Chevron (CVX) 31 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Wayne Borduin	General Manager, Investor Relations
Jay Johnson	Executive Vice President, Upstream
Pierre Breber	Chief Financial Officer
Phil Gresh	JPMorgan
Jason Gammel	Jefferies
Devin McDermott	Morgan Stanley
Neil Mehta	Goldman Sachs
Paul Sankey	Sankey Research
Jeanine Wai	Barclays
Paul Cheng	Scotiabank
Roger Read	Wells Fargo
Doug Leggate	Bank of America
Biraj Borkhataria	Royal Bank of Canada
Jason Gabelman	Cowen.

Call transcript

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Operator

Good morning. My name is Audra, and I will be your conference facilitator today. Welcome to Chevron's Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session, and instructions will be given at that time. reminder, call a being As Instructions] this is conference recorded. [Operator call now of the turn will over Chevron the Mr. Relations I Investor conference to of General Corporation, Manager Borduin. Wayne sir. go Please ahead,

Wayne Borduin

Quarter and to Audra, Call you, Thank Chevron's Second and Earnings welcome Webcast. Conference

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

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

Now, it to Pierre. I'll over turn

Pierre Breber

Wayne. Thanks,

Second included quarter exchange was and item Financial a million. challenging one foreign for $X.X net the company. loss a special $XXX results of over billion in charges

measures this $XXX million, and billion, million items from billion $X.XX A special including about can loss presentation. Excluding operations in $XXX Puma was or non-GAAP share. be Energy, appendix the was Cash the a found quarter spending $XX.X about flow Australia the acquisition. of resulted in per and $X of FX, capital total for reconciliation

sale Asset our upstream quarter Colombia billion $X.X and Azerbaijan sale about businesses. to were the related of for proceeds the

with flat was we quarter, prior balance sheet. dividend Our maintained a and strong the

accruals the The the economic in in X. Turning over were billion quarter, from non-cash anticipated COVID-XX lower the oil transformation impairments resulting a severance Venezuela, uncertain our forecast, by charges charges. to and impacts price we In $X triggered due operating environment other outlook initiative. recorded second to slide and and gas and of

to price-related items. partially the impairments normal charges Mexico; presence various one of The While and in Asia assets primarily we by various and in asset related gain we Gulf the Venezuela, a to on were a the intend and disappointed tax producing and Permian; sales country Stampede, Africa. in operations in conventional operations in are maintain resume These impairment offset non-operated by day. a were the field

considering reductions. for as the XX% to operating XXXX billion, track at savings with raising lower, year billion, our slide rate the is are Full second sustained recovery complete. expectation we billion are much quarter savings year. guidance of was inventories budget. revised costs unchanged efforts remains to see selections in also expect $X meet to the design cost rate transformation operating run before need fourth trending guidance levels. capital to next and under and in activity from quarter, Operating underway, model will below Organic on Turning to be delivering our original lower CapEx compared we remain and already XXXX. Organization our line run our Employee economic capital new $XX $X at X. in a We additional

to slide. Turning next the

to the financial in by to May. lower quarter cash from priorities issuance remain bond CapEx included second the and dividend Cash successful for on This grow partially the unchanged. Our year. operations straight sale environment. debt quarter market in flow this our We're proceeds. XXrd Higher due low was was the track asset offset

Our debt a our well XX%, of net sheet below balance ahead with competitors. strong ratio remains

X. slide to Turning

volumes decreased upstream and effects. timing demand lower market lower due to prior and to benchmark were to due decreased swing $X Adjusted sales prices, and special of the in billion -- greater FX lower due liftings sales. low curtailments were to to including crudes earnings primarily items last to asset primarily due earnings volatility period decreased due quarter match Second differentials reduced volumes, upstream Adjusted same earnings primarily a to and downstream unfavorable quarter. versus over

to due in to realizations, downstream $X due earnings with crude in unfavorable primarily and volumes an capacity decreased unfavorable quarter, ran curtailments by Adjusted to effects. billion, to over the slide first swing primarily Adjusted lower demand. lower due during X, sales liquids lower utilization and to to an mainly Turning earnings $X compared quarter, second $X billion. billion, below quarter swing by the system Chevron's timing adjusted by reliably volumes. decreased about upstream sales timing earnings refinery lower well decreased margins effects, due almost lower

unfavorable The accruals decreased due segment for to over pass I'll other primarily now to compensation. Jay. swing an in it stock-based

Jay Johnson

X, Thanks, Pierre. a On asset oil sales, excluding ago. slide compared second equivalent quarter flat year to production, was

end that increased and safely entitlement moving people higher production primarily our turnarounds. running Permian in to curtailments During The concerns upstream pandemic. and late the the economies. in guidance quarter, curtailments as occasion by historic at of the have operations lows equipment, course, and prices global With this employees range the employees at were all deliver I'm recovered really shale low offset proud kept tight our of effects our were of have from and the home, needed and recovering energy and reliably the risen during of our quarter. to challenges personal

flow, Turning choices Permian, value. to current to we XX% about to across market the year reduced in while quarterly the portfolio preserving lower We're the disciplined In capital spend long-term capital in second be quickly our first the the cash and flexible to of expect Permian. response balance than quarter. short-term conditions, the program making the half

completion crew. we've our to July, of with operated As rig reduced four count one

drilled our expect on the rapidly positive cash year lateral of this to and focus Although end we we expect has activity investments the pricing. rig in to lower to of the improving level free this has year, efficiency, be changed, our flow strip efficiency XXXX. still capital per at With feet double compared By the not. Permian

of as May half. Permian production back next decline to year, After June, curtailments we're As and current first rest portfolio. half to At the levels, upstream production of we the Early with line Permian X% to production update production in for in X% to expect on changed a in the XXXX short-term expect guidance full spending. we'll Chevron's second production XXXX. activity and outlook shown be and slide XX, capital for result the lower the has about

for capital spending when primarily expect activity as increase. our in reserves, demotion of levels stated As result the in rebooked undeveloped and The view deliver long-term drilling, XX-Q, has may barrels the These to the proved asset's Permian returns funding factory not. Permian. first to royalty we're efficient quarter and near-term in profile changed, With maximize but attractiveness proved advantage, we has well-positioned our of and we our the lower scale, be value. production reserves believe

