX generating puts have any we back XXXX the to divestments, optimization value proceeds sale to $X all As on asset in in on $XX The time over as

Tigris of X, third reduced Turning items by billion tax periods. earnings between African contractual assets. settlement. Special on were Items of gain the times a the two an $X XXXX and quarter on after R&M asset the held to U.S. Mexico, earnings quarter an sale, approximately non-recurring the period, of The in third Slide $X impairment billion write-off approximately special included XXXX. project In a South current sale for of that Gulf

net netted positive negative on quarter gain impact million. sale a special which $XXX of to All million. a the for In of a write-offs, Canadian third included $XXX items R&M assets, project XXXX, less of

five special $XX on million periods. earnings mainly special higher in XX% than approximately and items almost were earnings increased a Oil realizations foreign Downstream the The margins earnings Canadian the between prices increased Favorable by higher result U.S., corporate timing offsetting. sold. or liftings. impacts from between assets ago. reflected the $XXX expense. segment items improved about periods period exchange Asia Foreign about partially times, and lower and billion and was CPChem Upstream with downstream and variance and the by tax exchange our from excluding million. along in year were results, which interest foreign the foregone of $X.X other excluding were current contributions by decreased primarily in effects exchange higher items in This higher

quarter results compares quarter XXXX. for this X, Slide XXXX to with third Turning second

were quarter. quarter results $XXX higher second approximately than million Third

$X improved increased write-down, $XXX between special items quarters an swing was higher and exchange variance Upstream the periods. due quarter's exchange foreign the quarters and equal in by quarter adverse Of billion in second items special Third about realizations. to excluding to compared detailed foreign previously, size between between impacts as net results a the negative liftings of when million. non-recurring resulted receivable

the earnings, effects and an excluding almost Downstream lower a are on million, with During associated quarter items modestly also evident those foreign expenses, overlifted in by the Pascagoula underlifted. were the we Favorable Refinery. exchange position turnaround periods. $XXX timing improved special reflecting second operating year-to-date quarter we but were at particularly basis between

Turning to Slide a a day. production million for million X.XX year-to-date moved X.XX our production to was barrels day, X, third highest a quarter production barrels ever quarter. our This

XXXX asset for which average quarter full Excluding through the middle production year-to-date bar, the production the XXXX. third is of daily impact X%higher year than the growth our sales, was

excluding by we across impact activity production asset third was the mentioned range, by quarter. locations our growth barrels per barrels year-to-date day multiple approximately third production As XXXX quarter of turnaround current impacted day. Jay production X% for top had asset this quarter original impact The per impact on sharing our in impacted and XX,XXX normalizing these sales. At at be a contracts. the year call, turnarounds from day. planned barrels guidance without on is And prices the of XX,XXX production we end expect the sales last of XXX,XXX to even

Mexico production year the Nigeria declines, Major XX,XXX per unplanned growth downtime periods. to increased significantly Gulf primarily between from and a those and production rising tight ago. Base and and Delaware the net day. sales production were projects as a quarter The U.S. per production day, day day, XXXX to Entitlement barrels XX,XXX Turning barrels XXXX. production per X,XXX reduced production capital the new increase Gorgon effects XX% barrels in day, XXX,XXX X.XX barrels from reduced by increased XXX,XXX barrels along Major third Permian, million a asset where planned prices quarter impact turnarounds, to by XXX,XXX by of wells, Shale between of of such most or XX,XXX of production with an XX, and we in by barrels the was continued projects, a multiple barrels day due up reduced Wheatstone, periods. grew day, per by XXXX due barrels ramp from day production the XXXX X% periods. Slide Midland the in Basins third between primarily as and to a Hebron.

continued of and on maintenance activities very quarter, startup day production over reduced Now Wheatstone strainer X planned on These on increase over a had barrels previous X. quarter. during is on This a to a quarter. We removal XXX,XXX these XX% the averaged the Wheatstone XX, the quarter. plants Gorgon Train XX,XXX Slide during Train day two the a and Combined, overhaul barrels compressor production a operate well. average approximately on scheduled by

We first and plant commissioning gas first in the Wheatstone of domestic quarter are sales finalizing XXXX. the expect

add trains focusing production all running activity will be dependent on gas, opportunities local enhance to finding incrementally production Australian sales this five reliability. demand. we're reliably, LNG For and and With on

of tight second Turning barrels day, the barrels shale quarter was XX, to an Slide the Permian on and increase per in XXX,XXX XXX,XXX day. Permian, per production representing

say me again, Let relative quarter to XX% the is it up last year. same this

we that's interest, months. average of operated of operation many In a acreage, will our company pure XX As of of of equivalent in the XXX% during the you mid-sized working rigs in matter an adding quarter. a the hold realize, play E&P Permian we Permian where had

had XX X share. approximately on non-operated to also rigs, equates which net We working rigs Chevron's acreage, our

we are give one ahead on our on efficiency discussed year capital chemicals can who about it downstream in March. an gave our Jay business. on framework guidance Pierre, and of this last focused operational remain update we call, returns, I'll on As Within earnings pass levels now the the discipline. production and trending to

Pierre R. Breber

Pat. Thanks.

