Chevron (CVX) 28 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Jake Spiering	General Manager, IR.
Mike Wirth	Chairman and CEO
Pierre Breber	CFO
Devin McDermott	Morgan Stanley
Neil Mehta	Goldman Sachs
Roger Read	Wells Fargo
Paul Cheng	Scotiabank
Sam Margolin	Wolfe Research
John Royall	JPMorgan
Josh Silverstein	UBS
Ryan Todd	Piper Sandler
Jason Gabelman	TD Cowen
Biraj Borkhataria	RBC Capital Markets

Call transcript

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Operator

Good morning. My name is Katie, and I will be your conference facilitator today. Welcome to Chevron's First Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' remarks, there will be question-and-answer session and instructions will be given at that time. reminder, call a being As Instructions] this is conference recorded. [Operator

please call now Chevron General Spiering, turn will over Corporation, ahead. the Jake of I Relations conference to Investor Manager Mr. go of

Jake Spiering

and Welcome to Manager quarter conference Spiering, Thank you, webcast. Relations. Chevron's Jake Katie. I’m Investor XXXX first earnings call of General

Mike CFO, me. and Pierre Our on are CEO, Chairman Breber, Wirth, and with the call

on the will prepared available and to are slides Chevron’s refer We that remarks website

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

turn will I it Now, over to Mike.

Mike Wirth

strong financial last cash sheet. return for XX%. Chevron results delivered quarter greater enabled consecutive This the returned with to strong capital than balance employed again very quarter, shareholders record seventh while another on a maintaining

ago, the investor continuing remained Bend positioning products plans. and oil, major day executing our on months United delivering economy. the in important Kazakhstan, to safely project that and storage one in the our States, and gas levels on Permian, the two Achieving reliably global activity natural power largest focused milestones carbon our of help projects Bayou in be build we’ve to Since

publish our the matter you I Sustainability Corporate review it business and updates to our to on Next Report. ESG we’ll website week, provide our we that as encourage on topics stakeholders. our

new both to and is and cash cost capital traditional unchanged: businesses discipline returns commodity approach advantaged In our while to assets uncertain, closing, in remain markets and shareholders. applied of energy steady

in and results. actions our our You that consistency can see

the quarter. Now to discuss Pierre to

Pierre Breber

of earnings tax related or presentation measures. item were contains had reconciliation billion, non-GAAP to of per one quarter appendix in Adjusted profits special a this Kingdom. in reported $X.X share. the changes share. Mike. first $X.XX We United The Thanks, earnings per We $X.X of the quarter billion, this energy or $X.XX

within budget, guidance to repurchases top per flow X%, under dividend net cash CapEx share enabled Chevron our a X% debt financial at deliver range. share prior the increase, during its quarter ratio higher operating on the Strong priorities of

were earnings refining Upstream last quarter were higher to XX% timing effects. and due primarily from versus a to Both first over benefitted Adjusted increased due lower segments prices. realizations lower earnings mainly margins. up adjusted million earnings $XXX downstream change despite Adjusted in year oil

Higher and interest accruals compensation lower charges. stock-based all income other for decreased

Compared with and quarter’s due Upstream last earnings were to Adjusted include $X.X realizations. items quarter, last and at tax Other adjusted earnings lower decreased withholding expenses. billion. primarily lower the TCO absence transportation exploration down of dividend

essentially favorable offset were earnings and All with trading compensation charges and were net decreased accruals results. for chemical flat. margins Adjusted Lower volumes benefitted the incentive-based Downstream operating Other segments also higher other earnings items and including Lower

oil to of equivalent This offset was from contract the Permian. Thailand was expiration in production of and sale the XX,XXX per in First the year partially barrels by day down quarter due Eagle last about our a Ford asset. growth

back-end increase XXXX expect put non-operated production to Permian POPs wells the operated on production, areas. growth and loaded be across We as both in

royalty production roughly be We flat. expect our to

each activity XXXX. year, second the expected be increasing four of Mexico. we’re in this As company-operated year half Day, discussed during New and the rigs POPs in quarter, Mexico, our New added one more to Investor into All leading in will

evenly Texas We and Mexico. Basin split also in was continue Texas. Delaware about company-operated to of the remainder be between production with about our Midland the active the Last in year, in half Basin New

operator. areas contiguous compared where to have non-operated of five development half a than visibility in to in operators we programs, benefit schedules core multiyear our with and capex and positions More major is the with production execution large, royalty

River the royalty a royalty remainder in and operators area production where in half of from predictability greater the heart similar than is with of little The dozens less our diversification. the our Pecos the of Delaware operators. More but Basin. balance Delaware other The well-known balance the Basins, we of Midland with position is have comes of visibility, from also

in diverse operations own and advantage from where a royalty Permian Chevron with the summary, we learn position a unique In from has large, our others.

ahead. In along Also, expect Gorgon Now, downtime increase and of to refinery the billion quarter, we rate. FSO looking a turnarounds at $XX.X second Gulf the planned a of number to a expect buybacks share planned in we and annual Thailand Mexico at with turnarounds. in

continued quarter discipline, to another cash a results, shareholders. and In return strong with summary, of steady capital XQ was financial

for consistent that confident stakeholders. management, We’re straightforward and cycles, value create will commodity through

Back to Jake. you,

Jake Spiering

remarks. concludes That prepared our

ready yourself to question and now limit one are questions. take to one Please your We follow-up.

to our all questions best We will your answered. do get

open please the lines. Katie,

Operator

Thank you. comes Devin Morgan from [Operator Stanley. Instructions] Our with McDermott first question

Devin McDermott

Thanks morning. for my good question. taking Hey,

Jake Spiering

Good morning, Devin.

