Chevron (CVX) 31 Jan 202019 Q4 Earnings call transcript

Company Profile

Participants

Wayne Borduin	General Manager of IR
Mike Wirth	CEO
Pierre Breber	CFO
Neil Mehta	Goldman Sachs
Phil Gresh	JPMorgan
Jason Gammel	Jefferies
Jeanine Wai	Barclays
Roger Read	Wells Fargo
Doug Terreson	Evercore ISI
Paul Cheng	Scotia Bank
Jason Gabelman	Cowen
Biraj Borkhataria	RBC
Doug Leggate	Bank of America
Alastair Syme	Citibank
Jamaal Dardar	Tudor Pickering

Call transcript

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Operator

Good morning, ladies and gentlemen. My name is Jonathan and I will be your conference facilitator today. Welcome to Chevron's Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

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

Wayne Borduin

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

CEO, and to Mike are and website. Chairman Our Wirth, call are on me. that on CFO, with We'll slides refer the available Chevron's the Breber Pierre

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

to turn it over Mike. I'll Now,

Mike Wirth

Thanks, right. Wayne. All

XXXX. from elements capital its the win Last an March in to And that done the I differentiate to on focused commitment a as strategy a Chevron laid portfolio; in shareholders. capacity any past, four competitors; downside; advantaged cash in resilience discipline; out environment, price delivered to we return we've superior Chevron's to and to again

billion flow high. record executed over program. cash capital billion generated operations. $XX grew from annual to We We our $XX production We a in

sheet. We our industry-leading continued to high-grade balance and we our strengthened further portfolio

this X%, $X dividend year As rate the of forward. a billion increased expect earlier increased buyback the we week, sustain going and result, share we than per more by to

despite of cost which cover And minute. long this don't priorities in the on for performance next been a same the all Pierre will the impairments, a priorities, time. did increase cover just and at XXXX on slide. These delivered fourth our we financial quarter four TCO which the I'll change. They've

share repurchases, this. and years two production simultaneously in increased For grew a increased row, debt. dividend, can Not our reduced everyone say we

amount cash XXXX year intend on returned even shareholders, the to billion good see the to our and the of sources CapEx. same slide, the do can and including a we better. cash You uses was nearly $XX as

to Day out in to March, shareholders. in improve returns to continue our Analyst performance plans deliver lay superior our During order to further we'll

turn Pierre? financial I'll will the our Pierre, who to call results. discuss that, over With XXXX

Pierre Breber

Thanks Mike.

$XXX million. quarter and Fourth foreign a of X. net items special results a billion exchange charge Slide in loss included to Turning $X.X

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

billion. from the Cash third repatriated that to flow lower million This the for in was impact tax higher prior quarter is part accrued operations charge quarter. was than due taxes cash on $XXX $X.X cash, in including the the

was additional the which Total capital purchase and spending million This relating for around $XX primarily costs working includes billion. Pasadena El in to the inorganic don't interest Trapial. $XXX leases of acquisition and of exploration budget we spend, refinery

We're on employed at about capital to on about FX. capital adjusted improving to when March. and we'll was Return share and returns in Analyst special Day do committed X% more our items so for plans our

and strong flow quarter. pay in in cash over an our additional in billion billion repurchased free us $X the Importantly, to enabled shares dividends $X.XX

dividends year, we peers. share with stronger our the full and earlier, buybacks mentioned our Mike $XX among balance billion the As year And shareholders. to for the and a in debt returned ratio lowest we sheet end

reduce $XX the long-term is lower funding Turning gas-related fourth write-offs. gas and recorded and to to our Slide triggered item appendix. price available billion Line oil in These in over in by to we to In X. quarter, the detail were and outlook. our decision December impairments various opportunities

offset the highest-return asset our assets. disappointed confident advantaged, right charges, from charges gain U.K. $X.X we're we're our most These our we're that by capital While these making sale. partially to by on billion decisions prioritize were

Slide X. Turning to

margins, lower lower primarily down Upstream earnings the divestment. due earnings the the declined together prior Africa to items Excluding due FX, compared volumes offset impact billion with commodity also and special $X.X primarily prices, Southern XXXX, partially chemical refining earnings lower to liftings. were year. in to Downstream by of to due higher decreased

with line items and special but in segment of billion. for $X.X other charge, guidance The was higher, full adjusted year FX modestly

On more increase or XXXX. An a X% of Slide was XXX,XXX day from over X. X.XX production barrels day. record than per a barrels million XXXX

the our of Excluding asset to impact right range. X.X%, of X% middle XXXX guidance X% sales, by in the production grew

in projects Permian Shale the primarily tight growth of and by Denmark Wheatstone was primarily ramp-up and sales, the by and the This production production U.K. barrels major other increased partially day. decline of base the and asset per in offset XXX,XXX capital and impact

reserve X Slide our replacements. ratio one-year our to Turning XX%. replacement XXXX, reserve In was and

negative another natural reserves. gas XXX Our undeveloped of decision of reduce was reduced two capital million for reserves asset BOE. Adjusting items, funding to by replacement million a $XXX reserve these about revision resulted Appalachia XX%. proved to in And BOE sales around

are replacements meaningful to highlighting their sustainability the our Five-year XXX%, continued and lumpy ours ratios reserve replace reserve that produce more and is proved nature. the replacement reserves longer we by focus Annual over term. are

