Chevron (CVX) 1 Nov 192019 Q3 Earnings call transcript

Company Profile

Participants

Wayne Borduin	General Manager of Investor Relations
Jay Johnson	Executive Vice President, Upstream
Pierre Breber	Chief Financial Officer
Jason Gammel	Jefferies
Phil Gresh	JPMorgan
Neil Mehta	Goldman Sachs
Paul Cheng	Scotiabank
Devin McDermott	Morgan Stanley
Biraj Borkhataria	RBC
Doug Leggate	Bank of America Merrill Lynch
Dan Boyd	BMO Capital Markets
Roger Read	Wells Fargo
Sam Margolin	Wolfe Research
Jason Gabelman	Cowen

Call transcript

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Operator

Good morning. My name is Jonathan, and I will be your conference facilitator today. Welcome to Chevron’s Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ remarks, there will be question-and-answer session, and instructions will be given at that time. reminder, call a being As Instructions] this is conference recorded. [Operator

Borduin. call now of the Wayne turn will over Chevron go the Mr. Relations I Investor conference to ahead. of General Corporation, Please Manager

Wayne Borduin

Jonathan. webcast. you, call Welcome quarter third Thank earnings Chevron’s and to

with available are Jay call on and Chevron’s of Johnson, the to today We’ll CFO. website. Breber, refer me slides the EVP Upstream; On Pierre that are

the forward-looking cautionary this get on presentation reminded contains statements. started, Please and projections, we review Before X. that other statement slide please estimates, be

Turning X. slide And to Pierre?

Pierre Breber

Thanks, and Wayne. strong We had another quarter financial of operational performance.

results: First, quarter. were $XXX an overview with a of our The associated included accrual billion financial share. $X.XX a quarter's cash tax results Earnings per repatriation fourth or the item special million $X.X in

were gains the million. exchange for quarter $XX Foreign

items presentation. were found can measures or FX $X.X of A this special be share. and earnings to billion reconciliation appendix gains, per $X.XX non-GAAP in the Excluding

operations was $X.X Cash flow from billion.

a balance debt also We a low ratio. strong maintained sheet with

strong cash Importantly, shareholders. continue significant our flow deliver to our to cash allowed us to

returned dividends we shares, paid of dividends $X.X repurchased $X in and over guidance share Year-to-date, billion in repurchases. run $X billion of billion. we've quarter, our billion rate line $X.XX repurchase and with in share the annual approximately During

below was CapEx includes billion. $XX.X unbudgeted, ratable organic which Year-to-date $XX billion, our Total are of $XX totaled CapEx, slightly billion. budget inorganic that transactions

to commitment firm capital. to improve discipline a capital maintaining are We on returns

Turning to X. slide

operations oil received we prior cash Anadarko. of strong from of annualized from funded highlighting yield strong, of ability was about the have flow Third to basis, lower nearly all fee down price flow generate $XX four With an the due environment. financial of billion currently billion cash year-to-date $XX cash a On to in prices our from quarter absence lower cash quarter in X%, free the free our flow, nearly priorities. termination a flow Brent and

in is working Brent. dividend cash the breakeven price, Through capital quarters, flow company's the three low the excluding XXs

portfolio. beginning cash closing our the add XXXX, low by to the $X sale Since asset and expected guidance sales proceeds and year of billion high-grading further positive totaled will to sale lower our of billion, $XX Asset our after year-end have of flow range our breakeven, the end while be we to U.K. North near $X with the billion Sea the go. of one assets, proceeds

X. slide to Turning

XXXX decreased about $X.X $X.X versus quarter Third earnings billion year. prior billion of

to offset liftings. Excluding prices, and due lower special gas declined higher items upstream and by FX, partially earnings natural primarily crude

and costs, Downstream versus by charges earnings variance also turnaround maintenance were primarily reflects driven and chemicals lower year. last lower the other higher Southern volumes Africa in down, corporate to divestment, lower The primarily due the segment margins.

third slide X. Compared earnings second by decreased the quarter to to billion. $X.X Turning about quarter,

and XX% since the to tax charges were stronger and and Excluding lower turnarounds. a special results due items. primarily the primarily FX, the FX, marketing items Downstream in offset quarter. corporate The lower, other partly Brent prices of planned and lower due impacts chemical earnings, to refining by segment margins margins, excluding variance second in reflects upstream decrease improved

I'll to it now pass Jay.

Jay Johnson

the the increased the Barry ramp-ups at as downtime Permian oil in production from following capital by well major asset in and Thanks, slide partly Hibernia, projects Hurricane as shale production and growth production quarter Gulf unplanned impact Pierre. X, at offset X% Mexico. higher tight of a of third On with ago Foot Hebron. and This the Big was to sales, year higher equivalent compared

Turning to X. slide

bar. higher production, which shown guidance our X is to a turnarounds than middle million more than the X% earlier about with sales, excluding asset is at consecutive as XXXX, despite strong barrels was day production quarter X% X% fourth and for planned Year-to-date the of impact quarter Third of by sales. consistent the asset

quarter, fourth as growth Hebron. our the the to be ramp-up continued shale as assets to of we well driven forward primarily and expect production tight by Looking

provide on X. project. the Turning in wellhead and pressure an the future In update cost I'll review the growth to management completed third TCO and schedule project of slide a Kazakhstan. quarter, detailed we

result, cost estimate the the updated $XX.X contingency. been in $X.X an has to additional with a As for project billion billion

late has The shareholder has startup remains updated mid-XXXX expected TCO for schedule submitted shifted follow start-up on of estimate approval. and FGP will for been now to WPMP, by which The in XXXX.

waterfall Overall, the the increase is cost estimate. updated of shows the in drivers The contingency about key total including XX%.

