Good morning. My name is Katy, and I will be your conference facilitator today. Welcome to Chevron's third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session, and instructions will be given at that time. If anyone should require assistance during the conference call, please press star and then zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I will now turn the conference over to the General Manager of Investor Relations of Chevron Corporation, Mr. Roderick Green. Please go ahead. Thank you, Katy. Welcome to Chevron's third quarter earnings conference call. I'm Roderick Green, GM of Investor Relations, and on the call with me today are Mark Nelson, EVP of Downstream and Chemicals, and Pierre Breber, CFO. We will refer to the slides and prepared remarks that are available on Chevron's website. Before we get started, please be reminded that this presentation contains estimates, projections, and other forward-looking statements. Please review the cautionary statement on slide two. Now, I'll turn it over to Pierre. Thanks, Roderick. We reported third-quarter earnings of $6.1 billion or $3.19 per share, highest reported earnings in more than eight years. Adjusted earnings were $5.7 billion or $2.96 per share. The quarter's results included two special items, asset sale gains of $200 million and pension settlement costs of $81 million. A reconciliation of non-GAAP measures can be found in the appendix to this presentation. Adjusted ROC was greater than 13%, and we lowered our net debt ratio to below 19%. Strong operating cash flow enabled us to deliver on our financial priorities, including the resumption of share repurchases. Compared to before COVID, operating costs are down, upstream production is up, and we're much more capital efficient. Cost efficiency and capital efficiency are essential to navigate commodity price cycles, providing resilience through the low periods and leveraging upside when markets are strong. This has been evident over the past several quarters, and especially so in the most recent one, as we generated company record free cash flow, higher than the strongest quarters in 2008 and 2011 when oil prices were well over $100 a barrel. Adjusted third-quarter earnings were up more than $5 billion versus last year, primarily on higher prices, margins, and volumes. Compared with last quarter, adjusted third-quarter earnings were up almost $2.5 billion. Adjusted upstream earnings increased on higher realizations and positive timing effects, primarily related to managing LNG portfolio pricing exposure. Adjusted downstream earnings increased primarily on higher refining and marketing margins. The all other variance was positive due to lower corporate charges and the use of deferred tax assets, which previously had a valuation allowance. Third quarter oil equivalent production increased 7% year-over-year due to the Noble acquisition and lower curtailments, partly offset by price-related entitlement effects and asset sales. I'll now pass it over to Mark. Thanks, Pierre. In Downstream and chemicals, we delivered our best adjusted earnings in more than four years. Demand for our product is strong, yet with recovery of jet fuel sales expected as international travel gradually returns. While the improving market environment helps, we're focused on what we can control, safe and reliable operations, capital and cost efficiency, and value chain optimization to drive higher returns. Some examples of our self-help actions include using digital tools to improve planning, scheduling, and prioritization of maintenance activity, leveraging data analytics and asset flexibility to increase margins, and adopting new technologies like robotic inspections and maintenance procedures. During our investor day in March, I highlighted that self-help is expected to drive higher returns for Downstream and Chemicals. We're on track to meet that guidance, with benefits already flowing to the bottom line. Chemicals' performance is also strong as CPChem responds to current market conditions while continuing to keep a focus on longer-term unit cost reduction. GS Caltex reached 100% design capacity of its mixed feed cracker ahead of schedule and under budget. The CPChem U.S. Gulf Coast Two project continues to advance towards a final investment decision in a disciplined way that positions the project to earn attractive returns through the cycle. The Ras Laffan project is in feed, and we continue to evaluate this project. We believe in the long-term fundamentals of chemicals. Our investment focus continues to be on the low end of the supply cost curve, advantaged feedstock, competitive capital and cost structure, and strong project execution. Since our energy transition spotlight, we closed the acquisition of an equity interest in American Natural Gas (ANG) and its network of 60 CNG retail sites with our partner Mercuria, enabling us to meet customers' needs beyond California. We're also delivering first gas through our Brightmark partnership, and all CalBio gas farms are now online. We sold the first sustainable aviation fuel produced from our El Segundo refinery to Delta Air Lines at LAX. Earlier this month, we announced an agreement to acquire Neste's Group III base oil business and its NEXBASE brand. Pending regulatory approval, we anticipate closing in the first quarter of 2022. The acquisition is expected to provide a capital-efficient approach to expand our base oil offerings and, coupled with Novvi Renewable products, position Chevron to be the supplier of choice to meet customers' needs now and into the future. Back to you, Pierre. Thanks, Mark. We recently released an updated climate change resilience report, which includes a stress test of portfolio under IEA's net zero 2050 scenario, a new target called "portfolio carbon intensity" that includes Scope 1 and 2 and Scope 3 emissions from the use of our products, and Chevron's net zero 2050 aspiration for upstream Scope 1 and 2 emissions. I encourage everyone to read our latest report available on our website. Now looking ahead. In the fourth quarter, we expect lower production due to a planned turnaround in Wheatstone, which was completed last week, and repairs at the Alba Gas plant in Equatorial Guinea. In addition, our participation in the Rokan PSC in Indonesia ended in August. Production from Rokan averaged 84,000 barrels of oil equivalent year to date. We expect earnings from JKM -related spot sales out of Australia to increase around $50 million from third quarter due to fewer spot cargos as our long-term customers increase deliveries heading into winter. We're also expecting 3 discrete cash items, a return of capital from Angola LNG, Tengizchevroil's first dividend in several years, and a federal income tax cash refund. There are no P&L impacts from these items. During 4Q, we expect to buy back shares at the high end of our guidance range. Finally, we're lowering our full year C&E guidance to $12 billion-$13 billion, primarily due to COVID-related project spend deferrals into next year, lower non-op CapEx in the Permian, and continued capital efficiencies. To wrap up the quarter, we continue to make progress toward our