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3Q 2018 Earnings Presentation – Chevron Corp

Chevron Corp · Nov 1, 2018 · 71 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. 3Q 2018 Earnings Presentation – Chevron Corp – slide 1
    Chevron 2018 Investor Presentation November 2018 2018 Chevron Corporation
  2. 3Q 2018 Earnings Presentation – Chevron Corp – slide 2
    Operational excellence leadership Days away from work rate1 Oil spills to land or water3 Thousands of barrels 0.10 40 30 0.05 Industry leading 20 1 1 1 1 safety and spill 10 1 1 1 1 2014 2015 2016 2017 performance 2014 2015…
  3. 3Q 2018 Earnings Presentation – Chevron Corp – slide 3
    Macro landscape Global crude oil supply & demand1 Million barrels per day 100 Supply gap of 42 mmbd Demand in IEA NPS 80 60 Demand growth and production 40 declines lead to supply gap 20 2020 2030 2040 Global liquid…
  4. 3Q 2018 Earnings Presentation – Chevron Corp – slide 4
    Cash flow trend improving Cash flow from operations Free cash flow excluding excluding working capital1 working capital1,2 billions billions 10 6 Delivering 2018 8 cash generation in 4 line with guidance 6 2 4 3Q YTD…
  5. 3Q 2018 Earnings Presentation – Chevron Corp – slide 5
    Delivering on all four financial priorities 3Q18 vs. 2Q18 Four financial priorities billions 1 Maintain and grow dividend 2 2 Fund capital program Working Cash CFFO ex WC capital capex 3 Strong balance sheet 0.4 3 4 Return…
  6. 3Q 2018 Earnings Presentation – Chevron Corp – slide 6
    2018 cash generation 2018 cash flow billions 18 16 14 Cash generation 12 of 14B 10 8 2018 cash flow 6 Dividend breakeven 50/bbl 4 Dividend without asset sales 2 2017 CF CF sensitivity 2018 2018 2018 CF after after…
  7. 3Q 2018 Earnings Presentation – Chevron Corp – slide 7
    3Q 2018 YTD results Cash flow Cash flow from operations 21.5B Capital Capital & exploratory expenditures 14.3B Total production Record production Brazil deepwater lease acquisitions Elk Hills divestment Portfolio Rosebank and…
  8. 3Q 2018 Earnings Presentation – Chevron Corp – slide 8
    Looking ahead 4Q 2018 outlook Upstream Full year 2018 production 7% growth (excluding asset sales) Big Foot 1st oil Turnarounds at Tengiz and Thailand East Kalimantan PSC expiration Downstream High refinery turnaround…
  9. 3Q 2018 Earnings Presentation – Chevron Corp – slide 9
    Winning in any environment What we have What we will do What investors get Grow Be Advantaged production returns-driven Superior total portfolio and cash in capital shareholder return margins allocation Sustainable Free cash…
  10. 3Q 2018 Earnings Presentation – Chevron Corp – slide 10
    Profitable downstream & chemicals portfolio Focused portfolio Technology Integrated enabled value chains formulations TCO Advantaged Complex feed, scale and refineries with technology scale Strong brands and leading…
  11. 3Q 2018 Earnings Presentation – Chevron Corp – slide 11
    Advantaged upstream portfolio Diverse Opportunities Sustainable to high-grade TCO and long-lived San Joaquin Valley Permian Deepwater Gulf of Mexico Nigeria Gorgon Wheatstone Lower risk Low cost High margin /…
  12. 3Q 2018 Earnings Presentation – Chevron Corp – slide 12
    Sustainable portfolio Reserves to production ratio1 Resource to production ratio2,3 Years Years 18 40 16 Prudent and stable 14 reserves to production 30 20 12 Long-lived resource base 10 10 8 2012 2013 2014 2015…
  13. 3Q 2018 Earnings Presentation – Chevron Corp – slide 13
    Strong balance sheet Debt ratio1 Percent 60 55 50 45 40 BP 35 TOT 30 RDS 25 20 XOM 15 BBB A AA Credit rating2 Other companies included: APC, COP, DVN, EOG, ENI, HES, MRO, OXY, STO, SU 1 Debt ratio = ((total debt) /…
  14. 3Q 2018 Earnings Presentation – Chevron Corp – slide 14
    Disciplined C&E program Total capital & exploratory* 2018 capital & exploratory budget billions billions 45 40 18.3 35 30 25 1820 20 18.8 18.3 75% of spend 15 delivers cash 10 flow within Cash 2 years 5 C&E 12.8 2014 2015…
