Chevron (NYSE:CVX) reported third-quarter financial results on Friday. This transcript is brought to you by Benzinga APIs.
S. Full TranscriptKayte (Conference Facilitator)Good morning, my name is Kayte and I will be your conference facilitator today.
Welcome to Chevron’s third quarter 2026 earnings conference call. At this time all participants are in a listen-only mode.
After the speakers’ remarks, there will be a question-and-answer session and instructions will be given at that time. If anyone requires assistance during the conference call, please press star then zero on your touchtone telephone.
I will now turn the conference call over to the head of Investor Relations of Chevron Corporation, Janine Wei. Janine Wei (Head of Investor Relations)Thank you, Kayte.
Welcome to Chevron’s third quarter 2026 earnings conference call and webcast. I’m Janine Wei, head of Investor Relations.
Our Chairman and CEO Mike Wirth, Vice Chairman Mark Nelson, and CFO Eimear Bonner are all on the call with me today. We’ll refer to the slides and prepared remarks that are available on Chevron’s website.
Before we begin, please be reminded that this presentation contains estimates, projections, and other forward-looking statements. A reconciliation of non-GAAP measures can be found in the appendix of this presentation.
Please review the cautionary statement and additional information presented on slide 2. Mike Wirth (Chairman and Chief Executive Officer)Thanks, Janine.
Chevron delivered another quarter of outstanding operational performance and disciplined execution, reliably supplying the energy the world needs. , upstream production was more than 2 million barrels of oil equivalent per day.
For the fifth consecutive quarter, we achieved record crude throughput in our refining system, helping meet demand in supply-constrained markets. We also continued investing to develop future energy supply.
We announced a discovery in Angola within tieback range of Chevron-operated facilities, providing an opportunity for short-cycle, capital-efficient development. S.
biofuels business. And we recently announced an expected 50% reduction in Bakken midstream tariffs that expands economic inventory and competitiveness.
Chevron is well positioned to deliver more energy today and well into the future. Venezuela will be part of that story.
We have deep on-the-ground expertise built over our 100-year history there. With new fiscal terms, Venezuela is now more competitive within our portfolio and immediately accretive and free cash flow positive.
This development program will be self-funding and extend further into the 2030s, underpinned by billions of barrels of resource. Total costs are expected to be under $20 per barrel with competitive investment returns, and no major upgrades are needed as infrastructure has been well maintained.
S. refineries including Pascagoula and El Segundo, adding to domestic product supply.
We’ll look to capture additional value as we optimize product flows across our system, and we’re on track to reach around 300,000 barrels of oil per day of gross production by year end, up 20% over the last 12 months. Mark Nelson (Vice Chairman)Thanks, Mike.
Our strong operational performance is driven by a relentless focus on safe execution, reliability, cost, and technology. At around 4 million barrels of oil equivalent a day, improvements in our base business create meaningful value.
And advanced chemicals continue to deliver strong results in the Permian, increasing cumulative oil equivalent production by up to 23% in the first 12 months. We also delivered strong performance in other parts of upstream, including record quarterly production in the Eastern Mediterranean as the Tamar optimization project and Leviathan third gathering line ramped quickly.
In downstream, efficient turnarounds and the flexibility to respond to market conditions are essential to meet customer needs. S.
refinery turnarounds over the last two years were completed with first-quartile duration. S.
refineries. We’re also adding supply by increasing capacity at existing production facilities and refineries through highly capital-efficient expansion.
In upstream, debottlenecking projects have recently added capacity of more than 85,000 barrels of oil per day. At Ballymore, a 7% increase in capacity contributed to record deepwater production in the Gulf of Mexico, and at Anchor, facility capacity has increased 33% or 25,000 barrels of oil per day, which should benefit new wells coming online over the next year.
S. crude throughput at a time when the market needs it.
At Pasadena, we accelerated debottlenecking to increase refinery capacity by approximately 15% at nominal cost. In exploration, our new operating model centralizes expertise, applies one global standard to rank and select opportunities, and drives faster decisions.