and discussed higher on impact As two-thirds original fabrication previously, costs about engineering engineering the contingency. consumed of

More higher revised of which quantities for instrumentation, complex work increase of the one than is represent originally originally than construction estimate. completed. Additional largest the work of due engineering costs the estimated, driven cost category last electrical to was unit the construction more of market and higher primarily The in half rates construction higher by including scopes balance increases is than rates to be to the due and anticipated. significant

costs, is a primarily by FGP remains delay many years. for flow that's and and cash other operational generate asset costs Despite team. strong and category increased to schedule driven world-class the the Finally, project TCO increased owner's the readiness for schedule the expected

on project Turning completed. approximately system successfully the Drilling as ramp X drilled Detailed engineering of is impact risk and the foundations working are to of X being procurement is well restacked, on Work of we the fabrication are fabrication essentially complete. ahead delivered, slide yards XX, XX concluded. to expect XXXX XX project. schedule mitigating Modules beginning planned. wells set has and or and sealift The with at is XXXX, down the XX% as complete in The and we is construction. further the of spending complete, complete. logistics

completed start-up remaining chart of capital scope shows spend. lower now and with the and on The resides construction Most the remaining the slide activities.

experience, full completed, with on Given updated we including the of construction to believe in the work project the estimate. we're track on-site two deliver years line

Importantly, capital guidance. we're not changing Chevron's

billion for our XXXX billion $XX and $XX to the reaffirming for returns capital of XXXX We December will remain billion, $XX announced billion Our XXXX. discipline and capital to range we're to in $XX of our through leading committed shareholders. guidance to be in delivering be capital

commercial some in our developments recent highlights Slide upstream business. XX

a announced farm-in recently deepwater a blocks take in in interest XX% working Mexico. three Mexican Gulf we to of the First, agreement

recently operated also to in in XX% Brazil's working three Last week interest the first exploration in portfolio. non-operated and blocks. our to and additions two agreement awarded to the bid participated sell excited XX% which these transaction half our company, in round were gas XXth the a we of the fields We in XXXX. the We're signed close We're an Malampaya expecting to interest Philippines. holds about

to Now back I'll it turn Pierre.

Pierre Breber

number to lowering aimed the carbon related quarter, this Earlier of XX%, reduction at years and by our turning we to a intensity The to of highlights XXXX reduce addition period. there gas emission And in our of beginning month, Jay. emissions new we Thanks, between flaring methane our reducing time to the the intensity oil set X% to the XXXX. by same new two XX, over and slide at These our emission the year are intensity of gas this are goals. goals intensity to X% and X% greenhouse in were operations. targets the announced

Gorgon's capacity. the COX to In by are projects early this started process the carbon sequestration full will Once project and project. one gas injection over up fully about Gorgon Australia, greenhouse to the and of up life in is of reduce operational, world's XX% be in expected of emissions we ramping it the the largest August

underway construction is to farm, electricity Lost in solar will California. a Lastly, on Hills XX-megawatt which supply new Field Chevron's

of the full growth Now expect middle in looking to XXXX be excluding range, production ahead. XXXX In the asset year upstream, to X% we X% sales.

are Brazil, year forecasted full sales, impact per Denmark day. to Asset in have XX,XXX and barrels near primarily a

Planned fourth in quarter barrels impact expected the than per by lower in the primarily quarter, Gorgon be but more will than turnarounds, are production day. and Nigeria, to third XX,XXX

Jay in to unbudgeted. acreage acquired earlier, have As expected inorganic is which is $XXX that new add Brazil mentioned capital, million about we in exploration

co-lending we to to billion. In Thailand Full billion, be the refinery we to payment to high shares the in fourth includes below decision. repatriation full expected $X.XX refinery-wide SPRC In the quarter, repurchase tax turnaround at of every once million five year related which activity. cash dependent the make downstream, occurs and the a years. quarter expect guidance of expect $X is turnaround $XXX on year distribution This fourth primarily TCO

I'll back call to that, the over hand Wayne. With

Wayne Borduin

concludes do have Jonathan, our we We're mind now full one so Thanks, the follow-up. a best open of please prepared Pierre. questions remarks. to That ready answered. limit that your in Keep yourself take our lines. We’ll please to questions. question all queue, and your get do one to

Operator

Thank you. [Operator Our from Gammel comes Jefferies. of line Jason from first question the Instructions]

please. Your question,

Jason Gammel

Thanks Tengiz budget. very I related updated guess question to much first the guys. the

co-lending the the that anticipate already to Given effects in years? the you, going that on of significant spending to you'll you a is have venture behind lot this is be making any the do coming that

maybe in this more quarter I'll question what anything turnaround given out ask there robust or now. my maybe that that's relative The just just heavy just was pretty U.S. the downstream is it have schedule. to second margin a I expected earnings would Is that environment helping then ratable? you And were downstream is else happening

Pierre Breber

All right. Thanks, Jason. Pierre. This is

we co-lending, prior for years. So, next quarter, provide as in XXXX have on we'll guidance

depends dividend quarter but that in full it and XXXX that oil co-lending spend, expect higher. depending vary co-lending makes, the the of the As it's dividends. guided decision prices, the billion, is quarter the three lower, so the $X our be you than If dividend TCO And fourth on for environment factors: co-lending lower capital I lower. higher, the primary know, the to fourth will if on macro would be any we level the year be would

this it cash if have impacts you look how go flow. co-lending, So, you at really overall to back to increase as cost

higher you program. Chevron co-lending, dividends in will our clearly in higher offset because to lower hold we're cash, TCO capital going costs and does elsewhere constant, capital that So, to result prices if but the not translate increases in

the And TCO we're capital But and to of and co-lending. it help our that which so, TCO have we into most co-lending spending. of is our if part you will cash because cash be it's offsets non-cash way turns share the capital CapEx, will finance think that again offset to higher elsewhere going program, spend economic remember, in

and to margins we point quarter, space. If a have in more We've little out popped the we really the up that can we that there's bit, some Downstream isn't I to. -- that in production had in to underlying tend have -- margins go don't inherent distillate nothing

system. we of Coast margins some times would at environment. attribute are rolling in West operated the performance effects to seeing quarter, largely I but the the mean how strength in quarter some IMO through margin of You're underlying the third had I the

Jason Gammel

Very clear. Pierre. Thanks,

Pierre Breber

Jason. Thanks

Operator

Thank you.