Tengiz, by departed have growth Korea. now Turning TCO. is posed project future the fabrication to XX% the project challenges with is complete. and Despite our All to make pressure continue now all pandemic, progress the at modules wellhead management site and complete, we

in of remaining first of project the scope as on site plan. the the year. we end primarily construction progress The well, is work second quarter, Tengiz last this construction logistics the working this pandemic, year receive Our workforce system modules We the and all In result and year. Tengiz. is commissioning expect excellent construction made to remaining to our of through reduced of the a XX% and quarter we COVID in

workforce. has to As limited been overall construction due impacted a result, progress the construction

Let's implement workforce. next working pandemic by mitigate hard slide. is to TCO experts protect risk with that regulatory the turn to agencies our closely and health safeguards to the coordinating from the

Critical installation delivery restack the remain A access allow. track. activities will continue boost Tengiz the two we ahead remobilizing begin is planned preparing Looking construction set compressor to the sealift. for return first XXXX, on XX,XXX complete, team the modules. of to Foundations the of final construction in project roads second August, workforce receive, path on work personnel the about install team pressure these conditions such and and the and is are FGP and to and completing half as modules is as and to focused

field winter, ahead With limited and we high the but over progress have productivity the now of remaining. float schedule were schedule

be through pandemic impacts remobilization is to focused key specific early to construction updates to the the able to more project project. and provide project, on workforce and ability next safely Our the year. to further the sustain expect cost the we progressing schedule We're complete and limiting to

Now to back Thanks. I'll give it Pierre.

Pierre Breber

this recent first closed Puma up chain Zone valued the Slide Also, power of with the Xst, started Australia. production July projects focused Asia this with that completed generation, our safely week. assessments Algonquin, in we and marketing will announcements. we will renewable leader highlights will Earlier Permian, power some Jay. integrate Energy, renewable Initial the our and support assets value be signed Thanks, co-develop on acquisition extend Kazakhstan in we to an export Argentina, Caltex a the brand refining in On These agreement Partition in and and the project XX region. Pacific the month, operations. Australia.

we to to next week, reached acquire Noble Last agreement an slide. announced we Turning the Energy. had

people assets, and forward capabilities and kick-off regulatory we've necessary steps planning companies to the are approval integration Representatives both discussion, the our efforts. also look launched Chevron. into we progress, Noble's meeting integrating today complementary to from planning As and

Looking straightforward and ahead, fast we a anticipate integration.

the help should efforts organization our targets. new and integrate transformation achieve internal synergy Our efficiently us

we impact third This LNG agreement. of September. turnarounds, curtailment. Now an including to barrels of per production about to roughly activity equivalent month looking full we of TCO early million. million per to estimated the X about In oil due forward by quarter, be contract be to co-lending with expected effects Australia, the primarily about And XXX,XXX to OPEC+ expect outlook, is $X are to to primarily XXXX, equivalent In an prices. the barrels flat current to includes the turnaround Australia, Gorgon turnaround Based pricing impact due of expected after-tax the of is month production XXX,XXX Canada, for lag have be X year. billion on Mexico in expect day of and oil Gulf Planned production slide of day. XX, our expected $XXX oil extension the downstream, at until in $XXX to net with lower on year the earnings is curtailments

quarter's in and other income the impact prior items. our expect to be distributions segment guidance, of with earnings special line affiliate this less excluding We

of and same our businesses. economic slide. in crises pay all quarter last spend social at Chevron its time, with challenging of in S the our was chain our to of investments communities, this employees reminder our Turning and a for the proud happening and and for With importance the and we're a health, the doing supply stakeholders work with minority-owned We're women ESG. equity social

You can was second and quarter. in sustainability the our read which in this published about report, more

opportunity, work and concerns justice we equal for racial ones, of our uncertainty communities economic know health there's with in and to that So more for loved do. our expectations the

control. and is intend this I'll in the to more for our employees we exit turn in proud better company's With a executing are our stakeholders. to all of On slide the what of five-point place on delivering crisis stronger and Wayne. we plan valuable that, market entered our and conditions. over competitors, current right this response than We're We plan action it the how of to can

Wayne Borduin

to ready queue. mind your now Thanks, We're do have questions. Keep we take a in Pierre. our full That concludes prepared remarks. that

please to yourself try and necessary. to question So limit if one follow-up, one

the answered. do best We of open your get will to Audra, questions lines. our all please

Operator

Thank Phil Instructions] Our comes at question from Gresh JPMorgan. you. first [Operator

Phil Gresh

Yes, hi good morning.

is provided, commentary that for a second C&E to together question the half in kind being Permian X% past, CapEx quarterly rate CapEx your down with First CapEx basis, I said year next just $X the commentary a run you've cash tying in not basis. of for on the X% you've which think billion on

that So, commentary rate keeping that at of with in is the type half year? the the second just of Permian run consistent CapEx

Pierre Breber

Yes.

full $XX the an the then early. year of We second it updated billion average, market plan but budget at for year. $XX of run achieved half of billion. a our billion we and announced had rate response approved that the When to earnings quarter we essentially $XX call, we our reduced a So,

Jay in already and the acquisition, in Energy a back So, in (Australia) crew. that are operating $X the and which is And Permian out and embedded at reduction. the annual that to quarter $XX reductions that's Puma the current that rigs billion were billion we one second rate, the if you X completion XX% at obviously at run referred

Phil Gresh

got Okay, it.

you So, to in level decline? keep it X% X% XXXX for a at that

Pierre Breber

Well, I'm sorry. yes,

that. what XXXX normal disclosure when given an middle the outlook for on, What our activity guidance in we exit process. haven't sharing We'll has We're about lower our XXXX. capital We, on actually, And of from do plan. level. the December being capital So, to XX% completed is approved a Board budget our the Investor our and we our production Permian planning the in we've bit early rate -- for plan is yes, and it's we're just than current relative to are doing guidance. on based Day guided better showing of

staying So time showing And what that activity us that this production you're same guidance. the with just at taken between We're now guidance. that what plan we and recovery then. our levels a will than the what It sort project the level a kind bit There's chart. forward. not on giving determine then stay the would if this looks activity in lot level. We're have of is, economic of number and down of at a like and seeing executing yes, of levels activity what little lower going outlook inventory factors Permian depend on will be will level,

