Chevron (CVX) Q3 2021 Earnings Call Transcript

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Chevron (NYSE:CVX)
Q3 2021 Earnings Call
Oct 29, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. My name is Katie, and I will be your conference facilitator today. Welcome to Chevron’s third quarter 2021 earnings conference call. [Operator instructions] 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.

Roderick Green — General Manager of Investor Relations

Thank you, Katie. 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; who 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 2. Now I’ll turn it over to Pierre.

Pierre Breber — Chief Financial Officer

Thanks, Roderick. We reported third quarter earnings of $6.1 billion or $3.19 per share. The highest reported earnings in more than 8 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 ROCE was greater than 13%, and we have also 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 this resilience through the low periods and leveraging upside when markets are strong. This has been evident over the past several quarters, and then especially in the most recent one, as we generated company-record free cash flow, higher than the strongest quarters in 2008 and ’11 when oil prices were well over $100 a barrel. Adjusted earnings — 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 of FX, 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 some lower corporate charges and the use of deferred…