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

please. Your question

Phil Gresh

Yes, morning. hi good

to the about First question, this you're overall calibrate here talking high end will here -- $X of of you to plan, not to affect it spending end and fact the that about? incremental the CapEx CapEx we to within at within is perhaps we're just increase just ranges being coming ranges able it do CapEx elsewhere you that net budget? activity Is Chevron $X is Tengiz idea of how or Thanks. or low billion spending move back ranges to just are the billion the now capital offset talking

Jay Johnson

Phil, that different places to. couple we a of there's look

will First, and to the spend. offset TCO itself in increase FGP in the some its base offset of capital has spend continue

us gas-related relates for investments, have that able a investment things Beyond of within and was and program talking scale a now this particularly that fit those there current in that appropriate, are the are environment adjust flexible with and we we're set, activity, pace we as to levels of have as Pierre short-cycle lot done capital opportunities and may that though much we some about, to anyway. to program it more to back as

is the throughout And then thing capital driving business. just that the the final we're efficiency

base been very Our business performance strong. has

initiatives We to spend trying effective. -- our our make have digital more capital reduce

out with right ways people less. more so, across the And figuring are do board, to

the some at give spend you capital of Bangladesh some add incremental able debottlenecking additional was on adding recently, alleviated doing plateau compression, example good production to to where capital in making on and perforations existing need project. for wells, extended a recompleting the which the and instead look some major facilities, some project was a another I'll team

returns it's going and given types to do are going constantly really focused spending what's delivering So, the as these ranges We're remain you, and we to working going it We're that through capital within stay allocate of disciplined. the our on are each decisions. stay our year. to we're we we to we've driving look while that value capital that

Pierre Breber

end the and go of And that the the if from just offsets talked we off of can low Jay very answer intend to about. I specific. intend be has build do Jay's to not just to there the range. end high find No, to way through We

have out can XXXX. Oil cyclical It range prices change, to We a because we're is giving guidance COGS business. change. a can

can as flex or have We that short-cycle down, up we capital Jay mentioned.

intent of there still offset keep for elsewhere. increase for, the want our intent So the the and to range we what range, to is it's

Phil Gresh

were things fairly Okay, rewind I some follow-up all year then, so ago, a were here XX% which Thank increase, Tengiz Day, we guess, And Analyst getting a in that And right. back of on you the that fears tone things that just that track. or sounded just for there behind would then Jay. for color. kind be trying to and bit the were to a back I'm is much back at better now sizable. have a

how a the you. of have you So could have these about that I'm Thank just point things this we color little kind bit to more progressed increase? hoping provide

Jay Johnson

Yes.

changed is completed quarter. detailed third what's and we a review very schedule in fundamentally think I the cost

late So late of like past. that completed. and had we've about that a that's of to of program X. and frankly impact What engineering how the quantities to it. things -- has and there and the electrical engineering And of you the fabrication can looked gas, going instrumentation, about couple of overall we on surprise quantities the the in and just program, construction. related in X at see two some consumption we're as been contingency it, key increasing accelerated that particularly seeing engineering, And changes in the slide And was fire the coming the that out first a of the the in page was we're the that bars past controls, We've reflects were talked do those with associated talked cost the really elements. stages backfill of

And higher than much that we you construction Those had costs you bar, a see at drove represented. third anticipated. look if the

had to having start-up of was, by an FGP We fundamentally surprise big to modules. driven the integrate planned is by other The This year. delay change. the really assumption

Our about months of it's one taking on until its in integrated. estimate was from the integration time FGP, placed was based the XX modules it the foundation each on fully

as from we're While we're out. changed just seeing our the this basis, using XX year a very come we've pushed fabrication that planning ME&I yard, of complete our modules and experienced that as has year, gotten time view months that's schedule

So been the and the really we didn't in previously. that have the longer quantities growth anticipate surprises schedule

So are that's really point this where we at in time.

Phil Gresh

Okay, thanks a lot.

Jay Johnson

Thanks, Phil.

Operator

Thank you.

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

please. question, Your

Neil Mehta

you. Yes, thank

first and glide the just Permian So on question here. the path the

Permian trend You any would about you is some of Jay, any your continue to in about, acreage? detail the this U.S. levels. impacts above upcoming you the the with just And plan on talk, Can your and that have progressing think how you election? sort comments way target prosecuting

Jay Johnson

performance the with in start the just I'll Well, Permian.

