CVX - Earnings call transcript Q4 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 Fourth 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. reminder, is a recorded. As Instructions] this being conference [Operator over the Chairman Chevron I turn call Corporation, to of will now Officer conference the Executive and Mr. Chief Wirth. Mike Please go ahead.

Mike Wirth

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

the Vice and Yarrington, Borduin, Manager Chief are Relations. Wayne President of and with Investor today Officer, On call General Pat me Financial

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

together we cash assets. to XXXX, outcomes achieving our grew XXXX. In in of We unit X% cash annual and an billion We initiation production. $X sold build statement please estimates, upstream we dividend contributing please at in win started, outlined sheet. more get Chevron's ever highlighted be action margins yielded and Slide flow, cautionary the blue projections, to compelling lowered strengths, review that other oil we production record commitments will of indicated this out on momentum increase in the grew contains repurchase by sustainability cash free deliver three returns. intend reminded These very program. our returns. assets, year in a successful and free Before presentation advantages a in combination shareholder we share lower Back statements, and costs forward-looking the a this of the laid I I March, on portfolio, flow with also improvement and strong X. that our and highest than and operated balance any I gas an cash to We the advantage environment. to growing XXXX distinct prices, was in our delivered. these strategy

uses view of Slide of X, and to Turning cash. sources our a

deliver This highest on from priorities. Chevron to we our of environment. $XX in any the operations Excluding financial billion price working record cash flow cash nearly we $XX achieved billion, allowed ever when of achieved level free generated flow all in us pore over capital, by

and per paid to Earlier our share maintained For X% consecutive $X.XX share, we per a XXst dividends billion the this $X.XX X.X year, announced shareholders. out to to growth week, a representing we increase in increase. in dividend dividend quarterly cash our commitment our

capital portfolio and funded Second, a return across allocated projects. we highest diverse our

have for growth investments these We confident sustainable free position and flow. us cash

Third, balance we paid strengthened our and debt billion. X.X down by sheet

our shares in increased repurchasing began turn that the quarter, third fourth I'll, With will take generation. to we and through who call results. the the Finally, the in financial Pat? rate Pat quarter future the demonstrating you further in cash confidence over

Pat Yarrington

Thanks Mike.

X, XXXX $X.X an XXXX. per special diluted performance. year XXX million Turning to presentation. related quarter special per were and project gains of is Fourth share, Slide foreign to than overview full diluted quarter, $X.XX this the offset to or foreign XX% by reconciliation In of share. billion $XX.X off. write or financial the were exchange included item items of more earnings a our the were from appendix $X.XX in The up billion earnings exchange detailed

was and for from items billion. totaled special foreign employed For Return excluding the full exchange on X.X%, XXXX. year in capital XXXX earnings XX.X X% up

Our debt XX%. debt net approximately yearend our was was and ratio ratio at XX%

full million fourth the of our year the in rate repurchases brining the X we and in billion billion quarter, quarter. dividends, X.X XXX to During $X.X quarter fourth the in billion; increased third paid the to we share total from

Slide Turning to X.

we than past, X.X flow year, XX.X in full my the billion Headwinds for XX% about total the guidance. line as them cash defined with the year XXXX. For billion operations totaled from in higher original

of growth was expenditures and resulting billion the billion cash was production. when prices were in in year. breakeven quarter was year but quarter than lower first flow billion. was our price. This above capital due commodity And from $XX lower flow the it for primarily free because cash It in prices, improvement quarter, the X.X the billion For quarter was of to XX.X almost the for $X reduced third were operations Cash dividend comparable.

Brent, and We CapEx are sale dividend covering at our just cash of under consideration without $XX asset proceeds.

off cash moving for XXXX. flow little guidance Before a

levels, prices billion headwinds As $X hold be current and at for we XXXX billion. to expect between $X

of resulted billion XXXX earnings lower earnings. charges on in sales in Special gains absence X. U.S. Slide primarily onto reform the X billion items, higher Now net X.X X.X approximately Full an than a asset tax in and decrease were write year of increase relating off XXXX. project XX.X gain of billion billion to

earnings operating charges. billion These previous X.X impact primarily about higher million, offset and associated exchange billion almost timing of and Canadian X.X effects favorable higher by charges our operating special turnaround associated for exchange increased were lifting, results offsetting while just because Full primarily due ramp activity exchange, between slightly items Downstream lower and exchange with excluding by lower earnings Upstream sales Our corporate net foreign improved and net period reflected realization other costs. tax items earnings excluding items segment charges guidance. special billion. foreign in benefited increased planned periods deductibility XXX expenses In refining up where for by excluding by higher foreign foreign with between the to production periods at $X.X other the year expense million, in taxes mostly largely higher and and African with assets line South XX interest and the results expenses decreased increased our by marketing with were of CPChem. the U.S. continued volumes along additional and over special and

for the charges. net about other remains billion in guidance segment XXXX $X.X Our

are As quarterly results though, in segment this non-ratable. reminder a

of This X. Slide production more history. day, from level barrels on the a Now highest barrels million production was of in than XXXX the day a X% or XXXX. X.XX is an XXX,XXX Company's increase