  15. 3Q 2018 Earnings Presentation – Chevron Corp – slide 15
    Cost reductions continue Production costs1 Corporate cost reduction /BOE from 20142 18 Percent -12 16 Cost reductions 14 continue -18 12 Technology enables increased efficiencies 10 8 2014 2015 2016 2017 2020 -24…
  16. 3Q 2018 Earnings Presentation – Chevron Corp – slide 16
    Upstream cash margin grows Projected operating Liquid % of total production2 cash margin1 Percent /BOE 28 85 Increase high margin, 75% oil-linked volume CVX oil-linked production3 70/bbl 75 24 65 Divest lower margin barrels…
  17. 3Q 2018 Earnings Presentation – Chevron Corp – slide 17
    Record worldwide net oil & gas production Net production MBOED 3Q production 2,956 MBOED 3,000 4 - 7% growth* excluding the impact of Turnarounds (103 MBOED) 2018 asset sales Asset sales (18 MBOED) 2,900 4Q growth: 2,800…
  18. 3Q 2018 Earnings Presentation – Chevron Corp – slide 18
    Production growth at low C&E Projected net production at 60/bbl MMBOED Base1 plus shale & tight 23% CAGR through 2022 with 910B capital spend/yr2 4-7% growth 5% growth 2.73 Uncertainties 2.59 Price effects Status of PZ…
  19. 3Q 2018 Earnings Presentation – Chevron Corp – slide 19
    Portfolio optimization Asset sale proceeds billions (before tax) Target 2018 YTD: 1.9 billion* 10 510 Southern Africa R&M Elk Hills Democratic Republic of the Congo Public domain Axis Title 5 U.K. Central North Sea…
  20. 3Q 2018 Earnings Presentation – Chevron Corp – slide 20
    Improving cash returns CFFO ROCE1 at 60/bbl Free cash flow growth3 20172020 CAGR % 20172020 Percent 40 Price 16 Portfolio upside Expanding cash margins enhancement 30 Cost & other 14 Margin & volume Lower cost structure…
  21. 3Q 2018 Earnings Presentation – Chevron Corp – slide 21
    Initiate share repurchase 3Q18 Historical total shareholder distributions billions Maintain and grow dividend 4% increase in 1Q18 9 Fund capital program Disciplined and on track 6 Strong balance sheet Average…
  22. 3Q 2018 Earnings Presentation – Chevron Corp – slide 22
    Headlines Guidance through 2020: Shale & tight resource Annual C&E 1820B Increases to 17.5 BBOE Asset sale proceeds 510B Upstream cash margin Permian unconventional: grows 12/bbl Acreage increases to Cash flow sensitivity 450…
  23. 3Q 2018 Earnings Presentation – Chevron Corp – slide 23
    Upstream 2018 Chevron Corporation
  24. 3Q 2018 Earnings Presentation – Chevron Corp – slide 24
    Advantaged portfolio Unit resource value* /BOE Diverse 5 Sustainable and long-lived 4 Low cost 3 High margin / oil-linked 2 1 Lower risk Opportunities to high-grade Competitors: BP, RDS, TOT, XOM Source: Wood…
  25. 3Q 2018 Earnings Presentation – Chevron Corp – slide 25
    Diverse upstream portfolio Geography Asset class Resources New infrastructure 69 BBOE of 6P resource* TCO San Joaquin Heavy oil LNG Valley Deepwater Gulf of Permian Mexico Deepwater Shale & tight Nigeria Gorgon…
  26. 3Q 2018 Earnings Presentation – Chevron Corp – slide 26
    Sustainable resources Reserves1 Resources2 5-year reserve replacement: 107% 10-year resource replenishment: 171% BBOE BBOE 24.5 69.0 11.3 5.4 11.7 Replacing reserves while 62.1 growing production (4.8) (0.3) (9.6) 2012…
  27. 3Q 2018 Earnings Presentation – Chevron Corp – slide 27
    Sustainable production Base and shale & tight net production1 23% CAGR Short-cycle investments Low execution & subsurface risk 910 billion annual capital spend1 2018 2019 2020 2021 2022 Shale & tight Base excluding MCPs2…
  28. 3Q 2018 Earnings Presentation – Chevron Corp – slide 28
    Growing Permian value Quality position Unconventional acreage by NPV3 2.2 million net acres1 80% no or low royalty Increased resource 20% to 11.2 BBOE2 50k /acre 800,000 Portfolio value…
  29. 3Q 2018 Earnings Presentation – Chevron Corp – slide 29