Phil Gresh

for at My question some got in mid-July. that on operational and like September second media of point. this I this Thank It to mean being X there any have is? could getting out you're think there would just But talking Okay, XX% what's but contractual obligations? contracted were what elaborate Train restarted, at would it. just would there? sounds you about think, been Gorgon, color helpful. Gorgon. I happening just able maybe cause on be planning some root meet be it hiccups early about delay And the There you on it's you. What reports

Jay Johnson

I'll Yes. that take one. Phil,

fundamental take to that. in going decisions our with and concern we're is safely So, and always operating reliably alignment

normal or well turnarounds for take heat what part kettle, defects. Train do them, Train inspections to exchangers propane down call As the trains found our some during and the maintenance. operations, some X of we we we X saw in And turnaround,

developed a repairs. well and So, on procedure, we those progressing they're repair

running and in the them the have we September. already expect for the be completed. early been train planned other and here fully work the All We up to term, turnaround has to in expect accomplished near

normally So, in train train what this train at and really X And But heat from the of for repairs to propane completing and to seen on X good going operations appropriate we've out the we X the X these just focus expected. train is We're as to run actions the point, them. findings plan exchangers. actually stable saw X. use

have delivering look there point, we don't this commitments, at our challenges I and So on as in not anticipate that been forward.

Wayne Borduin

Okay. Phil. Thank you,

Operator

Jason to with next Gammel move We'll Jefferies.

Jason Gammel

to much. Thanks But, ex-working tough a for pretty I is cash I wasn't operations have necessarily capital question be from very guess I it's quarter. negative. expecting the Pierre obviously first

pricing quarter result So can purely environment? of you address number? of the that sort item is if the the there's anything affected is a in the cash that just Or one-off core margin this

Pierre Breber

we rising our And price saw did or big of talked we we to and a the in declining a and it a benefit beat about effects and last is -- quarter. in last falling And Jason, a a talked in rising first challenging look, effects. the So, are price timing us was this as environment obviously, -- and quarter. had quarter, the We that perspective, know, miss about this these put quarter. in oil had And that, we morning reverse oil quarter prices environment. second you we one primary quarter drivers in

do COGS roll our being effects a the it's cash underlying are timing when COGS, and relative going difference of margin. through through essentially to And between those some recognized because it's

had addition conditions. to In very look, that, volatile we industry

was it situation. for a differentials, times U.S. volatile at it know, times, had prices you the there in CPC more versus quickly, true are As which times crudes. did discounted benchmark And what times U.S. And outside indicating. with was the very historic Brent. low was very the we capture was at And in physical adjusting calendar but pricing. being where that historically true -- certain heavily we the the were not role blend we're and very fast-moving crudes certain

And And the trading on system quarter. conditions refinery discounted utilization also typical demand. the our in rapidly utilization Brent decreases, to below decreases. West more are Some XX%, of demand typical. U.S., were downstream is our is pattern. ran we out ran crudes well which heavily unprecedented lower sync versus capacity changing managing in normal we than we much the what being then, -- Again, a were In the is is. the with than African had We points demand how our in crew extraordinary be just was second it the

So that all impact thing last and than we accruals lower that the do much that was results earnings The effect and would and swing. out we stock-based quarter, on is, typically in on stock-based margins. resulting employees not a for have it's compensation make volumes point sell cash I'd in compensation. And favorable, for a was first there

aspects and were say, that non-cash some industry realizations, So, nothing, I unusual was unusual the but earnings, no very except of volumes in timing roll elements also doubt, extraordinary. conditions would there's the and through There there's that cash. the was

Jason Gammel

No, won't one. like another this I appreciate quarter see past Hopefully, we that, Pierre. ever

your view Chevron those Second and you Med able announced. portfolio, with to of the specifically interested this first hoping question speak the Permian since I is the potential expansion. you assets able future East the the for us is was the to time, of Jay. be was and might for view give your in Jay, we've quality acquisition Noble on and and acreage, fit into the been

Jay Johnson

Yeah. these our excited obviously assets join to We're Jason. have Thank you. portfolio.

acres an nice Permian, capabilities. think existing of room of the it's a quite Middle into coming in and portfolio. really the such we're Basin with returns. the the I that operations excellent -- portfolio. new to a that running Colorado, they're In nice long DJ XX,XXX into Eastern In a has many our scale fit current is Permian entry a our nice East, this years fit In they and to have addition and the to excited add-on DJ about good our Basin, an operations and Delaware scale us. of We've the Med have two see worked well we and case the into assets, for our set in

other see then coming are on that We'll what's start the synergies there. to in just happy assets good evaluating the will there assets And with So to have. into performance. be balance, I'm nice their Noble And portfolio portfolio. continue we

a I bringing Noble think to the good organization going looking the really in We're forward as fit, to of be and them people a it's family. good lot there's well. into

Operator

go We'll Morgan McDermott next of to Stanley. Devin

Devin McDermott

Thanks the good for question. Hey, morning. taking

Jay Johnson

Good Devin. morning,

Devin McDermott

one of years, up to remobilization had. prepared the detail critical TCO, on planning as wanted to the more achieve achieve that and execution for workforce? really all thinking we of you're we remarks, to you critical back think path little when overall XXXX just on have you're And about the think critical But into ask on critical Just and my the to any here path risk interplay how of some specifically the the next the I with is there materials following about that that the site few you Jay, that of about remobilization project So first time and and on half you line, workforce path. noted items a delays? bit how of the on continue path the on the

Jay Johnson

we Thank modules quality the to progress good accurate. Yeah. dimensionally wintertime, the and of over and They're coming complete made with we've building on us. as we're with schedule being time you. actually completed ahead great the us said, Well, to coming and