was a top most above where Base and of new Angola production reduced of LNG impact Gorgon. effect primarily from were XX,XXX than XX,XXX production per the net year. we back projects I'll continue primarily XXX,XXX projects Shelf day. X% years production XXX,XXX guidance per at production California Nigeria the as mostly in by production XX,XXX turnaround the to of ramp by day multiple at sales, and and effects sales of day. January. of and the in particular impact XX,XXX plan asset now barrels barrels Mexico grew a by which increased Gulf field of last of between the production provided effects the day. or during declines U.S. Excluding range Elk reduced the barrels production up barrels of a mid-continent, XX,XXX XXXX. increased production approximately day, Hills XXXX The we Major by more in Entitlement capital from and barrels assets to in grew production from reduced total XX% Tengiz, a wells, by due Gulf to the Mexico Wheatstone Permian day, significantly Shale it higher U.S. tight X% Higher barrels hand Mike. prices in

Mike Wirth

Thanks Pat.

production significant barrels XXXX, X, X%. real was continues because than added Slide We to divested. growing This is achieved Turning especially reserve million In reserve outcome XXX and a almost XXX%. replacement we more it was our produced while than more to success ratio replacement be story.

of to and at years, our production portfolio. ratio stands reserves a XX.X healthy showing Our sustainability the strength

strength the through reserve further illustrates price XXX% year as ratio replacement five Our downturn. of

XX. Moving to Slide

$XX of X.X Within by billion the XXXX Total which cash capital another and payments XXXX our was and approximately and leases XXXX TCO while billion Permian is We Brazil C&E billion. of budget, tight X.X included the for for CPChem. offshore primarily in related In inorganic Mexico. stacked and allocated commitment budget depicts continue billion. is to XXX allocated organic bonus expenditures to to in budget, don't budget, remaining shale This maintain The is discipline. other for Gulf bar X.X primarily C&E is XX.X our the to million XX.X expense billion we to component this our billion the affiliates, assets. of

total years. approximately deliver two to within XXXX cash of our expect We spends XX%

major and projects significantly several risk to current capital spend has concurrently. past, underway Our profile the have execution large lower we scale relative

XX. Slide would optimization on I portfolio like update to an efforts. to Turning provide our

sale our the contributors in the in During interest and in proceeds Elk in the and We Shetlands recently West interest business Rosebank marketing XXXX, field UK. of project of largest our received the $X of refining Hills being before tax Africa California. asset our completed we of sale divestment Southern billion, with the the

close earlier this project addition, the consortium of to deal of we In Danish expect interest sell we agreement executed in the in and our the XXXX, in Brazil. to first an interest the underground in week, sale half our

year is in value $X And We made our focused with Sea with transaction. guidance are asset our The UK last sale we $XX XXXX Azerbaijan investments, we North proceeds billion on and billion all continue XXXX. assets. to progress from to good central from any marketing generating of consistent the

in XXX,XXX same the In we last Permian. up day, to XX% fourth than focused XXX,XXX XX%. relative Permian, year. on day returns. was more the the or per to the Production Annual was Turning quarter production barrels up quarter barrels per remained

chasing target, of altering we We production plans our are a price day. not are the based nor the on

joint Permian. more oil ventures, was and transacted XXXX, than with than further pleased In we sufficient, last and position. and swaps, and unit land Takeaway and leading two that capacity capacity acres optimizing than our and Over liquids production. large years, our more years, count, for costs we've through operating in this farm added our development rig two the had outs XXX,XXX we just resource In more doubled already sales, we've our increased performance the We're doubled position base, decreased our year. more

for portfolio March. We will in guidance provide new our Permian

This fourth from equivalent Moving LNG well in of know plants reduce LNG and December. last despite and temperatures year. as performed you and per the barrels XXX,XXX throughput. Wheatstone higher XXX average We at cargoes loaded Higher Gorgon to quarter the almost Wheatstone LNG, temperatures generally day. oil during Gorgon summer was

the gas that We market weeks. local provide expect to the Wheatstone have commissioned few plant to next in gas and domestic now

this planned will turnarounds begin routine cycle We our year. at Gorgon of

the with each no We years turnarounds a frame one four-year the scheduled. will year undergoing maintenance having on of three first be cycle and fourth

reliability years our Slide turnarounds to these significant last perform the at Brent year, cash the days. that generation anticipate many production opportunities price. offer We and from increase shows expect maintenance about this These for routine XX fence $XX throughput. and assuming for a XX to Gorgon come. small to outlook We assets also enhancements make turnarounds

than the impact We sales. asset expect to X% excluding to year, XXXX any X% be production higher of last

by year summary, year Train we of forecasts slide. need acknowledge anticipate noted strong as largely These to and Our the shale In the on business growth and Wheatstone. full production driven our consecutive X tight growth. third uncertainties in at always is assets a production from

produced its purchase XXX,XXX and more Moving our refining system the to portion per Slide crude, us retail light Louisiana refinery Gulf an signed This in and coordination realize week, Chevron XX, to Texas. to day as announced with allows refinery barrel Pasadena, regional this to market of in domestic synergies with addition Pascagoula. we with America Texas earlier assets Petrobras agreement products, through in and related process a our Coast Inc. supply

close will updates our to meeting further expect provide and March. in by We in midyear analyst

future few just about comments Now expectations. a

expect We production throughout X% in and the forecast. quarter trends positive XXXX, first growth to X% to the continue reflected in