Devin McDermott

morning. Good

there, helpful So operations. of I some your sequentially back-half a ramp drivers fall things in ramp. were the are on in as slides have breakdown the Mexico wonder typically there a production remarks that the If detail and versus if some XQ. detail weighted New that's the the about you talk I how XQ did bit at And of more that you activity. in bit could volumes look just you permeant the in confidence going quarter,

Mike Wirth

royalty, Yeah, a and feed detail, cetera. COOP et tried Devin. show talking more Pierre about thanks. drilling including Thanks, breaking drilled little to JV, out activity

that that was glad So helpful.

from fourth portion royalty a production, year. NOJV bit and was from quarter can as really last overall is, a of little chart our function down of was quarter see fact production, you a First that of that performance which the meaningful

little gets this how due partners. gets little Now, a lumpy reported by to a it

lumpy, was fourth NOJV first last quarter year, over piece. versus so, it a up, down particularly And quarter time, it's was the little and it trended But

mostly flat this quarter last from of to first year. was XQ production year COOP

the expectation. on in Slide mid-teens, grow flat COOP mid-single we of XXX, roughly grow XXX,XXX 'XX I over X, think, about bit year XXX year full our a terms will and digits. little Our expect outlook, the it's a In was full outlook, in show we production day. is royalty as barrels -- NOJV, year-on-year to the

out the and think Pierre that quarter loaded. So as still we lays would that first of us give guide appropriate said, back-end kind

on So, updating that. we'll be each quarter

Devin McDermott

And And and eye WPMP. we of I balance on that follow less is Investor you how up that wondering also give for it's year Thanks. from noticed TCO. us an of be on the latest are And their key now it the this keeping makes startup Day, was had away the things if shifted year expectations to we're at you work startup my commissioning then you startup. sense. the update back than a that Got just and going milestones there on an exciting ahead for out should timing.

Mike Wirth

I it Tengiz month. some had of to I to team, from other a a preparing talk chance Kazakhstan tell visited meet job site, people this spent was And there. you, in less from And people construction with more the Yeah, time earlier officials, a last site plant down time we're actually did construction like both commissioning President the startup. than as operations people the at for a and senior a from I'll the like was also it down absolutely. I the Republic, looks little team, bit little our

obvious. very is progress the So

change The headline cost to our is you I'll guidance. schedule no there's give or

begin to startup expect of year. We the by this WPMP end

from to conversion pressure. Now high that's low the field of pressure a

that. down will by this the will pressure, the still field as the to And growth tie-ins take but low year. future begin some oil the XXX,XXX and turnarounds projects, startup next year. begin a adds time like the portion that will of production we of all these things by end barrels and require that that mid of take of Both metering So that infrastructure of stations and series

quite a get got set a quite complex the point activities to where us to it's So everything of we've online.

lot us. behind a work there's of But

Day which gas ahead were third-generation of that While a schedule. on we And of talked I I facility, about mentioned the was achieved completion was at injection that that there, we achieved. number mechanical we've that milestones the sour Investor there

we the the generator gas that we working. fuel that we first fired So tie-in it's so of gas know turbine system generator completed so

boilers, startup the pressure pressure required which of to to system, to terms high key milestones the pressure from deliverability. enable facility, other the conversion in we're sustained field utilities to operations boost watch of of second working for, are that quarter the for driver well In that commission is steam low

expect quarter, as completion mechanical by begin And end of the on third year. activities I the startup of the we then, said, field future this low pressure growth project. will the In to conversion

it So but us, every those And, some on of are there's quarter. still like complex work behind milestones. of key a the be I you updating lot lot ahead. We'll a say,

Devin McDermott

to Thanks, Mike. hear. Good

Mike Wirth

you. Thank Devin. right, All

Operator

We'll take Sachs. Neil next our Mehta Goldman with question from

Neil Mehta

Pierre. Yeah, and you so Mike thank much,

and outlook like recognized around you particularly seems updates be question it's to gas markets the last a down The you're guys global in of LNG the going pretty into just Australia, lot portfolio, first where of the how your curious on but course maintenance, seeing in take over operating are volatility the year, well. is just portfolio, the any

Mike Wirth

Sure.