objective of higher returns, lower carbon. We're more capital and cost efficient, generated record free cash flow, and are taking actions to lower the carbon intensity of our operations and grow lower -carbon businesses. We're executing a straightforward strategy that's expected to deliver value now and well into the future. With that, I'll turn it back over to Roderick. That concludes our prepared remarks. We're now ready to take your questions. Please try to limit yourself to one question and one follow-up. We will do our best to get to all your questions. Please open up the lines, Katy. Thank you. If you have a question at this time, please press star one on your touch-tone telephone. You may ask one question and follow-up question. If your question has been answered or you wish to remove yourself from the queue, please press star two. If you are listening on speakerphone, we ask you please lift your handset before asking your question to provide optimum sound quality. Again, if you have a question, please press star one on your touch-tone telephone. Our first question comes from Devin McDermott with Morgan Stanley. Good morning. Congrats on the great results. My first question, Pierre, I think is for you. I just wanted to ask for a little bit more detail on the reduction in the capital spending guidance for this year. It sounds like it's a mix of different factors. Some of it's deferrals next year, some of it's mix of non-op and efficiency gains. Can you just bridge the delta a little bit more detail for us and also talk about whether or not these deferrals or how these deferrals impact plan 2022 spend? Thanks, Devin. We lowered our CapEx guidance to $12 billion-$13 billion. That's from our budget of $14 billion and from our revised guidance that we had in the second quarter of $13 billion. In the last quarter, what's changed? Well, we continue to see non-op spend in the Permian below our expectations. We did have some deferred major capital project spending tied to Hurricane Ida and the Delta variant wave. We've seen continued capital efficiency across in the Permian and across the portfolio. It does not change our CapEx guidance. Our CapEx guidance for next year and through 2025 is $15 billion-$17 billion. We do expect higher CapEx in the fourth quarter and next year. The low end of that range is about a 20% increase from the midpoint of our revised guidance. These deferrals are very manageable. Again, I would think from the original $14 billion budget, about half you can think of as deferrals and half I would say is capital efficiency and cost savings where we're getting the same results for less capital. Got it. Makes a lot of sense. Then my follow-up's on cash returns. Very strong free cash flow in the quarter. Your debt target is now below the bottom end of your target range. It's good to see the increase in the cadence of the buyback in 4Q. I guess my question is, you know, what are some of the things you're looking for to further increase that buyback target back to something closer to the pre-COVID run rate? As you said, Devin, our guidance for fourt h quarter is at the high end of the range, so that's a $3 billion annual rate or $750 million in the quarter. As I said last quarter, and I'll restate now, we'll increase the buyback range when Chevron's net debt ratio is comfortably below 20%. We ended third quarter with a net debt ratio a little bit under 19%, down from 21% at the end of the second quarter. We just got below 20%, but we're fast approaching a net debt level where we could increase the buyback range further. As a reminder, Devin, I know you know this: we intend to maintain our buyback for multiple years through the cycle, and so we're positioning our balance sheet below our mid-cycle range so that'll enable us to continue buybacks even if the cycle turns. Got it. Very, very helpful. Makes sense. Congrats again on the strong quarter. Thanks, Devin. We'll take our next question from Neil Mehta with Goldman Sachs. Yeah, I just wanna echo great results here. Pierre, I wanted you to take a moment to talk about the global gas market. You spent a lot of time looking at this over the years. How do you see it playing out from here? There are a lot of moving pieces as it relates to your gas portfolio, but one would be just any thoughts around spot cargoes, and the other would be it looked like you had some timing effects in the quarter that supported earnings. I would think that would unwind later on, but just any modeling advice there. A lot of moving pieces there, but your thoughts on the gas portfolio? Thanks, Neil. First, I'd say that we are seeing high gas prices. It does feel more cyclical than structural. We've seen demand very resilient through COVID on natural gas in particular. Supply has been impacted in part by lower associated gas just a slowdown in some supply activity. Seeing demand and supply a little bit out of sync is something that we've seen in the past, and we expect that markets will work. We're seeing a commodity price signal right now, and we expect markets to rebalance over time. We have a very strong natural gas business. We have a nice position in North America, Australia, Eastern Med through Noble Energy and in Africa. We're well-positioned there. There's not much in the short term that we can really do to increase supply. We have a position in the Haynesville, and we could increase activity there, but that'll have a modest impact on a company of our size. I think over the medium to longer term, we're working expansion opportunities, in particular in the Eastern Med. and I think this is positive for signing up customers and enabling the next phase of expansion there. It's something that we're certainly well-positioned for, and we're looking to expand supply into it. In terms of the quarter, a couple of things. Yeah, we did have a trading timing effect that was related to LNG, and that's really tied to how we manage our overall portfolio pricing. We have customer contracts that are OI-linke d and JKM- linked, and then we have various supplies, and we try to match up the pricing. In order to do that, we essentially went long some JKM paper, which clearly, you know, was mark-to-market positive in the quarter. Now, that's gonna be matched against some physical deliveries in future quarters, so we call that timing because we expect to see that unwind when those physical cargoes are delivered. The last piece of guidance we had was really on fourth quarter earnings effects. We guided towards $50 million of increased earnings in 4Q versus 3Q from Australia LNG spot cargoes. That's just to make the point that we are gonna have spot cargoes. We have all five trains operating. The Wheatstone planned turnaround is complete. We'll have actually more cargoes delivered in fourth quarter when you think of contract and spot. Because it's heading into winter and many of our customers are in the Northern Hemisphere, their nominations seasonally pick up heading into the winter. They will have higher takes under the long-term contracts, which are oil-linked, and that means we'll have fewer cargoes getting the higher JKM prices. Higher prices clearly in