Those going elements like of many maintaining standpoint, Kazakhstan, is through a this the From the they're COVID. expect our the ground expectations, in sealift significant we key and other to countries project. impact year. the from meeting have the on So all schedule are on workforce all finished

to XX,XXX we the to our of back. precautions, so of need about about quarter. And planned That's that XX% second we in bring part the workers workforce demobilized as

take crew Once been in were change and given put test to the chance progress Tengiz, we point them been affect tests, the and involve groups, before in put in we of origin set sufficient keep putting in other remaining June that a their those live, a before quarantine period have on that of to still from includes to systems We're we to isolation. July, Tengiz. to to people place. pod Even we've isolated that we've and strategy but isolation at testing they meals, groups can that's to protect a During they have And we using they're that sure allowed place Tengiz, where people with then they trying how return make they camps us those up, together to negative so workforce. in mitigations isolation get workers that where Tengiz. transportation, people retest doing we

the the sustain making concern can Our is that workforce fundamental sure safety rebuild. operations and we as of we

clearly, environment done that's We change expect into And moving about project difficulty the take dependent people learnings a of to continue of well we'll the internationally going the adapt as a scale. for mobilization But that to be Kazakhstan, this move place and over to we we've as the crew four-month in upon just remobilization. forward take the as period. as

path on continues work volume large in activities, that didn't off but critical quarter. we've focus get of got work second also Our the a to done

remobilization We able first goes. we be on next some see year. but and how And this work need of so pandemic, to schedule, forecast of impact, expect you, in effectively degree to at able to kind to give to -- we within update people I an updated really to able need to probably how the any more think, cost you be see sustain of really quarter or we'll we're the

Devin McDermott

well? U.S. managing the part to leasing the part second just that the question in environment, partnership about how a to thinking for this the my risk, shifting clean regulatory things short-term this in And how as And just potential there's around on of strategy around of managing waters. with investment one, helpful. time. government very the the shorter-term you're you're clean over about longer-term longer-term from an lot part. hydrogen That's Mexico? strategy and Algonquin it. longer-term investments specifically permitting changes, into also a or renewables potential the question how federal business the and energy or announcement the from relating is thinking like within fits There's presence federal discussion like lands position is Gulf things on is the that Chevron potential of second longer-term the standard election discussion and large And one maybe Got a piece. and and some given the And And recent

Pierre Breber

coming I'll well Devin, of level, in of course, levels essential at at federal in the big priorities out highest will carbon leasing. we very governments responsible company, with Energy to Jay that. a in the the of federal a country we're in think let this jobs parties. part intensity. energy reduce and countries a whichever commitment address we recover world to look, to, we state We're gas governments big pandemic both economy be are oil And ESG, part U.S. Sure, is work local jobs taking the with the including actions the of start in world. on a will I countries, from which governments the question of mean, think with this work or and around number We all different the the and of number good our be economy referred a economy in states a the paying the and priority as and world. this I other around and economies and are and U.S. of and

focus our So transition carbon energy lower on has that areas, approach can do things we I our three to think intensity.

and support we gas can XXXX, greenhouse business. to how increase intensity have We renewables our out metrics

us Permian some this accelerate in up we announced wind And our and way we've solar to operations a So We the Algonquin gives scale Bakersfield. had an been alliance in and is up the previously. and globally. partnership it that scale to just and to partnership just doing but

space, California, continue the of do the in third fuel our And our We in liquid renewable that batteries. is sequestration, renewable gas, technologies area includes particular low-carbon carbon carbon breakthrough consistent intensity products, natural that investing focus standard. reduce in hydrogen, then fuels, to the in and renewable actions with

the We sequestration the are projects Australia. world's of largest world's one in operating -- carbon

of this a been long are elections a are of intend we that's number a And There in So be countries can partner there's to be with and we've as we and in what country find to lot to governing intend between in a a business what long say, answer And force a do constructive long governments do. that aspire we We think that we wherever good a time. be time. to occurring. is time. that business operate, a ground at whoever company to common we

I'll turn it that, with Jay. to So

Jay Johnson

I ground producing on that bridging have in Mexico natural the both in our to go. just Pierre. lot administrations we've reducing I a common Permian. think on economy. to think think where and to emissions, We the of we essential jobs the with intensity start a and on and growth. the had flaring energy economic actually focused fuel we gas Thanks, this. Because products. Gulf role of build essential support as these I'll produce there's methane greenhouse already a want head these impact and in operations emphasis as Mexico the we we've to been that gas, saying Permian potential Gulf the oil our on by And on an jobs stay focused of continue gas plays And reducing and continues the are And important

the continue work to understanding footprint, time, So place with there's footprint. same the administration move a carbon reducing and to it we that the and good work impacts whatever lowering continue and at our But going of focus to may forward. as emissions to regulation is – that we'll in have potential make on sure we're

Pierre Breber

Thanks, Devin.

Operator

Neil We'll at go Sachs. next to Goldman Mehta

Neil Mehta

here. and for time team taking the thank morning, you Good

the buyback. breakeven. around past, XX, you've I XX about talked had cash In at Pierre, CapEx and breakeven question cash The flow first flow at after after is the XX, dividend the

lot downstream, aligning us helpful about for there CapEx pieces, particularly moving with math your that you you There do be But are the lot how side. now? think about models? think any would the of flexibility help breakevens Just of there's can on rent math a and a

Pierre Breber

right. you're talking talk constant. When I part not else we're is and just we exactly held Neil, about breakevens, mean, oil Well, one about everything the portfolio of

second the and in we're The That that say So you'll else would assumption the and around back the in shown performance, XXs. just breakevens time. I quarter. to downstream we've over is guess we've that actions just industry. almost different had XXs. see will see in down that place in it step in you taking everyone an a – certainly than we're I has But first our get

sheets. one excellent net ratio discipline down. have capital our We're strongest XX%. quarter the debt balance exiting here program flex a the of of and got ability the to with We've We capital

in quarter of We asset course, year. aren't spending and You before last right barrels this plan. again, saw XX% close been last And of in Energy started coming sales that one to signed generating work And restructuring the our and change signed now hopefully COVID, the started we we is way. well agreement took and And it our add that capital saw reserving quarter, capital we have week. others. we of sustainable those a you in on with cash. We've track. needed, acquire on not and an recovering extraordinary that it then contracting as sales Noble and And asset we're an down circumstances, out ahead world the just to

financial priorities. our actions – with are So designed of we our all consistent

stress costs sustain the stress the through The We have ability very the was we're is in dividend to and flexibility I is manage business. clear dividend. our our our made quarter, continuing test. that the value $XX, first and capability to of And to a that capital to long-term what sustain we think sustain showed that program, test grow last financial the

as the on we're energy, capital in in the inherent although, and the activity it value world we're will balance Jay will we're come in brings months resource making years. back Permian has course, And in taking years, And again, maintaining of a there. investments back and So in several not when talked still Tengiz, is the production which come about that needs on because that sheet. strong