So of And overall, a markets it's are last ride seen -- in been year. gas we've wild the strong. a extraordinarily over bit prices

little extraordinarily had If the weather they've certainly as years now, time. Europe a both about inventories it were and than healthier I one point has, as were in ago, you situation warmer Europe the in hemisphere, stable. they northern weak. the are Certainly, in people much And two go more the at become back we've in moderated in think concerned through wintertime, U.S.

not still is nearly by historic strong perhaps as saw. into what but we're that And as so, standards, certainly a we strong market

number first LNG and we've Operations go had better cargoes for out Wheatstone was that of best was quartile than are year. the running XX% Australia the well. We had. two a Reliability year facilities. of Gorgon ever It very record last

on Train the into in cycle, a bring of field that. feel activity, to we're we continue on second X year. And to turn Gorgon of or we'll et in turnaround around which activity, the underway, wells development this so year, trains And drilled the next of will phase planned to cycle turnaround the facility. stage start the to course, with gas the quarter started and working full have four-year is the We've startup time this good next about that major -- developments a second cetera field the keep

portfolio Australia talked about good are we things from at standpoint. and some we've ramp. our So More Certainly, length LNG operational broadly look speaking, reliability an Australia. beyond Eastern standpoint a to opportunities the at in in continue

the on at gas we're Guinea of in looking concept this select opportunities Leviathan looking existing and year. to an bring expansion, resources but infrastructure. that, belabor a Equatorial to And end So at through the by expect additional concepts

on value what to focused that's continue business, it way a LNG but returns do do in very to add accretive. So we be can our to in

Neil Mehta

think range the a that then about That's is we And follow great. perspective. return I be just buyback you pretty about capital. guys the of clear should been from is, up on And thinking have

expect you your to do on how flow per track relative cash that share to Just just expectations? growth, dividend talk about free

Mike Wirth

we speak track think been itself. clear dividends, On have say I on record that. buybacks, I on for I should Yeah, time so won't our spend would

made Of are the years. course, the each decisions XX we've last are years payouts these consecutive got by higher year, now five of that XX -- over board but

per that has growth closest been dividend share double Our our of peers.

sustained long also period the this term but volatile we've haul, we've of the time the in not So through that over short seen.

very I Our stands dividend think record, track well.

first annual the four our a X% growth the year priorities, grow over X% compound increase years. sustain just of which and Reiterate I as XX of is earlier the to this mentioned, dividend, rate last financial in

speaks think on the I'll record track dividends again, -- I say for our itself. So,

both distributions closed we vehicles. consistent cash included deliver I manner of, a we predictable consecutive and shareholders think can very in the a for to and back highest mindful the we're that of Pierre just to that, cash ever mentioned through to continuing that in fourth those quarter shareholders quarter the

Neil Mehta

Mike. Thanks, Yep.

Mike Wirth

Okay, you. Neil, thank

Operator

We'll go with Fargo. Roger next to Wells Read

Roger Read

morning. that Yeah, appreciate little And production to a lot been detail the the things. the more providing Maybe thank you've you. detail I Good overall for come a Permian breakdown back in on know us bit. U.S. I

or JV the have the But over last where operated some of that couple versus you of the operated quarters, versus is been correcting looking the biggest the non-op, at Is next And partner? have couple the been Permian, we portion of think snags Chevron that quarters, hit is then Chevron-controlled been as much those about over it of non-operated? your the think the problems? how in about

Mike Wirth

Yeah.

amount speak others. should speak a their about of We operated operations. really behalf on So But, good of can't of speak I from I those. we operation, learned will certainly to the our They time behalf including multi-venture Investor spent on about pretty spacing because on the long profit for talking and drill Day, a wells, at time about basis of design development. loading, wells been the uncompleted talking had the a the talking that prior learnings for sat

are we lot a learned by we've and from And operations, things learnings the own learned others. from that augmented those our

strong more New more not Mexico, bench other and be metric. we ther focused talked to optimizing very production we activity. development, about continue some And or single so returns, driving on In to

you Just little Roger to how a year, guidance, it. this think about bit in to of for give more terms

We that area, but some plans lot where from into comes expect Oxy's bit operators Midland neighborhood area royalty we've got from the of, in production known others River as the to of are that in that in what then largest visibility from well operator And a got be big area. where comes well a maybe big that over in XXX,XXX flat, roughly there's of that XXX,XXX, day. Pecos operators, Most barrels the operators we've are. little a their

last than for the XXX production wells in from year. on year drilling the New which down XX% later which midpoint production single a of put year, side, the a day. year, year, to side with showed earlier this Maybe the higher digits be COOP little barrels growth we when and year, digits follows last touch in We've expect Texas full Delaware chart Pierre Our the growth, a expect the mid-single be from our roughly the bit the in increased of XX,XXX maybe to is got production Mexico feet. lateral you COOP

XX% the POPs high it's be the non-ops. in the in for year-on-year. interest increased gross the full NOJVs higher. And about because interesting, mid-teens POPs the than expected year. NOJV, our And is significant relatively then in our actually to growth gross and It's number a we up are net have The of more in the royalty advantage working

XX% than year's AFEs year. schedule POPs begun be the that more actually in execution the of of for visibility presume. three And translates received this a three really than than good on so We've this increase to wells might And NOJV the operations more more into got gross production into expect we've actually quarters activity. popped quarters have we you

as about it's a three the of got portfolio year. because a of continuing for different a hold contributors and full guidance, So I We've to strong, mix. also these a said we're at but XXX complex bit really earlier,

Roger Read

obviously No, that's in tends that. I appreciate suspect, be for follow-up a draw I Working And to is question, QX. a great. Pierre. you, capital,

planned sounds decent You've got in a maintenance the like of level QX.

how maybe we cadence? rest look So QX, cash year in just of the generation at any thoughts overall on of terms should flow the

Pierre Breber

of capital and Well, as working in said, terms working quarter, in capital, you build inventory was on cash, that primarily Roger, the draw first was a related.