And performance improvement we Our our and efficiency. view, drilling, know, in focused and very seen be have in been returns you on to particular. as disciplined has continued

remained throughout. Our very strong completions have

from longer watching we're chain to boards the so of fill acquisition segment the the and of right through efficiency, actual and checker the laterals, every the completions, facilities allow the the -- And on some into production. land in drilling the value

And the then, products that realizations marketing our transportation getting can highest we to we're with producing. ensure that group working for the and we're

with we as we're performance. actually, said, performance better doing seeing, with We're we're on our we're We've always plan. the well So profile. driving production but pleased for very that

effectively. not And more U.S. millions benefit it's It's all country, really companies In the world. of only We -- It's involved. upcoming huge done done the about around look, but safely. economic in an it for election, learn hydraulic for for economic been well terms time. of unlocked has as done the fracturing the wells, the as the

proliferation It's always of some environmental which benefit the to a great benefits standpoint, for unlocked also in a but U.S. profit from the of terms isn't fuel gas, our it's

we is standpoint, is our XX% our unconventional that and from it that Mexico. at look in land you New acreage all on federal less If than about company Permian have of of

restrictions not like kind hydraulic for from any a fracturing the relative context our of would see to -- it's company. that's we while standpoint, So on

Neil Mehta

the the called some there great. to rights some thinks context of then, it. years? you aggressive couple Brazil. that's and and Appreciate exploration being in of Can increased over follow-up of out next There's No, provide the And upcoming the Chevron related is sees auction you transfer of terms that itself acreage here your about Brazil it there. way how

Jay Johnson

the before over portfolio very you to of that doing up Well, we of several base. talked a And has we've that of as years happy resource exploration our part been lot know, reload really last with work, clean portfolio. are actually a strategy. our been We've our existing

happy future. over space, for on base, But because want out have resource in reloading the of And focused period capital exploration to primarily also the with we're because time. our we're additions resource looking our manage we the in we

So and what our has that us has our on do seen you've way. in Brazil opportunities. focus focus That's exploration been been

interested in It's we'll focused and as pre-salt hydrocarbon that. are place be to see success the we We good basin. a on the Brazil, exploration prolific probability stay to of a on increase because

primarily up next continue to on We We're good results. have seeing we wells But looking exploration, as those a will of forward forward. for year, wells be us. which to couple look coming stay we'll focused

Neil Mehta

Thanks, guys.

Wayne Borduin

Thanks, Neil.

Operator

Thank you.

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

please. Your question,

Paul Cheng

morning. Hey, guys. Good

Jay Johnson

Hi.

Paul Cheng

to a that further and something also in increase. and but process? of have the in working Jay, don't what Tengiz us order there for to terms – for execution the beat you stage on have for Clearly, XX% want that have year fine-tune not development at to project was learned dead from Tengiz, horse this delay to your

we So learned? have what

Jay Johnson

all do we our make to all and can try all very I'm past a those this a the have sure go the -- learned how taken good from is question. time, better? into because disappointment. each Paul Well, building as We time it's Clearly we this self forward. project we disappointed, ask the lessons we're

planned to particularly And I'm fabrication yards. well. what's in have think coming the going we a complete. are out the the exactly accurate been dimensions on for we've to and been been to this is When performance with foundations has is their has logistics work effectively modules flawless. gone work site up. way There them very had able about everything the and The the well. we it's The set very we lot of the complete happy dimensionally delivering gone lining how The execution system modules XXXX. and is very sealift

So we're all happy on those fronts.

fabrication is unhappy delay schedule with that only a performance and with been disappointment lot a saw And the do and had said, the we've project. we engineering. engineering impact themselves, overall quantity we've engineering growth on construction. this in the Not has to on the as but The it's costs

in forward. in We are lessons to to need And any large do that We the don't projects going this that it world area continue better it's this have the from to land-based time. and like we're an anywhere other this current build area. mega our very learn at

got So take really and we've think learned approach about in we future. this lessons the differently time these to how

Our remains capital on commitment discipline.

of this our the execute to project remains commitment best Our ability. to

XXXX, improvements and XX% in the we've this on improvement we that improve the When XX% to site. XX% year taking to productivity at we talked needed to you look another saw productivity a seen productivity. Tengiz, across in In ground in the improvement XXXX in XX% we place about the

continue completing completion management mechanical improvements system, systems on And stay through moving then going production, on we're to production it to and then focused to start-up. getting productivity, and completion great to and construction systems. seeing work the we're the management So with it

Pierre Breber

just answer I if could off And Yeah. of Paul. Jay's build

put the depreciation share or enterprise Chevron change after than is to the this perspective, Just $X in than prices. oil additional cash tax impact to less of an per in less $X.XX flow

said, do put in company every for Chevron. this we're we to this better. means trust And So did me; as want like fighting for own perspective to Jay and dollar. need I But what we a

Paul Cheng

when on think I this. you're I Jay that the engineering understand. But unhappy saying you're Sure, about

but internal an guys is external it it the an contract not or is So you that just the upon finger, issue, use?

Jay Johnson

You're asking…

Paul Cheng

do to will really going are How learned? say learned you is in be able the I I what it what future? have you but you And mitigate -- the from -- that, mean we change exactly -- to mean be? that you what how

Jay Johnson

a make engineering From Paul decisions we're engineering in think trying that do own the amount project standpoint, I and to are that of have terms around design back they couple is we we see to things. variation in-house more engineering. more minimize our And we of focused doing development early an with team's One, each the capabilities. of bring

of I a key part think that's it.

And there I think going context the be the to to to I project opportunities also think this It's I do our on also think looking the don't it's built. for the total important. industry at engineering. isolated improve are in of company. necessarily environment, is

there's these done understand we as to for engineering necessary So the are programs how that to and better really be projects. work prosecute define

Pierre Breber

And don't Jay just this projects is if Q. -- I in we said like can our have what

you than very coming tight facility look it capital ones different very we good are that going lot but program, to spending projects to shale are some of are fabrication drilling A side, up a standard in deepwater lot capital, is and our the at have on be major we're they're projects, completion, tends yards. and base designs in capital, these. where the capital and of business If the

said, ones. land-based record Jay locations, and track a in remote As have those not it's better projects we in

than place again, perspective, investments are this better. From we of been. portfolio, the has an do to We're from different that in need learning hitting the least us where project enterprise So, a are front at it.