JKM Q4 versus Q3, fewer cargoes, -that's a net benefit of about $50 million. We also have some exposure out of both our Angola LNG and Equatorial Guinea, and you can think about another $50 million or so from spot cargoes from those operations. Sorry, it's a long answer to cover the full breadth of natural gas this quarter. Now, there's a lot of moving pieces. Now, that's great. Then Pierre, you're tracking really well on CapEx this year. Now, I think initially 14, then 13; now it looks like as low as 12. Next year, if I remember, CapEx is 15-17, is the range that you talked about. Is it fair to assume that the lower capital spend this year would suggest that you'd be on the lower end of that range? Any moving pieces that we should think about as you set up the 2022 spend level? You'll see us increase capital in the fourth quarter just to get to that $12 billion-$13 billion because we're at $8.1 billion through third quarter. You'll see that in the Permian two more rigs, two more completion crews. We'll have higher activity levels at Tengiz. We're gonna maintain peak manpower through the winter. Activity tends to be backloaded, backend loaded. We have some project milestone payments. We have exploration wells that'll be drilling in the fourth quarter. You'll see an increase in fourth quarter. I think we'll announce our 2022 budget in December like we normally do. It'll be within the guidance. I think it's fair to say it'll be towards the low end of the guidance. Again, even being at the bottom of the guidance of $15 billion of organic capital, that's at least a 20% increase off the midpoint of the guidance we just gave for this year. Again, I don't wanna get ahead of that, but you should expect us to see capital in the lower end of that guidance range. Good stuff. Thanks, guys. Thank you. We'll take our next question from Doug Leggate with Bank of America. Well, thanks. Good morning, everybody. Good morning. Pierre and Mark, thanks for taking my questions. Pierre, I hate to ask a housekeeping question, but you gotta help me out here a little bit on tax. The way I'm thinking about this is that there's been a lot of changes in, you know, post-Noble. Your mix has changed, and obviously we've got a lot more profitability in the U.S. with a low tax rate. Can you help me, is what's going on with tax sustainable, or was it a mix issue, or was there something unusual going on? Because we saw your tax rate a bit low, and I'm worried that we are carrying too high a tax rate going forward. The tax benefits in the third quarter, which we cited, are real. This is a deferred tax asset. It was acquired through Noble. At the time of closing the transaction, we put a valuation allowance against it because these tax attributes expire after a certain number of years. Based on projections of financial performance at that time, we thought they would expire without us being able to use them. Our financial performance is so much stronger that we actually were able to use them in the third quarter. That reduces our taxes, both on an earnings and on a cash basis. It's very real, and it's an additional synergy from Noble, and it's not something that was included in our synergy estimates. That is not something that necessarily will recur. We'll do a review of all of our tax attributes at year-end and see again what deferred tax assets, you know, could have value going forward based on a change in conditions. Again, I would cite that. That was in the "All Other" segment. It's not something that you would expect to recur. That's really helpful. Thanks. I don't suppose I can push you to quantify what that Noble contribution was, can I? Well, it's the primary variance in that segment. We talked about lower corporate charges and tax benefits. All right. Got it. My follow-up is really, I hate to get in the balance sheet issue, but you know, obviously going back five years ago, you guys didn't carry any net debt. Admittedly, you had a lot of projects going on back then. When you think about the cost of the debt, which is obviously very, very low, and we'll see if it stays there, versus the way you think about per -share dividend goals. I'm trying to think; Exxon talks now about 20%-25% has been the right level for them. It seems that you're heading well below that kind of level. What is the right level for you, given that, you know, you can obviously refinance at a very economic level and, obviously, you know, step up the buybacks if you chose to? When I became CFO, I answered this question: we didn't have a hard target on our net debt ratio, but 20%-25% is a good place for us to be through the cycle. There could be times where we go above it. For example, when we showed our stress test, the only company in the industry to show a stress test last year at $30 Brent for two years, to give confidence to our investors that we could maintain the dividend, our net debt ratio did go above 25%. That's appropriate. We do not need to be anywhere close to where we were before with no net debt. But when prices are above mid-cycle, we should be below the low end of the range. We are. We got to less than 19% now, and we're fast approaching a range where we could increase our buyback guidance. It's very close to where we're at. All the excess cash that we'll be generating under these conditions, and we show that at $60 even, prices well below where we're at now, that we can generate $25 billion of excess cash over 5 years. This is cash in excess of our capital and our dividends. All that cash will be returned to shareholders over time in the form of a rising dividend. Again, our dividend is up 12% since pre-COVID, the biggest increase in the sector, and a buyback that's ratable and we maintain through the cycle. We bought back shares 14 of the last 18 years. When we set a buyback rate, we intend to maintain it through the cycle. That means we'll maintain it when the cycle turns, and which means that we can, in fact, be doing it off of debt for some time period, and we'll rebalance back into the range whe n we, you know, continue to buy back shares i f and when the cycle does turn down. Well, let's hope that it's not anytime soon, 'cause last year, we still got the scars from last year, Pierre. Thanks so much for your answers. I appreciate it. Thank you, Doug. We'll take our next question from Jeanine Wai with Barclays. Hi. Good morning, everyone. Thanks for taking our questions. Good morning. Good morning. We wanted to follow up on Devin's questions and I guess Doug's question as well, getting back to the buyback. Pierre, you have already commented that you plan to maintain the buyback through multiple years through the price cycles, which is great. I think we remember prior commentary that the goal is to not have to reduce the buyback once it's started. We wanted to just check in on that and how you think of the trajectory of any buyback increases. It sounds more ratable versus opportunistic. We know there's a tremendous amount of free cash flow coming your way, but also it seems like investor expectations are running alongside that versus being more ratable, that the strip is backward dated. We just wanted to kind of