a XX%. consistently Slide peer our earnings our tightly during the over has and downstream Chevron's group capital has per employed on have led shows averaged return integrated years business. five chemicals past We And that barrel. adjusted and downstream profitable XX in

the with to U.S. the owned petrochemicals, businesses. are lubricants best only are major And in fuels wholly heavily feedstock ethane. Asia. the integrated Our In advantaged, we additives weighted and in businesses focused we markets and are

objective feedstock value across lead to our forward, customer to industry is investments chains returns. earnings target the in to our and grow Looking

me let address IMO Now XXXX.

reduce Organization As a fuels the International in will emissions bunker XXXX. Maritime starting sulfur from new reminder, regulations

and highest its is markets a result a demand most uncertainties our shows of Chevron's has complexity It years increases in the for peer over agree upgrading the benefit, among highest that marine Although there capacity should as of high-grading complex group. with are portfolio refinery network Slide capability. conversion that lot the and investing unknowns XX and how gas react, of refiners oil. will percentage refining

fuel weeks heavy crude a positioned refiner, mid-distillate business to complex crudes. discounts believe benefit sour proportion X% and the of And post-IMO IMO network competitive like about our soon recovery The shows and up XX refining XX-XX markets chemical rates various We impacts. Coast ventures from we and up sour Slide to Forward fuel CPChem major mid-distillates start a and joint Hurricane XX% March nameplate ChevronPhillips as GS petrochemicals from Chemical project successfully Company over We CPChem and de-bottlenecking is Chevron's high we're ethylene expect and Harvey. highly development. run well reached its produces focused started widen. of projects high increase margins after. sulfur in Gulf plant production to a oil oil. on opportunities. after in remarkable a have additional exceeded Caltex. two capacity full stages after

project, is with one stage expect this the Gulf and a Coast its of like the advantages time. its CPChem long in Following We for ethane a supply Coast. second because competitive U.S. evaluation of the in feedstock Gulf success

Two West fuels Mexico, have part recent with retail In about has Chevron-branded in tightly end stack. In on of GSC capital feed we two-thirds shown LPGs naphtha supply the value businesses, marketer-owned cracker, highlights been that XXXX one terminals After of under an project, invest our is to next starts Coast and are and averaged share built, about complete, plan Estimated projects. is are investment through are make matter. costs more complex continue we a the of in the also in next and chain an of We've is Slide response XX. left chemicals costs during side focused We our the additional to important that a capital-light our have decision always terminals access refineries. on half first way, a little to agreements integrate front XXX on are our for but of the billion. developing We'll we cost most off-gases. new of market capital than sales design be be sites. year. September. signed and to very higher positive. disciplined expect integrated Customer final, for $X refinery not in rest the set mixed fundamentals are a final olefins the chain. our retail strong, chemical we development. a but efficient The two XX% will rebranded engineering Stations value with We how

offering grow our We continue with to convenience XXX stores. now store over

for the app us to in XXXX. operational with speed are will the retaining in Asia. went major As the Chinese serve new we fuels leading In a Oronite retailers. more partnerships project sales we efforts when than and with with and U.S., only and at blending announcements the we year-to-date, This in pay live Southeast an simplify retailing the shipping the Same-store double China. our celebrated In have franchise our growing pay C-stores in ExtraMile have a U.S. mobile C-store relationships space, advantage up These made and additives digital experience. it's important help grown in the groundbreaking industry market the our on in average. X.X% business, growing facility

our in as increasingly a volatility, are ultra environmental new and viscosity low efficiency stringent OEMs the co-developing we're excited low fuel days, product. we with meet develop biodegradable engines It's by important lubricants potential renewable early for this but ultra of business and oil Finally, properties to base they regulations.

Through downstream quarterly Chevron's in requests consistent shows a chemicals for your one results. any area. That track financial planned we've earlier, from engagements, plus heard our performance. has turnarounds The quarter. turnaround impact and defined not impact quarter refinery of in XX this forgone after-tax said, investor guidance improved for shown expenses, produced. recent amount margin activity but have in Slide the variability is last of average record As are earnings and U.S. the our Planned given seasonal, the of refineries volumes turnarounds planned the shutdown in a fair years five any for as Asia. impact our

we than be it's expected best in if greater way that is impact low expected the turnaround $XXX $XXX to be to result, high is if between. a activity believe characterizing As million; forward-looking provide as the guidance earnings to medium below million; and by

had quarters During and XXXX third the first the quarter activity two low. was high turnaround

year-to-date Now turn and to out to guidance I'll results. with it over close Pat fourth quarter

Patricia E. Yarrington

Okay.

Downstream sustained earnings in fueled So about expect Permian is a fourth and year growth fewer XX of the turnarounds. this on turnaround now for continue positive just the fourth quarter to and planned production contrast expected cash segment's trends quarter looking by Slide in couple at comments has and planned upstream weigh flow. activity high this we the to of remainder expectations a

we Through For on the C&E, licensing budget in the nine six $XXX the we of spent can't and operations unanticipated you'll the this of billion. X% round. course don't plan million to for predict approximately we as expect from total recall the first and full-year, to of running prices budget the have those. is our strong inorganic of $XXX modestly primary Cash flow won higher months, we we spend. to our that will quarter. approximately expect a than determinant million C&E Oil above be blocks of primarily for $XX.X it inorganic C&E Brazil outcome Organic is and be result full-year in expected be fourth spend