Moving XX to Slide some Slide XX. commercial highlights developments. recent

additional production and working an ownership giving acquired interest in field the of conventional XX% block. this potential unconventional we the Trapial First, in us XXX% in the El Argentina,

also acquire further an announced We and in to after with strong our production Australia, the us network retail deal in recently the allowing to retail Asia terminals sites refinery agreement integrate closes.

half future. knowledge we ever-cleaner Late energy a ago, and upstream weeks our with we Council, Hydrogen agreements in this to signed our sell assets interest to in and joined are year. both to Azerbaijan hydrogen the our And in on the Colombia, experience our close the also last expected of solutions for commitment transactions few building first and year, explore

I'll back to Mike. With it that, turn

Mike Wirth

Pierre. Okay. Thanks,

our TCO, stacked discipline. are CPChem budget by more GS and in XX, capital will primarily affiliates bar third which we capital And expenditures our billion, organic of Slide to budget Caltex. On be $X in C&E billion than year. includes the commitment XXXX flat for $XX depicts our maintaining consecutive The

billion downstream Permian budget, development, remainder another XXXX to and $X $X goes business, projects. exploration other approximately upstream to FGP/WPMP, base the to In billion allocated chemicals to the is $X and for and other $X MCPs billion our billion

our peers. capital program Chevron's is unlike

sustain and enterprise the years primarily for is focused are investments risk on execution and short expected grow return low many high has to profile spend cycle, Our to come. that

Slide our year, assuming a XX Brent production price. for shows outlook this $XX

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

driven projected is the prior sales. record excluding of business Our asset ordinary by asset of fourth XXXX our range noted in a declines base production the of slide. of production key by uncertainty and The the in on year sales. Permian, another areas XXXX, of as potential growth offset the reflects expect consecutive impact year partially effects we year growth After largely

Moving share to few thoughts. Slide closing I'll a XX,

to for margins. mentioned intend I've excuses win As in commodity before, prices environment. tough or not making we We're any

and execution appendix. of we're and cash strength, at advantaged to result a and More the guidance risk discipline, through well our significant the to is quarter return for maintain XXXX financial positioned our As portfolio, shareholders and first related capital detailed committed spending organic low and in billion buybacks. dividends full to capital $XX year

back With over Wayne. to I'll turn that, it

Wayne Borduin

Mike. Thanks

everyone that have about I'd strategies Security Analyst remind where We're Meeting in to and will York performance, like five-year share seeing we our annual outlook. long-term more in New March, business looking our there. you to we early forward

webcast. in available attending via person, live not those will also it be For

your now concludes That remarks. We're prepared ready questions. to take our

Operator

the [Operator Sachs. Mehta of line Goldman Neil Instructions] comes first Our from question from

Your question please.

Neil Mehta

earnings good, one timers for were one be quarter light. might you, did there. a little the seem like flow Pierre, in flow cash some this and question It first looked is in cash The there

are how off about talking we that about we just some So what and time one-time spend the of some you should those go think next as can into quarter? items rolling

Pierre Breber

Neil. thanks, Yes,

the on flow that cash the perhaps. taxes we third to expected So light did the provide was pay little cash. guidance a In quarter, we repatriated

tax So on recall saw when move. we the effect the that accrued cash repatriating quarter, for the cash, but if taxes actually you until weren’t fourth our quarter, the in P&L paid fact, you cash third in in

affiliate down cite than cash dividends. $X go balances billion at from you I billion $XX And was less item then saw for would the over So year-end. second to lower

affiliates, So Company, lower Phillips Chemical our in XXXX. we dividends have Chemicals TCO dividend from no and Chevron

So in last TCO past TCO the at we and received we fourth in quarter - have times didn’t dividend a that year. years from

Neil Mehta

on. of guidance. out follow the just how of in a XXXX. variables about production there, more And volumes in bit kind little pluses can called about is value you but that over minuses - talk What their those about how you the are some some for timing and of on Up be of you X% should number - about to thinking of And up think think that solving we focused should volumes? we you’re elements the that recognizing

Mike Wirth

two Neil Yes, I X% years take last had, year, X.X% mentioned, sales. as ago, of I’ll years growth that three X.X% asset production think without I one. of We’ve

the course strong piece Permian and that’s our We in XXXX, we growth. we is to that, what X% to volume program on biggest up be see And a delivering can you over continue of as this year. The good, said, the delivered. of upstream

in production I full now what call would - the Permian. factory And right mode

that, And kind both contributions continue so, shale we to about from think very click along near-term Argentina. tight, in that including We’ve got of more I continues you March. machine bit a not lay to a talk other Jay longer-term out but only of view for view little Canada in well. and where invest the will and

magnitude as growth Permian, within at but the and are addressing and Gorgon those beginning the strong certainly LNG contribute, improved Wheatstone the constraints reliability plants. And to not and same optimization through

a So number we’ve across of coming got those. growth

over PZ [ph]. begin if we’ve here production you as as on some there, point months. And there will the next few uncertainties note at the got some It we looks

we There’s how we’re - we on partners, grow details but Hard come funding right out have A and ventures other certainly And in worked by say this levels that still that, of activity to, to non-operated course, but for look, trends really the hard year. back is say some starts again cetera. things to to predict, in. little going to decisions joint go How one to expectations then, production with being et expect there. difficult some that Venezuela now.

we I if growth drivers compound with over the portfolio. we intact. As to the underlying And, laid asset X% a anything Those said, in aside the fundamentally, that next else last sales said X% we where drivers annual March, five rate remain do out setting years.