check in on the trajectory. Thanks, Jeanine. If you look back to our history, we've never ended a buyback program at the rate that we started. We tend to increase them. I think you might be right that we haven't decreased them. Look, I'm not opposed to that. We have a range. We're using the range, right? We were in the middle of the range in the third quarter. By the way, it's the first quarter since we've resumed buybacks. We bought back shares in the first quarter of last year, pre-COVID. Now we're using the top of the range. As I said, we're fast approaching a net debt level where we can increase that guidance range further. No. Our focus is on being rateable and maintain it through the cycle. Investors, our investors, our shareholders have different views on buybacks. Where we have the most common ground is do it consistently, and do it through the cycle when times are good and when times are tougher. We're setting the rates at a level that we have confidence that we can maintain it through a commodity price cycle. Okay, great. Thank you for that. Our second question is really on the Permian and the outlook on capital allocation. Can you just talk a little bit about what you're seeing on inventory and supply demand? And maybe how close are you to potentially accelerating in the Permian a little bit beyond of what you've already laid out? I guess, on that, we know that it doesn't get much attention, but could you also be thinking about increasing activity in other short cycle plays? Thank you. We're gonna increase capital in the fourth quarter and into next year. That'll be in the Permian, and there'll be in other locations. As I said, even the bottom end of our guidance range, $15 billion, represents at least a 20% increase from where we expect to end up this year. We're seeing that in the fourth quarter. We'll see 2 additional rigs in Permian, 2 additional completion crews. We're beginning to see a non-op pickup also. Again, that's part of the reason why we lowered our guidance. Non-op has been a bit below our expectations. You can see it in other basins. We have a great portfolio with a number of short cycle investments. We're not changing our overall CapEx guidance range. Our CapEx guidance anticipated that we would be in a recovery mode, and it would increase over time. We showed a five-year outlook on the Permian that shows that we can grow production as an outcome of a very capital- efficient and also carbon- efficient development of resource that we can grow that production from 600,000 barrels a day to 1 million barrels a day. We're executing our plan. There's really no change in what we're doing. It's playing out the way we expected and seeing a buildup in activity in the Permian and across other parts of our portfolio is what we had planned to do, and we're gonna do that in a very capital- and cost-efficient way. Great. Thank you. We'll take our next question from Phil Gresh with JP Morgan. Hey, Pierre. First question here, just kind of circling around the capital allocation piece a little bit more. Back in March, you talked about having $25 billion of excess cash or greater than $25 billion in excess cash over five years at $60, implicitly suggesting the dividend would be covered around $50-ish Brent, I believe. I'm just curious if, as you've progressed through this year, the performance that you've seen, et cetera, has anything changed with that to make you think that breakeven would be moving lower, or is that still an area where you're comfortable with? That's an area where we're comfortable with. It's just keeping oil prices constant, right? We're seeing Mark Nelson's Downstream and Chemicals group perform very well. We talked about natural gas pricing being strong both in North America, Europe, and international LNG. Those things aren't held constant. If you looked at this quarter's results, I think you'd see our breakeven would be a little bit lower. But in terms of mid-cycle assumptions for refining margins, you know, chemical margins, natural gas prices, and then an oil breakeven about $50 is certainly where we're at. Now that, of course, changes as our dividend goes up and other things over time 'cause it's a dividend breakeven. It's covering our capital and our dividend, but that math is still intact. We are a better company than we were for a few years ago. We showed that chart where our costs are lower, our production is higher, and we're much more capita-efficient.. We can sustain and grow this enterprise with less capital, and that helps us deliver higher returns and lower carbon. Got it. Okay. Just a follow-up question on Wheatstone. There were some reports from your partners about reserves being written down there. I just wanted to get your commentary. How do you think about this? Does that, you know, mean something in terms of future capital requirements, given that it's a longer cycle project? Just any commentary you'd have there. Thanks. It's unrelated to Chevron. If you recall, the Wheatstone project was the first project in Australia, and maybe the world, where there was third-party, you know, the reserves, the resources came from two different joint ventures. It was Apache at the time, and now it's Woodside. It was really Woodside announcing that the fields that supply their portion of that toll through Wheatstone, that those reserves have a write-down. Chevron does not have an interest in those reserves, so the fields, the Chevron fields that supply Wheatstone, are not affected. Again, it's unrelated to Chevron activity. It's only that they essentially, we share the facility through them, and those fields are also being processed through. Wheatstone's doing very well. We had a planned turnaround that covered a portion of third quarter and early into fourth quarter. As I said, it was completed last week, and we expect to have all 5 of our Australia trains operating this quarter. As I said, we expect more cargoes. There's a lot of focus on JKM, but of course, our oil-linked contract prices will also be higher because they adjust with oil prices are higher, and then they adjust with oil prices on a 3- to 6-month lag. Great. Thanks for the clarification on that. Thanks, Phil. We'll take our next question from Ryan Todd with Piper Sandler. Great. Thanks. Maybe a high-level question. You did your energy transition spotlight event a little, you know, a little while back. You said, you know, a share of the capital budget at close to low carbon businesses being close to 10% of the capital budget. You've seen one of your peers here in the U.S. raise theirs to a similar level. As you think about the feedback that you've received since then, I mean, our view was that it was a pragmatic, you know, balance between allocation of capital towards good low carbon businesses but t not too much to kind of protect returns dilution going forward. Is 10% of the budget... As you've seen feedback over the last couple of months, do you view that 10% of the budget is enough, or do you think that's gonna be something where you're gonna see increasing pressure to kind of creep that higher going forward? I'll start, and then I'll ask Mark to talk a little bit about some