do anticipate asset additional fewer continue the fourth quarter, working release capital. production sale we to further growth, we'll in benefit and While expected dividends some from modest proceeds affiliate of

production growth, from Lastly, out our conditions results flow favorable given earlier year-to-date reliability. compare how in that Cash let's our as and year. commitments revisit expanding the anticipated asset is and strong laid operations we against market they

sales, to production is and the growth full-year increase. to closer relative Excluding XXXX X% the year-on-year impact year of asset a X% we at end currently to expect

of are guidance. assets performing Permian ahead Our well

and we to We've Total solid captured and continuing repurchases. distributions our to and shareholder We continue. billion discipline operating so to billion We're conditions. portfolio, capital in growth, capital and generation $X.X share proceeds have in to expect operating and optimize dividends We're had far performance returning to $X.X of million our and significant production year-to-date, seeing that billion shareholders. a above expense cash the rationalize discipline financial $XXX very continue growth plan in with our favorable are amounted performance XXXX market cash due to commitment and year-to-date. demonstrating $X.X in

and in able very resilience cycle. Chevron cost to result, down been sheet. believe in attractive grow a shareholder with a price investors levered our the up cycle we've balance that offering As offers momentum low portfolio and We for distributions oil the strengthen

So take please one the line. follow-up one go and question concludes now do that We'll answered. your to try certainly questions ready your and remarks ahead Jonathan, we're to mind our get and necessary. prepared have if all Please open keep yourself a in to questions. full we limit please do best to queue our and that so

Operator

Certainly. Thank you.

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

Your question please.

Jason Gammel

Thank you moving operational address Permian. the guess I you such Obviously growth. in forward, there I turn saw to was might I there you prorate the factors wouldn't certainly be the very production while first that performance And much. of to led growth hoping that strong very strong XQ. to able some

Patricia E. Yarrington

Okay, Jason, thanks.

I last been up the we we realization that primary quarter XX in or years that couple ramping rigs the the potential to achieved throughout the of so of was third rig determinant. have think, first all and here XX

We basis high incredibly that that that we're we're a as We're finding of well. are design that has successful has off density been fracs operating of been pursuing and and successful. new finding

we NOJV partners, number NOJV the factors than the a perhaps were stronger, led been have of too, year, beginning there's have So has and that prices say of have well. they activity to I risen would at because that the overall the thinking seen improvement as our

Jason Gammel

the expanding very high Coast. I that the Can advantage compared to very competitors. interested of your talk your business drivers may correct, that's be margin being to on you expand in call. small maybe about U.S. there? downstream Pierre some on but you, refining Pierre, strategic wanting presence high been relatively Gulf you've if and the the of had great. as your about discussion before we've That's maybe And believe being return for to saying quoted take

Pierre R. Breber

on I the about for refinery, for One, Gulf refinery company we're Thanks, comment have reports almost in Jason. I've over media major a I as been years, as primary that the or on strategic can Coast the of Look, speculation Coast. three only job one is what won't two the rationale say operates talked I but Gulf long now, reasons.

supply And Pat retail that I've talked position Second don't barrels. with is, we in party and do is quartile we the have we that anything. just our Texas synergies integration the the time, presence need advantaged with refinery. Permian. third a strong a in top about same Pascagoula is possible At to also third said

chain price. around I've We that has Any right do have be earn value we attractive to it. value-oriented. returns. built a at we're also has Any the said acquisition tight And to investment

I that's so, say And all time. I think this really can at

Wayne Borduin

Thanks, Jason.

Jason Gammel

the Appreciate comments. Okay.

Operator

you. Thank

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

Your question please.

Neil Mehta

good Hey guys thoughts congrats, and on your quarter. to want on a Pierre, divestitures. get I Pat

You billion laid out a $X billion target. to $XX

about do in fall Where feel guys You're on of might are you that you how billion achieve range to ability the just that? just outstanding. about processes the the going you think – do on be any updates there, to $X deal way and

Patricia E. Yarrington

indicated, we certain, have more quarter. are that guess, to bit in Neil, bit already and say results believe, little billion a little the far. marketing a I that within of three-year that in come positive I we $X we billion would say, in $XX the would we realize billion I about change activities And is coming that then so period we've will believe time. Yes, in the overall, feel over underway XXXX. the should, There at We're $X range fourth

being assets by comfortable feel billion those Actually, potential the example $XX probably for we're interest in that The buyers. I'd interest. multiple U.K. for reasonable billion about to are marketed the significant we finding shown having – we're So say $X range. being

So that we that I think range feel good very given. about we've

Neil Mehta

two of a in when little That's to who address bullish about then you to to bit And view want things. investors capital more spending guys now, a the talk they skeptical great. it the not head-on. – post-XXXX. on that but are point increase Chevron, I period we have harvest to reload to is the growth you might And materially concern of post-XXXX, need because one right projects you're might

particularly concern anything topics of a of source risk sharing second would of say Asia off, to market can you rolling production be those around is of and concern The the the helpful. in both Thailand, them but so help on in around less contracts comfort Indonesia

Patricia E. Yarrington

we Well, capital the me cycle early And Okay. investment and the here the to wonderful these part with for opportunities just have as intensity, and the opportunities continued of Permian unconventionals. once let speak position get therein. a other issue high-return obviously into growth. low We short growth decade in next you know, are around volumetric