$XXX earnings As than the first after-tax In support our you billion on repurchases as equates a for activity XXXX. expect quarterly week, in growth during previous provided expect in disclosures and headwinds dividend in we to million. turnaround And earlier which of the corporate in low to charges and quarter. less from we the we per this refinery Earlier quarter additional impact future $X call, downstream, flow there early increase co-lending be TCO recall communicated as $X.XX share share guidance as an quarter, estimated we anticipate you of cash first will project. the Pat

a I share XX closing few thoughts. would to Slide Moving like to

mentioned before, any win to intend we I As abundance. in

take sheet we limit a so questions lines. continue shareholder As yourself strong of lower one our and do our one to to have That our Keep open strong question remarks. of necessary, please result to concludes flow, to if to your mind in returns. ready we level We're risk, full Jonathan, well-positioned best a portfolio, now capital will cash answered. questions. the record execution your discipline, to deliver get advantaged follow-up, are balance and please prepared and try that free all queue,

Operator

[Operator you. comes JP Gresh from question Our the Thank of from Phil line Instructions] Morgan. first

Your question please.

Phil Gresh

about a talked up the $XX you’re in you dividend up a XXXX, than last First buyback. at question, dividend stepped here higher a the year, breakeven rate also you and stepping

Or see you think a you capital? the return elaborate more breakeven So that just could how capital? lower bit where you I guess on about giving confidence this going? Is on you and that may moving little just if more than it

Mike Wirth

hard ago get in progress we Phil, made Well, bringing not were over XXs worked and breakdown. the to few the down. significant have breakeven the We dividend years really that last in that long

it remains We was and the have it year. provided think in to the way of XXXX, forward as we we in I look definitions, think some dividend breakeven about our last a think prior in where area simple

right we've see to payouts. price strong in You that reasonable environment the of dividends the in right evidence our competitive repurchases we in, confidence got commitment Pat sustain kinds be those to of share that step really environments, any coming a will able to is a cash flows increase we've got the flows said, has up now, coming price as those a cash through and confidence in

other the strong And to we that the that really ability our point margins history. our capital got would just out I kind is modest relative seen growth, of sustain same. have The spending cash provide to and at is, do our thing out have still capital portfolio of you the spending production

Phil Gresh

to I The to that quite The And XXXX. going more for be bit know XXXX could production which shale ramping just the day future something in maybe on specifically be that contributing second capital guidance? from budget a that you're is up the think just that a question thunder Is stealing if The pretty just piece flattish I Permian be quarter. little, a Or spending guess got wanted 'XX, that last would just piece non-Permian you've this you on to here. not is growth analyst something highlighted elaborate would it that but. contribution? I year-over-year the of

Mike Wirth

beginning are the ramp to basins. in we Well, other

the have operate. in seen have Muerta and we the the up. learnings all economics basins tight reductions rigs emanating the activity in our and other significant the shared are So, and in on Permian. We've EURs development spotlight the large in we've are Duvernay the and actually we costs in shale in scale we from And Vaca in in these tight within coming asset have. The while of it's added The the Permian the compelling. which Marcellus, that that improvements only as shale maybe from are portfolio, we far each

north well have I appraisal we that El Trapial thing Muerta. the other Vaca is, The just of note program in begun an the in eight

El We the continue are our the program. in Compañía, currently Lana in producing Sothern that but north to up possibilities area folks and we are at by prosecute the Trapial, intrigued

We in well where execute to have a as acres with XX,XXX YPS, got additional that well. we acreage the also pilot full in net a picked and plan we there Narambuena, XXXX up non-operated

been brings our in potential portfolio; relatively Argentina capital we I'll profile say we that entire characteristics really which The So the to costs rapidly. tight multiyear development shale like risk cycle have again, projects. the great last low and it and generate much and time, it talking short of some is than brings about a is cash lower multibillion-dollar ability economics, attractive and about, thing

Phil Gresh

of was for what amount TCO? Pat, co-lend And the the

Pat Yarrington

XXXX In co-lend was the zero.

Phil Gresh

For guide, the I’m XQ sorry.