Together with new technology and leadership, this is reshaping our portfolio and changing outcomes. We’ve added 22 million acres over the last two years, doubling our footprint.
This includes 12 new basins with a focus on both sides of the South Atlantic margin and the Eastern Mediterranean. One of our proprietary AI solutions, Apex, draws on 4 petabytes of data and 100 years of company knowledge, now pulling together basin information in hours, not months.
Scout AI, now deployed in 10 new basins, builds basin assessments in hours, not weeks, and our latest technologies combined with AI-assisted interpretation provide sharper subsurface imaging to identify and high-grade new prospects with greater conviction. All of this is leading to better outcomes.
We’ve made 15 infrastructure-led discoveries in two years at a success rate of 40%, above the industry average. Real-time optimization using AI continuously monitors drilling conditions, recommends actions to reduce non-productive time, and maximizes performance.
Eimear Bonner (Chief Financial Officer)Thanks, Mark. 9 billion or $5.
28 per share. 6 billion.
9 billion in the quarter. In line with historical trends, we expect fourth quarter capex to increase while still finishing the year at the low end of our annual capex guidance.
Adjusted third quarter earnings were $6 billion lower versus last quarter. Adjusted upstream earnings decreased due to lower realizations, lower liftings, and unfavorable timing effects, and were partly offset by lower DDA and tax effects.
Adjusted downstream earnings increased primarily due to higher refining margins and volumes, more than offsetting unfavorable timing effects. 2 billion of adjusted free cash flow in the quarter.
We reduced debt by more than $3 billion and grew cash by more than $4 billion, further strengthening our balance sheet, enhancing our ability to fund the long-term investments needed to reliably deliver energy long into the future. 4 times.
Looking forward, consistent with historical trends, we anticipate additional timing effects when prices are rising and unwinds when prices are falling. Third quarter production was nearly 4 million barrels of oil equivalent per day despite anticipated entitlement impacts and planned turnarounds, highlighting sustained operating performance across the portfolio.
This includes one month of production from our Venezuela joint ventures following the change to equity accounting. In addition, other core assets achieved new performance levels.
S. Gulf of Mexico, they set a new quarterly deepwater production record.
The Permian recorded a sixth consecutive quarter above 1 million barrels of oil equivalent per day, and TCO has been operating near full rates over the last several months. In closing, Chevron delivered another quarter of strong performance and yet we’re never satisfied.
Execution is excellent across the base business and projects, and we’re relentlessly pursuing opportunities to safely improve further. Technology is an important part of that.
Our proprietary capabilities are helping increase reservoir recoveries and get more from every barrel we process. At the same time, the strength of our partnerships is creating opportunities for the next decade.
We see that in Venezuela, in our efforts to extend our concession in Kazakhstan, and as we pursue growth opportunities in Iraq. Underpinning all of this is an unwavering commitment to consistent financial priorities and capital and cost discipline.
Janine Wei (Head of Investor Relations)Okay, thank you, Eimear. That concludes our prepared remarks.
com. We’re now ready to take questions.
We ask that you please limit yourself to one question and we’ll do our best to get all of your answers. OPERATORThank you.
If you have a question at this time, please press star one on your touchtone telephone. To allow for more questions from participants, we ask you limit yourself to one question.
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Arun Jayaram (Analyst at JPMorgan)Yeah, good morning. Appreciate the color on your opportunity set in Venezuela as an early mover advantage.
I was wondering if you could maybe touch a little bit on the cost structure. I know that when you put that out in September, it was probably $10 a barrel lower than we’re thinking.
Mike Wirth (Chairman and Chief Executive Officer)Yes. Let me comment on the risk question and then maybe I’ll ask Ian to make some comments on the cost structure.
You know, Arun, we manage risk around the world as part of every business. One of the ways we do that is by having strong terms and that gives us the ability to generate strong financial returns.
And certainly we’ve seen the terms on offer in Venezuela become much more competitive. Now, you know, one of the most important ways to address risk is not by relying on contracts, but it’s by doing what you say you’re going to do.