    Strong Permian performance Development & production costs1 Well performance2 /BOE Delaware Basin3 Normalized Cum. Prod. (MBOE) 30 Chevron wells Delivering competitive 20 performance Competitor wells 0 2 4 6 8 10 12…
  30. 3Q 2018 Earnings Presentation – Chevron Corp – slide 30
    Permian unconventional production Midland and Delaware Basin* Net MBOED 800 3Q production 338 MBOED 700 600 500 Up 150 MBOED or 400 80% from 3Q 2017 300 200 27 net rigs operating in 3Q 100 20 operated 2015 2016 2017…
  31. 3Q 2018 Earnings Presentation – Chevron Corp – slide 31
    Industry leading Permian position Coring up acreage 80% acreage no or low royalty Enhancing value with transactions Improving capital efficiency & focus Increased average lateral length per well by 35% since 2016 2018…
  32. 3Q 2018 Earnings Presentation – Chevron Corp – slide 32
    Permian takeaway capacity Midstream business Cumulative firm transport capacity of 100% of operated + non-operated take-in-kind crude production through 2019 50 MBD in excess crude oil takeaway capacity in June Firm dock…
  33. 3Q 2018 Earnings Presentation – Chevron Corp – slide 33
    Expanding shale & tight activities Applying learnings across multiple assets Duvernay1 Vaca Muerta (Loma Campana)3 Appalachia4 EUR2 per well increased 40% EUR2 per well increased 100% EUR2 per well projected to Unit development cost…
  34. 3Q 2018 Earnings Presentation – Chevron Corp – slide 34
    Gorgon / Wheatstone Strong performance Net production 3Q18 net production MBOED 400 Gorgon 228 MBOED Wheatstone 151 MBOED 300 Wheatstone Train 2 Strainer removal completed 200 Ramp-up exceeded expectations 100 Wheatstone…
  35. 3Q 2018 Earnings Presentation – Chevron Corp – slide 35
    Developing Tengiz Base business FGP / WPMP3 Strong earnings and cash flow On track for first production in 2022 Reliability of 98%1 FGP adds 260 MBOED capacity and increases production to 1 MMBOED4 Net production grew by 17% since…
  36. 3Q 2018 Earnings Presentation – Chevron Corp – slide 36
    FGP / WPMP Progressing toward first production in 2022 Overall project 40% complete Pipe-racks and modules in transit from Kazakhstan, Korea, and Italy 6 pipe-rack modules delivered to site 3 drilling rigs in operation…
  37. 3Q 2018 Earnings Presentation – Chevron Corp – slide 37
    Active Gulf of Mexico Chevron deepwater assets Leveraging installed infrastructure Jack / St. Malo, Tahiti, Blind Faith Petronius and others Extending tie-back radius through Ballymore Blind technology Tubular Faith Shelf…
  38. 3Q 2018 Earnings Presentation – Chevron Corp – slide 38
    Improving deepwater value Efficiencies Technology Standardization Reduced completion time1 40%2 Extending subsea tie-back reach Subsea trees, equipment, Reduced unit operating cost Real-time reservoir management topsides and floating…
  39. 3Q 2018 Earnings Presentation – Chevron Corp – slide 39
    Downstream & Chemicals 2018 Chevron Corporation
  40. 3Q 2018 Earnings Presentation – Chevron Corp – slide 40
    Profitable downstream & chemicals portfolio Fuels refining & marketing Petrochemicals Lubricants & additives Focused, regional optimization Advantaged feed, scale and technology Strategic positions serving global markets Refinery…
  41. 3Q 2018 Earnings Presentation – Chevron Corp – slide 41
    Strategy focused on leading returns World-class operational excellence Grow earnings across the value chain Target investments Lead the industry in returns 2018 Chevron Corporation 42
  42. 3Q 2018 Earnings Presentation – Chevron Corp – slide 42
    Downstream financial performance Strong track record Reported earnings Adjusted earnings per barrel1,2 billions /bbl 10 6 1 5 3 2.54 1 1 1 2014 2015 2016 2017 3Q18 YTD 2014 2015 2016 2017 3Q18 YTD 15.3% 24.8% 13.0%…
  43. 3Q 2018 Earnings Presentation – Chevron Corp – slide 43