Pat Yarrington

guide, XQ the okay. Oh,

on for that we how starting requirements So, would flow and the lending that’s depend will I profile the It and as reserve of and and right say, off the about I this about for for go when billion, investment you as confirm actually see say, the depend have $X happens billion XXXX discussions and think maybe also of against matches you order started base, operations But here as $X profile the the the will the magnitude, on I we think to order to on think was on year. happened happens and dividend what from at back under are I will if we because distribution change number as co way that first don’t generated year But magnitude what prices progresses dividend. investment to project. partnership. look I it price. number for It cash like what a depend you the

Operator

you. Thank

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

question please. Your

Paul Chain

the Mike, lack or wondering, you development any Argentina. plan? quickly given you you with you the how timeline or think kind the any over the can about environment, of or there, political kind the of can share? that talk capital I'm pace And infrastructure infrastructure proceed of outlook, data

Mike Wirth

encourage reiterate, partner climate very, We There energy country. talk YPF has very Argentina number about will in probably more this to the in a I'd and development of improving But the bit just investment good has to reforms March government there. Macri is in and instituted committed Paul. a been support little

resource learning great country. up, the much blocks in and have actually competitive can picked Permian there that the that’s benefiting We production stay we multiple from of economics, and

infrastructure pace way in or So perhaps the conditions. on a with and there's is and is this point, our the do developments at we'll And commitment not North yes, to government broadly, that. away the developed part of gas the the that it market take America United but more liquids States

in have realities on very got but by the are tremendous, reforms put little resources ground policy the encouraged Argentina been So, forth to a bit see and government. the the by different, the that I we’re

Paul Chain

you not probably them up front game you And has going facility need bought, and that relationship has at for the XX, if labor rocky. Because make what's the to been XX-plus standard? underinvested least I that Pasadena, been just Chevron very the significant facility? plan to a refinery mean, to to for for the always bring years are investment that

or run to of it Pascagoula? by So secondly, much is you as upfront how a is game And plan? the And extension of facility going sort full-blown what's that are the an investment?

Mike Wirth

I agreement can. respond of me expect later executed to So, try the first best to week. half We close this just somewhat in as We an let here until that don’t to the here Paul year.

for it's fully can reliably that plan investment safely and facility the lay we little me we actually an have operate ourselves standards satisfied closed out So, due the expect. diligence, the we premature to that at a In the transaction. would

great And concerns and of primary you don't good it the It out risk for in integrate us overpay, three to that believe like to ways us getting so, own exchange don't are at paying of I that one to increasing a integrate allow production. we think that and criteria. you refinery. Texas location allows I there. to One, and system meets optimize will product, over opposed any with purchase or that are allows as asset. as West of and and markets think serve product acquisitions It's Pascagoula the don’t a in through take we the final should I crude price, with our we you the have run Texas should our Out us our that it to

is, about that part of the strategic in The third those strong that because it be optimize positions. what way different is thing have ought we three kind I assets don't and talked system those a of provides other in because to levers system current refinery economics owner our the and able as other than good a that our just they to of can simply

I be what overtime, to of we our that many a within dimensions. bit past us fills and we to paced to so established expect relatively be in of business, level over would there business. gap, years spending the may I expect ability the would And choose to it refinery. And downstream other we've within modest. overtime multiple the investments make those we would capture evaluate in gives different the in fit thoughtfully them value our as will a this

Operator

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

please. question Your

Neil Mehta

had question latest In with the project the first and contingency the feeling The well? thoughts you around are on on good the and cost about I Tengiz. timeline as

Mike Wirth

said have a to this. what add we So have probably don’t I lot to on previously

schedule, are XXXX on startup. still we so a We targeting are still

can't has we think very are site now mentioned move We As productivity up, high. are had The but points. our We modules Jay improved. as Korea inland are waterway The very I system good during wintertime summer. from and third the it moving very well call, from the staging quarter freezes quality modules working on through levels the to Kazakhstan. a because Korea from on from logistics arriving Italy

we in see There's to We about this can are project moving be recent if Korea will and he actually terms we lot He uncertainty. lot New to complete to also where of our the last key very Jay the through be have field modules headed the Korea. it there of And good of week. fabrication get year. visits XXXX, week when about in gains the into yards he there is module be March, XX% Caspian York and activity in will halfway be you these give And was where next a year and XXXX upon to a this expectations it’s we will built weekend site to at are. position in a in reduce and fieldwork certainly Kazakhstan we had will stand productivity will visiting a in a exactly again point. and where into what insight in will

Neil Mehta

Yes, think $X follow came up some expecting on billion looking share question, I get To fourth buyback. million. in quarter. want Phil's follow-up: at just to $XXX the the most more on And the we in us were color forward that. to It of

a base big a share the to it. about Is billion philosophy $X flexing would behind more think it and perspective? higher a program, a and view program? load repurchase And into we kind perpetuity, flex into buyback picture how then this granular that think Can are potentially run rate share As but lean talk you about sustainable? from be you our the you demonstrating you program that of willing that about program are had been

Mike Wirth

it. going to take Pat I’m Yes, let

Pat Yarrington

call, the cash I that rate that the When was cash have and through points our our belief up initiated saw you we to confidence keyword in wanted could that this be second this think back we we the increase is sustainable move and suitability with really cycle. were made first here that have billion. generation quarter generation, quarterly the the future to future cycle I the just, our of the in and we what that $X purchase of through view

supportable paid that’s any bit, the in $X billion the so obviously strong because XXXX And off we stronger reasonable thought that We our to had a be prices environment. really still cash price about very in and but frankly XXXX we generation we would and that come little not feel in years to come.