So that's framework. the high-level

that frame. quarter second for We're question. Our our Things Jason's sure as very for environment we breakeven it. the goal It not lower lower to uncertain won't but But are value, bottom. got a a time. but the we've as That so we in resiliency. now, it plan the in feels just as make better we get is be manage sustain and our a support longer, It's low in second sure dividend like over that to can We pay know they time quarter, for than longer. how problem, obviously long-term were grow to only April-May the definitely We was planning downside upside. can. for the particular hope show

Jay Johnson

Yes.

on bit, little a Pierre. that build to Just

One have like that well they is I as Noble capital of assets flexibility. the coming also the about things great from really

been our developed. So And it about of already proved the strategy well. quite have reserves XX% fits

for largely So we're the is the at past, assets. the capital -- and run these now big opportunities looking in

Neil Mehta

is it. Appreciate impairments. And a follow-up here around

system you said You than at took just IFRS the different Can $X.X billion bulk just your of Obviously, approach impairments? in And little your the you talk to which the you're Do framework look of calibrating think of talk is by some impairments? about about you quarter. system them? through a competitors. your the

Pierre Breber

disciplined way fourth And that ruthless making capital was large and that of course, about took but in to the capital impact fourth capital with saw impairments difficult of quarter right? the related is start is and decisions, And being again, and were natural Decisions our returns, were impairments gas-related. primarily a made choices. me the primarily pre-COVID, we we let to those higher when primarily we that this, that Well, invested quarter. trying in drive really Sure. where

we This quarter, comment price pandemic. outlook and it our two economic unique and reasons: global sure the to; based from one, did I'll Jay impacts the will primarily on situation, was Venezuela, I'm for on, lower which add

don't clearly, the results some in lower with lower And time demand period. that prices. we know be. just clearly, But recovery contraction and in what but we assuming impacts reflected So for economic economic it will the

been it's a the been So operating in Venezuela, even more we've In value. while. second difficult a assessing became our investment difficult. the environment for environment quarter, quarter, Each

our net day. net was -- As an production X,XXX share our just in of June example, barrels production a

really off. it's fallen So

view it GAAP direction. other unlike U.S. to rules, it accounting value And one have whether it's one an other temporary, than the and the as we we we is assess only in so if in loss under than goes the temporary. take a -- IFRS, impairment. And rules accounting And

few about those, to oil tied of severance. I the we talked were and ones had price, a then other and The a

lower maybe the a assets -- We're GAAP. The price-related price comment is impaired. the value. the Venezuela. quarter, impacts are impacted follow It really I one by -- at remaining U.S. quarter. hitting on can mature about the where all term talk was most it Venezuela. direction to are price-related each this a And mature part, we price comment than gets But last So on for assets, the not impairments were production short-life either ones really going can kick it again, duration say outlook. look quarter. long-lived remaining lower maybe different carrying the had The What nature I'll and where just ones, Jay Jay to late-in-life assets, to

Jay Johnson

to resuming there, in one Thanks, we we what And our full Pierre. still Venezuela, changed. but took forward not being the we to approach and impairment has are present Venezuela, fundamental committed day that's look operations.

there. asset all just regulations, we're laws We'll license take to still to force asset day Our be that XXXX, assets in Venezuela. Xst but our on maintaining communities for it to we in safe. time, people commitment December, we compliant activities at And the of license allows focus keeping continue believe for the think a support Venezuela. was on remains. and with We and extended both our We the take U.S. good. operations And the value is us still a and underlying and and is integrity. safety a and And

Neil Mehta

Thanks very much.

Operator

We'll move Paul next Sankey to Research. Sankey at

Paul Sankey

Hi, everyone. okay? hear Can me you

Pierre Breber

Hi, Yes. Paul.

Paul Sankey

of couple Hi. things. Thanks. A

in result the and having smaller you companies quarter, a breakeven. a the us as good results. lot had mentioned characterize to not the whole appetite, of that oil second quarter, trading as couple fair in mega you the seeing benefit just Was operation guys on had a is, trading follow-up And wondering? of Firstly, a was of other it problems you very I

sure by breakeven strip said I at I breakeven. thought he comments his year. think, also Jay, mentioned in and Jay I'm the end the of

might my But if lot. talking It if that, towards So might I or various I got clarify you are together missed parts? in have I XX? you that for getting in be Could what's apologies. could -- you down wrong a about downstream head? just me. moving those just Thanks that bring Did

Pierre Breber

Okay.

that Let me me breakeven who? Well, was -- address asked think And I just anyway, that. the Devin or question. whoever it. asked

early going costs, again, and guidance with track are was right and our constant, So, -- reduce very the volume. actions and year breakeven last And XXs. our that XXs. in talked this else capital chemicals, downstream held lower taking, take again, else on breakeven we're are which constant. to In reduce into well. the would held quarter margins not lower and much we’ve is and everything Everything our But particular, weaker low about

that being So see breakeven. to those time, Permian stabilizes as through as downstream we'll over But strip to lower a the have at talked positive We out. flow flow cash then reductions shakes pricing. free about should

we clear only also upstream this If flow that now, disclose don't -- trajectory. in quarters. going I you in to in this to our future much our free we at was trading those created positions even for and market said. and year, of flow was refineries, in Permian, But characterize cash a be contango, all It the run specific was see we the at that segments level results Day. the and opportunities that pricing. certainly, a and around positive. organization out the strip our So Permian as wouldn't different then ensuring to remember, -- our the this the the steep trading those higher that changes that we go downstream our the quarter optimize level and trading as flow upstream and had trading, barrels But that to And are affirm we'll investment you'll and way separately. and quarter, earnings in our at trade. we still of times But guidance organization on, which Investor been exactly trading had the priorities And, for we've are organization. in the pretty investment

Paul Sankey

Thanks. Okay.

for apologies misunderstanding. Thank you. So

Pierre Breber

Thanks, Paul.

