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00:00Let's just jump in. Earlier this week you guys raised your dividend. It feels like a lot of the analysts and shareholders were really hoping for some buyback clarity. Why not do buybacks now when you're throwing up so much free cash flow. Well let's look at it was our strongest quarter since the pandemic with our highest earnings and cash flow. Some exciting announcements on low carbon and the dividend increase that you talked about and a really strong balance sheet. The dividend increase is consistent with our financial priorities. We've always said our number one financial priority is to sustain and grow the dividend. And that's why that's our first action in terms of a share buyback. Well we're gonna look to is our ability to sustain a buyback program from multiple years through the commodity price cycle. And that means we'll to have confidence around future excess cash generation and have the balance sheet an even stronger position. So does that say something about how you feel about where oil demand or the oil price is going to go. I guess this feels like maybe as good as it gets. Because what we're talking about with many different industries. So I wonder why not now. I think it's gonna get better. Certainly in this country there's reason for optimism with the high vaccination rates and the stimulus package that's coming. Other countries have control of the virus. Unfortunately a number of others do not. So we're not yet on a path to sustained global economic recovery. But as we look to demand for our products gasoline is back to pre code levels. Diesels probably a little bit higher. Jet fuel is really the last piece and it's poised for a comeback. We'll see that in domestic air travel. I think this quarter next quarter and then hopefully international travel travels soon after. So no we're optimistic about the future will generate even more cash where oil prices are. And with recovering refining and chemicals margins. PR We're looking forward to getting on a plane. We're looking looking forward to flying internationally again. Look the oil price as you say and its derivatives pretty much back to where it was pre pandemic. Your share price isn't. You came in at 121 you're trading at 1 0 4. What do you think the market's telling you right now. We have a simple message to investors. It's higher returns lower carbon. So we need to earn higher returns. And that's by being disciplined with our capital. And we need to sustain those higher returns in a lower carbon future. And so we are very aware of where our stock prices and working hard to win back investors to the sector. And we can do that by again generating more cash and continuing advance a lower carbon future. We have exciting announcements in terms of projects with partners both Toyota Microsoft Schlumberger and low carbon businesses going forward here. Not to harp on this but with the last question that I promise. Does that mean that you have to get back to pre pandemic levels for you to do buybacks. Like is that the qualification that you're kind of hinting that now there's no target and there's we're gonna use judgment. I'll say our free cash flow is actually higher this quarter than it was in 2019. So it's similar oil prices even with refining and chemical margins a little bit weaker at least in the first quarter and look better going forward. Our free cash flow is higher because our capital is so much more efficient. So now we have strong free cash flow. During our Investor Day we showed that we could grow free cash flow 10 percent a year over the next five years. That's at 50 dollar branch. We're now over 60 dollars will generate even excess cash. Even more excess cash. But we're going to do things consistent with our priorities increasing the dividend. By the way most of our peers either cut the dividend reinvest maintained it we're the only one that sustained it and grew it. We grew at 8 percent last year. So on average 6 percent during a pandemic. We're looking forward. We're going to generate excess cash. We're going to use our judgment on what's the appropriate time to start a buyback. And again we're going to want to sustain it for multiple years. That's really the key. This is the first quarter of positive free cash flow. We want to have confidence we can sustain the program for multiple years. Okay fair enough. And in terms of cutting the dividend etc. I mean that really shines a light on the European majors like BP. It's been widely reported that Exxon and Chevron potentially talked about teaming up. Would you ever consent. Have you looked at BP. Would you look at BP for example. I'm not going to comment or speculate about MFA but I can say as we were the first to do an acquisition with Noble Energy in July just a few months after the worst of the economic crisis we closed it in October. We've been operating as a combined company for two quarters. We doubled our synergies. The assets in the eastern Mediterranean and in Colorado and other assets fit really well. We're really happy with the people integration. So we're going to continue to look at emanate. We don't need to do a transaction. We show during our Investor Day that we can sustain and grow this enterprise organically. Of course if there's an acquisition that we think can make that story even better we'll pursue it if it's the interests of our shareholders. Here though is the lesson from Mobile that actually the acquisition is much better than you anticipated. You certainly accelerated the timeline in which you been able to generate returns from that. The integration looks like it's gone really well and it's been really straightforward. Has that given you confidence that you can continue to do this or is that simply just a one off. That was just a really nice fit and maybe couldn't be replicated elsewhere. The timing was right. It was the right company and what looked like a good deal then has only gone better. Look I think this industry will continue to consolidate. Whether Chevron participates or not really depends if we can find the quality assets at the right value to make our story even