maybe did You board supported but as won’t you XK to repurchase program this talked will that note, fact note, that $XX with we well a release a no morning with has term for an limit. the billion our share resolution

you $XX be that our think that we Yes, have to sustainability. our of that very strong message investor willingness distribution. commitment, about indication view to I to think shareholders intent I the this So our and program boost should billion that gives can about

Operator

you. Thank

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

please. question Your

Jason Gammel

and enhancing returns to there etc. regional out if of medium-term take wondering the just through offices, down ask the cost concentration. out the to right cost playbook you seem I is the taking into a about and but the further is more some of am seems out the the already This explorations of highest-quality of downstream lot be cost Wirth the you a concentrating And further wanted and I out ask more to I of business Mike to upstream, potential reason Company. assets. taken through overhead be question of divestitures with structure shutting have

Mike Wirth

the Jason, I short will yes. and give answer you is answer

can is always that have in And support assets think that. think will you continuous opportunity ways that business to to we call efficiencies. always our I means ways us lot world. in digital have can an There's commodity do only overhead I to in need more bring looking part to and find do through matters but own efficiencies, and seeking you as a technologies a is tell there we control grew what a efficient scale conventional things lower look even ability inherently more of up I structures to our a the done, that, for do in not for analog technology to into a today that into destiny. in business been offers business and continue big I cost really would moving to structure you an

unit this thing reduction when attention in it's unit seen see and cost so come year pay down and your growing you’re significantly. other The cost, another We X% unit or business, to to you look cost we've I that even and other go can cost can to XXXX, more as reduction percent way out even say to the XXXX up or come terms more. the unit as number down of in think important

cost So, we in we need on across environment to to our to be prepared we portfolio. efficiencies not what where are an continue prices work and will be entire competitive to look

Jason Gammel

Foot? Just talk a very quick Big at follow-up, can you about the progress ramp-up

Mike Wirth

well. of very have on online it's November It last performing year. came and well been in we got so, first Yes, the

and and is as completed The that the in going being we first well speak, second quarter. anticipate here we on drilled

expect So we that Bigfoot wells at of will through be process adding story XXXX. part production the the move can of steadily and you in to

Operator

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

question please. Your

Paul Sankey

sales Pat, hi, in that by mentioned believe way. of XXX,XXX Mike. the acres And I or done Permian, about you've swaps You the

leading-edge we returns that might strongly want in concerns basis. perhaps also you there's targets. as your that Sorry, there. terms I for outperforming guess was you potentially you numbers there's as slightly acreage. I on you about not given I of Because are on there? Permian available. talk returns your are be And Can your major final how a fairly that, to about are some guard caught just volume Permian assets feel off performance you where wanted update your an

Mike Wirth

because lot performance out to share you of will exceptionally Permian be we can as in so, the Yes, more strong. detail the see, continues March

try land we improve the got interested With in that finding good we laterals have, longer optionality, is we drilling everybody because large development contiguous currency to have and position areas. that

thing other with pie, our truly to you value so, Midland is the creating we can bigger a trying with enough And million about to creation lots There a these split got acres the our Delaware nice of and is basins, X.X X.X of not with position optimize levers because million which transactions net economic have finite in they transact you're that both. are you for pie win-win people. but and

we disclosed that’s expect billion grow. a X.X figure is currently resource, that to Our there would barrels

better So is and you time about I returns XX% locked higher even laterals we on we or before better price doing. in today returns. plus to be we range that good they are was the It's than well the in strong basis seeing last data else as Permian spoke environment, and the as are of design we that returns, than When confidence are anything very, put have as a moved could out of it you. to our modest in we seeing talk longer very

and are across as and the prepared mentioned returns-driven returns I'll and the remarks chain. returns lifecycle reiterate asset as that in across that, and my We I the entire value of

not the of at looking put biggest XX we little kind you And rigs for as rig fleet. the And through most so to We out are been paused go looking bit. to the system. that several or stress to telling are we XX we online get grow IPs, returns going are you wells growth, years. best the of system We've to you a have the

And the so, basin. thought benchmarking regular standpoint adding point needs we're We anything that proof some will. pausing ensure engage order in in rates performance of from within a this terms that in at to

identify We number that to levels And dimension got non performance into other ventures, improve in I can they have joint using to we’re to get what are continue benchmarking and to at. visibility the doing what are and where every operators tell performing you of better. will we areas simply a continuing intent good really we in operated

March. will lot in our So, about a this more talk Jay

capacity that mentioned have you We value will will a chance we across with been details as breakout into a well. to delivering we’ve capacity chain, session better we give go questions like and situated I takeaway we in But well and added already are feel XXXX. performance the with

to year across the refining will later this chain So we’re margin. capture able margin that and value include

Paul Sankey

the joke them differentiations Permian which seems CapEx to the future. ask to another referring call competitive mineral have of between the on that call with also advantaged got But Exxon's on I flat about be going could the the one major in Thanks CEO CFO. of major Mike. right was also a not might it the there, morning, deals one CEO having there is companies and elaborate your the occur some obviously one. make being but by the to you number that Mike, keeping I just this issues we And of you if outlook. any two major in an near is you potential position know