of our renewable fuels activities in his portfolio. We have good shareholder support and alignment for our strategy and objectives of higher returns, lower carbon. That's both lowering the carbon intensity of our traditional operations and then growing low carbon businesses that leverage our strengths, our capabilities, assets, and customer relationships. They target the sectors that cannot be easily electrified, the hard-to-abate sectors. This is things like air travel, industrial emissions, heavy-duty transport. The $10 billion of capital is connected to some pretty ambitious targets that go out to 2030. You know, 150,000 tons per annum of hydrogen, 25 million tons per year of carbon capture and storage. That's all consistent with that capital guidance. We are more in the execution mode and getting it done versus, let's say, competing on CapEx targets. It's not easy to do. These are ambitious targets. They have challenges, lots of opportunity. Let me ask Mark to talk a bit about his portion of that on renewable fuels. Thanks for the question, Ryan. You know, if I could use a real tangible example. You think about our El Segundo refinery and our diesel hydrotreater conversion. We've said a few things are really important to us when it comes to renewable diesel. We've said that the ability to sell it at the appropriate margin, the ability to have the right kind of feedstocks, and the ability to be capital efficient is critical for us to be successful. In Southern California and the El Segundo refinery are an example of all of that. We've already increased our sales. We're getting close to 40%, but let's say over 30% of renewable and biodiesel in Southern California. We have our Bunge joint venture, where we're working towards definitive agreements as we speak, and yet they're already supplying us at the El Segundo refinery. Finally, and perhaps most importantly, capital efficiency. We indicated in our energy transition spotlight that we expect to be a leader in the capital conversion of particular hydroprocessing units in our system. We believe we can do that for less than $1 per gallon of annual capacity, and that's including any pretreatment requirements. That gives us the ability to produce both renewable diesel and conventional diesel just with a catalyst change if that's necessary. When you step back and you think about that work that's been done initially at El Segundo, where we did our co-processing investment for very, very little money, we were able to test tanking and piping and metallurgy needs, and now we're working towards a full conversion of that diesel hydrotreater here by the end of next year. That won't be easy, but the team is working really hard on it, making very good progress, and that would be 100% renewable diesel capacity and over 10,000 barrels a day. Thanks for the question, Ryan. Great. Thanks, Mark. Maybe a follow-up on some of your comments earlier, Pierre, where you mentioned when you were talking about gas markets and you mentioned the Eastern Med opportunities. We haven't talked about that much in a little while. In your conversations with potential buyers of that gas in the basin, I mean, in the past, when it was operated by Noble, it was, you know, there was talk of everything between European targets to pipelines to Egypt to floating LNG and all sorts of opportunities. Any thoughts on what may look like it makes the most sense there in the Eastern Med and opportunities for, whether it's, you know, shorter-term debottlenecking and opportunities there versus longer-term project development? All options are still on the table, Ryan, and it's commercially sensitive, so I don't want to show our hand in any way. I mean, the point is that this is a great resource. There's some very low-cost expansions that can be done, and there's some larger expansions that can be done over time. What's really changed is that was in a geography that a year ago looked oversupplied for natural gas, and now it looks, you know, much tighter. As you know, the natural gas business internationally is really dependent on getting customers to sign up, and I think customers are more motivated now. Look, it's probably overdone. As I said earlier, we expect the markets to correct, but it is a better time for us to be engaging. It's a great resource. In many cases, it's backing out coal. It has expansion opportunities. It's been free cash flow positive from the moment that we closed Noble. It's just a great asset, and it's well-positioned now to have opportunities to grow in the future. Great. Thank you. We'll take our next question from Paul Sankey with Sankey Research. Hi, everyone. Pierre, if I could start with you. Would it be possible to try and normalize your exposure to LNG, given that there's so many moving parts over the course of the past year or so? I'm just noting that you said during your comments that your spot exposure will be somewhat different in Q4 as a result of customers pulling long-term contracts. If we could just take it apart a bit and sort of normalize into 2022, 2023, where are your volumes, and how much of that is gonna be long- term versus spot, if you could have a go at that? Thanks. Paul, we'll cover that more in our fourth quarter call when we give full- year guidance on a number of items. We have a long-term contract that will begin next year. It'll take our weighting to long-term contracts a little bit higher. Again, we've been notionally around 80%. But that's why we very consciously just provided guidance for this quarter, as it will change a little bit next year, but we'll do that on the fourth quarter call. Okay. I'll move on to Mark, but if I could just slip a quick one in to you. In regards to modeling, do I assume that we put everything into buyback in terms of free cash flow, or are there any other items that you would highlight? You know, maybe pension or something that we should just be aware of going into 2022 and how much we consider your buyback to be. Thanks. Over time, the vast majority of the excess cash will be returned to shareholders in the form of higher dividends and the buyback. We did a one-time pension supplement last quarter. It was really tied to the very low interest rates from a year ago. It sounds like a long time ago. Under the Pension Benefit Guaranty Corporation rules, the funding requirement is fixed based on the year-end interest rates. We were a little bit underfunded and therefore would have paid a little higher, what's called a "variable interest rate," essentially higher than our cost of borrowing. That's why we supplemented it. Obviously, we're in a much different place in terms of interest rates now, and you'd expect our pension contributions to be, you know, as they have been, and we provide guidance on pension in our 10-Q filing. I would not expect anything on that end. Again, if you go to our financial priorities, Paul, you know them well. Sustain and grow the dividend. It's up 12% since pre-COVID, the biggest increase in the sector. Our capital guidance is gonna be up, but it's no change from the guidance range, and it's in a very tight guidance range and very capital efficient and lower where it was pre-COVID. We're gonna pay down a little more debt, as I said. We're fast approaching a level where we can increase our buyback range. The balance is excess cash. Over time, it goes to shareholders. We're not gonna sweep it out each quarter because investors are very clear that they want us to maintain a buyback through the cycle. I guess that would mean no specials. I think it's time for you to ask a question to Mark. Mark, well, thanks, Pierre. Mark, a very general question, but could you talk about how capacity is changing downstream, both in refining and in chemicals? 