That means you contribute to the economy, you meet your obligations, you treat people right, and you’re a positive force in society and in the country and our 100-year history in Venezuela. So to me, the best way to manage those risks is to have support of the people in the country, and that leads to, you know, an environment where you can resolve any differences that may emerge.
The last thing that I’ll say, or maybe two last things that are different today than they have been historically is, you know, number one, we are lifting all of the oil. And so it’s not going, it’s not being marketed by PDVSA, it’s being marketed by us.
We then control the flow of the revenue back into the country and the disbursement of taxes and royalties that are legally obligated, the payment of costs, et cetera. And as we go forward this will all be self-funding and so the capital will be generated through the revenues in the venture and we won’t be exposing additional capital investment, so it’ll be recovered quickly.
It’s a factory type of drilling program that has analogs to other things we do elsewhere in the world and we can manage the pace of activity up or down as market conditions call for it. So it’s a very different set of dynamics than we’ve historically had in Venezuela.
We’re also very pleased with the cost structure there. Eimear Bonner (Chief Financial Officer)Yeah, thanks, Mike.
The cost structure is really competitive. So total cost less than $20 a barrel.
So think of that as capex, opex. And as Mike said, this is a factory-like operation.
So we’ll continue to learn, continue to become more efficient over time. So this is low cost, it’s a high return, very competitive within our portfolio.
Another thing I would mention is we’re not anticipating that we’ll have any major additional infrastructure spend as we double production between 300,000 and 600,000 through the end of the decade. So we have the infrastructure we need and as we build out and as we grow, it’ll be more, get small, small capital versus anything major.
Those are the key things. OPERATORThank you.
Devin McDermott (Analyst at Morgan Stanley)Hey, good morning. Thanks for taking my question.
So I wanted to check in. Hey, good morning, Mike.
I wanted to check in on the TCO concession extension progress. There have been some media reports recently making statements around some of the government asks includes things like one-time payments or working interest adjustments.
Mike Wirth (Chairman and Chief Executive Officer)Yeah, thanks, Devin. You’re right.
I’m not going to comment on media reports or specifics, but I can talk about the process. We continue to make good progress and I continue to be very encouraged.
The discussions began a little bit over a year ago. We’ve had technical, commercial and legal teams meeting on a regular cycle.
I’ve been in contact with the President multiple times during this period of time to be sure that we stay aligned. All the relevant government officials have been in all these meetings and has ensured good alignment.
The list of issues has narrowed really to what I’d call the fundamental core issues, and we’re focused on working those. I think they’re very reasonable issues to be on the table.
They’re the things you would expect here, you know, 35 or so years after the initial deal was put together, and we’re working our way through those. So, you know, this is a large, complex contract and obviously a very important asset to the Republic.
And so we continue to be pleased. I’ll give you more meaningful updates as we have milestones to report.
In terms of what good looks like, we need to have something that is, in today’s world, I think, competitive for the Republic and they want to see their large resource assets stewarded responsibly, which is something we’re very proud to have done for our years there. For the partners, we need something that’s a competitive value proposition.
And that means that for the capital we’ve already invested and the capital we would invest going forward, that we can get a competitive return. Everybody, every one of the partners has alternatives in their portfolios and this needs to be competitive, as we’ve discussed with Venezuela and other assets.
Neil Mehta (Analyst at Goldman Sachs)Yeah, good morning, Mike and team. Just want your perspective on the Bakken since the last time we connected.
You did restructure some of the Hess Midstream contracts. So just trying to think about the financial impact, but maybe just stepping back.
Big picture, now that you’ve had some time with the Bakken. Mark Nelson (Vice Chairman)Hey, thanks, Neil.
This is Mark. I’ll give the front end of this and then we’ll have Eimear comment on some of the economics.
But our operational activities that we’ve been working on in regard to improvements day to day and this action with Hess Midstream are all about enhancing value and increasing flexibility. As Mike mentioned in his comments, the 50% reduction in tariff, it, quite frankly, makes the Bakken stronger.