Operator

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

Your question please?

Phil Gresh

about billion the in here balance to some - buybacks, first dividend of sheet a to and your $X big you’ve The return of willingness talked despite peers trend protect the in in signaling XXXX your week. strength earlier the this the seem be to here buyback increase sheets. continue balance Obviously, question need

you at would as where to macro sense perspective. there not is reasonable mean, buyback a from would the think make do that it look any scenario you So, I

your Or is there cycle this the so, through on reasonable year when was it something you. most thoughts that I place, just you in idea ago, put that? this know latest would a stay Thank

Mike Wirth

there. in Mike. we expectations it’s change the increased We’ve our No Phil, year. last indicated buyback Yes

this, afford can see which at cash Pierre is change came look our have year, no as cycles, we to all. guidance that through intent see and can to is you that certainly and you last capacity at what the If again mentioned. our flow, Debt we down this

Pierre Breber

a and build if address it flow, We Yes, I if $X paid down covered paid can production full was program at We higher per grew off share our fourth strong. said we Neil’s question quarter debt. cash X% and XXXX as more on that. you funded cash very than Again, of look capital flow, X%. and in year but Mike billion dividend just fully that over

bought $X back share. billion And we in of XXXX,

the our the sustaining the buyback dividend X.X% That expressed confident increase the in ability and, cycle. So, with future we’re was year to through again, expectation this generate cash. of exiting

Phil Gresh

question second reduction efforts, follow-up, down like would for and big on cost you here you’ve it focus been to doubling a Mike, it’s been recently. sounds be just

way could be would it that as talk if this helpful lately you in been reduce on see? happening see terms Thanks. what’s be Chevron’s So the front. could we that upstream in ability downstream you a businesses material to costs investors in to something and/or Do about would of that

Mike Wirth

over done downturn cost Phil sound discipline saw I last always record the a taking business, We’ve on years job this, last like intensive commodity the a a may so always we costs good out a response to matters. business Yes, discipline but in our several capital business, capital of decade. in matters. in broken in And earlier

can efficient You comes when assume seeking it never structure. efficiency done, more and to that an even driving cost you’re to

taken that that. to production so continue grown going has expectation the ways the last We’ve significantly my time at over certainly of as years. out to number for And we’re is do same look cost to

our and ambitions more and a of dramatically to little lay so to of And we’re some unit ways is see. look have the down March, come going for costs expect to are you and to what specifically my unit over both reduce out kinds time. absolute expectation can on costs In continue things we’ll costs this,

Operator

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

question please? Your

Jason Gammel

cash year address much, still for in another very solid Permian. able of Permian execution was gentlemen in thanks I whether on could that target Yes you to the be terms as you essentially being seeing? hoping the flow see XXXX, small prices and The you a you’re But capital influence talk some for have there. positive. just amount I budget free what picked know up if about commodity could

Mike Wirth

very short see And to Jason, metrics, is fully to we across cash the in answer that look Yes, if yes, production, growth We to all the We improved strong performance. the you fourth do. Permian positive continue be year. the flow QX. quarter with this expect to at we exited QX the

EURs increasing, come getting continue go feet year, per down. development every to to continue up, are lengths drilled We’re more costs rig lateral

capital both are And operating we from more an becoming a cost and standpoint. efficient

all the fee as it benefit the just that in and strong You acreage barrels the as I royalty of put has. we the the and better. Permian with mean, hold, that it gets picture ever together looks

Jason Gammel

And rate a that fairly to follow-up, which March, to defer but of this may look a amount peers low low of businesses type a to putting that you then of your relatively investments. prefer return carbon, of significant as be European capital largely are generally and be something lot into they call just

investments lowering Can And of you? you types think for about footprint you within overall that how portfolio? make these talk carbon are Chevron the sense about of whether your the

Mike Wirth

our flaring then driving operations. year, I’ll are two tied to and We carbon changes absolutely to Last intensity what to carbon significant in lowering So the that footprint announced in come lowering start Jason. with me investments, of let are we committed our methane metrics do. emissions we

production. additional related oil included We I in metrics production adopted of to compensation which gas expect carbon also have intensity two to be and

technology, a abatement to at the carbon opportunity look footprint. lot work reduce our curves intersection around investment of are We across our marginal of doing to portfolio cost entire and

We’re integrating in agreements, dairy codeveloping farmers, feeding year, way much power greater this for projects renewable natural our renewables as gas a instance. purchase into our soon in business green with refineries as and with biofeedstocks

like that are is, air, more can that is capture carbon the final And other up, then from where looking to investing includes high. we try things to And sectors technologies, scale thing only can intensity in ambient things these but solutions challenges. difficult things provide this the for energy not to decarbonize

thing largest just have operate Last say now. you trains I'll project and remind right capture And the Gorgon. to two at is, storage the we that the on purpose we of planet carbon running on

third X.X be That tons will, per million to year. up full this at start sequestering X The million capacity, will year.

of things finding We're looking have it to address So because invest it our challenging investments, we're portfolio. some to to ways the be can issue. is as absolutely find climate we and environment we the the offer that committed in can that we would with investors, say, at be for can improve good scale. we and historically, that been competitive importantly, returns, in and, for challenge things this When attractive the returns also that you comes things scale. other not big to need that And ways do for can a invest

And continue committed to that. to be so we

Operator

Wai Our the next line Barclays. from of comes Jeanine from question

question Your please.