'Cause I know we're adding a lot of chemicals, obviously. We're also shutting down a lot of downstream. Firstly, is there any way that Chevron's dramatically changing its capacity and exposure downstream? And secondly, could you talk about that in the context of where you see U.S. and global capacity? I know this could take two hours. I apologize, but if you could generally say, you know, how global capacity has shifted, and the more numbers you could give us, the better. Thanks. Yeah. Thanks, Paul. You know, so let's start with the refining side of the business. You know, we've... Use margin as the proxy for capacity being utilized. You know, we've said demand has to recover for high-value products. Inventory has to fall into traditional ranges. We need some degree of refinery rationalization, either closures or conversions, you know, throughout the system. If you're in the U.S. today, I think you're seeing much of that demand recovery with jet still to come. That's even with, you know, offices not completely open and still some restrictions in place. Inventory tending to find itself in traditional boundaries. Starting to see some closures and/or conversions in some of our markets, especially the U.S. West Coast, which means the market could actually be tight on things like motor gasoline, even jet five or six years from now. You see that in the United States. If I shift to Asia, I would say that demand recovery on jet is a little bit behind that of the U.S., especially given our exposure to Southeast Asia. Inventory reduction, you know, falling into those ranges, is starting to happen. Some of that with, you know, with China stopping some of its exports for the moment. Demand catching up with refinery capacity in Asia still needs to happen. That means that we both need some, perhaps some rationalization, as well as demand just to catch up with the capacity that's there. My high- level comment would be that in the United States, we're seeing the actions to bring refinery margins into balance over time, getting closer to historic ranges, and just a half phase behind that maybe in Asia. For the petchem side of the equation, you know, petchem margins have had a strong run this year on the back of good demand and considerable supply disruptions. We would expect to see margins come off as we get to the fourth quarter, normal seasonal type of drop- off. But we're actually preparing, you know, for with capacity growth over the next few years. We expect that to outpace demand, so we're at that part of the cycle. Even in 2025, we're presuming we'll be on the lower portion of the margin cycle. That means there'll be a period of catch- up there in regard to demand- catching capacity. Hope I got to your issues. You did. Thanks, Mark. Just from a Chevron point of view, is there any major changes in your capacity over the next five years that you anticipate refining in chemicals? Thanks. Other than the comments we've made about, you know, remember, it was about a decade ago that we did much of our what I'll call rationalization, meaning taking things out of our portfolio. We've highlighted our energy transition spotlight, that we have this opportunity for this very capital efficient conversion of individual hydroprocessing units. We will certainly do that over the next decade to get to that 100,000 barrels a day of RD SAF capacity. Thanks, Paul. We're gonna have to go to the next- Thank you. Bye. Thanks, Paul. We'll go next to Roger Read with Wells Fargo. Hey, thank you, and good morning. Pierre, I'm gonna hit you on capital returns, buybacks, and balance sheet. No, I'm just kidding. Mark, I would like to ask you about the Group III base oil acquisition, kind of how that fits in the overall structure and what we should think about there, and whether or not we've seen some stories about renewable feedstock for Group III, maybe how you see that working over time. Thanks, Roger. As mentioned in the prepared remarks, we're excited about the announced acquisition of Neste's Group III base oil business and the NEXBASE brand. The reason for that is it's a very capital- efficient acquisition of both offtake of supply, appropriate qualifications, and the brand, NEXBASE brand itself. What that does for us is it allows us to expand our offerings. We're gonna add that to our existing Group II Plus, and Novvi offering to have a complete offering for the base oil needs for our customers in the future. Think about that Novvi brand that we've talked about. I think in the Energy Transition Spotlight, we shared that Walmart would be selling online our Havoline PRO-RS, the first renewable lubricant line. We've actually brought some of that forward, and starting next Monday, we will have our installer base in North America, specifically the United States and Canada in particular, running a whole line of Havoline PRO-RS. We're creating that demand for the renewable portion of that offering, and it really gives us something where we can be that supplier of the future for our base oil customers. Thanks for the question, Roger. Yeah, absolutely. Then, if we could come back to some of the things on the CapEx. You referenced delays out of the Gulf of Mexico due to the storms, which totally makes sense. As you look at the development and some of the exploration, I think you're looking to do out there over the next couple of years, is there any change to that or any sort of change in the order of projects we should pay attention to? No. We have a steady stream of projects really with Anchor that has been underway, Whale that recently went to a final investment decision. In Ballymore, which is coming along. You'll see a very ratable development program. Gulf of Mexico is a high return, low carbon asset. Some of the lowest carbon intensity barrels in our portfolio in the single digits, and is a business that we've been invested in for decades, have know-how and some competitive advantages, and can find attractive investment opportunities. It's sort of a modestly growing part of the portfolio. If you think of the biggest growth that we have going forward clearly is in the Permian, which I referred to earlier. Tengiz, a project that we're investing in and this project is going very well, and the project will come on in a couple of years. when you get to Gulf of Mexico, the Rockies or Colorado, a few other places are also have very attractive investment opportunities that can deliver both higher returns and lower carbon. Thank you. We'll take our next question from Biraj Borkhataria with RBC. Hi. Thanks for taking my question. Two questions. The first