And this is what excites me the most because it will allow us to evaluate the full potential of the basin. We’ve already begun to put in place more optimized development plans that build on the ongoing operational improvements that we have been building in over time.
We’ll move from three rigs to two rigs at year-end while sustaining 150–180,000 barrels a day of oil equivalent production, again building on the operational improvements that we’ve made. And you should expect to see more long laterals with these changes.
Eimear Bonner (Chief Financial Officer)Yeah, thanks, Mark. Hi, Neil.
So we expect to realize several financial benefits with this, in addition to simplifying the reporting structure, as you mentioned. 7 billion of debt and delivers incremental recurring earnings.
So it’ll close at, you know, at the end of the fourth quarter. We will treat that as a special item, and it just reflects the accounting treatment on deconsolidation, not any deal economics.
As we look to 2027, we’ll see an immediate improvement in Bakken upstream earnings and cash flow. It will be partly offset by some cash outflow primarily related to taxes.
But we’re really excited about this, proud of how the operational teams are working together in our centralized shale and tight organization, of which Bakken is now a part of that. And this transaction just takes it a step further and helps us unlock more financial upside.
Neil Dingman (Analyst at William Blair)Morning. Thanks for the time.
My question is on capital allocation, Mike, specifically. Obviously the balance sheet now is even what I call beyond pristine.
When you look forward, you tend to have numerous exploration opportunities and I just think the opportunities, both organically and externally, are just broad. So given the, I guess my question is, given how much, how low the balance sheet is now, is your thoughts about next year?
Eimear Bonner (Chief Financial Officer)William? I’ll take this one.
Yeah. The balance sheet has strengthened over the course of the year as a function of the outstanding operational performance that we’ve seen across the organization.
Given the fact that the market dynamics are still very volatile. I mean, in third quarter alone, a $64 intra-quarter spread, I mean we saw prices as low as $68, as high as $132 a barrel.
I mean, our capital allocation framework and our financial priorities are long standing. They’ve been in place for decades.
And you know, over high prices and low price environments, they’ve really stood us well. So no change to capital.
Maybe just recap. You know, the first priority within that is to grow the dividend consistently.
We’ve done that for 39 consecutive years. We’ll continue that as a commitment we have to shareholders.
We have a capital program that’s underway and we are trending towards the low end of the guidance this year. We’re investing in the business today and that’s all enabling us to invest in the future.
So no change there. In fact, we’re seeing in places like the Permian that we can deliver on the goals there with less capital.
The third is to maintain a strong balance sheet so that the cash generation and the coverage ratios that you saw in the material today really show how strong that is. 5 billion to 3 billion of buybacks and we intend to be buying back shares within that range.
Mike Wirth (Chairman and Chief Executive Officer)Neil, welcome back. OPERATORThank you.
John Royal (Analyst at Piper Sandler)Hi, good morning. Thanks for taking my question.
I wanted to see if I could dig in a little on the comment, Mark, increasing distillate yields at the refineries. Mark Nelson (Vice Chairman)Yeah, thanks.
Thanks, John. You know, maybe stepping back, I couldn’t be more proud of our manufacturing team with another record crude throughput, strong reliability, something we’ve been working on for a while, our top quartile duration of turnarounds and then these capital efficiency bottlenecking actions.
There’s a lot of strong momentum. And so we want more of that going forward.
Specifically to the change that we made with our catalyst, I think, you know, we’ve got peer-leading complexity and that means we’ve got a high proportion of hydrocracking. So we were able to, after a little bit of an adjustment, deploy this proprietary catalyst into our largest refineries.
And it immediately, with some adjustments to cut points, allowed us to increase distillate production by 10% for our large refineries. In fact, Pascagoula hit a diesel production record, at least over the last three or four years, this quarter as well.
And so I think what we need going forward to meet customer needs is more of the same. In some cases, that might be viewed as boring.
I view that as exciting. We’re bringing AI into our reliability equation where we’re helping to predict where risks occur using 100 years of data.