Paul Cheng

that think will return internal return much And -- on Jay course, project the low. they pretty once of before lower. the rate cash Tengiz the I is even the My Pierre, actually come question, onstream. increase, cycle flow be this of great full and capital cost with in is final that, But full

more say, you it to a want guys long. that Is certain whether project? factor of flow, return, for cash is how or sustainability important go and the cash a you with way the flow the when is determine which internal of So

So I'm to process? that trying decision-making understand the

Pierre Breber

Yes. start are maybe capital. add about all and and I comments. and talking you've heard, Look Mike increasing some I'll on Jay mean, will myself, Jay returns

on focused are return the we on investment. So

at again, It we the we some you returns, but a know than both But are is, financials share. it's that once like dividend I that, And kind dilutes share fundamentally cost of is looking to so at to impact on a stating on have at company we Chevron, that, looking the of it. cash the $X.XX And rest give, the support we're lot and and I less again, increase, and characterize think buybacks. important. Tengiz what taking tried the obvious across that actions offset the per helps a of also the returns pay are capital, portfolio.

Jay Johnson

Tengiz, oil handling, It the FGP our there. gas performance not of maintain in it in is this for it just I facilities that see been of the time, important lower an pressure the would back same and your on reservoir the a know for Paul, on all Tengiz, the provides but it just wells we addresses an I incremental aspect helps as declining the performance. reservoir important long project, the for and existing well views will overall say this which have does platform, is excess project particular which pressure as unlock pressure production

milestones this debottleneck was key offset. as decision be the achieved said, that of pipeline. at ways can And one we're also, Pierre to There was CPC looking the that the

will seeing mitigate open so some and of to And improve boost going some cost. that's additional that and on offset export the realizations and increases capacity, help up help we're which project returns

Paul Cheng

all. you, Thank

Operator

you. Thank

McDermott comes question next Our Devin Stanley. from Morgan of line the from

question, please. Your

Devin McDermott

morning. Good taking Thanks the question. for

Jay Johnson

Devin. morning, Good

Devin McDermott

some I to on from earlier. discussion follow-up wanted of exploration the

I You slides, active bit and and the you also about the well. but the talked leasing additional some in of Gulf think you've Brazil, in of in highlighted fairly blocks Gulf as a offshore U.S. been Mexico little release Mexico,

and the seeing here where and most any, here, back that talk step larger be options on I that the bit you potentially a from So desire, pipe? you're capital the some and projects to going growth we're tight, you opportunity strategy great. from think diversified to more color little offshore there but look away if were shale would and in a at about can mentioned little more the As overall

Jay Johnson

the question. for Thanks Yes.

have some of in the of And interested U.S. this to sector So knowledge a of in Deepwater in Gulf have Gulf Brazil, areas in the Mexican plays we the the of of Mexico. addition the we deepwater very already been Mexico. on of lot the

So some bid acquired in complement additional we'd and some nicely these blocks into we've recently earlier farmed blocks round. an

highly-prolific strategies move more probability really our be of areas One exploration we has the basins and our initiatives to and frontier consider been highly-speculative focus that to really areas out of of that the in increases our of success.

what of use this we're goes that opportunities development. that, the the amount really the new explored and in some trying under up XD only that seismic capital is for early time, doing of open lightly to balance we're same At to or fact

And looking far how Gulf of push of avoid our we a Gulf of Mexico, U.S. infrastructure the blocks in existing brand-new U.S. strategies back tie to the exploration to lot around build opportunities having and to envelope we're the active. In one very to and we've infrastructure key is or focus been greenfield. new can that existing discoveries of

example, about production that capital and to It's with close. operator, be, brings new discovery examples A Tubular for couple very another very a cost back tie at the short-cycle low heard Bells. of It would in time. recently will very that you with Esox of

extending strategy by the So the the those I Mexico. kind about our of and of exploration said, low-cost are also We're enabled talking in high-return some U.S. are reach, subsea technology. as Gulf that new being supported tiebacks through of that

technical that we've and existing that used Malo and pull to production ullage. move we floor really and We technology, radius, single pumping quite hosts now successfully can that certification and phase pumping to of the multi-phase really which Jack have proven finished back have can at pit the to St. this extend

prolific in basins, entirely in So of infrastructure whenever more also getting out line but it's and our facilities existing possible. existing utilizing with theme exploring of our

Devin McDermott

on my response is Great. an efficiencies the seen mentioned across mentioned some in also we've across area incremental you remarks. success I you it. comments And Got portfolio, the of it your things around realizing of the is in think one the to prepared second portfolio as pressure. where cost the And Pierre, you're Tengiz's

bit you the capital on response extent the a elsewhere also, I was And the gas on these is, seeing pressure? portfolio. where So detail North are to more efficiency Any back hoping additional Tengiz's America, the improvements. portfolio where in cutting within in then get areas to you're that specifics capital more in gassy to in

color would be well. helpful there Additional as

Jay Johnson

Sure. happening honestly, across increased board. quite efficiencies, The the are

units performance of our some new Angola, better example, of We've in to developed opportunities great are past. base. seen continue improvements drive for All how the have in particular, the in by investments to some using out we've on existing our installed made where really focused they

a existing around of many strong facilities. Angola, lot be been government But the Angola cooperative tied it flow cash unlock saw very world. of happening with to of We the really reserves back is coming good a to out can marginal work of and there's that the our

barrel, for seen deepwater reduction were our to under Mexico to in and Anchor the which in barrel In XXXX. The in range. and a Gulf a of that where and $XX to targeting certainly $XX terms the $XX down the is come we come down cost Gulf from OpEx we've a has we're facilities like now just where unit we're of of Mexico, significant Whale, targeting development new projects

practices, these on we're sure to we adopt be the it's and cooperation forward. more even learned, them really We're in make great units that we're our sharing taking across it's but between other as another company going thing to these lessons best to one we're areas that business seeing share, doing to focused move

efficiently. do quite All in isn't of response us this of context rather this to that's it to the in and Tengiz do Tengiz. it's this just But think I allowing environment

do our with on this SAM, Security capital we'll in and at potentially In Analyst something terms in That's in announcement that specifics the more give of year in the be we'll our capital in on we'll not we Meeting that each changes. course the discuss color of the where year. point early time, December that but program making

Devin McDermott

you. Thank Understood.