    Refinery performance1 Utilization Energy efficiency Net cash margin Percent Index Index 90% 120 35 2 1 1 2 5 1 4 2 4 2 2 2 2 2 1 70% 80 2008 2010 2012 2014 2016 2017 2008 2010 2012 2014 2016 2017 2008 2010 2012 2014…
  44. 3Q 2018 Earnings Presentation – Chevron Corp – slide 44
    Refinery planned turnarounds A/T earnings impact of planned turnarounds* millions 2013 2017 average 300 Third quarter typically lowest activity High 200 Average Forward earnings Medium guidance categories 100 High 200MM…
  45. 3Q 2018 Earnings Presentation – Chevron Corp – slide 45
    Integrated fuels value chains U.S. West Coast U.S. Gulf Coast Asia Pacific 1 brand share in Western U.S. Leading brand in Central America Long-standing partnerships Mexico retail market entry Top net cash margin refinery World-class…
  46. 3Q 2018 Earnings Presentation – Chevron Corp – slide 46
    Retail, lubricants, and additives Progress and innovation Mobile pay PayPal and Honda partnerships in U.S. CaltexGO mobile pay in Southeast Asia Retail growth Lubricants & additives On track for 400 branded sites in Ground…
  47. 3Q 2018 Earnings Presentation – Chevron Corp – slide 47
    Major capital projects Evaluation / FEED Under construction Commission / start-up GS Caltex Richmond refinery ChevronPhillips Chemical Co. Mixed feed cracker olefins project Modernization USGC petrochemicals project ChevronPhillips…
  48. 3Q 2018 Earnings Presentation – Chevron Corp – slide 48
    Petrochemicals value chains U.S. Gulf Coast Middle East Asia Advantaged feedstock Strategic partnerships enable access to GS Caltex USGC Petchem above nameplate advantaged feedstock 4th largest aromatics single site capacity…
  49. 3Q 2018 Earnings Presentation – Chevron Corp – slide 49
    Petrochemicals major capital projects Growing portfolio Operating Pre FEED FEED ChevronPhillips Chemical ChevronPhillips Chemical GS Caltex Co. Co. USGC Petrochemicals project I USGC Petrochemicals project II Mixed feed cracker…
  50. 3Q 2018 Earnings Presentation – Chevron Corp – slide 50
    Advantaged feedstock Ethylene cash costs per metric ton 1,000 Petrochemicals profitability Oil / gas price ratio continues to benefit lighter feedstocks 500 North America ethane maintains advantage over Asia naphtha…
  51. 3Q 2018 Earnings Presentation – Chevron Corp – slide 51
    Lubricants and additives Premium base oil Leading producer, global slate Finished lubricants Formulation technology expertise Strong global brands Additives Leading global supplier Premium base oil plant Equity blend plants…
  52. 3Q 2018 Earnings Presentation – Chevron Corp – slide 52
    Downstream well positioned for IMO 2020 Conversion capacity and complexity 100% 15 Complex refiners Conversion to crude capacity ratio CVX advantaged Nelson complexity index XOM Highest Nelson complexity 40%…
  53. 3Q 2018 Earnings Presentation – Chevron Corp – slide 53
    Midstream outlook 2018 Chevron Corporation
  54. 3Q 2018 Earnings Presentation – Chevron Corp – slide 54
    Gas and LNG pricing Regional gas pricing /MMBTU 12 Gas is an increasingly Market range for global commodity 10 oil-linked LNG contract prices 8 Steady demand growth and ample supply 6 capacity Asia LNG Spot 4 2 Henry…
  55. 3Q 2018 Earnings Presentation – Chevron Corp – slide 55
    Macro landscape - LNG Global LNG supply & demand MMTPA 600 500 Supply capacity (existing & under construction) Supply Market oversupply 400 opportunity in mid-term 300 200 Pacific basin Supply gap developing next decade 100…
  56. 3Q 2018 Earnings Presentation – Chevron Corp – slide 56
    LNG supply curve LNG development costs /MMBTU 15 9/MMBTU or less Abundant lower-cost 10 delivered to Asia LNG supply Debottleneck opportunities in Australia Focus on cost 5 competitive LNG opportunities 0 100 200 300…
  57. 3Q 2018 Earnings Presentation – Chevron Corp – slide 57
    energy IQ ESG investor presentation 2018 Chevron. All rights reserved.