I you to do would think well that. that maintain

relatively a as is outlook long-term it think I it stands.

going prospects just to you You have downside size? the surprises good your without towards the your of seeing drifted actually very it. that falling of range the the company going trajectory are of forward, looks that and What given for above top CapEx CapEx a growth

Mike Wirth

our things and to Mexico, the Yes, have given to two we deepwater our it's does have a Rosebank were not We Last Tigris a one in because invest We development us lot that capital more it committed can’t within a modest project better good with then of good year will to business the probably our for thing we for same resource else than project, better to opportunities not but someone alternatives at we of invest. generate so rights fits projects, capital not because good but notable return invest portfolio, Gulf relinquished in. examples. are it and we our discipline. there grow levels can

that And earlier other were make so, call really economic shale as continue those came kinds The will thing opportunities, well. in are the and tight to the and up those one choices. we of

us areas does year were are up returns, to for require as ago in spending or And portfolio would overtime based Permian minimize higher you're whether to our with portfolio last And annual. the X% risk, there grows, just short generate in two this highly attractive capital some other cycle years X% X% production, these that to to of talking capital invest overtime opportunities strong modestly go year further so, find we execution opportunities that. we X% growing outlined

grow And our capital and characterized I so, to ability think it. we're you've committed discipline to

capital So well. relatively it's flat

already to we forward the update We meetings. March we've articulated what beyond views get when will

Operator

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

please. question Your

Blake Fernandez

One: and early have on help any bit just you you. for us a out little might days, there, could both questions helpful obviously I Two do but exposure upstream that know downstream you talk about it's Venezuela? and end. thoughts our

Mike Wirth

Yes, I update quick you on can give Venezuela, Blake.

First focused on and and is on. really the most so safety that's of are the important what ground, thing people for us we our

have is that we tell environmentally the I And to you sure want where interest safe also can operations case. and the be an sound. are that We

we governments sure a closely have the We the worked intent new licenses of issued of be that sanctions Department. by the within to Treasury general number with the understand

good and ground. understand in consultation we to are how be the operation for us to are applied. the future government U.S. will and maintain interested I I with Venezuela. be feel has in the they safe continue And say understand to can the on engaging been ground sure our so, position that we stable like very we we foreseeable And to on them operate close a And we the think operation and and

barrels look you tends Venezuelan give runs the of it that side XX,XXX, from ours Pascagoula XX,XXX it at downstream in crude one the is or and run If refinery the take. to U.S.,

time, For clear like prospects some of been the had contingency so have have place. in and actions plans this we

sourcing. have We alternate got

We have for got plenty of crude in Pascagoula. tank

crude got there. water on have We the

our and execution now. the maybe first little quarter for full-scale we And a contingency here into beyond so, are visit back right then planning of a to the and bit balance good

So, we refinery will crude. keep full the the with

able We are we we and will this. I navigate to to going like through think feel optimize

is contractors in only the hope but the of, for and not employees, people stability and ground on the Venezuela the biggest our in Venezuela. Our safety

Blake Fernandez

scope color or satisfy you've think of your this which Coast this The some Or isn't Does kind barrels is it's question: potential small, a that do of or there covered the will the you I you to kind additional get just alluded refinery of some appetite but expand speaking, kind some of to a integration acquisition Gulf Coast there? second The in have so, of potential on of I day and time. a of of additional XXX,XXX is overtime? context size not facilities. for know really we large Gulf Pasadena in kind March. more broadly But think

Mike Wirth

one we to we agreement focused the for it here to I don’t only at have are capture out on. with an on into will really standalone signed I not want of value The network to key that the transaction got value speculate be we is that refinery. a and basis, yield so Pasadena sure I ability it but on And we and think to them that. integrate our can value leave

Operator

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

question please. Your

Roger Read

know maybe all to your has but wait really CapEx stuff look a got take I March, mix. to fun at the to

XX% or the longer. weighting not at Do mentioned CapEx, X-year a the think of as a number parts look so the aimed back the of you years? has CapEx less some of does total you at cash a that that You one: number whereas rest the obviously we within but Gulf deepwater to flow, I'm challenging start to Mexico. mix long-term Deepwater obviously change more over couple signed thinking contract rig next much

that to we come to move the start CapEx? see as do more over more is a on maybe think something we want start that XX/XX maintain next that at like you maybe things Or years? XX/XX the of to level in, as So to several

Mike Wirth

was its very XX% because by makeup. from Roger, shifted watermark long terms has and that in the dramatically not mix down our a question Yes, come it shifted good high ago it’s of and from

and important back to think issues I Sankey's question. Paul both going

I this is think bit million to shrink. I tight. We think us. got the FGP and number We in normal years is than this little shale and which X.X the in and that that tight, likely on $X peak rather spending in a shale get is X.X budget Permian, year other next. on over new for for grow year the And overtime,

amount And $X year's billion in a so, non-trivial this that's budget. little over bit