Jay Johnson

Thanks, Tim.

Operator

you. Thank

of question line the next RBC. Biraj Our from comes Borkhataria from

Your question please.

Biraj Borkhataria

my taking thanks for Hey, question.

another board on taking the was XXXX XXXX, Sorry, would mentioned increase that quite coming productivity a significant that improvements Jay, in the on ago. suggest I have Tengiz. CapEx but time one you long

these on guess on years question. you're got and Pierre, experiences just your the projects. first twice I share wonder my the these this Then today timing That would at back, had I to that last at follow-up. about of these. So if the you just increase want But comment some you of embarking make a the think fair step with in taking and I've few Thanks. these that. CapEx of of issues future? look you've types be signing major projects off scale another of square

Jay Johnson

So on largely Tengiz site the are the contracts at productivity rates. construction at and the unit

work relates of productivity to with important, ability additional we and So because the is numbers we've to work time we the the being having that of planned, there's because lot pay indirects And a got. the the But schedule frame add it that and labor. based are come the people underlying on in execute that direct installed. with finish to the quantities the

And because really higher electrical shift has you the when in So been past surprise unit while that's about has quantities, work. We've place, it's multiply our quantities manhours. been on the mechanical that instrumentation in in the rate in talked really times complexity in what's of in unit and But rates the costs the resulting for cost. increased the as said have schedule. the the the were I bids increase the that the those rates some

with what how that in I you square given out what we've completed. really detailed just the the and and past came schedule So review that we that's of cost

Pierre Breber

Biraj have have a time. deepwater terms think tight And I hopefully in is What like Kitimat -- Yeah. WPMP addressed queue. mean, lot this. other we some over it's and lot we base here projects and of shale capital, but STP being our of projects worked not I I business in don't a ready. of is

So look portfolio that I not have now speculate it. it's choice. right as going we to understand your at I But don't question, I'm theoretical. our about

business long going in we're learn to it. be said, a We're from going the time. to That

don't that land have we this decisions large but based better, do project. any construction to capital have We scale immediate are in

Biraj Borkhataria

understood. Okay,

cash, easier -- or tax that to you we tax be cash is follow-up, in you. to that it Thank these a of P&L but repatriated charge? the question, whether should confirm hopefully, an the Just on or expecting just one-off, was Can are expect more a you future?

Pierre Breber

Yes.

question. for So thanks that

management previously decided which cash review this repatriate we was So, completed the quarter a cash, in and no, to third unremitted. global

and outside to completing we be and state U.S., earnings So for the accrue expected invested withholding why didn't this the prior that's these were to review, forward taxes.

made accrue we when it, when the we the decision to that's tax. So repatriate

-- quarter. a will lower cash So tax, into actual U.S. but balances, cash allow quarter. fourth movements, so it payment lower cash We third the the balances. will was And non-U.S. P&L the in will accrued cash It us this cash in tax our to our debt the bring the be the is the will

in And because it's expect and of earnings types some course, like At that's economic repatriations decision. earnings the be the could business. not repatriated, right other for normal it earnings. the doing current of prior there this are We're is do of same course that, time, We of this. prior

over So, $X no, brought being of the to non-U.S. is It's this a billion cash U.S. one-off.

of preparing third $X U.S. these cash. of but quarter. quarter full billion the You expect been we the $X to cash see ended lent the We the some a be bit lower where down amount year-end high for we U.S., had won't some by than because to balances into moves to repatriate billion because ended our little were cash balances our that it we third go

Biraj Borkhataria

guys. Got it. Thank you,

Operator

Thank you.

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

Your question, please.

Doug Leggate

I know I that so suggested. and walk guessing could don't about recovery talk ramifications wondered remind what because terms, the if of you you if the got implications through headline ring-fencing the impact may normally us us and overrun Tengiz's or please? Jay, in fiscal the this just walk I existing us what everybody. cost you to on, like through And Thanks, just could guys obviously, of I've be light but severe recovery, don't just or I cost Pierre, maybe, want you increases. know are for cost are I'm production not as, wonder with of cost a the as follow-up. net

Jay Johnson

Well, this in contract a tax Tengiz. is and royalty

the recovery. going really through it's the the and through of so the to And terms way flows DD&A books in that be

start-up facility. cash we once past than So the actual will more it flow the get returns it's impacting of the

Doug Leggate

was that was impression is case? the going the I accelerate under to it the DD&A, not

Jay Johnson

As and... royalty we're contract of the discuss terms but I said, contract, not going the tax to a it's and

Pierre Breber

obviously I tax And be DD&A, which the just booked $X.XX, when refer clear, than talking to not different. booked less about depreciation, I'm depreciation, to is

Doug Leggate

and be contribution NGL terms capital But Okay. was cash an going is least accelerated prices plan laid back on. you sorry when gas plan, the against piece to to the No, have Obviously, you Permian flow I quite thought out to it materially. would of I'm breakeven follow-up Obviously, continuing you and laid out when is in obviously, really Thanks. outperform more that. profile. about royalty to the and the you've to so -- cash the and production My deteriorated continue talked at you expect Permian.

wondering realizations you've ability do And to on if to the Coast specifically, in that. solutions leave to realizations last announced you does that takeaway NGL Thanks. they What those it your just work there. metric lease that over could on the your of improve I'm Gulf So I'll your update are the thoughts with to? gas And type several more uplift months. going line? and Or to