one was just thinking about the balance sheet. You know, because of your conservatism and the way you manage your balance sheet, you've been able to make some counter-cyclical moves, and Noble was obviously the most recent one. Given we're at the high point of the cycle now, can you talk about any plans to accelerate asset sales? I know it's not needed for the balance sheet, but just interested to hear whether you think there are any opportunities out there, and if so, are they across upstream, downstream or chemicals? The second question is on Tengiz. It's good to see that the dividend come through after a number of years. Are there any loan repayments due in 2022? Finally, just a quick comment to say thanks for the PCI calculation tool which you published. It's actually quite difficult to dig into some of those figures and understand all the variances, so I appreciate the transparency there. Well, thank you, Biraj, for recognizing PCI. Our teams will be very happy to hear that. We wanted to make a tool that was transparent, where you could use it for other companies, 'cause I know comparability is of interest to investors. It's based on, again, transparent reporting data and comparability. Thank you for taking advantage of that, and I encourage others to check it out. Let me just talk about Tengizchevroil because as we look back, we had a very successful spring and summer campaign there. We hit our productivity targets, and we achieved a lot of our milestones when we had a full workforce. We had a Delta variant wave, which caused some higher levels of isolation in the middle of the third quarter, but we ended the quarter with positive rates very, very low, and we're back to our full workforce. As I mentioned earlier, we intend to maintain a peak manpower workforce level through the winter months. We have a vaccination rate over 85% for that workforce. We're well-positioned to make a lot of progress this winter. Now, we have to be thoughtful about it, 'cause it can get cold there, so we're sequencing the work in a way that we're saving work that can be done indoors or in sheltered locations during the coldest months of the winter. No change clearly in the guidance that we provided on second quarter in terms of budget and schedule, but I wanted to give an update. Things are going very well in Tengiz, and we're looking forward to a very productive winter season there. In terms of the dividend, you're right, it's the first dividend in three years, so that's nice to see. We did have a modest loan repayment that occurred last quarter. Look, we'll give guidance on 2022, just like with Paul's question, when we look forward. It'll depend clearly also on oil prices, but that's something that we'll give guidance on our 4Q call. In terms of asset sales, yes. We acquired Noble when or announced the acquisition when Brent was in the low $40s. Now Brent is in the low 80s. It's a commodity business. It has cycles, ups and downs, and when you buy or sell assets, timing makes a difference, where you are in the cycle. Of course, strategic fit and all the elements. We're very pleased with the Noble transaction. We talked about the timing of it, the first to do it, the synergies that were doubled and the tax benefits that we saw this quarter and interest cost savings. We did tender a number of bond offerings earlier this month. A lot of those bonds were Noble bonds. Again, that was not included in our synergies 'cause we weren't quite sure we could achieve that, and we'll save over $100 million in interest cost savings. Noble just keeps contributing to the company, and that's part of the reason why we're a better company now than we were several years ago. It's a different market. Yeah, I view it more as a seller's market than a buyer's market right now. You're seeing us modestly increase some assets that don't compete for capital as well in our portfolio. In fact, one of them is our position in the Eagle Ford. That was a Noble legacy position. Chevron legacy was not in it. We don't have quite the scale that we would like. Again, essentially buying that position at $40, and now we have it on the market. That's in the public domain. Obviously, we expect to get much higher value than for what was implied in the purchase price. We have some other U.S. onshore assets that are on the market, again, that we feel are very attractive to a lot of industry players bu t just won't compete for capital as well in our portfolio. Thanks, Biraj. Okay. Understood. Thank you. We'll take our next question from Paul Cheng with Scotiabank. Hey, guys. Good morning. Two questions, p lease. Morning. The first one is for Mark. Mark, you guys did the Pasadena refinery, and at that time you're saying that it's one-off because you're complement your Pascagoula refinery. There's a lot, quite a lot of refinery available for sale in here. Want to see, with the substantial amount of the refining capacity being shut, does it change the way that how you're looking at that business? Or that you think you already have sufficient of the capacity and supplementary and you really don't need to add? And also, in the retail marketing, some of your peers that have been aggressively; they're building that up and including in the U.S., and you guys have been out of that business for more than 10 years. Is there any plan to going back, so that on the energy transition, including in the EV charger and all that? The second question is for Pierre. You talk about, say, the Tengizchevroil dividend. How about the Angola LNG, can you give us some idea that if the current commodity price hold, should we assume every year that both Angola LNG and the Tengizchevroil is going to pay the dividend? And any kind of sensitivity you can provide, that if the change in the oil price, how that impact on that dividend payout going to look like? All right. Paul, thank you for the questions. Yeah, I'll take them, I guess, in reverse order. I think your second question was really about retail marketing. As you know, we have three world-class brands. We've taken a capital light approach to selling our branded fuels. In fact, one of the metrics that we often look at is the Opus Brand Power rating, and we continue to be well at the top of that list. What that means is the majority of our retail sites around the world that you would see are owned by retailers who have specifically chosen our brand. We have our brand, our fuel, and generally not our capital. We also happen to have one of the strongest retail convenience franchising offerings out there, ExtraMile, that you've probably seen. In fact, I think we hit our 1,000th site this year with very, very little attrition. We believe that our limited capital approach provides us the majority of the margin and sustainably delivers high returns and still allows us to stay connected with customers. As part of that offering to customers, you know, today we have EV charging stations in seven countries around the world, and we're partnering with our retailers to continue to expand that offering as customers actually need it. Your second question was, I think, about the refinery portfolio in general and maybe Pasadena