That’s helping us continue our reliability string. And then I think we mentioned this in our prepared remarks for Pascagoula.
Over the next two turnaround cycles, we’ll increase capacity there by another 7%. So more of the same to come and couldn’t be more proud of the team.
James West (Analyst at Melius Research)Hey, good morning, everyone. So I wanted to touch on AI a little bit further.
I know Mark’s made a couple comments on it, but Chevron was really early in the adoption and implementation of AI, not just amongst the super majors, but the oil and gas industry broadly. Eimear Bonner (Chief Financial Officer)Okay, I’ll get us started.
Across the enterprise, we are sitting on both sides of the AI equation. So on one side, leveraging AI to lead and drive performance, and on the other side, delivering the energy that will power AI.
We got our focus on three main things. Let me give you a couple of examples because we have captured real value this year, more than $100 million year to date.
And we expect obviously that to increase significantly as we scale. Maybe Sheila Tight is the one to mention before I hand over to Mark to cover exploration, but we’re using an AI production engineering kind of agentic assistant to help us optimize production on an ongoing basis.
So this is something that we have built in house that is 24/7 optimizing the production from our wells. Another example would be how we’re using AI to help us with designing wells and scoping capital projects.
So there we’ve got some proprietary tools that are in development and we’re testing them at a really early stage. And then on the operations and commercial side, human-agent teams helping us with turnaround and refinery planning.
Mark Nelson (Vice Chairman)Yeah. Thanks, Eimear.
James, quite frankly, I think it’s reshaping our portfolio in exploration at a large scale and it’s delivering higher confidence prospects at pace. And the way I think about it is our goal is to have rapid access to data, reduced cycle time and then increased success rates.
This is that hundred years of data at our fingertips. The next thing that we did was create something called Scout AI which allows us to essentially do a deep basin assessment in hours.
And we’re applying that in 10 new basins as we speak. When you combine those tools, along with our spatial high grading, elastic waveform inversion and ocean bottom node data that we have available, we are coming up with new prospects.
So we’re incorporating this throughout the exploration process including real-time drilling optimization. So it’s touching every part of the exploration value chain and I expect the impact just to continue to grow.
Viraj Borkhataria (Analyst at RBC Capital Markets)Hi there. Thanks for the presentation and for taking my question.
I wanted to go to Slide 6, which I thought was very interesting. We obviously spend a lot of time looking at major projects, but you know, these barrels are some of the highest value-add barrels that you have.
So I just, I was wondering if you could talk about the potential to do something like this in your LNG portfolio and particularly in Australia. Mike Wirth (Chairman and Chief Executive Officer)Yeah, thanks, Viraj.
I would view debottlenecking as a mindset and it just builds on our mindset of capital discipline. And we’ve mentioned some of the examples in the upstream from the 20% increase at FGP to the 7% increase at Ballymore and the 33% increase at Anchor.
We are already above nameplate at Gorgon and Wheatstone today and I see more potential for that. But what excites me even more than just that potential debottlenecking that can exist there, it’s the reliability with the world-class reliability we have in Gorgon and Wheatstone allows the customers to get what they need.
So I think I see both things working together. Continued reliability, potential for capital-efficient expanded capacity in projects will help us do what we need to do.
And I think part of that led to our record production in the third quarter for the combined assets. So more to come.
Thanks, Viraj. Yeah, and Raj, maybe offline Janine to follow up with you.
We’ve done a lot of debottlenecking already with Gorgon and Wheatstone and I think we’ve talked about that on prior calls. OPERATORThank you.
Jean Ann Salisbury (Analyst at Bank of America)Hi, good morning. If permits for behind-the-meter projects in the US become harder to get, is there more value in already permitted sites like Project Kilby?
Eimear Bonner (Chief Financial Officer)Hey, Jean Ann. Yeah, we’re really excited about Kilby.
It’s a great project. 67 gigawatts of power in West Texas with strong partners.
We signed a 20-year PPA with Microsoft, AAA-quality customer. As you know, that really leverages our strength.