Jeanine Wai

longer-term it something speaking Or to and the strategy was else related to quoted were companies on And by related those until fail. are on following just you or more transition forced versus broadly were write-downs I wait gas upon them changes to comments saying natural gas think else? view question. the Mike, month, specifically up just Chevron's that wondering, LNG Chevron's Last just liquids? that we

Mike Wirth

final. than need times access affordable, an else. the our X for is, will to there The living. with reinvented live And to XX a we people. we time, And for to what now, have and really for planet. support of people from standard energy We that of the it has Company at reliable, continue been period to in we world in many we around the and And on impact billion growing of Probably growing need population years. more reduction the adapt more a years XXX something same over be expectation billion time. today ourselves X.X a There's do. than

seen that tools have also we never are technology Now that available before. we've today

we of for many, so that And evolve future. into of is be the to what need to part continue do decades to many technology, and structure, our our our discipline applications cost culture, competitiveness our equation our

a And so really we've It we a the addresses more them. us but carbon that technologies that all of talked also my ways find lower in response our to We change. need in to the comments operations, change and it way to calls message need things and new intensity work to to adopt and are evolve we efficient for addresses employees about. our to

Jeanine Wai

Gulf My the upside second Mexico there, post XXXX. growth of medium-term on and question is potential especially to

And facilities So any the the being attractive return extend about that from in estimated continued be you technology on exploiting might infrastructure, about back then existing potentially can a on you have flow? terms excited portfolio. with cash that infrastructure working very any free perspective update existing ranges? focus in on Can of given high we you're rate tiebacks or to there talk of through could resource that

Mike Wirth

Yes.

and So before. we've a project greenfield which at operating both of than seen at cost sanctioned structure, Anchor projects cost lower cost end the with the much we've a year, is capital

time that concept more think, we over where I think tiebacks, track of us is do out that's in. good lot we've on invest the one exploration. acreage there And need continue that. and when you'll see the got we continue of to to exploration a projects I a record to find But So answer, right

as five with bells. called a actually will from which discovery into tubular operator a oil. away a first turn low-cost, tieback, high Hess the discovery had about Esox, XXXX last We return miles year It's XXXX

working and distance extend other includes things sea floor, and to set of expands We've to pushing pumping closer to use improve really of on liquids hydrates movement the on and technology infrastructure of to avoid production. the ability been and existing to opportunity longer XX the neighborhood this range of the fluids, subsea tiebacks miles, us miles XX compression that the of and tiebacks for from formation out

pumps subsea technologies. multi-phase We're working of these a number on and

And so forward, the existing use is well that you large blend will an and I of of increased think as see as tiebacks we in. go infrastructure project what greenfield occasional as comes

And instance, things enables which for of follow-on an I what these development. just we are you've got like phase once what phases initial more development, just that's in, Anchor, much is - described, which And that of economic. additional

and I in other it made approaches ways technology see lot a has of optimistic in economic, my technology more use on I'm progress on think comments just and really more make even deepwater to that, direction, the the we'll one need moves look future. to And standardization and that prior for builds we been to

Operator

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

question please. Your

Roger Read

got could, question. and of the Guess, if upside side I've one kind on we question the that's maybe risk that's one on

the first. with So good news

Or a talk in XXXX operations? some some could see of in the XXXX? You I upside the I risk thinking portfolio of have about else Permian? has we we mean, the portion should focus the there. restarting a production. zone, And some then on should position we was But things be neutral highlighted other you been curious where recent at to

Mike Wirth

between been memorandum partition in Kuwait, Kingdom the an in the on understanding on Court Kuwait. by been to being we're and Arabia So moving implement That Royal some several and now shut parliament the and there's ratified the that. actions progress Kingdom the required Saudi with has down, of agreement of administrative to after of years zone

in All this of work of that It's suggests in that May we the since been year. should resume PZ shut XXXX.

activity will equipment on really we safe so to focus of that startup and any is that ensure careful we integrity. be And resumption

gradual And so ramp. and a a careful it will restart be

gradual and I so start-up at we some terms likely work this before in then And a year, ramp. we're some production think point see of a begin to

a this - upside. what it that of is impact be nets But lot So positive some if could to not year.

I to in think We we'll see more will completed there additional some have of rigs get XXXX. eventually the wells. drilling to begin new in ramp

on so, like that trend but saw shut looks a over should we we down. XX so months be And next before line back something the or it towards

of In expectations surprised to has continually upside, us Permian in raised the other even the of past. we terms as upside, kind the

I and possibility. a shale strong is mentioned continue that show performance. improvement also terms those certainly, really in and so to of other the And tight

And areas are you other see think where those could so I production some upside.

Roger Read

bucket to hit, your above my Northern part we for seen water own you. take winter cold across. obviously, than then of prices seeing and better hasn't everyone gas to And it of a run helped. expected? else mild quite facilities some We've on natural nameplate continues run fairly is LNG Are start global hemisphere But capacity.

indicator And feel gas so there optimism that about Or what do in good a curves, or the look place pessimism for in a of as we greater if American ahead? pretty another. reason - is that's you think year one in we at XXXX, probably forward North

outlook. how fit sort of Just that your into curious would

Mike Wirth

winter, a have others. and We're Overall, both markets Roger, you a We've tempered of gas gas that. reflect got percentage in an we're market reflect that in a as banking not America pretty Asia. mild recovery prices. levels And in And under on we - think pricing. portfolio I underweight inventory relatively on North is, say, had forward versus our gas as the

our good oil-linked got on And you, our there. with I'll lot portfolio pricing remind of pretty a across LNG we've term contracting

standpoint, we relative from not a may be as So exposed. quite weighting

discussed on dumped like yeah, markets we've up, there. I focus bucket as So ice that be things to to and pretty are the maybe And it got self-help But why think, I flattish. rather setting was water that's cool on water than me cost, you a earlier. of

Operator

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

question Your please.