Jay Johnson

stands. this, through a guidance of went in the know that call quarter still Doug, we you Well, and as lot second

not Houston we to produce have XX% well, to In into have sufficient and but now capacity of terms the the take to opening it it we up in now crude just and XX% as basin, export capacity, takeaway XXXX. capacity,

So things. the side of crude that's

NGLs terms XXX% capacity primary focus gas, the of are of we have in we our and sufficient through sure make was XXXX. covered. And basin evacuation that in have to

and we've able we routine Our no of honor production. to practice that is to been flaring gas have And view enable our that.

going XX% to moving of out terms of right by our it's based have the the have XXXX out pipelines different gas stream, on of but capacity and gas second to expecting basin. on about the about XX% how vary basin, In these of quarter we're flowing now, of we come

free cash flow still next positive expecting to year. are We have

Doug Leggate

about portion leave then XX% I at oil the can NGL you you but Jay, gas just in NGLs? it liquids, is split I'll to be clear, Or this Thank is can XX%, that. talk – you – versus know you. the

Jay Johnson

total -- in mix gas in it natural a-quarter see roughly a-quarter of is about about and our in crude, We half liquids it's of gas. is of

Doug Leggate

lot. Helpful. a Thanks

Jay Johnson

Doug. Thanks,

Wayne Borduin

Doug. Thanks,

Operator

you. Thank

line Markets. Our next the Boyd from BMO of question comes Dan from Capital

Your question, please.

Dan Boyd

you more TCO guys. Hi. And I on Thanks. you just Good want than actually spent million if recall morning, about I to the $XXX again follow-up budgeted. correctly year spend. last initially

wondering be of the by That's the or going first So how in sort this is is of what the already of I'm to question. budget overrun spent end sort of much the year?

at just be year, that look your your affiliate high. there's I when given CapEx or implying below will is, next stay be I'm follow-up that. down running that cash still you production a spending $XX potentially ahead impact is billion schedule the the of then, And offset for to Permian potential total that order the budget, in next enough Are if CapEx of any could wondering of year? if to And

Jay Johnson

So things, a couple Dan.

our move spending into the slide for as as really First of of consolidate take XXXX, And we a all, shows site project. to you at lower we'll our profile our years spend. work. peak as see and activities that or kind and XXXX largely to look we And start the spending we I'd rate FGP and XX construction of production XXXX

of one work complete. have in XX% one of is currently four the about that year We yards. go more to fabrication original And

fabrication and engineering the would project, I to part construction we -- $X of how it's was of say, us, in about of But increased The increases the over -- billion did in we total the The first engineer about that spend have us. to it of half at front the where see around roughly and really billion the schedule. more in been allocate as in majority or terms directed the $X look we've of it, it's contingency. half In and behind we incremental it consumption the seen construction costs really the of increase that surprise.

Pierre Breber

So $XX year Dan off for guidance next off of reaffirmed between just TCO to billion. Jay's mean, $XX coming will coming build we're billion said. again to be comments. Jay the I off as

we a and And But choices projects, now. -- in between efficiencies capability that that we program we finalizing our so range. -- absolutely the Jay make capital we're doing talked right landing have have have plan of capital about our low can we deferring program -- return we're and around the

Dan Boyd

And than offset that areas? production outlook Okay. more other in the

Pierre Breber

are are a natural that our better like to modest on other but gas and investments shorter impact to we that mean to Clearly X% down some so of return or guidance haven't of given manage. I we do the to offsets some not decide impact examples, of defer some year-by-year. the We've flex there trying that have X% the XXXX, some spend production. could given Yeah, cycle other that. production outlook the if going change Again lower no things we're production production, we to offsets Permian

give we quarter on our guidance call the late fourth production usual one-year in will on outlook January. So –

Dan Boyd

Jay. Okay. Thanks,

Jay Johnson

Thanks, Dan.

Operator

Thank you.

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

please. question Your

Roger Read

couple And a on to for global unplanned here or about morning. on there's the just about in any terms how gas maintenance? should you. update we are of a LNG? weakness additional think seeing times, performing side of what of gas, add-on Wheatstone planned side little you Gorgon the mentioned and spot and markets, Thank been in market then Good an contracted that, in maybe as it's LNG, think I maybe guess, you're risk the different

Jay Johnson

strong utilization continue we and on reliability creeping Wheatstone those turnaround and Gorgon scheduled of both Wheatstone well Train is capacity. you very was Gorgon and a well. the performing or X slide the Okay. quite and production in stay back and focused as the a turnaround. saw enhancing under are our actually as as of quarter the planned to currently But out third Gorgon there's facilities

to it'll an turnaround about be is get We be of that talk a them. to as we'll those and going both those -- annual planned have be schedule for will Those we closer event.

another year can been as next a safely regular they Gorgon like so facilities into and we allow efficiently rotation announced. downstream Tengiz. to these of done places get just train has We will in and have be be do And done to turnaround, us that for our

try amount the we some or continues and cargoes spot as the have reduce production, do thing, expect will as to any medium-term of spot. see cargoes potential be to good We would for. put stronger strengthen, spot actually relative term higher that because increase for the we time more long-term of to for production, we But place. a either reliability spot hit up than we as to given more in That's have and quarter we we'd available over that anticipated production planned in contracts we've

Pierre Breber

second in long-term terms. we is is that Yeah. some to this contractual have within contracts. mentioned something They the add bit within the thing the and limits contractual and downward The Jay This only customers on flex quarter, but seen in have delivery it otherwise that than to have. have spot little almost ahead. of we some we schedule, more tied would year has to a a resulted in do market that, and the Annual seen It's

Roger Read

this we weakness summer that particular are any pretty markets time? And the past in point, at well you're or spot seeing for the that

Pierre Breber

spot -- looks it oversupplied. of terms look, and looks structurally on In calling sort of LNG -- the macro

certainly course, Europe, amount fix in our that, Asia but fair be to winter levels positioned. full storage cold can well of seems Of a a

it now, I LNG But us takeaway coming us oversupply the for exposed really looks So more to look right time. the the on. just not it surprised there's and mean, is spot markets if I all again, we market. are at

We selling oil-linked, Roger. Thanks, primarily contracts. are under long-term

Roger Read

Thank you.