XXXX. coming So TCO one. that's production number We've got with online in

for de-bottlenecking LNG opportunities on a is to and plants rate, next high-reliability getting for just the the evident We're have de-bottlenecking position several fully in run think years. We our reasonable we them Australia. opportunity now over

growth potential deepwater. have We in

the people's there is intensity – potential Ballymore, several going where they're had in people will really the out our color pace And and capital. to objective those time. thinking is intensity reality nothing would prior Gulf which on there's case. three future of that's to not over And areas substantial years is close history I have that's Mexico; in our come to is of the think in of a the think I thinking Whale that investment be year Anchor. there We are and ever we've future period where And that the terms

relative capital where So range. thinking. capital it be might growth to to it's increase be in at may rate. going XXXX, XXXX, people kind of a I say, potential, lower There will be some have coming be think we but But small to that much need

what extension? so concession question Oh, the that that; other taken on I've had? long you was Now the

Neil Mehta

Yeah. Concession. Yeah.

Patricia E. Yarrington

Yes.

Okay.

work and – glad question a I'm been the this through because it's really you I written try there's on to good to a the So lot asked it's think specifics. opportunity

concession information – you we our extension expiration our put So and stat our in the by way, information, look situation supplement. if particular at

encourage of four to a next really the if those expire. get people coming is six look understanding look that at got over documents I you what we've about good will due when. years, contracts and But out So three to

have that In a that PSC this Indonesia, have XXXX in the Nsoko expires we is just Congo in expired one in the is Kalimantan so. XX about We in which contract Strait area, here. non-producing Makassar NOJV or expire going a XXXX. going the expire we small in is days XXXX. PSC is And ago And to China which PSC in East to have

couple a more of are to there that substance others have So us.

elected in government The All of did we We're those shareholder. value well has will are the Indonesia, that to for a bid disappointed this to Rokan this, be expire but offered government relatively a successful XXXX. immaterial press and bid that return not bidder. were in substantive. We but Chevron and in of as that and Pertamina have lot one as this we asset not There do felt Indonesia would the PSC in the we and did Indonesia are gotten on a the impacts couple to us this put to lately. of of

earnings is great contract smaller that evaluation. under production moment, can't of and XXXX. Erawan And PSC cash out indicate in net we is is bid as then that but in that this this upstream the a particular today note, at say this the in of the have and area put about in But about I concession expires contribution the a deal Our barrels other a day. percentage a portfolio. of XXX,XXX than would is Indonesia much Thailand

also put same offers we the we is did that approach the taking value that Chevron but Indonesia, feel a are bid in offers shareholder. Indonesia We to for value in which for

Neil Mehta

the time. Thanks, guys. Appreciate

Wayne Borduin

Thanks, Neil.

Operator

you. Thank

line question Gresh the of next JPMorgan. from from Phil comes Our

question, Your please.

Philip M. Gresh

morning. Thanks, good

guess... I question, First

Wayne Borduin

Good morning.

Philip M. Gresh

Permian? given ...would plans and You the targets there the a leveling Permian, how that the in with given your you rigs count point. today? previously you this are the about rig Or you're add be on about you're just How talked you forward here? and to count But kind follow-up of thinking hit rig are success that of you that for go-forward the seeing off want thinking make your this seeing, success the the end lean does about at year.

Patricia E. Yarrington

XX having now all we focus to can efficiencies the to on a rigs. the that land position take pause the a the of would right rig be market think we gotten good that's would through way XX I So drillings realization. from really completions, the and basically. to fleet our to all to feel that approach about capturing a necessitate And And to the bit the

of rigs you but options much what and So right rig to make our as number pause, at all and take look you're that can want BOE efficient We're as so reappraise making. possibly efficiency. our on that getting. always we that and And and a to not approach that we're now it's about focused the have activity we is be. efficient being per investment really results the that to the drilling, as the would returns that And we that actual I we decide from like – cost that's the it's getting we're gain we're capital sure and getting do can generated going forward. the will say you're then that operating

think rigs performance And critical an to measure. metric to to from time would so away try what move we're indicative to over I be going be of we more efficiency a something just consider the that

Philip M. Gresh

Yeah. sense. makes Got it. That

to Or given at gross sheet in there to kind versus you potentially that other net desire the and have How conservative you at – the debt $X of we're macro amount? rather where opportunities? some the trending you'd You the about obviously but cap, XX% question billion. cap, metric cycle, do just stick future XX% Second increase you're to continue where started that with any the Is so is sheet. metrics, with last think balance to well on the lower you're to to quite on desire stage balance debt of – quarter more do at? buyback in a view, given

Patricia E. Yarrington

– Yeah, a in, and Phil. position think it's I so it's to wonderful a great be question

that know generation $XX very We occurring We confirmed company. capital repurchase And share program. into also is the good we months and billion have a obviously only program. we've got cash billion feel the $XX that to comfortable the three in about

we the – be see there's market our is where then to and if if know program. that to levels, approximately So to to share to position we And being repurchase be are generated. those of confirmed in consideration we give then at continues surplus high a circumstances current the obviously would cash size we materialize, cash spending, at continue current generation, levels or prices all the give going

in balance help We be time I then that price, sustainability. we've outlined downturn words, it be a sheet will we want that the balance we want improvement on we we will stronger Because shareholders of extent can do, support got to to that balance component evident. into regard, the to then a the cycle. sheet supports to have whatever say we that that that can into distributions and thin part reliable we believe the to same that quarter at in we the the some When in to position, a that sheet, a when point available last through kind sustainable get get and come. sure the our In have of back that parameters shareholders. other it's will make I that

Philip M. Gresh

Sure.