Doug Terreson

And past converging, the mantra may this appropriate so, the competitive which this had advantages point, on integrated companies decade in least so during or the capital my on clearly suggests you Mike, too. of guys in return-driven view. have and be capital at returns allocation disciplined, converged while that that's between oil, approach,

My and are question something there leaving underscore think that defendable the Chevron. that advantages experience, And of multinational logical is for and out historical still examples are cost management, capital, superiority, so, maybe you project whether of you the where future. competitive advantages the capital And of that being and historical there in redeploy are have. that from hand, guys strength on are need the other you you'll to away sense advantage areas if eroded strong

Mike Wirth

a one, lot Doug. in there's Well, there, Number you're right.

think we prices seen We returns and lot in across convergence prices. part that the of I books came the we high through sitting industry, of a now by high We cost and cycle supply of a capital on returns the reflect the in more world have this we and with in living last investment are abundant structure. had everybody. had of

and disappointed a are that there I there all going while are and like do are in companies it at that in update, the cost than wish the that still the many is at strong, strong not can I think the with project execution believe companies do was Tengiz, have been project like advantages and there. advantages world historically associated so the ours and better we schedule the that

other as our we of will very help Our we been companies there things responsible time potential is to sour I expertise to in back gas tremendous we’ve value, be few work capability PZ, develop in continues over can handling that heavy the has and get be to as capabilities, differentiated. that something there oil earlier, Venezuela, and And our which hanging a in mentioned is that in, way do. resource doing

capabilities think differentiators. historic that some So are I there’s

talked is is want would royalty from but differentiation. standpoint, standpoint, is acreage after about both of and thing year Permian that The capability and certainly drilling, not portfolio, a the factory it’s lack position belabor the of to lack our it, I with a relative of times, a our experience of in to as point other many and year, that continue fact we’ve point quality everybody has, see the given that benefits we the another fee which size

believe are So that there I we do differentiate. do still areas

Pierre Breber

off remarks, share environment look, at whatever them get, and program. those talk cash you also strong I it that our prepared or And grow flow about our want but Day. weak could we to are reduce cash flow. our and build to and call macro things, we’re more about all debt if dividend, returns in we’re improving committed answer and the able the production, I Analyst there, too XXXX call buyback in and We my we’ll low Mike’s capital But the increase to I’ll whichever do talked program, it sustain said fund

of is essentially At in understood that’s our the we’ve cash the cash last the grow capital That five to showed means past. Analyst Day free things forward we going said different going not flat. to seen of flow grow years is going next going efficiency we’re keep We we’re program that and that we’re so our over one the ops. from capital I think fully than to

than dividend days couple sustain that’s that to long what ago, in peers. cash a able and the us grow do capital we’re a buyback the our program So And certainly to and term. kind announced increase of the and past almost lower the flows for than any still time better enables sustain we enterprise grow at

Operator

Our line Scotia the of Bank. Paul Cheng next question from from comes

please. Your question,

Paul Cheng

idea. My

charge, means impairment not is and at decision work the an parameters out. the made did large quite You which of time did some the obviously that

your and this future from or we accession, project this the how M&A changed? impairment process, learned or So have process has what

Mike Wirth

gas, mostly Kitimat we drivers that We’ve on got view mostly but world a those, and natural Yes, two bit big dry is the time ways a different the little project Marcellus Paul, dry of LNG which quite of that charge and is gas. site. were gas. position, And the of Utica also those essentially were the is gas transactions a entered both at which into, from Kitimat the away of Canadian our had

have the Permian and really been think a I game-changer. unconventionals

earlier at about conditions the production at didn’t the see today, United things market talking those gas look the with were prolific time. Roger, You that and the we in States we

against And M&A are a there’s so do about the lesson scenarios not forward think testing ideas I on markets. that view then-prevailing

with market level year, to we a and we markets we go a that. reason have maybe that certainly certain cases we Anadarko that there’s a reason that And synergy saw to an wouldn’t standpoint. central commodity did a acquisition We we our a beyond be that one at might and transact we we reason would at that like because there’s different looked predict, environment willing There’s premised transaction experience stressed the and because than analysis – that’s from on. last hard a we value would are Anadarko the

price, with you’ll And it the and so That’s sure a it’s predictions are going into or be us, the a look future. view where lesson they’re make with these Yogi and not would big It’s Yogi I or whether Berra if future – wrong are deal predictions true. pretty you scenario into happy that’s I lost hard, say not said you’re wrong. on the when with certainly the Berra two especially if commodity – on what strong in happens about a you’re from you think take is at

Paul Cheng

at $XX probably I question, Brent investors, someone, mean a I for long-term companies as capital lower most market addressed is is think. price, into $XX, Brent SMP of I they much second than think to On on think return, give Last the X% the earned assumption. as willing employed. they’re year, that already you return And the $XX Pierre which

drive give looking So where the idea at – to we’re able you may don’t us see biggest mean, overall see about it would you at given improve a to is have, that really or be you’re big some talking Growth project, Can the those some the portfolio that you whether mean, Tengiz, of up you opportunity your we Project improvement. where all. the Anchor; I Future return. projects able be that the I return