If draws over happening. payments primarily a it. some working you'll working of payable. there's excluding there's variability was and capital because And the We quarter, capital last some year, tends second we that give in pattern, see taxes you time, everything on saw try the around zero those out had but course of to that through to

you. give I guidance would on that's the So

free of margins, see capital, We draw working of to through And should be quarter, try payments, will terms expect exclude effects. and gave in from -- and and flow, some our we and that of look it Day some next terms Investor cash a you'll on them cash. depends commodity a large upside obviously ops cash lot prices and In cases. them. downside which tax in on on you But then timing during depends

Roger Read

you. Thank great. Okay,

Operator

We'll question Cheng take next from with our Paul Scotiabank.

Paul Cheng

the and been of have payback kind that put. that criteria the Have we think guys. management morning, period good Hey, I to different due different project characteristic returns

emission those loan that new your carbon CCUS the as but terms for a like in own mitigation of activity, not business. that for So investment,

payback projects. return for sanction in of kind of business minimum order period the to For you is and what that the sign that you internal that rate

Mike Wirth

brand-new of markets. that Yeah, we've lot of understand the decades periods out is the confidence Paul. businesses expect reality these for returns in been we've in well-established Look, are businesses. well And in and got payback a many very we and

questions as today. government need capital They exist that which fully rules the of in by and yet durability commit businesses enabled written ask the we we are not of ourselves it. part These about to don't to are policy which are a

So they're different. very different. They're

similar goal as businesses to term core the get business. Our our of out out of long returns over is get these we

not And going we of have returns. of so the to things the establish that be that offer the the the term, into to that would time. them expect double-digit see we these opportunity in wide days, may near mid-term we're that fullness In also go growth returns and eyes some to our high we open, in but with as early understand

investments. big make we So

kinds also going these got and expectation We've build build we've chain we're businesses. We've over Our things. management to of the these investments, of the markets operational develop help customer deliver in to we're to technology. got fact those got returns. got got mature. to We've experience, cycle We've these is to experience. of scale But mindful capabilities to life risk supply

the And the that term, so we than into but for of in wind because steadily believe well-established the that where offer returns, go like understand we the fact expectations is risks those probably returns. look also term the will the near be the could we more go and returns long-term are sectors prospect why understanding which today don't but won't we'll different defined, avoided better solar, our long-term we into short things we in have

we to things we And of working the so these we out but would do into were go of kinds don't the kinds they returns of we're those, that just projects, trying offer expect on.

Paul Cheng

quite that's from a of just a U.S. capture they're sensory establish to someone that of the think there that organization single And trading out and your Chevron. going they that rule book push maybe can payback in a fair market competitor, into aggressively the a taking that more that opportunities is announced second question and largest from trading amount

I little think always been on Chevron bit has more conservative a that.

the do and be lot global reach and So that have that more for an opportunity opportunity that think there is we a that you missing of Chevron a of a similar to edge may Chevron? others? have So over physical -- ones knowledge really company for a

Mike Wirth

I think describe. I little your a bit Well, what Paul, maybe miscalibrated perception would I what would say is from is

a have Pierre run it. global many, many for always used years, had it. We to organization used run to I trading

we active kind description, we're trader. in And I'll so the certain three-word trade. you trade And a overarching optimize in way. of and We give flow,

first flow our to to commercial our market. molecules the the ensure barrels role organization So and is of

third-party ships, is knowledge be sure second The to our We we value we optimize assets, out of market we to that a Quad basis, third positions, talented trade. market can. what make have do responsibility then people to is we the do. at call and And get it, we do trading. And very system the training. we our money On X most in possibly organization regular and

We systems good that doing. have risk we're ensure also understand management to we what

being as describe if trader. there's you conservative. the word So used I I wouldn't us not And a think know definition, a I don't

a a Look, we but described the it time long order and have in for that global done just it we're trader, I basis. do on a

it's contributor to to that grow to business. earnings, our So our of and look we continue a part

Pierre Breber

or trading to They own and be would is only The earnings. investors answer for I add, volatile. Chevron thing shareholders to Mike's Paul, tend like companies don't

the been think very multiples on historically trading low. I earnings have

trading large most the company. or houses private In fact, of

the where if but the company is lead our and what with with yes, price are it And resource works delivering a that's of trading to enhance investors and Paul. going strategy we're that petrochemicals us reliably framework exactly for can great, having exposure. owning safely energy results, Thanks, refining trading. not we and described commodity within Mike So company

Paul Cheng

you. Thank Okay.