better. Again we don't need to do a transaction but we will. And we've shown in the past not just with Noble but if you go back to Unocal and Texaco a decades before that a transaction that makes the company better is something we can pursue. The world feels like a pretty volatile place right now we're dealing with a number of challenges. The pandemic is but one climate change obviously another geopolitics continues continues to feature as well. Do you think that you and the industry are looking more nimble now than you ever have before. Certainly over the last few years there was a time when oil majors did huge projects in really difficult to reach places. That time feels like it's over. Are you more nimble now. Are you are you more able to react as things change. Yes I think so to a certain degree. We talked at our Investor Day about being consistent prepared adaptive and so it requires all three of those characteristics. What is very different is the shale and tight resources like in the Permian Basin that are much shorter cycle investments much more flexible. If you go back a year we were planning to do a 20 billion dollar capital program. When the world changed in March very quickly we ended up under 14 billion for our capital. We couldn't have done that to your point five years ago. We can do that because our capital program is much more flexible. It's much more efficient. So to that point does that mean that you will not buy any more permanent assets because you've said that the U.S. are kind of done there. So do you stand by that then. And then a second question is I know you're not into the huge projects but you know Guyana is a humongous project for oil that you're not in yet. And that's definitely more of a hesitant Exxon thing. Do you feel pressure to look at that at all. So first we have one of the world's biggest projects in Kazakhstan that were a couple of years away from completing. So we certainly have a major project there. We have some great developments offshore Gulf of Mexico that you'll see you know under construction and moving forward here over the next several years. But the shale and tight is a very competitive asset class. We showed in the Permian Basin with our royalty advantage. We were free cash flow positive. Last year we can grow that free cash flow over time. We showed at our Investor Day we could still reach a million barrels of oil equivalent per day. We haven't said we wouldn't do an acquisition in the Permian Basin. It's just that we are as such. We are so well positioned that anything that we do has to make us even better there. So does that mean that going on is something that you're not looking at right now. We're not in that base and we have some exploration Surinam. So you know again we have assets that we think compete with the very best. Undoubtedly that's a very attractive asset. We're not going to be in all the great assets around the world. You're the numbers guy tax rate. Plugging in for next year. Look what's important. First of all I think we support strengthening the infrastructure in this country. It is important that our tax code is competitive with other jurisdictions. If not we've seen that capital move to other countries and now that'll move the jobs. The jobs in oil and gas business are very good paying jobs jobs you can raise a family on. So I'm not going to speculate about that. We're certainly going to work with the bio adminstration to have a fair tax code and a competitive tax code. But to that point I mean it does seem like the path of least resistance is higher taxes and whether or not you're modeling anything along those lines. I'm wondering if you think that overall essentially we see some subsidies come out of the market. Are you going to see higher cost of capital to drill. Is it going to cost more. Is it going to slow production. Well right now we're not seeing higher costs in our sector we're seeing a little bit on steel that you know is in our drilling operations. We have to earn win back investors by delivering higher returns lower carbon. So if our cost to capital is up it's primarily because the sector has underperformed frankly other sectors. We are one of the few sectors that's lower postcode than pre-cut. So we're going to win back investors by being disciplined with our capital. We're a global company and our capital can go and earn earn the best returns and tax policies. Absolutely relevant to that. But again we have opportunities around the world. We're a big investor here in the United States. Oil and gas jobs are good paying jobs jobs you can raise a family on. So we hope to be able to invest here and we'll just see where it goes. Last question. And as Guy said you're the numbers guy. This is not a numbers question but maybe you can give me some hints into how you guys are thinking about it in terms of Texas. That was just a huge event for the entire oil and gas industry. Do you have any plans to winterize any equipment after that storm. Do you think we're gonna see that pressure from regulators. Yeah. Look there's. It's being looked at by the Texas state legislature. There could be instances where we do weatherize our equipment more. But I'll say it's a very integrated energy system. So in some cases it's the power that goes to our facilities. That was the issue. In some cases it was the pipelines and the processing facilities downstream of our well operation. So I think the industry has to look at it with the regulators as as an energy system and work on all the components. Because if one piece of the puzzle fails then you might have made the other parts more resilient and still not delivered. So we are we count on being a reliable industry and we can absolutely make ah ah energy system more resilient going forward.

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Chevron CFO on Dividend, Oil Demand, Industry Consolidation

Chevron CFO Pierre Breber discusses the company's dividend increase, the outlook for global oil demand and Chevron's acquisition strategy with Bloomberg's Alix Steel and Guy Johnson on "Bloomberg Markets." (Source: Bloomberg)

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