So you know, from the very beginning we designed our solution to kind of consider some of the concerns that are being expressed in terms of, you know, the grid. It won’t put any pressure on the grid in the short term, won’t raise prices.
It’s using non-potable water. And so that’s why Governor Abbott on the 6th of August announced that it complies with the standards.
So, you know, right now we do have room to expand. We could expand this from single cycle to combined cycle.
It will all depend on additional permits beyond the permit, obviously, that we’re working through the system for Kilby as part of our FID decision. So it’s going to come down to objective permitting.
Overall, I would just say we’re working towards our FID. We have our EPC contract that we’re finalizing.
We have to secure our financing. Sam Margolin (Analyst at Wells Fargo)Hello.
Thanks for taking the question. Maybe just circling back to Venezuela and the broader resource opportunity.
I think one of the things that stands out about Venezuela is just the pace with which the business plan came together. Mike Wirth (Chairman and Chief Executive Officer)Yeah, it’s an interesting question.
I appreciate your comments about how quickly we were able to reach a development plan and alignment with the government of Venezuela. As an incumbent on the ground, as the only incumbent on the ground, we definitely have an advantage in terms of our understanding of the geology, the infrastructure.
And it does have, as I mentioned, parallels with other factory development campaigns that we prosecute around the world. I’ll go to Iraq as maybe an analog as you talk about large resource holders and willingness and interest in bringing in new investment.
I mentioned already that the terms in Iraq are more attractive than what we’ve historically seen there. And right now, at least as we’re working through the negotiation, they look very competitive.
We are working on a development plan there in concert with the ministry and have a good line on that. There may be some infrastructure work, but I think that will be modest and manageable as opposed to a major capital project.
And the resource depth there is significant and there’s good exploration prospects that would come along with this deal. I’ve mentioned on prior calls that we are in discussions with other governments, a number of them in the Middle East, that are also interested in that kind of a proposition.
So stay tuned as we bring things to a point where we can be more specific, as we were today, about Venezuela. Doug Liggett (Analyst at Wolfe Research)Hi everyone.
Mike, thanks for having me on. S.
government about incentives for drilling and so on. I’m wondering, if we look back to when you had your long-term growth trajectory in the Permian, you slowed that down after the Hess deal and free cash flow was a priority and so on.
Mike Wirth (Chairman and Chief Executive Officer)Well, you know, we had signaled the intent to bring the Permian to a plateau in kind of the middle of the last decade, to be honest, when we were at pretty modest production levels. And as we reached and surpassed a million barrels a day, we turned to managing that plateau, which will last not only the end of this decade, but the end of the next.
And I expect well beyond that as we apply more technology to this enormous resource base. Mark mentioned in his comments today the progress we’re seeing with some advanced chemicals that are helping us improve recoveries.
We actually continue to have a next generation of that chemistry that’s moving out into field pilots, which we are optimistic may prove even more successful in terms of improving production outcomes and adding value. And what they can do is they end the economic life of the plateau, they can make it economic to grow to a higher level, they can take benches that are currently sub-economic and they can make them economic.
And so we’re certainly working on all of those. But in the near term, as we’ve just turned now for just short quarters from growth to managing at the plateau, we’ve seen a 25% reduction in CapEx per barrel, we’re seeing reductions in operating costs, we’re seeing reductions in downtime events, we’re seeing a tremendous amount of innovation and application of new tools and technology to get more value out of this million barrel a day business.
And that’s the key focus right now going forward. You know, like I say, we’ve got a long resource life, we’ve got the advantaged royalties, which is very attractive and it creates optionality.
So I don’t want to speculate about what might take us back into a growth mode there, but we’re building the capability to do that economically. Manav Gupta (Analyst at UBS)Good morning.
I was wondering if I can pick your brain a little bit on the ethylene chain margins. We started the year at record lows, saw a massive bounce in 2Q.
We are moderating a little, but we’re still above mid-cycle. And I think your own project is probably going to start up sometime next year.