Operator

question Research. next from Wolfe Margolin with our take Sam We'll

Sam Margolin

-- acreage, right? the what about the royalties I you as is just rate reported. actually the clarification Good our correct interpretation, to that's the a we're on communicate. because because trying your NOJV something growth morning. partners with That's one exceeds Is in of you. NOJV stack the they rate This it's question think that the Thank In NOJV section, important. portion Permian growth said you

Mike Wirth

that, we -- we only of interest and working because Yeah. our not our I working but -- interest have high get because out ventures. also of -- we most these relatively have mean in production our

interest and you So But cases. royalty that through not the that or dissimilar in -- advantage that most we of we we account operator NOJV. to working it's have also for and we to the then report

your are for got But no What royalty. we same That interest. as Sam. royalty got NOJV co-op as levels in capital. landowner. working why pure is faster the activity. is We're than our no royalty there, the little of describe a interpretation growing barrels just We've our We've collecting production you're correct

Sam Margolin

in then the a in And top buyback. substantial, if to capital good a just what that's decision the that a about Okay. in in environment, preserve the the range as to I feel and right understood on range range sort now equilibrium to an on and there This have come downturn, cash is whether whether about there opportunity the you the for within make market stay and that pace. at about follow-up. the is where you be out might is to commodity allocation The like or end horizon because it's looks the of we're pretty

thoughts of not a sheet to kind day directionally of And would balance predict preserving it faster to about your future, or sort the on of the be value pace? hear you for I'm great the any but asking Thanks. maintaining cash

Mike Wirth

with then cases I'm be very and to cover environments, have. Day and dividend capacity that at surplus low But couple with we Yeah, balance a low-debt with the in words. was Pierre say lay the on to invite the already of levels two and operate sheet tried Investor different CapEx our breakeven within cash a what lot of low a range of and a going to price you that out to Sam, couple to showed we our

scenarios give We've maybe recap on you got Sam. plenty them booking Pierre, just the thumbnail capacity. can of a to for

Pierre Breber

billion and the our that just be is looked the we run let towards me at hold don't clear case $XX sheet. guidance this $X end. we We is low case right the can our high And the this down shareholders working to cash scenario the on be balance price not us it's both sheet. that and shareholders' and inefficient and scenarios is over had intend that Yeah. scenarios cash for first cash billion, cash. depending us Day, it, surplus and cash, will to time In at high plus it's redeployed surplus And redistributed the Investor because is our of on it's our temporarily balance now It and economically on of our cash. company hold

return a We cycle through it not pro-cyclically. want to the in steady way,

So the $XX that's cash all then buybacks some a debt surplus of we're We've about range, it's well also a taking And can could on ratio. we because the down. our to that below excess paid off low effect. our Brent we XX% and case do accumulating. continue using capacity debt the end net by of XX% showed our low that debt And in near we but which timing averaged it's why economically, certainly side

range So we'd to of capital guidance towards want again, structure. that XX%, work get efficient to of end low that more a to

our always terms manage We are shareholders. for volatility times keeping don't for the prices or day for going We cyclical. know that decades know strong to We've balance been we're a any this of and to decades. last. want In maintain strong cash good We in business that sheet.

get been that's to annually years. going about XX XX consecutive So don't our that grown They're going commodity talked price X% about, That's because growing that. for years. dividend worry to they're for get have shareholders the Mike the to

and And the a the steady then shares outstanding right a up through we're as the of cash about additional of here, through cycle cycle, approach our looking way, coming a cycle, form now, in buyback. at we X%

for stable about -- if shown more prices M&A that we're creates there we've talked structure. deal our tend implied how for equity because the that's And planning use are so commodity to we question M&A volatile. volatility And is we is manage It your in shareholders. that to a

do positioned be not commodity So to sure also our to enable need will to manage enough make prices, but balance us we're only what sheet do. we always strong to

then out so a in need And don't or to Group. we acquisition Thanks, remind Energy, transaction we year later I to that of first when and Energy do were coming the Noble you followed a announced COVID Sam. of Renewable acquired the we

Sam Margolin

you. Thank

Operator

next JPMorgan. take question from We'll John Royall with our

John Royall

question. for good my Hi, morning. Thanks taking

demand So can on seeing the within just the the Are side? And market. system? no, about still curious seems you signs talk see demand tight weakness your what's answer you any globally views of relatively margins spot is to on general to happened like and what you're if your trends starting on a refining

Mike Wirth

Yeah.

We've John, couple on by demand gasoline back globally. call. end So of mean commodities. of We're just pre-pandemic sitting in product guess. I wet I there in the I'll essentially variations to go a this. regional thoughts, levels here the a is Obviously, had are very this California winter.