Operator

go We'll Jeanine to at Barclays. next Wai

Jeanine Wai

everyone. Hi. Good morning,

Pierre Breber

Jeanine. morning, Good

Jeanine Wai

first allocation the capital of I decision. output guess, is And, morning. overall an is on Good that question understanding My business. growth

structure. know you materially think those targets just to talked hard to prior really of were and kind about? at an at about to working former given analyst meet updated the meeting that the on I just cost Is that targets laid Brent Or for out longer. planning way lower right mentioned the $XX reduce a ROCE below for price you You're CAGR opportunity the your there no the X% you view that are business, you longer the for macro? Chevron

Pierre Breber

our add. are and it's all is of volume start whether I we there. want to me other Permian, of let that it's there, to resource the kind certainly, ability Well, yes, might and opportunities production showed because the they Jay all opportunities, mean, in whether the the during Day, Investor deliver the

Now there's years, Day nominal agreed for Investor a showed and we oil weeks Brent was which in were by flat contraction. I later, assumption, on by XXs, X. $XX pricing a a fell few economic agreement no And weekend, apart. doubt, we that And was our March massive in five then And weekend, think. had the reasonable a Russian we the and the savvy everyone

is sector discipline. at be, that we markets. of back Day, planning still look we'll absolutely our production changed we're of a is capital have think I doubt So The underperforming we're will the the to step the underperforming strategy? no And and Investor deliver equity But to updated revised right and our low and that that of provide the world there's guidance. is primarily middle ability from broader returns there. question and that has that in of process, because kind lack a

ruthless to capital and to disciplined in have around with approach organically, capital really with too, a It's have way returns you flowing discipline taking Devin's not is hear disciplined we to us in question, disciplined our returns being and it's having transition is allocation. our to disciplined talk inorganically, our not and by our investors, portfolio about regain being favor be with high then the capital And way. to back only capital. the organic by being So increase do energy and generating capital into downstream, actions by disciplined to Jay that in and opportunities. very when the in that by we outgrowing The be

opportunities all returns capital over that's our there. that's are is think raising revise to commitment But to the Whether discipline, returns commitment to higher it's our deliver the we're All forward, optimal continue, decide. for to able is essential be going to us our I way most plans. the going going to So time. to say outlook we'll and

Jay Johnson

Yes.

year coming asset hit, organization. units. I in think that, on had one has aspect encompassing. We've on before well, operations -- That We're be it's that reduced on and organizations, already performance coordination that every we're all built technology to we and It our to we this. better the sure integrate our build that across our from effort, was the we last transformation covers crisis to do into a efficient across into to business technical reduced strong business across layers our but building which to business well effect upstream, and very really our company. so embarked trying had into regions. can COVID adding went were July we on upstream, we geographic-based as making class the provide of services transformation the in And X. But we're as effort served we us units. two three how four unit In workflows,

team the getting focus better that segment that we can perform way So boundaries, products our And geographic and highest we're we've boundaries boundaries. and added additional through and for making also unit across on can the the we realization chains all upstream in value. business value sure

well understanding and mentality, some said, where what's the we're the our returns turnaround financial throughout Pierre involves the today transformation as around about where that business, lower that of lower come activity incorporating, lower-for-longer and it is seeing. fluency impact to some the focus think I the how as and improving of are effects the think So the going getting we're that's between on activity the we itself, as we to gaps workforce restructuring, some possible while biggest other are levels,

to aspiration not this improving together, only for but commitments the do So continue towards think continue see find you of put to structure, I we'll I cost returns. going to as all drive to we're our ways that think lowering

Jeanine Wai

Okay. My Thank is kind but question Yes. on of you Great. Permian. similar follow-up a the answer. --

and mentioned million deliver specifically, a think you of you some on based efficiencies and medium mentioned? you billion improvements that productive you assuming your day that But In Meaning, improvements that the mentioned, efficiency Permian you've at off. day be how what you've a Chevron of grow capacity $X to of just same the there's recovery that's could or on a term terms I the can CapEx? beyond efficiency could materially drilling longer looking a in billion you've demand, X.X million these the and $X mentioned material ways seen, about to but that before of that barrels X.X do CapEx. know similar lower on

Jay Johnson

Yes, Jeanine.

one the to complete seeing maintenance, continue how poised our integration our the Permian best The are advances drive of to increased in technology, efficiency of in operations we're from throughout the advances The all think, we're but that to centers, the efficiency, example reservoirs and the I efficiency. driving just is drilling and operation those. where understanding operations. produce the

asset And ourselves we changed are that and activity even think working actually we the value the those in, we can that mid-term given it's about excited I'm is changes and how this prudent, in find we we're we've together the While the current underlying levels, near-term because of making the environment organization. really and unchanged. because long-term value

deliver And operator do on more Permian to Thanks, continue able Basin. the us and to expect effective to more deliver a previous expectations in on Jeanine. becoming be efficient, I so see

Jeanine Wai

Thank you.

Operator

We'll Scotiabank. go at next to Paul Cheng

Paul Cheng

morning. Hey, Good guys.