Okay, thanks a lot.

Wayne Borduin

Phil. Thanks,

Operator

you. Thank

from Our Bank comes the Leggate Doug next from America Merrill Lynch. of line question of

Your question, please.

Doug Leggate

Thanks. everyone. Good morning,

earlier do afraid question a has up the follow But minimum I'm terms. I'm I it's PSC been And is PSC. for so I questions, guy the re-bid if a responsible been legacy concession. all these I to Pat, from about tax government may. quite transparent as apologize. So, want Thailand on The probably the

could So address I just you if wonder issue. one

as could if right? third-party tax that close expect cash cash framework would $X thing very under being standpoint? on you much Is production contract anywhere this, terms, of the that at analysis as retain might this If new you information, billion to on the from though meaning year. tax so, And a to this you even the delta how – look, your flow flow be look old

Patricia E. Yarrington

been uncomfortable Doug, forth have can't are are Yes, commercial in position. while I you're being an discussions and underway putting bids really evaluated. me put comment and

discussions the the wait what whatever to and the I outcome think gets and – from going awarded. we're to see is have

year have by date terms. what think outcome you confirm then the of tougher does planned be. an I will that the the end I the the indication be. results bidding for package what understanding contain will give is of of to sort can fiscal We'll this

can build exactly your to I will say the that you into point. this not degree be, But what expectations. I'm So think at liberty at

Doug Leggate

an I more follow-up but trying spot, it's and bit certainly on in a not you constructive mean to awkward is answer My did the for put it. Permian. hopefully to thanks

ahead you're you're about of prepared you schedule. your – saying year in So said remarks a running

to level you of change target? you're production – Permian further and expect you outlook? with the the the in upside same same so on, know with would at risks ahead, what mean? plateau next to that to your the trajectory spreads, same least basically if take Or expect year, same the continue design improvement what with will you in more obviously In maintain words, I activity would gives given less? or do expect differentials it the other see you Or and we growth So far maintain so and you running

Patricia E. Yarrington

to I full you mean, have XX ramping into things to we're constructive now mind, going just year, XXXX. We're rigs right. to the up really And I on rig go been the think rate. Permian. Yes, XX calendar the We've for keep in once some

as be continued our coming seeing So basis We're that positive. a along. continuing from benefits move will and we design improvements in of new efficiencies

well the fine-tune fine-tune our here value to entire that guess think with Permian. we potential the upside associated I would really there's So we say continue chain placement; as I

I running. it's I So, an several years which you certainly a But we'll positive our update asset. that SAM, for we in XXXX done now we've And give constructive for March on outlook at think the we're feel Permian. that think

Wayne Borduin

Thanks, Doug.

Doug Leggate

Thanks it. for taking my Pat. questions, Appreciate

Operator

Thank you.

Our Mizuho. next from of line Sankey question from Paul comes the

Your question please.

Paul Sankey

fuel expect to transport severe perhaps thing gasoline gasoline unused ask the little you difficulties would that distillate? as U.S. on major to for to I will be matter, is more price. you to too the do think for market would And about your Thanks. as you go you press And Hi. one prices how gasoline can imagine the the regards have that, little IMO residual Pierre comments. be since handle. morning, will administration specific, recent a you're line, the other especially potential more be a talk out? we'd play been to on you that think there? everyone. for and how talk impact would the market bit impact some is to that – oil where effect hi, do end a up I bit opposed – given Pierre, Pat. to be that price will of the clear thought Good there the Can I the IMO on back There's U.S.

Pierre R. Breber

is Well, through are of roll let's IMO the Okay. a going to uncertainties and Thanks, Paul. unknowns see. around how lot system. There

of IMO right. not part challenge in vacuum, is think a that is I the

that gen there diesel, You everything the that the spreads crudes forward look because and in see expectation high-sulfur And can't other mid-distillates, happening. right doing what else global all out, it crudes are see are crack market. would going in factors put you'll to be So you enough be sense, economy production there right? time? the The post-XXXX. point of high-sulfur have lot is fuel not a in demand oil. sour of XXXX is and if point been fuel markets And sort back happening fuel there on. What say scrubbers goes of to of place comments at a now that the step alluded hold discounts parts oil you you IMO my As What's that or sour and can you bunker is consume But will and that increasing are there's think moving at widening. happening? HSFO will diesel, makes when lot supply to, one and that constant of

going to in lot marine look distillate. that there's will are be and it they on those going gas fuel So oil look like be could And/or low-sulfur a that's and a space. to oil alternatives alternatives that will

difficult it's of there's to because MO gas, thing terms a predict, in So so many factors.

would I on crude Those or gasoline movements – in is say couple that are any or $XX few think a move weeks one pricing months. we've product the much bigger the underlying movements plus thing last seen I minus And are if really either It – that some can used you pricing. of differentials. way. gas could the distillates. see it intermediates gas about make We're MO really to for go get can up MO going talking pulled just

it a could higher and gas. if make there's weaken also You that little could runs are excess bit MO arguments

it's our we're fuel I on production by small-scale can't minimizing making prepared So being predict. it, high-sulfur is in oil something really modifications. refineries for What focused that