Mike Wirth

no commodity environment. Paul, in silver Yes, bullet improving there’s a on look price flat returns

it’s on things sleeves that’s can all that’s technology. that’s costs, your and up little it’s work reliability, you margins, roll You returns the get And chain value drive cumulatively that higher. optimization, to

you’ve the working decades what are be to day levers that of host in little we’ve do they future worse on. you that do. downstream and with operations and have a and downstream find every what got business business are This whole margins in your done a the productive we to in get that’s every is more assume And what is we in efficient need There’s way you be going today, than to do. thing you for to the to

the not that satisfied level at with I’m are. they returns

to you’ll but our things hear about how we plans be wait to then, is know there’s it. going this old-fashioned a not it, to here. the more we here. just not returns work, simply we for have get We’re in We’ll to to that talk hard do; answer March. and and more – it’s about We to to improve magic prices have after wand This good get have after

Pierre Breber

showed We growing to Yes, book are our in let returns are margin to to and and chain the heading are we growing me just in investing and add that accretive cost all and quarter a even that in that. value Permian very returns. north Permian XX% second efforts, asset, and of and in the those the the investments addition

investments earlier, So some have efficiency the portfolio. capital enables levels the we we capital do really than and in have at past. us have accretive to said the grow enterprise we sustain that just I lower that to are

talked efficiency you our returns capital So all everything plus increase take about, the over time. to intend when we Mike

Operator

from Our from the line of next Jason Cowen. question Gabelman comes

please? question, Your

Jason Gabelman

what this taking thanks my guess just said. Paul follows Yes, for question. I

like it was high. you returns. on if bit could was wondering for And project about Specifically seemed I CapEx talk Anchor, a the

danced talk follow-up. about more in queue, have that maybe of and competitive of your projects project kind it, one for I is project. And specifically around that but a Thanks. of the returns kind You’ve

Mike Wirth

pressures Yes, Jason. XX,XXX project new for of additional – $XX because A little of If barrel. actually so technology pounds I technology. higher period south of development as deeper go back a costs some reservoir we’re have to export Anchor barrel. we an earlier to And unique is that for $XX dealing investment that out is to includes which this a north well. were prove deepwater pipeline, bit of here reservoir, projects our with time,

close down the from a have high costs into teens barrel. to barrel per Operating range $XX down the come

to things prices together number, significant specific we’ve improvements come the assumptions you and different of recovery. at completions because different not all going a run frankly, drilling cost to return seen So And give those these performance. around in bring we I’m things down. and

a at look we So range of outcomes. potential

But that go technology I up a as the believe I unlocks potential development is resource it development a And in lot will competitive for additional returns. of tell you, our we will, we It type holds that portfolio. think, us sets forward. improve follow-on

make down. think more these going don’t the to in in economic. I to And continue so costs projects we’re to we’re look of deepwater, terms And done driving these even

Jason Gabelman

is you resource a a high When more pressure, kind Yeah temperature, type, high of say further? new it unlock

Mike Wirth

Correct.

Jason Gabelman

opportunity then TCO, visibility wonder that of kind Mexico us. some a queue you’ve you your have there’s do plan to and you options lot you projects, project that see of to down to companies attached that’s a then Thanks. with given couple kind projects into Permian more beyond all to are Gulf farm an not maybe some and XXXX. of And There’s of visibility if of projects your I to stakes? around. on looking of international step providing that, And per

Mike Wirth

through suggest period lots and them, only transparency. and of lots the think where stacking one in to that will big went March lay the path because we have The a up to out a know doing conditioned what that’s view ourselves that’s some thing at that I Yes, asking. question the longer and last time I that was give projects doing a of more great the our we number so future to time. a these you over investors decade is by we were believe people I would of we been

very different a have We portfolio today.

We have facility-limited and and large Kazakhstan. traunches flat production Australia are of pretty LNG that in

to as begin up there. build way scale you unconventionals behave Our the this

right those as accretive to on to it so much We sustain that grow the and that the the durable, reliant portfolio. look continue But into margin, cashflows highly-economic And are those to at have projects returns. alone long-lived we projects more just and appears a for resilient, future. we’re not nearly as

away positions things it quite terms may doing to enormous lot as as grinding really drives giving the projects I outcomes. but most in financial of not unconventional And than big durable, on longer it’s talk think, of And you be about, strong so glamorous a believe. people

March. prospects. be so in about talk We’ll much we if that’s about present the attention our we’ll And not opportunities have themselves, in may more and we that evaluate, we more opportunities about on at always farm-ins, We’ll people of question captured to. those. talk terms And right exploration paying opportunities that talk other something look the

Operator

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

question, Your please?