West the And so the Coast. season first quarter reflects wet on an unusually

continue to at But the up flat. demand a demand been In et speaking, mobility right, global Diesel kind had to open pre-pandemic as for and has back, through and has continue increased, complex Asia, COVID broadly coming cetera. we carried economies now. gasoline levels while see of

economic of in was of first years. last lower the beginning of is it Could premature 'XX. to of quarter that. is First couple quite quarter a not maybe but the some demand strongly certainly, an been indicator touch conclude slowdown, think, I in for than leading as But it diesel as had be the 'XX parade it's

scheduled. pre-COVID up Jet And of below to in been of travel domestic being country attention XX% kind nearly and China has it's that. see is demand flights paying as below still levels. grow. prepandemic well out continues the to everybody the obviously, place, flights to of we still And

travel grow. will indicators that see suggest You

that's they in the but what certainly to listen airlines, and anticipate, to You that be seems progress.

a quick So that's look a kind across slate. product of the

projects a the world. rationalizing period and of any And things. period coming had of that couple go refineries reflect in you And relatively happens year we because but a refining relative the one were year a close of of to it same around economies here. would margins think uncertainty time, to at perhaps that had big of that a recovering ago, capacity find One, people and down growth later can of quickly. you expected out COVID we're a I world part the shut day, deferred the been saw

the Asia see U.S. seen in We've same and refinery don't the projects at Middle closing You refineries as seen rate. East. here startups We've in in well. the

little margins coming has So period but moderated feedstocks come more over a in system the a U.S., pressure longer still Asia, about have coming towards to historic look strong Pretty in the little they're They're down. think the you stronger under Asia, and refining a markets working. into are trending where out how priced bit. maybe back from, mid-cycle. demand those capacity of Margins than how time, down got you if they're in but

warning paying So I attention but don't we're signs see to it. any big close certainly, flashing,

John Royall

refer position maybe the to But Very the Thank the think broader And just refining mentioned that's the much the sticking exactly impacts and helpful, on Can profit talk penalties you California then it? how if Mike. about expected for potential and around California. impact and in how that market your about excess California you in to new there? downstream, does with in maybe how you. you not sure regulations California

Mike Wirth

sure. it, about talk I'll Yeah.

There's So into line a kind the is it's bureaucratic bottom process. of right And now. a is into now rule-making phase. no this impact

exactly take to I while, it's quite likely plays is think say to out. and it implementation a hard how

legislature some profitability think group Commission, you and established ended will California. into vote articulated. Energy was of forms there and fully an where unsuccessful for to yet some other again as of be a the to to tax which the started effort windfall try into gather in be up thirds that of because a new moving lot a assess two modified standard, profit I That create need data is What the will a industry then tax in

work to It going going is how this a So take you potentially it's play level, for in or of it's sort result lot there's time. a in to can't some I or profits there. a because could -- some be out above fine of to but tell done penalty margins a

Commission going there's to requesting. that. are things information they're have of substantial lot guess we predictable say make to with the pretty maybe reporting get two. to do are we're work We're I produce. closely them One, that the I happy requirements, the and are Energy new to sure data We'll a there would that

markets does And really down needed then in investment encourage supply, over marketplace or commodity is think I anything is, a bring second to average to this what's on time. the prices which don't new

it exacerbate In of which if opposite time, moderate, probably result runs doing over fact, tend levels I think in, to does the the average, time discouraging volatility demand and will on decreasing higher investment not of over of risk supply price. of

and as it point, I it that's So unfolds. watch we'll this it at all about know about

John Royall

you. Thank

Operator

America. I'm sorry, question Doug our Bank take from we'll with Leggate of next

Unidentified Analyst

good is Doug. morning, guys. Hey, This Kalei for on

So thanks taking for the question.

The new first is on Permian the disclosure. one

are flat So you royalty volumes. guys forecasting

mix, a asset part from forward? the the becomes that production of as going affected that smaller wondering, I'm So how margin cash is

Pierre Breber

barrels margin. royalty essentially Well, infinite have an

enhance return that so than our near And math a shown employed on and of Doug can percentage there's offset, lower $XX Brent will margins. I think we've we're to XX% do the premium. slightly be other doing it's if that drivers at equivalent you is for And a lots capital part but

know, and of you that return a the asset royalty and have. no virtually advantage low-carbon So that's as with it's we come part cost, barrels, high the

Unidentified Analyst

TCO. question Pierre. goes to Understood. that, I My second appreciate

Just wondering the from magnitude new update can of an expansion if XXXX. projects timing first we oil on the dividend and get for

Mike Wirth

Yeah.

idea laid as year that gave our activity, in turnarounds on I a said, next and this chart So lot project, an expansion a of both there's out at Investor Day, And year. bar production. you the we

time, I cetera, et next growth see you're place. got itself these the two in ties, manifest turnarounds, to of years, in as real will we've the the because I lot a think earlier, production going XXXX when The said

on you dividends. guide Pierre, can So

Pierre Breber

$X our other No we shared dividend affiliate affiliates. call that the last of on for to in full guidance billion year. and our billion That includes tinges change $X the

We expect, second that then a a be larger in the in quarter. and like dividend dividend will fourth quarter, last year, modest the

project affiliate transport TCO we and specifics performing continues back well. that been to that It's come but don't around alternatives -- completing But around very time. the manage by cash to embedded dividend over our balance overall through It's more guidance. hold on give in on sheet will year. cash uncertainty its both

Unidentified Analyst

like? work look a state, turnarounds I what through. production dividend still hit to But the there's appreciate cadence steady expect that to as you the do some

Pierre Breber

quarter, said, make will just was and to as year, Board So again, decisions fourth be two I it's of quarter going in the TCO second the last we'll there year, it -- and Directors up quarters. This to forward.