We seeing increase scrubber uptake owners. are for ship

testing excess on folks, to prepared We produce are looking power at asphalt, we we're looking that have are to alternative We're that do sell like leader working and new going low-sulfur upgrading testing we're and part fuel we're lubricants additives. They to so a solution, be of fuels, marine different are oils, additives marine that. developing for products and what for generation, markets capability. And IMO. confident who also them. so big a and lubricants we're in We're non-marine, the

to there's we'll underway. ready and be year go lot a little it. got work of We a for a So than more

Paul Sankey

Thanks. asked your like feel question. of not the scrubbing for and I'm that us to power I market give you generation Pierre, expectation sense guy first any penetration? have just Can the

Pierre R. Breber

for because who comply investments reduce There's any That's you It's are And our owners as work. We're thing players. are Well, again – arbs. There's up, we're people view of of that And to capital. view markets in right. is capital. not penetration, they get much large-scale they it make to arbs our lots economic a – to investing transient. investments And with open are on One to most step the of looking put lots capital. cost-effective IMO-related. not refineries about ship closed. lots the when IMO scrubbers, way than more we back, there that is scrubbing for invest if or to regulations mechanism working

is our view that a lost sorry, the – on track I bit. So that

Patricia E. Yarrington

Power.

Pierre R. Breber

But the the complying generation, Oh, it's But mechanism a primary pretty Middle places. is there's power some generation the our view good-sized a time, over I'm clearly. again, on lower-value power market the go generation it's to other uptake require of sorry. power not East to market market expect on and it's Again, and Yes, in likely with we to through be IMO. increase will scrubber that transition. –

Paul Sankey

I'll thanks. else someone Thank let a you. Pierre, go. have

Pierre R. Breber

Thanks, Paul.

Wayne Borduin

Paul. Thanks,

Operator

Thank you.

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

question Your please.

Paul Y. Cheng

good guys, Hey morning.

Patricia E. Yarrington

Paul. Good morning,

Paul Y. Cheng

since one you for two really questions short. are Pierre, you; so here,

be when is run, those XX XX, XX to heavy API? sour is can medium helping you And involved that Gulf we system, that as also below us as or we by if think Or refining it's really Duvernay, need XXXX you're the late an you have in it's can don't need position guys so issue. upstream, to we involved a you be your be over Your to to that or that you what we given to you transitionary define involve? need that that your may �� XXXX between then have all define tell will think And concern comment Coast second have you're not where some gap. equity of percentage involved given you will support and that, oil, position that some you as looking sufficient that and is. that like is export much the run infrastructure how pilot those also seems And on XX you it you because have guys that will capacity doing in a question ensure be API? early terms – the oil concern something may your you those? guess Or and I question you And project owner to

Pierre R. Breber

Okay.

see. me Let

the or take highest Annual of in have is would downstream capacity. can think I Any – mean, charts least. or we're API we figure sour it folks lower-value not out on stand I versus to the showed say disclose we and the guess, has our stand Report at how happen one upgrading as run I a of we've in disclose the designed And upstream Permian, from own. We're earnings Supplement specific is that We invested the We're per the I that. don't Nelson specifics your to are in has but our chart its amount feedstocks me think competing crudes. On the showed that – we region first we to on to content do on the how disclose segment. are showed the I origin competitors. its second that that a make Again, own. – we country gravity. of Complexity, investment about What major do there. showed Let barrel on do I question, highest we

have And so to that we way. look at

have But with can investments part that's Again, economics we're enterprise; Any downstream upside that of have upstream, an in have on Permian. that of, ride competitors. compete we to the is benefit we back in merit the can't the stand in extra and on benefit. if course, their synergies against own Now our added that. an synergies the investments attractive very of on particular, from

it was takeaway On I'll that with the around think I leave Pat. question, third and

Patricia E. Yarrington

a yes, I this to and think that be will there Yeah. out, of bit as our mean, built over belief back a we had or opportunity capacity you to to was export I view I to question corporate just that I out capacity. flow And export would But fact going in of it the markets a a three think be little build add, may see assurance. be that two kind don't capacity about years. risk see need the going next

We day next barrels in the part have XX,XXX a year to dedicated early of that now. capacity a expanding export see barrels XX,XXX about about of ourselves We day.

number. So million is far believe the X about exported we've I barrels,

So But of export capacity. we to flow. investing be over assurance because appropriately general a we're there risk that the feel will think Permian time our don't for flow in in that we

Paul Y. Cheng

there? in infrastructure on don't believe involve that Pat, is need the the Duvernay of you to Canada, to in that the apply the area that same you build-out

Patricia E. Yarrington

Canada? In

Wayne Borduin

Your question Paul? reference the is sands, oil to in

Paul Y. Cheng

Duvernay? the to No,

Wayne Borduin

Oh, Duvernay.

Patricia E. Yarrington

I Yeah, guess particular Duvernay? with I associated have any Duvernay. don't insights

Wayne Borduin

previously I in. we that we... disclosed Yeah, Pat, have I think think would chime I just

Patricia E. Yarrington

(XX:XX:XX).

Wayne Borduin

that our infrastructure ago we continue well-paired expect be as flow. into that that progress we to to while we ...a step capacity the of to there enable able to committed And you'd enable out to that additional Pembina is that production Duvernay. development would the agreements agreement

Paul Y. Cheng

you. Thank Okay.

