Chevron Corporation (NYSE:CVX) Q3 2019 Earnings Conference Call - Final Transcript

Nov 01, 2019 • 11:00 am ET


Chevron Corporation (NYSE:CVX) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning. My name is Jonathan, and I will be your conference facilitator today. Welcome to Chevron's Third Quarter 2019 Earnings Conference Call. [Operator Instructions]

I will now turn the conference call over to the General Manager of Investor Relations of Chevron Corporation, Mr. Wayne Borduin. Please go ahead.

Wayne Borduin

Thank you, Jonathan. Welcome to Chevron's third quarter earnings call and webcast. On the call with me today are James Johnson, EVP of Upstream; and Pierre Breber, CFO. We'll refer to the slides 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. Turning to Slide three and Pierre.

Pierre R. Breber

Thanks, Wayne. We had another quarter of strong operational and financial performance. First, an overview of our financial results. Earnings were $2.6 billion or $1.36 per share. The quarter's results included a $430 million special item tax accrual associated with a cash repatriation in the fourth quarter.

Foreign exchange gains for the quarter were $74 million, excluding special items and FX gains earnings were $2.9 billion or $1.55 per share. A reconciliation of non-GAAP measures can be found in the appendix to this presentation.

Cash flow from operations was $7.8 billion, we also maintained a strong balance sheet with a low debt ratio. Importantly, our strong cash flow allowed us to continue to deliver significant cash to our shareholders. During the quarter, we paid over $2 billion in dividends and repurchased $1.25 billion of shares in line with our annual share repurchase run rate guidance of $5 billion.

Year-to-date, we've returned approximately $9.5 billion in dividends and share repurchases. Year-to-date organic capex was $14.5 billion slightly below our ratable budget of $15 billion. Total capex, which includes inorganic transactions that are unbudgeted totaled $15 billion. We are maintaining a firm commitment to capital discipline to improve returns on capital.

Turning to Slide four, third quarter cash flow was strong, down from the prior quarter, due to lower Brent prices in the absence of the termination fee received from Anadarko. On a year-to-date basis, cash flow from operations of nearly $22 billion funded all four of our financial priorities. With nearly $12 billion in free cash flow, we currently have an annualized yield about 7%, highlighting our ability to generate strong free cash flow in a lower oil price environment.

Through three quarters, the company's cash flow, dividend, breakeven price, excluding working capital is in the low '50s Brent. Asset sales proceeds add to our positive cash flow and further lower the breakeven, while high grading our portfolio. Since the beginning of 2018, asset sale proceeds have totaled $3 billion and by year-end after the expected closing of the sale of our UK North Sea assets, we will be near the low end of our $5 billion to $10 billion guidance range with one year to go.

Turning to Slide five. Third quarter 2019 earnings of $2.6 billion decreased about $1.5 billion versus