Hey, thanks for your questions.

Operator

next Our Silverstein Josh UBS. comes with question from

Josh Silverstein

Good morning, guys.

Just curious about the Permian. the pace of rig activity in

you're getting to step-up because Delaware that one going into I'm curious it year more next need year, in you're continue of be adding support to year. efficient looking you Is activity year. XX% kind do this next just production forward about are forward. how pace? more to just you I'm rigs as curious, growth Outage keep next add in the less four guys thinking the You to per growth quarter

Mike Wirth

Yeah. we've once. pulled we all with back dramatically to at rigs in I and didn't mean surge XXXX, down want everything

production does with year we COOP with the got I with so to that entered outlined business we we XX this XX base decline a And And profile running. expect have this rigs think longer-term year exit big underneath consistent it. that we've

And us expect rigs into add move going as to 'XX. so to we additional some you're

Josh Silverstein

on it. gas environment. lot activity of this are Haynesville, the in little there's activity a more kind bit of Thanks. Got the guys more across because you know I'm And pulling the DJ. a rest are any curious back They're bit a gassier XX I stepping price there of side. if from Lower up little

Pierre Breber

in that to developing are up We volatile. that of rig building prices the that resource. number we're activity. about a Haynesville. adding -- frankly, to get going to Gas for We've a need years we talked be And

operators. offset some have We

it, And for to don't do time it's if us after get we the that. so

no still liquids plans. in DJ a heavy has component, change our

of of be that production and And we little the areas bit Argentina within all again, DJ year of the higher activity. half a are fact, a to existing In our the second where couple we're is budget. CapEx in other expect where of increasing

Mike Wirth

Josh. Thanks,

Operator

with next Todd Piper Sandler to go We'll Ryan

Ryan Todd

on comments Thanks. in on trading, question this follow-up the the $XXX that on maybe read on some just likely trading? -- the there, quarter. strong particularly in earnings think I million that Is And or there? going something there. and slides anything And Is a were Maybe reverses earlier on quick clarity that off, bar, first the international forward? your a other other downstream, to chart positive that borrowing primarily there's

Pierre Breber

I our future would to it quarters. not say lot -- are, factors, be it's You're It's a to business. trading consistent Mike referred of right. as can trading described that. We businesses out all And primarily it's variable it. how with in and we pointed

wanted not many primarily, cite just variance. we one as So of it's in of It's to one but elements it factors. that other the

Ryan Todd

And plan Permian, the Analyst you you Pierre. talked obviously also at of about variety the if Day, Thanks, the then maybe at XXXX. the development you talked shifts a back you've in look -- XXXX on the versus Permian

I think here to similar and that. you -- highlighted

towards any or in development Mexico, the on it appreciate -- impact bench like at bench other you the of all I think pacing move to some what the more impact does single are single productivity -- New longer-term have the shift we Does et can to recovery shift to any adjustments some development zones the increase the on talk of of impact near-term area? cetera. implications have of to more

think resource about you term? all Does parts at of the you and portfolio it service different long logistics infrastructure in about how think depth over change the how

Mike Wirth

return not Yeah, say would Ryan, always We've seeking. I really. been

utilized, get then to of it principles surface it and to activity. return drilling on investment asset surface over haul. to And infrastructure. the about be tried underutilized for not we're time. of for building as optimizing about continue continuing long drive to fully leaving And long to fundamental learn, the peaks periods over be this this all optimizing thoughtful all keep We've is the of infrastructure tried out so this about return We've we about thoughtful can

we learn value real to apply we factors, productivity recovery learnings. will volume, changes, the technology But as not communication, about objective returns. benches it's about continue remains those So more about the It's same. of all as and

Pierre Breber

three just multibench as development. Midland a bench Delaware reminder, Basin, to the and in Ryan, is Basin the single right? move is more quarters

Ryan Todd

Pierre. Thanks,

Operator

Gabelman We'll Cowen. take our question next from with TD Jason

Jason Gabelman

Hey, morning. questions. Thanks my taking for good

to period? the But of terms in I Sorry think Does relatively gave in I stay appreciate ask to between the a you same? I wondering, disclosures more back stay operational you non-op the XXXX all have stable was to of the I'm out Or the the go another. non-op to but at through does Permian, 'XX? component helpful. going are really production, and the do now proportion barrels Analyst your proportion Day. forecast forecast

Mike Wirth

would Jason. provide big shift. we. insights not I can We a that similar, There's growing Yeah. It stays further on activity. as We're say, relatively

of. adding a pretty top rigs As base on got I earlier, mentioned we're and you're adding you big in

So lot. percentages those move don't a

Jason Gabelman

in That's fell Depreciation All was that upstream. then helpful. And right. related quarter-over-quarter accounting to? question. decently just one What

Pierre Breber

looking excluding Are you it items at or. special

Jason Gabelman

$XXX look I million. was the If X, at quarter-over-quarter Yeah. DD&A Slide Upstream positive

Pierre Breber

some Yeah, up Jake? you to That follow why activity. with could don't be tied exploration

Jason Gabelman

Okay. Thanks.