Operator

Thank you.

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

please. Your question,

Sam Margolin

Hello.

Pierre Breber

Sam. Hey,

Sam Margolin

on is question for the first probably my So Jay. it's and Permian,

better. less and you if interested your the gets bigger as well-understood more And base is to modeled, your would important overall it's your have how any what that rigless sort work and stuff that up look great. of look or but do growing is think in you modeled you they're your EURs, on way? Permian be the intact there's kind targets, had maybe it's any I wells like shaping or older to today if wells projected, of first-generation the how of and wells better activity that you leading-edge workover that production perform than I'm or changing update just that component

Jay Johnson

actually wells the we question, performance That's our Sam. have you. them wells, performed to as When expected a we production early perform. out Thank at our good of look horizontal

as with EURs have wells been through. our consistent so move the for we And expectation

strategies, those basis we higher continued seen course, new As higher to our have the well. and as of of our and wells, are though, and design we've evolve, EURs completion expectations meeting

So as is program overall, planned. working the

wells, a wells, that aggregate. performance. can as lower you the see on or be planned. than all but out, And than the them in higher underpinning are the as for portfolio, with more at pleased of may appendix. deliver we've to meeting But you set profile that's the we've our point ability been The Obviously, as chart what's a program, productive expectations in the newer they're older really production the overall the any individual much the time some well

Sam Margolin

to fall. suboptimal all with your year the X.X for about continues thanks you flow leverage especially deployed debt is in balance If ratio impairment, biggest debt and so how the Pierre, trending level then a free debt's much. the net some thoughts a a to the under-levered that enhance business, just what not The you the get times. of optimal so Is cash impact is and that time leverage like return think And to can the debt your of the net somehow, on a leverage profile but the on of Okay, great Tengiz? context or is question sheet, this annualized you there equity just follow-up, is? net net

Pierre Breber

No, good yes, thanks, a we macro cash in environment. challenging generating are Look, Sam. Yes.

will know you quickly. four go financial them our think I priorities. I

sustain X% and we to increased the is year. first it this The grow and dividend later

capital is you and the our the heard guidance. second business The Jay in reinvest capital reaffirm

our to to program. are we going not So capital add

strong get what $X we that's And sustain the a annual and rate. that is our program you're billion at to we sheet buyback maintain to a fourth intend that is The asking, third through balance that. cycle the to I'll and have

three what happens it we in particular the if in to increased those program, we're the requirements: the capital buyback cash generate the year; holding Then the So which term, sheet. dividend, balance and than which we clearly, short earlier program. this goes flat more

in the returned shareholders That's but just as be expect and that's an works, going buyback go where dividend if or that's without dividends, you it's to in need future even program, conditions to form be how that math just speculating time short stronger over because we the increases over term, say, time, buybacks, sustained don't continue cash we share those a credit. to of should higher about the

sheet industry. in We leading the have balance the

of dividends our strong on change, can because a below grow where macro well that's again outcome We depending have a sheet below the balance to that profile, And maintain that, I've generation about talked but the of Obviously, buyback to I'm gross comfortable XX% balance the in the ratio and sheet. positioned well cash industry. very we're XX%, to being the strongest in sustain we the debt are capital invest environment. that, business

Sam Margolin

Thanks so much.

Wayne Borduin

Thanks, Sam.

Operator

today Thank final you. comes Gabelman Cowen. the And line for of Jason our question from of

please. question, Your

Jason Gabelman

hasn't Yeah. to just taking addressed hasn't That M&A. TCO result overspend. of just wanted CapEx on changed a this as my quickly XXXX want that call. Thanks And get then, secondly, the thoughts your I for confirm question. been firstly to

past, still thinking kind operates way in operates opportunity that multiple I'm I Thanks. the just potentially or U.S. think set the in of to right wondering, shale. you're now. arenas, that not how you've wanting in expand looks discussed acquire and that's the company M&A about if some one

Pierre Breber

for billion, for the and Yeah. $XX first bit exploration Thanks, on on Brazil guided at an a our this we're we're in question we basically your little so bit track. that's year, capital the We've basis year-to-date, is to Pasadena been organic primarily, had refinery on capital around. modest billion. organic Jason. some On capital Year-to-date, $XX.X budget

delivering line with $XX an we're So, in on program organic budget our again, capital billion. for track of

M&A, of speculate to that. terms In on not I'm going

have very I Look, talk a it. value we heard think proposition. us strong you've about

about, the us been time. or a have to equivalent X%, advantage resources production X% of X% reserves yield flow talking buyback cash and dividend We the cash flow shares, a a X% free and portfolio to allow that has yield, strong an share buyback that with a grow grow Jay over

think do for So interest it work need the we our we our a All it's And now, in proposition very shareholders. shareholders, on our that we have shareholders. we of for said, when we past think opportunistic difficult is make right Thanks, the have Jason to own a in been appreciate deal. to don't at times the our good M&A question. value

Jason Gabelman

Thanks.

Wayne Borduin

Okay. Jonathan.

Operator

remarks. like it I’d And to any Yes. back hand further you to for

Wayne Borduin

Well, call. We're the that's now, you end – much. that now Thank prepared concludes our remarks. of the ready very

Operator

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

disconnect. may have great day. now You a Everyone,

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