Mike Wirth (Chairman and Chief Executive Officer)Well, thanks, Manav. You picked a couple of topics very difficult to predict.
I’ll start with refining maybe and then go to petchem margins. On the refining side, I would expect margins to stay elevated in the short term.
And, you know, the world has 10% of its refining capacity offline today. Exports are reduced due to the conflict.
You know, quite frankly the products businesses have less shock absorbers. But that will take some time.
And so on the refining side of the business, what we can do is what we can control, and that’s help consumers get as much as they possibly can out of our systems. I think we’ve demonstrated in the third quarter that we’re doing that.
On the chemicals side, it’s debatable today, but somewhere between 5 and 10% of petchem capacity seems to be offline today. And that makes markets tighter, especially from Middle East volumes not flowing.
And that likely means that at least through the end of the year margins will stay a bit elevated, maybe into next year. But I’d make two observations.
And then maybe second, ethane, especially in the United States, remains the feedstock of choice, and to your comments, both of those things play to CPChem’s strength. It’s an ethane-advantaged portfolio and they are working as we speak to bring on the two large crackers, one in the Gulf Coast, one in Qatar, to full production.
Both will be next year, but we want those to come online safely and reliably, and they’re working hard at that. Lucas Herman (Analyst at BNP Paribas)Mike, Eimear, thank you very much.
Nice to have the opportunity. Question on freight and freight rates and the elevation that we’ve seen.
It’s been a sort of central topic on a number of the calls over here. We should be thinking about it as well.
Mike Wirth (Chairman and Chief Executive Officer)Yeah, I think it’s been the big mover here this last quarter, Lucas, and it’s got a lot of attention. You know, the crude oil prices historically on two basic things, quality and location.
And right now location really matters. If you are very close to the crude oil that you’re going to run in your refinery, you don’t have to move it very far.
Hopefully you’ve got it on a pipe and not in a ship. It’s an advantage to have a controlled fleet.
And we have a significant portion of our fleet that are either ships that we own or ships that we have on long time charter, where we charter both the boat and the crew, or a bareboat charter where we put our crew on that vessel. These are contracts we entered into before the conflict began.
They reflect charter rates pre-conflict, which are significantly different than they are today. And so the other thing that’s interesting is because our upstream portfolio has evolved, we’ve moved from when I was running downstream, we ran maybe 15% of our crudes were out of our own equity system.
Today we’ve been up in the 50% range, sometimes higher at certain refineries. And so we’re seeing significant value in optimization globally of our asset base.
And so it is a material contributor to the results you’re seeing this quarter, absolutely. And I think going forward, until these conflicts are resolved, this is likely to be a part of the story in the future.
Betty Jiang (Analyst at Barclays)Hi, good morning. Thank you for taking my question.
If I take a step back and actually ask about M&A, just wondering, given the ongoing disruptions around the world, does that change your views around where within the energy value chain, perhaps for you to have more or less exposure? Mike Wirth (Chairman and Chief Executive Officer)Yeah, I’ll start, Betty, by saying our portfolio today is the best that it’s ever been, both in the near term in terms of providing energy the world needs and doing it in a way that creates value for shareholders.
And then in the longer term in the growth opportunities in both our traditional business and this emerging power sector that we’ve been talking about today. And so there’s no gaps or weaknesses that we see that need to be addressed.
That said, you’re always looking and you’ve seen over the last several years, we have engaged in transactions that made our portfolio better, that have added assets, that have scale, have durability, have strong financial contribution. And we have at the other end of the portfolio, we’ve moved some things out that no longer compete for capital within our portfolio.
And so we’ll always look to be doing that. I think we’ve got a track record of staying very disciplined through market cycles, of being value focused, not deal focused, and executing with really good integration.
I don’t want to speculate about what parts of the value chain, what parts of the world the conflict may present opportunities in. We’re always evaluating these things, but we generally don’t talk about them until we’ve got a deal that we’ve actually secured, at which time we’ll lay it all out to you.