And things it could the for tight major include and so and other fleet include creates as more that capital room shale or that comes other down, past deepwater, it projects. could moves and

over program have that we underway our think introduces cycle learned deepwater to is I a simultaneously under incent was and the have one On that development past have is of things mentioned, MCP this the that risk large very real. ratable that execution we I

so, our find we to and a have approach ourselves. be intent And as balanced not go to forward would

tight difficult plus to cash door. requires investment, again to trip is really kind typically capital think it's to I that of that that's that because issue risk portfolio, base to skewed got overly manage business the which that and spent So from an and it cycle and go we've shale short our but becomes the in strong

the back future is would be plus range the think that likely today you the opposed we’re I to as that kind other to of see more minus range direction. or the flips in something

Roger Read

the a more about exports a towards And as just then beat more infrastructure about just should opportunity of think to maybe across horse bit to the it part Are acquisition US. and acreage. board? the acquisition we more an the crude refining refining undeveloped and think here, Pasadena as I'm harder this wrong we're little moving some from indicated thinking

Mike Wirth

a couple of port a And disclose system our one it’s That he this tank. is Susan the land. trading asset refinery, was pup and from it's cheapest means I not reason one and goal the downstream engineer said, is our our system, our the the I the young in there call integrate simply have is, lessons in the we when upstream I system that mentioned process access, the into or is but think refineries this of is system. we the learned to refineries there tankage because that, I our times it's of

and margin, I asset building look this are refining offers complex we when the optionality with through and but other in times are the can we integrated love And in through commercial can fall and the across there infrastructure realities create equipment at at there chain both participate and this. investment. so, can on lower are we way the just that to system approaching our up think the you and not And relatively to us that's margin also that value activity value entire capture opportunity downstream ways

Operator

Margolin from Research. Sam line of Wolfe the Our comes from next question

Your question, please.

Sam Margolin

entity it new. has with is it to Permian not significantly. as outcomes Mike, same the cash you going obvious statement the But growth additional flow thing been an Permian like is one about And a maybe might way. is I'm that that of important swing long-cycle the forward a is sort the seems you how say of standalone pulled pendulum ask much think different to in of maybe try But to again not the profile projects. to free or of that an respect

more within these are on all that buyback long-cycle portfolio areas, kind your commented that thinking deepwater just -- on factors Or that that expanding of is in among is are other out sort that or So uses other that something is important, that's all you the have of pointing too? to are about other plan you sort the of there? and thinking growth something about of the and and that dividend cash you

Mike Wirth

way story production for been flow good year we last getting story. lot we Permian. designs, And finding good the our We are of drill did think positive news bit a performance you capital is it. were a basis of the little of more little a overrun are guidance think was about changed the we hole that so in has cash that’s to increase to have of spend new we think I good we more Permian free So can that and our out XXXX, the related capital more I because still

our alternatives year crossover do priorities mindful terms it to very of and four kind to forward. were the cycle. dividend that that free mentioned good going and Having allows that has we creates the flow shares have to for addressed be This reached of cash last also flow the us dividend cash to the to meet free and we to at our growth sheet and have And investment free strong sustain to intend intent in we in repurchasing already I use share repurchases which As cash the to confidence points continue intent look that. shareholder distributions for need crosses are balance all Pat this investments and opportunities. and through over. respect of flow able we we increased the rate the increasing is

Sam Margolin

conceptually? related note; about down this the fluctuates Okay. of I which leverage a just lot. is rate there Is be target think is balance just the a in And there for it is a Or Is Pat. prices sheet came going to guess at something -- function to of commodity one leverage on that a terms here?

Pat Yarrington

of have don’t other are we the generating. the use balance that we previously think outcome sheet how Sam, as a we of leverage decisions being rate, the target outstanding we cash about

the environment, some. use and maybe when leverage past, balance your you And have stronger I the you environment price obviously price you back during on a it said As in would cycles. XX% the build ratio average are the some sheet through in weaker

And feel balance an period a us to through trying for it’s trying what share allows both think repurchases are we the the to kind sweet sheet, good a sheet, I that’s balance in. of that’s spot that really those Having that insurance And play dividend of any area price are So, sustain or good important sweet having -- a we to that’s component. good and we weakness. policy.

Operator

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

please. question Your

Alastair Syme

makes really Thank on that of you. and state was you market your the It plans. Coast just one think view how about the Gulf chemical on polyethylene potential expansion

Mike Wirth

the states. and opportunity particularly positive very petrochemical still investments We’re on the here in

quarter here think third recently good long-term in margins We've seen I feedstock some a up. on the pressure were it’s costs because story.

I ebbs things cycle in have economy. with commodity time markets long in kinds chain been these pressure, for and the happen but the in flows of bit and think projects, of under all margins little

fundamentally hasn't changed our the that of So, sector. view the attractiveness on

Operator

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

please. question Your

Doug Leggate

it line to absolute you that off with you trend, CapEx anticipate you And about this getting idea cash the at billion these again spending are holding given might rolls the thanks Mike, on that so Can an affiliate my cash $XX the least Tengiz time give Mike, the how to you spending XXXX? do Pat, question appreciate through you completed, on as $XX $XX-billion-plus billion we calls, spending. for doing always talked of be us actually Pat. for around.