Biraj Borkhataria

figures XXXX. and If first slide X% was is the the base than actually the X on in on base look like it one less looks there, from The I decline. base just at decline just take of the is but forward. And anything I to there’s applicable is whether guess that get in that shales, number a I’m relevant not going if excludes sense the that and figure trying funny XXXX

that would around Just helpful. be comments some

Mike Wirth

like all on we’ve a are new these Malo the There portfolio lot was are base Perdito, and our of our things now of are in Jack/St. and there’s that large things so got deepwater are that and projects assets some base in there. mean, I that projects. different some

behave is way. this a that portion model one reservoir there Some so our that larger like our and to that needs just to that limited, in also facility phases of shape but back larger overall our to reservoir not you the making think it and next of I growth the be of was of dynamics appropriately that underlying calibrated now to decline, Jason, this mental and production, the portfolio development is production profile percent new the and I of drive give limited, some a larger to do point some investments does offsets comes not

predictable So that stable, results production. in more

decline our how a But phenomenon. production declines, investment to and a just base decade ways a using be at required and opportunities than change wells. looks. our new less portfolio look to we’re facility you have, or investment ago, that, That’s sustain modest we There’s arrest brownfield it some it that, at look you is the technology that’s the short-term structural in and was not in

Biraj Borkhataria

That’s helpful.

Wayne Borduin

Thanks, Biraj. Do up? a you have follow

Biraj Borkhataria

just question but slightly is renewable Yes, you California, fuels, there. favorable about to tact, regulation the as I given a on wanted ask the sit second guys in different

you space? U.S. what’s number I And something you in seeing interested diesel the what a about if expansion announce economics? So particular. holding attractive do to you, of refiners that it’s was projects wondering we’re from What think then, back the is renewable in investing you’re that’s in if in.

Mike Wirth

manufacturing, of really California A the Well, the decades. been lot part we’ve have fuels last ethanol for in not been at We’ve two renewable but better to the blending. looking chosen selling into we business. go of

of On biofeedstocks are renewable produce diesel, diesel. a are, and California to we’ve relationships mentioned suppliers in renewable co-feed order making question, order diesel, got close in facilities to with we in at we refining a response renewable to earlier I modifications

and So biofeedstocks than kit co-feed. existing proven got safely and rather introduce we’ve reliably developments, that and our going new is way projects we greenfield infrastructure view to and the into have now

existing do working and investment, economic more It on takes to it. So a capital we’re so of way it’s advantage that.

will So continue and chain. be growing value biofuels to we in are the

Operator

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

Doug Leggate

much saying this guys, the second, if could hit Mike, and of Year wonder all it’s I portfolio a the cash to market, issue the the gas Mike of happy the the gas had overall you. about when just rates flow and of and for on be underlying we’ve the for state high Permian. me of help is some I’d incrementally particular not about increase company. positive by U.S. New I concerns your going realize mineral to the decline of and decline I think like and you’re the XXXX, skewing just of why assets this and is U.S. towards and on your get given and putting gas to of and it. returns so interests the royalty benefit capacity skew perspective I interests understand company, on, the the toward NGLs what about but XX%

Mike Wirth

you production ability production that investment Permian to high of have hundreds look, modest full you’re very The on incremental infrastructure an relative decline be keep Basin, so production as is the at and then profile infrastructure and a is wells built, and that thousands profound. to Doug, it flat individual you have the well producing a add asset.

when about the certain New you and you’ve more a got or this York, we and then costs product certain factory, the Permian. to in and push is a March explain that’s in factory, will and think the running come Jay factory to but how the investments out it factory,

The commodity XX% liquids. mix, it’s look,

We’re right XX% portfolio XX% our gas. now, NGLs, XX% oil in

get grow, to investment XX% lot and continue volumes we are the Pierre mentioned returns on there markets. and long greater earlier than a growing. As on view we of a production take that oil

if your need And so earlier to somebody X%, got we’ve current returns that improve. are those mentioned something look,

Well lever are things if you’ve returns. got opportunities to to to that of up XX start a invest in way north that’s

And so it. we look, look at all, optimize it prices we on commodity the

advantage. We’re to to long that lived far moving add value is and and competitive commodities but are positions to near markets high a it return, these

Doug Leggate

but those so the full March to including are just and out and be I clear, say Jay on? has forward what cycle look returns build to in of plant to all infrastructure

Mike Wirth

including corporate with costs costs. fully And loaded

Doug Leggate

you help how this everything six we in questions investment guess just with broader it’s compete good past challenging how an all if space. this seems an advocate it’s of headlines in us it dollar? right now. an All seem fossil kind months like for out More been does I’m fuels year. challenge you altogether. in fossil a business of of Mike, fuels, there’s morning some do the about for divesting be, Chevron to curious of energy like My all role your else follow obviously this position And How just is the industry, a looking pension I funds just those of of for last I’m awakening up, kind thing? obviously and incremental for as because kind ESG the to more anticipate particularly answer philosophical this issues over

Mike Wirth

all Yes, in we of ESG. well first believe

We and that. environmental industry, have The have time time of of history operations again. and and over our invest getting long, a long, have, enormously of in now been and is attention right time we a a responsible the others reduced impact we look, operator ES&G for E across lot time long our and the we

country, it doing but one the solves today, the again be to is one the big of part no going everything, this will to financial have scale, we industry be a are that challenge. no capability, technical the And We the we capability, challenge. one collectively, to and addressing respond

energy. is ever-cleaner more in improve The been future. the energy needs better point and and energy their the life any to at affordable planet, people deserve today than it world and more world lives ever better The quality on economies affordable, essential and needs in reliable see be the opportunity the will which to developing of history, in is improving has

of that. fossil part And changing. that we activity we intend to that acknowledge be to forward. acknowledge will addressing that part the contribute climate be we that a We human as we solution. fuels is of go that and We acknowledge And

money, of so part And solution. time, in being investing that people, technology are we

past, that I’m an there. There’s that and a will And solved of is successful months you six out I’m the look, optimistic last in optimist. you again. even the And say as big louder. that challenges can we But we’ve pessimism over lot drumbeat hear be maybe