specifically. We're very pleased with our refining portfolio today, and it's really because of that hydroprocessing capacity that we have across our system. It gives us flexibility to deal with the fuels of the future, and renewable fuels in particular, in a very capital- efficient way. Specific to Pasadena, again, we have an opportunity there. The premise of the acquisition continues to hold for us in processing our equity crude, being able to supply our own service stations in the Texas-Louisiana area, and then, of course, having the intermediates back and forth between Pascagoula and Pasadena. That's all working as we would expect. We've shared that we think there's an opportunity there to have very efficient expansion of light tide oil processing capacity, and we've hinted that that's going to be a hydro skimming focus. We're working on that real hard and look forward to talking more about that next year. Thanks for your question, Paul. Pierre? Yeah, on Angola LNG, it's in our looking- ahead slide, Paul. We guide towards $300 million of return of capital. It's essentially a dividend. It's just kind of an accounting characterization of it as return of capital. It's cash, is the bottom line. In terms of guidance going forward, just say Angola LNG does sell into the spot market essentially both on oil-linked strips and into Europe, TTF or international JKM markets. It does have exposure to international natural gas pricing. $300 million will be a nice return of capital here in the fourth quarter. Again, just like with Paul Sankey's question, we'll provide guidance for our full LNG portfolio on the fourth quarter call for 2022. That'll include Australia, Angola LNG and our interest in Equatorial Guinea, which again is another asset that was acquired through Noble Energy. Thanks, Paul. We'll take our next question from Manav Gupta with Credit Suisse. Hey guys, two questions. I'll ask them upfront. The first one is, I'd like to pick your brain on the mid-cycle chemical margins here. Historically, we thought the mid-cycle would be more like $0.25. Obviously, right now you're more like $0.65. Even though you did say, you know, the margins will decline, some of the bigger chemical ethylene players are out there saying we will settle for the next two, three years above the mid-cycle level. While the mid-cycle could be $0.25, you could still see $0.35-$0.40. That's the first question. The second question is we're seeing you get into the CNG distribution for the first time, and I'm wondering if this is associated with your strategy of developing RNG and basically controlling the entire value chain so you can distribute your RNG that you're going to produce through your distribution network. Thanks, Manav. Got your question. First on petrochemical margins. You know, we indicated as we look to the longest of terms, we expect petchem demand to continue to grow in line with the long-term GDP growth. We believe in kind of the next 4-5 years, we do see capacity growth in the next couple of years going past demand, which brings us towards the bottom portion of the margin cycle. I think we shared in our investor day discussions last year that we brought our view down, and again, erring on the side of conservative perhaps, but that it was gonna be $0.20 per pound in regard to where we could expect those margins over time. Anything above that, of course, we will take. It drives us in our CPChem joint venture to make sure that we continue to work on our unit cost reductions, which they have done a very good job on and will continue to do going forward. We see that as our number looking forward. When I get to your comment on the RNG portfolio, you read it exactly correctly. Our close on the 60 American Natural Gas sites is really about us leveraging our strength. When we talk about renewable natural gas, we say a couple things. We say it leverages our strengths and biofeedstocks are really important. The strengths in particular are value chain, active innovation and partnerships. The two areas where you can see this at play actually, in the formal presentation would be in the gas that's now coming from CalBio from all of the farms that we have there, and then our Brightmark activity experiencing their first delivered gas. On the 60 CNG sites that American Natural Gas CNG sites with Mercuria, that allows us to follow the request of our customers, if you will. We're trying to get CNG to those customers throughout our portfolio, and that's the first step in doing it and a platform for us to grow. Thank you. Thanks, Manav. Thank you. Our last question will come from Jason Gabelman with Cowen. Yeah. Thanks for squeezing me in. I may have missed it, but can you just discuss the drivers of why Tengizchevroil's declaring this dividend now and kind of what we should look to assess if they'll declare it next year, and just some background on how we could calculate that. My second question, just on cost inflation, what you're seeing across your projects, if it's impacting Tengizchevroil at all or any of your either large or, sorry, long cycle projects or short cycle in the Permian. Thanks. Thanks, Jason. Yeah, I should have mentioned, you know, Tengizchevroil is paying a dividend. It was in the plan, but it could be higher than was planned, which is why we've guided to a range, primarily because two things. One, clearly the macro environment is stronger. It produces a light oil that attracts trades to a tight discount to Brent. And with the fiscal terms and the rest of it's generating excess cash. And also we've seen at the project some real cost savings. Again, we've seen some deferrals, but that would be factored into retaining cash in Tengizchevroil. But we've seen some underlying greater efficiencies, and we've seen some foreign exchange benefits there. It's a function of things going well, both from a market environment and from an execution of the project. Again, in terms of 2022, we will provide guidance on the fourth quarter call like we have in prior years. We've guided historically to that cash flow line, which is the difference between dividends and affiliate earnings. I think we also might just give separately a range on expected dividends from Tengiz and other major affiliates. In terms of costs, we're not really seeing any cost increases. Rigs; U.S. onshore rigs are maybe creeping up, but they're still well below where they were pre-COVID. In general, the industry is operating below capacity. Although there are pockets of goods and services that we use that are tied to the general, you know, economy, like steel and clearly steel is up, but the majority of our costs are tied to industry- specific, you know, major equipment, and that's still operating below capacity. It could increase in the future. I know there's a lot of talk about it, but what we're seeing up to date is costs are well under control. Thanks. I would like to thank everyone for your time today. We appreciate your interest in Chevron and everyone's participation on today's call. Please stay safe and healthy. Katy, back to you. Thank you. This concludes Chevron's third quarter 2021 earnings conference call. You may now disconnect.