Pat Yarrington

we I C&E. toward think in as although, and Mike, as verses potentially cash split XXXX, But production answer opportunities a off didn’t the move other TCO's in headline total that out would question where have there come investment first we see CPChem. way, affiliate we spending you be

example. what particular that investment occurs of will difficulty] a so on made [technical decisions that be category And how are in function for

that I not project any it's certainty. degree with of something can So

company you want be longer both, of on about and will think through how summation operated, certainly, the capital to fact that say that I work billion $XX to update opportunity to operated I here of is period prospectively an what we the billion of selective into a you for and near-term is discipline and staying read time. this would very all have that owned we in But think what’s our that $XX judicious affiliate and theme we’re owned projects in the I the is and March very additional queue. range give an important we

Doug Leggate

lot much were cost if My I know spending guess. it's that PSCs. oils, XXXX, variables. barrels a created lot in you included, through a And the of of of assumes higher some tough of big yourselves back levels are answer, XXXX, obviously follow-up go recovery all than XXXX, related, a we one today. that one given But I XXXX, XXXX, the is to kind to

Thailand, would look recovery some appreciate start you that, if see that I do in levels? it. my these the can, to how is of offer CapEx barrels can as extent guess you your to off? maybe tail Do And you light I trending at see if So barrels forward maintain question you of entitlement quantification cost we you

Pat Yarrington

Doug, locations you across portfolio that. I our of numbers in isolate don’t got the think that on recovery Cost we've for applies we here. can here number

of happened aware obviously what You’re in Indonesia.

So, think you that on I have a I pinpointed can that. don’t give answer I

Operator

from question from line the next comes ISI. Our Evercore of Terreson Doug

please. question Your

Doug Terreson

still active a a also decent of the years, have have but of about on the in you Mike, divestiture optimization you question had left amount a value And queue. I guys part pretty plan. the have portfolio point, over specifically and program the this

your the program has So market the for question. is do this or during consider kind of it assets cycle because are the to is, Or really is guys you market else? trends is on experiencing it So question softened color you the my and business divestiture somewhat? something course normal be any of

Mike Wirth

Yes, I'm you with not a XXX% tracking I'm there, sure Doug.

of this had but portfolio. it’s it's high you always and are in lower, program little little bit have a there times continually business upgrade divestitures, and to times We were a looking your

and that portfolio then some stepped we We remains that alignments we a asset, mentioned away of Divestments the they have for particular for broader future, view value. strategic our our fair mentioned there as it and our are portfolio that earlier the capital cannot of resource I will within things receive potential compete can got good and compete that I things capital. now we would driven are couple view on by didn't a really because And earlier think are attractive. with from things

little a maybe can of But that a I and you that what's to a are in portfolio. high-grade So price. commodity the forward function the continue to of position we bit us view think macro environment our expect on

Doug Terreson

Yes.

have should maybe it Mike, I differently. asked So

for that you So if think way seller. guys assets it were good experiencing healthy seems enough about are it? appetite Is you a like to a

Mike Wirth

very we we are right to receive value. good now to we talking likely about everything Yes, are people think

Operator

Capital from for last comes question line Biraj the Markets. Borkhataria Our of from today RBC

question please. Your

Biraj Borkhataria

was figure, was of there, the few moving on I of last particularly you the revisions terms that could XXXX. In years. XXX%; had some impacts you. Thank key It of kind a the XXXX what actually disaggregate just impact from trajectory in you growth impressive parts the the And replacement. then the on where. XXXX, if given to pretty price reserve over was wondering

Mike Wirth

from shale have Australia, did Wheatstone, so came Asia, board our shale Canada, unconventional some Permian of strong primarily these the we've other we contributions but basins Gulf in about Mexico, and tight, so, and through across and year, our been the Yes, another ads largest of activity talking tight Gorgon and Eurasia. other and our through

just XX barrels. small relatively was than X.X barrels on barrels price. million less of XXX sold negative million produced price We billion we about revision Our short

lower was big big attention are So, They there quality a with we execution thing to call and in bring reserve high unconventionals The geologic others. that I risk risks lower that’s addition. what impact not and have from so we them is lower there view contributions lower as very your were would the price risk and that had barrels prices. one piece, breakeven while

and hour. to of the we Chevron appreciate of everyone's thank have the go time so, on a good forward City would reserve want of I we quality in that many particularly to top for your March. And is and everybody all in participation you continue in forward the see and to your given improvements portfolio activities. very I much. expect of see the that story not we look All replacement as Thanks strong continued conventional right, York I today. on our the development call, well, interest New to

Operator

conference XXXX concludes quarter Chevron's this gentlemen, fourth call. and earnings Ladies

may now disconnect. You

Chevron (CVX) 1 Feb 192018 Q4 Earnings call transcript