Operator

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

please. question Your

Alastair Syme

With the impairment, something I signaling about you’re guess LNG.

in investors and tack the is question the one of competency away created the to global the I decade within are happy from you organization. LNG? a completely So you’ve been mean, of lot clearly biggest last

do are happy effect? to in So nothing you

Mike Wirth

do The time for long where to they stair over get to you things. on in that grow LNG markets will Commodity these over in and demand on linear a grows steps. happy are player LNG. things supply view get have and we’re built, demand in a take economic, big And comes Alastair. competitive fashion, look, into positions No, we’re

scale, refining, where low-cost now where tough that And the so like bit be got are efficiency. we’re in competitive in are a position you’ve need a to fundamentals operating like highly but right long-term, near-term positions you technology, petrochemicals, market

and to kinds the looking LNG we’re our are add to things to those of evaluate continue so opportunities And we’ll for portfolio.

one is, Our our was versus investments in compete assessment the other that, going that the alternatives. tough on be to the all there Kitimat out world to given project

decision proposition. a doesn’t just us it asset it’s so to the We come class And as very find but condemn hard an investment to the projects. for best to, want

Alastair Syme

I an sort with informed TCO; discussions sure where in any follow-on, on overruns on the leaves get you’re where not at just to and the where it? I’m wanted My that government. specifically, you’re the been having update of government’s cost

Mike Wirth

stakeholder site Johnson our next week, government’s both with discussions the key there people this, in and Jay so been people obviously so government. the be engaged. from Yes, the and in-country The meeting and have visiting are will ongoing.

one whole And things, and so there’s on these process when the a in through that. go you engagements series we’re of of

Pierre Breber

contract’s that, a I’d contract. royalty, tax Yes, agreements add to other Alastair, the only thing It’s in not and that our Kazakhstan, is right. unlike production-sharing

So in which contracts, the the not cost government the concessionaires production-sharing their is case reimburses for for and royalty. tax

an stakeholder is they’re it course, structure. of So a important but fundamentally different contractual

Operator

Dardar line And Pickering. Tudor our from final question comes from the of Jamaal

Your question, please?

Jamaal Dardar

wanted to here. dividend outsize that touch years versus growth on we saw Just the previous

dividend repeatable the be continue and there. curious capital as roll-off large just you the and thought on And wondering lowered, outsize long-term? process intensity to how So could growth over is just shed MCPs assets

Mike Wirth

of or a were multiple over decade, rate – we’ve of X%. back So ago at dividend grown looking not we at kind long it annual at the you growth you’re history back whether if decades about and over – look last compound our looking

sustain now of years people to a we’re to cash we positioned. bit the been and efficiency level that, of Pierre have our over upside strong prior-period. that and portfolio much And lower cash grow but become investment capital that about think so flow than our to capital here and with in I well in little have is flows this than the a the accustomed talked we’ve recent lower

absolutely increased We sustainable that intend strong just would the in cycle. said, And the if it’s weren’t buybacks dividend dividend we through we intend We confident to our distributions. sustain sustain perpetuity. have we not as to

Our one is and dividend. to priority, grow number financial I’ll you, sustain remind the

in will that we’re talk price the cash environment in a very even side, like And we so on position signal the capacity we we to this one sustain confidence to cost a portfolio, more about and going March, cash in. our this be commodity we can and of It’s portfolio. the was in generate have. coming out generation, efficient been a very our efficiencies continue very, further we’ve one a of but signal strong in the confidence profile capital have we of very strong confident that in forward, And

cash the what tell Decisions are ahead can’t of they may in get made capacity. the by the confidence in on generating the board. the But board I do we have board future. our you, shares I’ll

Jamaal Dardar

And then the a buybacks. one just quick on

the lean the the buyback, could the in for seems model impact very order temporarily at balance difficult roll-off, PSC periods sustainable into to pricing, to there strip nature. mentioned time you but us You be it of satisfy full there. It’s maybe the sheet where

best the there; debt obviously, on wanted given sit of class Just ratio? verify to you comfort your where as

Mike Wirth

time, for some never point in be sheet the We’ve has No single cash flow. right? balance to okay, buyback from to the yes, that’s - Jamaal. to thanks, we have Yes, free lean sustain said want it We’ve every said if on through-the-cycle. funded we quarter

So that’s not expectation. our

the We industry. have sheet strongest in balance the

is net-debt ratio XX%; Our debt is XX%. gross

target I’ve some now. debt. comfortable We to take higher than I’d we debt we are be capability have have about the right on talked But range. don’t a certainly,

low, bit we’re how the But math little That’s okay. if works. a if that’s we’re outside of,

generate a top buybacks. that in form dividend, three So balance invest business, the priorities, at to which in the sheet. And to have cash return if we pay our surplus strong the and is we’ll of share

keep to we and so average and to buybacks sustainable, to also want the through dollar ramp-up cost essentially we to we ratable But don’t because want do that cycle. able it be want just

our answer on short lean we’ll the is There times sheet. yes. balance will So be

And our balance sheet through has to buyback Our capability. cycle. is the intent that sustain the

Mike Wirth

time We everyone with Chevron that, back call. today. Thank, everyone’s on in Jonathan, your participation Jamaal. do thank I’d you. interest Well, and to like today’s your appreciate for to

Operator

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

You disconnect. may now

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