Operator

you. Thank

next from Simmons comes Our Company. question & from the of Fernandez Blake line

please. question Your

Blake Fernandez

looks you trending Good you're above. or couple upward folks. the inflationary like about as morning. into it's activity like we upper momentum kind well? you maybe bit talk your on CapEx, a based? of giving Hi, are next X% of Could the a that question about of be the little there, whether about drivers what it Pat, And should toward end thinking years So for range?

Patricia E. Yarrington

Right.

several question, plan year-to-date as if or go the inorganic, We're so relates And really we we one expect basis. $XXX million about we're prepared there's an nine and over about for $XXX made. million of means concentrated that good $XXX months, about basis, above particular $XXX in a million reasons So, Blake. this the $XXX full we're that to that there. Yeah, area. to It's to on have organic on back said any to lease number acquisitions, this. by million were about about year. my plan in we ratable bonus not million And But I time payments remarks lease the to get

premise is, planning call the together. would that I just fact than thing noticeably we first XXXX the use when in prices been higher that we budget oil The have the out put

we has with a fact standpoint. cost thought going in that the capital that we down; savings there would plan savings. direction cost the cost in Because So other from have built those. been some be they There out, we capture along fact and able we price. to able been haven't oil really had trends turned into were and leveled our And to capture stopped

basis the we've had the but cost with in high and more fracs, that is a the to of then, but well again, there's on that's new more, Permian to to the there's that. about piece there the development TCO Jay fact the capital So fact, overrun in There with more are relates projects we And that design, outstanding. we're than really other could major able mentioned piece small overruns. projects. spent the of that originally relates that plan against And prosecute as envisioned. the they there's drilling last talked density I in throw acreage call, a also a efficiencies, economic outcomes being

so better. EUR per much the barrel And dollar is per

money money – spent. that's that's being So good

So I those we would are outline that that for reasons the far. so the have overrun

In moved the been And of pressures, higher, to sustained example, has inflationary in prices there, In we pressures, continuing say, XXXX I will XX% because in the Permian. increases for of structure that up think pressures, in period. maybe in oil expect some. the inflationary do general, I terms see we order to are X% cost industry the have the

facing your that So that would be I to and build yes, are would would into reasonable that be something expectations. say, we

Blake Fernandez

Thank helpful. very you much. is That

this but question, was kind The takeaway. second hope on mine in cover I Paul's exact detail Permian question, the you necessarily didn't of on

kind a had of here, excess seeing takeaway then curious still year? capacity I for timeframe takeaway think the just June in highlighted taken quarter's with production and non-operated are through next say capacity XXXX. through you same that we're of last call you I'm massive through ramp-up and ample that pretty throughout well care from

Patricia E. Yarrington

be. Absolutely. NGL growth are. we transportation whole for of or got we what that to mean Permian trying process ahead the be I is stay we've Yes, that setup the or have, the we fractionation, expect whole whether to crude it

we this increment, do – securing offtake. And from so through in contractual

have Midland the working this mean, it's four we the I three of year for that for we working orchestrate out period the to course, of are be So couple period. nicely next trying years. position on team very And that we those the step-up here. feel covered a of the our and for perpetual elements year will

Blake Fernandez

you. great. That's Thank

Wayne Borduin

Blake. Thanks,

Operator

Thank you.

of the from comes line question Citi. next Alastair Our Syme from

please. question Your

Alastair R. Syme

Hi. Pat, different Anchor? just ask Tigris to makes what I and can Ballymore, Whale,

Patricia E. Yarrington

economics the down really those it to comes the think that comes anticipate to we down I fundamentally it out of individual developments. –

by factors be into whether I its topsides a the the go independent as to three-field complexity, mean, an whole had resource, that opportunity, the there's aggregated it that reservoir. So Tigris it's of the whether influenced of size number a demands complexity was to the because tieback or you're needs account. development. got of And own

you leases, there exit the decided in about to we in read deepwater. that shouldn't our anything to Tigris to shouldn't dedication you read the the fact So

in as Mexico we dedicated as deepwater. picked deepwater expertise We up to deepwater. offshore Mexico leases the as still are have significant a of Brazil well. think Gulf number We the well We and the of in

deepwater. projects. in return what we to for just choices the the portfolio. invested secure going we're our It's and the So making opportunity we're in high all And highest after will be about best looking still returns believe

Alastair R. Syme

XXXX. a around Thank just the out sake to and I What as you. contract sort SAM of cash just you Can around the guidance – discussion PSCs made return put can renewal? are follow-up, around clarify I for of that the returns assumptions the to in

Patricia E. Yarrington

on important I Rokan back and that Right. were those in materials two for assumptions the that March extended. ones of Erawan, provided mean, talked were that concessions both about in the the both I we

concession though, are the those terms I In of extension XXXX, important. Both that's of dates think XXXX.

those we us. still So next available for the several years to have

Alastair R. Syme

clarification. Thanks the for

Patricia E. Yarrington

even in our growth strong concession without seen and extensions, I'd such And can plus shale tight. say, just the still, unconventional, Okay. those can we because still our we see and base in we've growth –

Alastair R. Syme

very you Thank Great. much.

Operator

Thank you.