Maybe. Last thing is you talk about the conflict.
And so I think those lessons are important to always bear in mind. Philip Jungwirth (Analyst at BMO Capital Markets)Thanks for taking the question.
It’s been a year since you hired a new head of global exploration and we hit on AI earlier and you have a lot of good technology details in the deck. But just more broadly, would love to hear your observations on the progress you’ve made in the exploration portfolio over the last 12 months, what you’re most excited about going forward?
Mark Nelson (Vice Chairman)Well, thanks, Philip. A lot to be excited about.
But let’s see where to start. I think I’ll start with a high-graded inventory, better technology and faster decisions which I expect to lead to improving outcomes.
I mean, our opportunity set is the largest and highest quality I have seen in years. We talked about doubling our acreage since 2024 in the 12 new basins.
When I combine an expanded portfolio with the new technology, we are getting better imaging and higher-confidence prospects. And so I would expect here over the next few years to have high-impact exploration in areas like Namibia, Equatorial Guinea, Egypt and Suriname, just to name a few.
And quite frankly this is the highest-confidence outlook I have seen in years. We mentioned in our comments about the discoveries that we’ve had.
The one I just want to emphasize in case you haven’t seen it would be our Angola 154X well. This is in the prolific Lower Congo Basin.
The materials that have been made public indicate an oil and gas condensate column over 200 feet and a net pay of 300 feet with excellent reservoir quality. I suspect it will be better than that as we look closer and closer at the data.
Mike Wirth (Chairman and Chief Executive Officer)And what I might add on to that is that Mark and I were in a review, I guess earlier this week, on our exploration portfolio and some particular opportunities, and your question about talent. We have brought in new talent.
I think that brings in different perspectives, different experiences, which we’re seeing value from. And Mark mentioned it earlier in his comments.
OPERATORThank you. Bob Brackett (Analyst at Bernstein Research)Good morning.
And let’s continue on the theme of improved exploration outcomes. How does the improved speed, the improved outcome, how does that inform your strategy?
Does it allow you to take more risk? Does it drive you to increase your exploration budget?
Or does it actually reduce your exploration budget because your chance of successes are improving? Mark Nelson (Vice Chairman)Yeah, at this stage of the game, and I made some of these comments in my prepared remarks, given the growth in the opportunity set and the new team and the new approach we brought forward and given from where we come, I would expect us to increase our capital spend next year 50% from our previous baseline last year.
And we’ll continue to do that over time until we see a reason to adjust. But it’s nice to have an opportunity queue that gives us those choices.
Thanks for the question. Jason Gabelman (Analyst at TD Cowen)Yeah, hey, thanks for taking my questions.
I just wanted to go back to the Permian if I could and a couple there. One, production was off a little bit, still above a barrel a day target.
Wonder if that’s just normal quarter-to-quarter volatility or something else was going on there. We saw a comment from your peer that there was non-op disruption.
Mark Nelson (Vice Chairman)Yeah, thanks for the question. I would think about this logic.
Maybe we continue to focus on maximizing free cash flow there. We do have the inventory depth to grow above a million barrels of oil equivalent, as Mike mentioned earlier.
But now six quarters at this million barrels of oil equivalent, we are driving significant efficiencies. I’m just going to reinforce one thing: that greater than 25% improvement in capex per barrel of oil, that’s pretty significant.
Our drilling and completion spend is down 40%, our facilities spend is down 50%. That’s all because we’re staying in that band.
Our gas-to-oil ratio is relatively stable through the end of this decade and so we can maybe take advantage of some other parties’ challenges in this regard. There might have been a little bit of an uptick on workover rigs from our NOJVs, but it’s not material to our capital production.
Janine Wei (Head of Investor Relations)Okay, I think that was our last question. Great.
Sorry about that. We’d like to thank everyone today for your time on being on the call.
We appreciate your interest in Chevron and your participation. Again, please be safe and stay healthy.
Kayte (Conference Facilitator)Thank you. This concludes Chevron’s third quarter 2026 earnings conference call.
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Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