Operator

We'll with Royal Biraj take Borkhataria next from our Canada. question Bank of

Biraj Borkhataria

for there. my to Namibia. taking I Thanks Hi, about ask questions. wanted

And then you. you me plans in pencilled I've months you've got XX for in? walk what months farmed so just Thank recently something next ago. got few through else. follow-up a or You the on Could a

Mike Wirth

Sure.

being in we've right and Namibia of end at February, seismic that's acquisition So processed the completed now.

any the need to can't on we really certain comment are had mindful what is determine have but exploration success which drilling region, that which further include and certainly who And that. exploration so the others steps next on encouraging, work can We in do I the wells. then are, of

So tuned on we'll you, that share information, more stay as it with got we Biraj.

Biraj Borkhataria

topic, just improving and on and And cost more, the then Okay. a some hear on. providers inflation so more talking pricing you of because service different about

just outside Lower the what seeing side you could and XX? of you're inflation on thoughts your latest So you. cost Thank the comment on

Mike Wirth

Sure.

year capital mid-single-digit inflation So really our no in current guidance our spending. change to

XX, we planned Lower As and we're seeing you for note, higher in are some that. there areas the where inflation

or longer to remind commit increases. activities contracts that to price volumes things do I'll lot a cost We based. our periods challenge of price in our suppliers. of models detailed index got time term procurement to us certain are We've you and that what a longer over try win-win between either fixed create to are we

or spot we through we've inputs then buying so see some a differently. seen not that And if because services basis current or would on commodities activity basis the manage that of you you push were cost

with on market of instance, For into rates. year this rigs contracted Mexico. in They're below fully rigs, current offshore Gulf year. the came We three generally for we're working the

The we well. reset we're And thing there would reviews are managing will based index-based I these is one market given, where periodic indicators. so say I think kind of on this contracts,

that's managing to And so on resets the referred of all But parts that we've in bit that built partners, the inflation will our embedded guidance going second of we'll little that probably I see I there the some given reflect that range some you. a certain within through in the with earlier, quarter we're already we'll plans. be of is in think this and into our our business,

Biraj Borkhataria

much. you very Thank

Mike Wirth

Thank you, Biraj.

Operator

you. Dingmann from Thank We'll take question Neal Truist Securities. our last with

Unidentified Analyst

Hi, this is Patrick [ph] on Neil Dingmann. of behalf

anticipating respect Venezuelan I investments know of of question, mentioned capital exports, we're out exports curious it's you you're to Venezuela? my and really further threshold know with previously, sales to What that a in no For Venezuela. maximum is made there

Mike Wirth

currently mean a to the about of barrels the from up term entitled day position seeing I that about that when and -- that involved Is there our -- by maximum production market is. what XX a changed. XXX,XXX license entities production our we're of there limited it's portion in and we're We're

U.S., and bear actually and from well. the for we're to a up have mind. that we to crude. if And yeah, That The the it's maybe year, further another six-month market go in OPEC, finding this comes XX% everything a goes license rude

and commitments. are as production receivables past up can are is capital straightforward we've paid we why without activity -- proceeds lot there's which that's at that other So of relatively a being bring some proceeding, you of that workover said, help major got from and some these

to We'll step at bit time. -- a the down a that's and a things been situation, and one unfold it's and an have to take up good direction, how pointed in current of see have but this hopefully so we And just we model.

Unidentified Analyst

as early to is you it It's extend be looking are tough at you that -- there a I here. guess all? follow-up, negotiated. just Or too are exploring would term, that be six-month to

Mike Wirth

the a That's so we're policy government. decision, last them. not several negotiation. U.S. associated provide we it's a It's input things the have lines for a relatively and these matter time by But with asked these and had It's really made decision short on their years, input things. for

we're with all see way. how sanctions full to the conditions the compliance that stay intend just we'll And and turns And the so making policy in out. of

Pierre Breber

going This Jason's to back I'm go is Pierre. question. to

So yeah, lower drivers. is really depreciation three

in Some the abandonment that of it were was the some accruals quarter. absence fourth of

of you view as sort those So can nonrecurring.

And due then some of it is new to rates.

those and rates we production bit year, a was reserves, quarter first each our are course, on based rates additions So depreciation And to revised little a lower than then, bit proved little fourth lower. of production. quarter

also lower that depreciation. contributed volumes lower to So

Jake Spiering

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

Operator

call. XXXX concludes first Chevron's earnings you. This conference quarter Thank

may now disconnect. You

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