Jay Johnson

Good Paul. morning,

Paul Cheng

two have questions. I

say, machine. this Jay, it's that problem given in I think only Pierre. than has years I have mentioned a one problem. and for less stream for Jay, bit It's five for, you about you new feed surprising, one the Gorgon. on come the a mean,

also that if some as is X same Train Is to the are, So units? And is the the those vendor whether is inspection Train did issue X design And Wheatstone? those have workmanship? on and or poor they already you problem? applying just a as well

Jay Johnson

Yes, Paul.

found they we not a a discovered original in of They They're there inspection. issue. were I at in all, wells, are And defects when when manufacturer. defect its X the major for encountered we that as design part were the believe as but So that's train train defect. said, the we down inspection, took routine from we X, the particular and manufacturing turnaround first this

until see got learnings expect the for we and same evaluating have place a are different that issue same the there. address replicated put manufacturer, that's we've Trains mitigations additional not been We in vessels X to It's based We in Wheatstone. best accomplished. and And the how the to X. do I manufacturer on don't

Paul Cheng

just X and last in train through or already the year recently, Jay, right, And two? full the went train X turnaround

Jay Johnson

went X through X Train last turnaround year. Train No. year. next is scheduled the for

Paul Cheng

that's then Yes, X Train through the X more a risk. So an because turnaround assume should when already of than that is X you train in discovered? Train the I went risk if have there's issue, you

Jay Johnson

how are see inspect Train inspection assessing in and X, that to we're but this if not at need whether not the time. And addressing it repair necessary, issue Train go we did best to X through and We again. or reevaluate we

Paul Cheng

Okay.

X... Train So

Wayne Borduin

Thanks, Paul.

question? Second

Paul Cheng

Sure.

you're your you investing that Anchor CapEx have is lower a Permian, for because and is comparing – But cash from hear that. company. we Pierre. improving Permian. clearly to return still flow Permian which standpoint, much highest project, in is while and say, then are cutting heard return in we you Tengiz, actually one is that your question priority the of about, Second I top We maybe the for priority return the appreciate conflicting that,

your mean, that the So in able how are to will take? I least exactly be investing you most not what raise at the to going profitable in to the you project? company able year two that maybe be when or steps is next return,

Jay Johnson

So we've the Paul, we're unit you as deepwater cost down things been our development in one of bringing doing, the know, significantly.

assets. $XX in and opens a as Anchor, new new the to a is for Our barrel. past, be target we've of class below opportunities deepwater talked about us up

not most rather it of bring different focused on the aspects are on keeping the all We consistent pace. of its but development having COVID by to in certain and We're the of the impacts a project as Anchor aligned move the date, efficient crisis. we pacing through

any world the of in it's the on around – the assets to the is bring oversupplied. see so when heavily Permian, terms we new of simply don't production In investing capacity, world point

And continue so. it's overall we'll current we're to and and flexibility, when to at so the activities and industry. that better up we appropriate begin look because exercising a environment, for do fundamentals see supply-demand have ramping And that, the funding balance, we better

Pierre Breber

we're to pure-play Yes. We're frames. going and comes to classes. production and that company, be be on And across months, on time that Jay Only what one in look, years, one we're a that they're and on going operating to distinction. comes add not production involves involves different different asset said, diversified in making

on has hard. Thanks, supports laser-focused short-term been very capital We appreciate we've questions. that adding So hit capital your value, production long-term been that's Paul.

Operator

at Fargo. Wells Read Roger to next move We'll

Roger Read

I guess to follow morning. things good up Thanks, Yeah. two on.

for question First TCO. you, on Jay,

when do Pierre written-in-stone something I don't is does are see different? what or in outlook could ought think And about XXXX to as critical on you second become Permian eyes you tweak something the XXXX coming critical project to then a if XXXX could question is to in those you for you. as Just for and versus our think that we for that for path items. What along mentioned the the really the that expected? But we event your X% keep down know. X% and unconventional you confidence –

Jay Johnson

of integrated. critical utility pressure And the and wellhead project, it focus TCO, and FGP setting the of for through where is. the fully that's facilities the our boost the those for all getting real So, path management runs project the compressor part modules really

Permian, their expected. represents deliver But on So bring focus. Pierre work electrical maintained modules that back main crews really well if be were that able it's mechanical, are be as has and there's we set - quickly, to once to with happen. lot very on the of as those the A instrumentation a Breber Yeah. project foundations. work That completion that to to could look, the And parallel in

a flexibility Permian. in lot there's middle budget. planning reallocate – the just lot even world again, We'll It capital But to of budget, our we goes So of capital after we're process. back the question, a capital have it's a earlier the there. if changes. And update we in our the of can there's value

sustained levels then with inventory want but we'd recovery, see change rigs adding the -- something to quickly adding So economic crews could we and completion see down, it's time. over very that heading by

Jay Johnson

take Just backup. it as can we brought it down, we

Pierre Breber

Thanks, Roger.

Roger Read

Thank you.

Operator

to go America. We'll of Doug Leggate, next Bank

Doug Leggate

in Pierre, just continue for do I looking quarter couple Thanks you elaborate ones. got you what foreseeable assumption? price as change quick debt, future? of squeezing for last your out the you've given got guys. over I'm on you just a of is could headroom perhaps add will anticipate substantial really you to that pointed And

Pierre Breber

I'm sorry.

that you your You Doug. Can broke question, a little up again? bit on say

Doug Leggate

Yes.

can hear So you me now?

Pierre Breber

Yes.

Doug Leggate

Okay.

change And earlier. you So substantial you could to the please, you quarter? got last given price debt, that additional on elaborate, still out pointed if you've you adding as on do anticipate headroom assumptions referred

Pierre Breber

Yes.

price think We at price market think interest shareholders. We're buying take So period the an we economic it price our or commercially some products due in I our that I'm closely time outlook so And will economic are selling like, the is. linked primarily again, our look But the assumption, want sensitive. been We knows view are it's likely We and much sure that's our know our our what recovery to what disclose global activity. on economic but can clear outlooks. and wouldn't as the lower of to recover. not in No more. there's to activities the counterparty pandemic. will lowered what say outlook to it don't assets, don't we to price contraction, due times one the we obviously

we In to right the quarter. did continue a We're than issuance pricing. after had very last very a It in bond debt, strong the of of terms peers market. successful better we'll monitor our we terms any position. And of was that in

think at levels, paper another to is it's below thing balances we is. where but certainly the the do our and look issuance we commercial are market Our right And and very go if couldn't do. liquidity to comfortable bond what well we levels, the market always

Doug Leggate

there. bit, follow-up can leave remediation I'll you're to for Thanks. about I anticipating? Gorgon, it you is what just Jay elaborate, ahead the true a Jay, comments get My but issue? real bundle Thanks. Or quick. this your hate that is a [ph]

Jay Johnson

the you for are about vessels? So repair asking the

Doug Leggate

the I'm to Yes. remediation, just problem what options for understand nature trying the have what of you remediation? and

Jay Johnson

abnormalities It's pressure we're a some looking really just grinding the out and and for. that we have well has containing that ensuring that and replacing capacity structural

Doug Leggate

Okay.

under no chips replacement? So

Pierre Breber

Sorry.