  58. 3Q 2018 Earnings Presentation – Chevron Corp – slide 58
    Leading in the energy future Enabling human progress Creating value responsibly Developing more Deploying the best energy with less talent to solve the most environmental impact complex problems Leveraging global Finding…
  59. 3Q 2018 Earnings Presentation – Chevron Corp – slide 59
    Highly engaged, diverse board with relevant experience and expertise Board of Directors Balanced Director Tenure Michael K. Wirth Ronald D. Sugar Chairman and Chief Executive Officer Lead Director 0-3 6 Chairman and Chief Executive…
  60. 3Q 2018 Earnings Presentation – Chevron Corp – slide 60
    Board and committee risk oversight One of the many duties of the Board is to oversee Chevrons risk management policies and practices to ensure that the appropriate risk management systems are employed throughout the Company Board of…
  61. 3Q 2018 Earnings Presentation – Chevron Corp – slide 61
    Energy demand views IEAs world total primary energy mix Oil and natural gas are expected to account for about half of global energy consumption under almost any future market scenario Coal Coal Gas Gas Gas Coal Nuclear…
  62. 3Q 2018 Earnings Presentation – Chevron Corp – slide 62
    Capital allocation Capital discipline focused on delivering returns Investment to fill supply Capital discipline and returns focused gap is needed Global crude oil supply and demand 2018 capital and exploratory budget Million…
  63. 3Q 2018 Earnings Presentation – Chevron Corp – slide 63
    Climate change resilience Portfolio testing Most of our assets are competitive when tested against aggressive scenarios like IEAs SDS. Our portfolio is resilient and flexible. Supply/demand scenarios 2018 Chevron Corporation…
  64. 3Q 2018 Earnings Presentation – Chevron Corp – slide 64
    Actions External engagements OGCI Climate Change GHG Proactive engagement (Oil and Gas Climate Initiative) Resilience report intensity with governments we advocate market-based mechanisms Under development: that: performance…
  65. 3Q 2018 Earnings Presentation – Chevron Corp – slide 65
    Actions Technology and future energy DS&C biofuels Adjacencies GHG R&D CTV Future Energy Fund increased emphasis on renewable diesel biojet; power our operations from seed funds for the trial and use of emission- biofuel…
  66. 3Q 2018 Earnings Presentation – Chevron Corp – slide 66
    Executive compensation Our objective is to attract and retain leaders who will deliver long-term stockholder value in any business environment In 2017 and 2018, Chevrons Say-on-Pay vote received over 93% percent. A contributing…
  67. 3Q 2018 Earnings Presentation – Chevron Corp – slide 67
    Appendix: reconciliation of non-GAAP measures Cash flow from operations excluding working capital MM 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 avg. avg. *Net Cash Provided by Operating 1,141 2,531 5,311…
  68. 3Q 2018 Earnings Presentation – Chevron Corp – slide 68
    Appendix: reconciliation of non-GAAP measures Free cash flow excluding working capital MM 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 avg. avg. *Net Cash Provided by Operating 1,141 2,531 5,311 3,863 3,212…
  69. 3Q 2018 Earnings Presentation – Chevron Corp – slide 69
    Appendix: reconciliation of non-GAAP measures Cash flow after capex excluding asset sales MM Full Year 2017 Net Cash Provided by Operating Activities 20,515 Net Cash Used for Investing Activities (note: includes Capital…
  70. 3Q 2018 Earnings Presentation – Chevron Corp – slide 70
    Appendix: reconciliation of Chevrons adjusted earnings TOTAL DOWNSTREAM 3Q18 2014 2015 2016 2017 YTD Reported Earnings (MM) 4,336 7,601 3,435 5,214 2,939 Adjustment Items: Asset Dispositions (960) (1,710) (490) (675)…
  71. 3Q 2018 Earnings Presentation – Chevron Corp – slide 71
    Appendix: reconciliation of Chevrons adjusted earnings TOTAL DOWNSTREAM, EXCLUDING PETROCHEMICALS 3Q18 2014 2015 2016 2017 YTD Earnings (MM) 3,176 6,586 2,823 4,671 2,204 Adjustment Items: Asset Dispositions (960) (1,710)…

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