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

please. Your question,

Roger D. Read

the little side, morning. CapEx the inflation budget how already is being were? Yeah, relative we thanks. on that Good think these your any risk on TCO you're XXXX, CapEx spending run or going issues about out guess a where up where bit to And in comments projects affect then, cost inflation then incorporated the cost on I follow are to of? as And overruns starting the update we specifically expectations? bid could to for or overall

Patricia E. Yarrington

the thanks for question. Roger, Yeah,

make with $XX or it's here. First, $XX on within years. billion side. we let sort comments and made, because the me got days plant a to is capital the happen over activity me to to staying to be about stay project $XX choices. inflationary To focus I our Johnson. both is the with that, that let few couple range billion XX me or And we've needs billion making to just that the TCO major on Wayne Jay next particular, adjustment did think $XX of of let our about very that We're just it's side ago visit in lined it's comes And because doable, range. reiterate, billion within so whether out And any the choice

that with making And got to years view And a we personal so I here, observations what's still got firsthand a there. have of and of start fact X.X we're couple to on years though, the only just do X.X going go. in

XXXX. still First oil is for scheduled

into all work this. the So individual, we're way complex the individual packages, kind daily. tracking I number five identified of And done It's and progress of say It's on quite gotten project. only and streams packages, out, activity lined in XX% of about work they've project. where have a things I'll streams are been broken got being they're what my productivity a individual work from going that's big through call down daily/weekly/monthly well observation, their those would

so tremendously. improve are seeing And productivity we site

out second We're years. XXXX critical are undergrounds mentioned being and MEI the execution quarter away and the on the of civils XXXX moving really Jay think I call, from rest of that the XXXX – the phase. into

an be critical will absolutely from year so, And XXXX standpoint. execution an

I productivity still being gains was really course, of that or too lot well. And the working we things are delivered. and working us. So modules I'm really with It's anything The want nicely. proceeding seeing. over being far of impressed here, of my are out don't ahead work skis but we're get quite are well, out to logistics the lined overstate – I a have

Roger D. Read

That's fair.

think I of right or we on the performance quarter you the you try rack to here. given won't stretch the put

Patricia E. Yarrington

appreciate that. I (XX:XX:XX).

Roger D. Read

the about it's in about what operated the Chevron or I we being percentages density the going think non-operated, rigs, as your you're to up out? own high – – the the just In within applied we building change whether non-operated is thinking Between words, a spiked while, and you're mean, non-op. think overwhelmingly comments think fracs would really learning the in we growth and here. as spread question, been not that or being and outperformance your follow-up about – even quarter, so other a about for just the forth, versus in forward? outperformance The this rig is affect should and wells I'm operated on Permian operated

Patricia E. Yarrington

Yeah.

in production activity contribution had started non-ops about So We up terms kind had several would as activity, rig – the well the I building production that had and the years operated activity between quarter, absolute as the that say too. course, had the rig of non-operated But been in was started previously. same. of of activity, non-ops

as non-op comparable So relatively though I co-op. the seeing improvement. the feel, in contributions are and quarter areas between Both are

Roger D. Read

right. Thank you. All Great.

Wayne Borduin

Roger. Thanks,

Operator

you. Thank

Research. question Sam for of Margolin Our today from final the Wolfe line comes from

Your question, please.

Sam Margolin

in but keep morning. sort I'm of Good call. it's I late have sorry, it to I'll try a the concise. question, stage thematic

You time, effectively getting made might you're in and That fiscal in efficient escalating even where other with places too economics a kind improving. the tightening of are is same in be or Thailand. happening reference accounted for, terms Permian at cost sort to happening, of and the inflation the more opposite

so much they you incent than to are process mix you've the what's broadly, think your in level things unconventional relative are make of optimized on a is a managing the be In but kind set just kind else, question basis the direction? my you economics everywhere the how manage if to go of that your that? screen on could portfolio, better where here getting within guess, I seem do sure you past you're to when So of of wildly production one

Patricia E. Yarrington

assets portfolio. I or TCO, think of yeah. and several we a Permian, diversified the you a Australia have belief legacy whether just Sam, we unconventional deepwater. having would of in the value fundamental in Yeah, say, have And diversification

terms, fact some a host in locations the in favorable And the in asset would to that world terms the right, more to to like Chevron need kind fiscal fiscal to foreign continue are a around classes governments see the tightening that order they situation. investor, significant realizing of the revise other that several be want have we incent the investment a of you world, pursue. around you you're in but see to We locations

in long the So term. for and we're business ebbs it flows and the

et we best growth, dividend replacement, and just to make for decisions portfolio flow And production – only to the for continue make try term; term, we growth, also assess cash growth, a so our cetera. but can we not reserve short long

it's So a – we look it as portfolio. at a

Sam Margolin

for much call. so color on long Thanks the right. All all a

Patricia E. Yarrington

you. thank Okay,

Pierre R. Breber

you. Thank

Patricia E. Yarrington

Okay, call. was last that our I guess

thank everybody Chevron So want good day. time I back on to certainly participation your appreciate Have and to today. in you. the for call. We your interest we a everyone's appreciate Jonathan,

Operator

call. Thank you. XXXX Chevron's this gentlemen, conference quarter earnings concludes Ladies third and

may You now disconnect.

Chevron (CVX) 2 Nov 182018 Q3 Earnings call transcript