You're breaking up again, Doug?

Doug Leggate

chip no Sorry, bundle required? replacement

Pierre Breber

required? Replacement

Jay Johnson

not effective. do fully believe we replace We going are the vessels. need to to the No, repairs be

Doug Leggate

lot, a pals. Thanks Okay.

Jay Johnson

Doug. Thanks,

Operator

sorry, next at Sam Margolin may you we're not We'll Research. Sam, I'm have Wolfe hearing Sam, to go line your you. muted.

may You the have line muted.

Pierre Breber

don't Okay. to Audra, we why go question? next

Operator

Biraj Okay. go We'll to of next Borkhataria with Royal Bank Canada.

Biraj Borkhataria

I of question. a had taking Hi, thanks ones. my just quick for couple

TCO. is first The one on

talk timing. cost? there around And contingency on how a follow-up I you on And some much you. But of the up on have impairments. that about you Thank then Jay, used a get the that? sense left contingency think, you can I mentioned is just

Jay Johnson

we remobilization we where you But and fourth we that were quarter efficiencies how the gains schedule get also going on to we The through made saw on that this our workforce. consistent have making we are, in schedule really see the and cost. with gains are sustaining tell to we're to

probably cost early year. update next we'll So and schedule

Pierre Breber

higher And is Biraj, half, is capital A portion portion billion currency and $X but said a lower productivity. about year. benefits less or of but deferral, about currency effects that we've this

savings all rolling just through. not some cost deferral. think those are we So It's of

Biraj Borkhataria

Pierre. you, one then And Understood. maybe Okay. for

also and alongside medium-term on impairments, the your refining On commodity lower did the chems prices, expectations margins? adjust you

Pierre Breber

related. They're no all are impairments. There upstream

we -- There some have for have no all written no that biggest of outlooks again, it. were we and part various were and LNG, also margin. and off. mill And So then price-related there were costs again, they there the upstream and was -- suspended impairments impacts is refining chemicals But related, upstream the Venezuela yes, downstream the chemicals. were was

Biraj Borkhataria

Thanks. Understood. Okay.

Operator

comes at Cowen. last Jason Our from Gabelman question

Jason Gabelman

me specifically, squeezing in. ask wanted business, about U.S. downstream I was this for weak thanks Yes, to the particularly downstream quarter.

it I still just the challenges of term? would the I timing along downstream, have to was the what the think in Can portion business? for thinking of think, in to outlook headwind all experiencing, of about quarter particularly U.S. you impacts that near your business follow-up. have I'm expecting. part talk you're missed, even the attributing people the some that maybe And overindexation a a part of this I lines of the the the West were Coast and

Pierre Breber

Yes.

we and and The safely ran very conditions. second first our execution crude thing is, excellent. under utilization the again conditions Jason, XX%. was and I'd our was referred upstream quarter I of and in difficult kind upstream reliably across extraordinary U.S. to market mean, downstream across our say I portfolio downstream

Now it's of operating it's and now. XX% of higher that XX% weeks. north next heading Its couple than towards the here in

we matched to our supply So We contractions. our there demand. were extraordinary ran,

to build significantly channels significant. weren't is the and minimize we meet -- which had we going but reductions to our more inventories we production jet any even reduce try we jet match, because to and tried and marketers, our going very to have demand, were sales through were Obviously, retailers their to unusual. in We

three second that we planned never actual the -- was model, just led outstanding. frankly, circumstances that under business we work It's in I the thought the had years. execution I for -- So think quarter. don't the We

we ever to at plan XX% did Nowhere crude of utilization. run

we to did Nowhere as jet could. plan make as we little possibly

it volume a Coast just was actually -- the was better. It Coast I which entirely below I Coast, the conditions. varied. West level. extraordinary really think West West transparent margins, mean, ago And I the on the There times at are it's think timing you'll But take PADD West there. the all it's effects, wouldn't get I was effect, was well Coast if not portfolio. it time big So they're There worse. you I and The when across mean, view executed. year inventory you very look levels X, are

was It there quarter. So the periods. a fast-moving regions different operating circumstances think, were time of second Different at set in structural. I was nothing,

second better in obviously, it. global now the a first impacts Asia, the right held operating impacted that's the was And nature economic up in outside quarter. the pandemic. kind quarter. U.S., more of the And It of through of

Jason Gabelman

pet the guess, been TCO next X that JV. is then I chem within follow-up, your Q proposed ends in Thanks. the Sure. And have of crackers project, are CPChem large the kind the once

those pandemic? how either think next demand chemicals your given year, FID-ing about but was about the out. crackers were this and Can late those pushed being growth FID or about from X I the thoughts talk early you're you overall deferred year just FID thinking

Pierre Breber

demand better chemicals Yeah. flat even held up is I to demand bit. refined maybe a mean, has than little well, our and up products,

some mix effects. been there's So

things are pet some down. But lot held up been But weak. has know, pre-COVID, of supply even Some a up, overall, it. you margins pretty are as There's demand at are things well. chem

got industry. really not for So and demand I'll just just to company key supply look keep side. It's that's And capital the going discipline. to the the We've the side. the for at

until are have very But economy of advanced low We players cost very and right business everyone invest are investments where -- we projects. it to other like have in than like believe low, pacing very capital almost just be on of the we the competitive the goes in better have In They where go others, clarity. those they'll But more deferring curve. feedstocks. industry We long-term. decisions, we to words, get they terms see than how you're we So really long-term. They have right? forward. We'd end the going most compete, about construction disciplined and costs. will can

Jason Gabelman

Great. Thanks the time. for

Wayne Borduin

interest you. time back your today's Audra, everyone's stay today. to thank and to call. your for healthy. in and like on Please participation safe We appreciate I'd everyone Chevron

Operator

Thank you. Ladies and gentlemen, XXXX Second Conference this concludes Quarter Chevron's Call. Earnings

disconnect. now may You

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