Good morning. My name is Katie, and I'll be your conference facilitator today. Welcome to Chevron's First Quarter 2025 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. As a reminder, this conference call is being recorded. I will now turn the conference call over to the Head of Investor Relations of Chevron Corporation, Mr. Jake Spiering. Please go ahead.

Thank you, Katie. Welcome to Chevron's first quarter 2025 earnings conference call and webcast. I'm Jake Spiering, Head of Investor Relations. Our Chairman and CEO, Mike Wirth, and our CFO, Eimear Bonner, are on the call with me today. We will 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 to this presentation. Please review the cautionary statement and additional information presented on Slide 2. Now, I will turn it over to Mike.

Thanks, Jake. This quarter, Chevron delivered strong performance and advanced our plans to further strengthen the company over the near and long term. This included multiple project start-ups and asset divestitures. Our advantaged portfolio underpins a track record of consistently rewarding shareholders through the cycle. Cash returned to shareholders has exceeded $5 billion for 12 consecutive quarters. In the first quarter, we returned $6.9 billion through dividends and buybacks. We also acquired nearly 5% of Hess's common shares and look forward to completing the merger in the coming months. Recent macro uncertainty underscores the importance of cost and capital discipline, both core to Chevron's leadership. Our 2025 CapEx and affiliate CapEx budgets represent a $2 billion reduction from last year, and we've targeted $2 billion to $3 billion in structural cost savings to be delivered by the end of next year. Chevron has a proven track record of managing through uncertainty in commodity cycles, and with long-standing financial priorities as our guide, we're well-positioned to win in any environment. We are focused on execution to unlock industry-leading cash flow growth. At TCO, we reached nameplate capacity in just 30 days, significantly ahead of plan. We expect cash distributions from TCO to increase going forward, including a $1 billion loan repayment in the third quarter. In the Gulf of America, we achieved first oil at Ballymore this month. This is the latest in a series of major project start-ups within the past year, and they are expected to increase production to 300,000 barrels of oil equivalent per day in 2026. The expansion of our Pasadena refinery has further strengthened our Gulf Coast value chain, and we made good progress on our asset sale program, achieving premium valuations while retaining future upside in East Texas gas assets that could deliver over $1 billion in value at today's prices. In February, we announced senior leadership appointments and changes to our operating model to enable more efficient execution. We're also expanding our pipeline of future opportunities, adding more than 11 million net exploration acres since the start of last year, advancing our gigawatt scale power solutions venture to support the U.S. AI data center build-out and participating in a pipeline project to increase export capacity in Argentina. Now, I'll turn it over to Eimear to go over the financials.

Thanks Mike. For the first quarter, Chevron reported earnings of $3.5 billion or $2 per share. Adjusted earnings were $3.8 billion or $2.18 per share. Included in the quarter were special items totaling $175 million. Legal and tax charges were partially offset by the fair value measurement of the Hess shares. Foreign currency effects decreased earnings by $138 million. Organic CapEx was $3.5 billion, our lowest quarterly total in two years. Inorganic CapEx was approximately $400 million, primarily related to investment in our Power Solutions partnership. Chevron generated cash flow from operations of $7.6 billion, excluding working capital. Working capital was primarily tax payments related to the sale of our Canadian assets that completed in the fourth quarter of 2024. We expect our working capital unwind of $1 billion over the remainder of the year. In the quarter, we issued new long-term debt of $5.5 billion. The purchase of Hess shares is expected to reduce the number of Chevron shares issued at closing by approximately $16 million. Compared with last quarter, adjusted earnings were $200 million higher. Adjusted upstream earnings were flat to last quarter; higher realizations and timing effects were offset by lower liftings and lower affiliate earnings mainly from higher DD&A at TCO. Adjusted downstream earnings were higher due to improved refining margins and lower turnarounds and maintenance. First quarter oil equivalent production was flat to last quarter. Production from the future project at TCO and recent project start-ups in the Gulf of America offset impacts from asset sales. We expect growth towards a sustained 1 million barrels of oil equivalent per day to resume in the Permian in the second quarter with higher frac activity. Chevron's strategy and financial priorities remain consistent, and our track record is proven. We've grown our dividend for 38 consecutive years through multiple commodity cycles, leading our peers and growth over the last decade. We've built a resilient upstream portfolio that leads our peers in breakeven. We're delivering growth projects that are expected to generate an incremental $9 billion of free cash flow in 2026 at $3 Brent. Our capital program is as flexible and efficient as it's ever been, with the majority of our 2025 span directed to short-cycle assets and soon to be online deepwater projects such as those in the Gulf of America and Eastern Mediterranean. Our balance sheet remains strong with a net debt ratio of 14%, well below our target range of 20% to 25%. We've repurchased shares in 18 of the last 22 years and bought back at record levels since two years. We provided a guidance range for annual buybacks of $20 billion depending on market conditions more than two years ago. That guidance remains unchanged. In line with the current macro environment, we expect share repurchases to be $2.5 billion to $3 billion in the second quarter. I'll now hand it off to Jake.

That concludes our prepared remarks. Additional guidance can be found in the appendix to this presentation and the slides and other information posted on chevron.com. We are now ready to take your questions. We ask that you limit yourself to only one question. We will do our best to get all of your questions answered. Katie, please open the lines.

Thank you. Our first question comes from Neil Mehta with Goldman Sachs.

Good morning, Mike and team. Mike, I know you were in Kazakhstan a couple of weeks ago. So I'd love a full rundown of your perspective on PCO, specifically, how the startup looks like that has gone well. Early discussions around the concession extension and then your perspective around production levels and risk of curtailment.

Okay. Well, thanks, Neil. First of all, I am really pleased with the commissioning and start-up performance at the Future Growth Project. It was a world-class ramp. We achieved nameplate capacity in less than 30 days. This was due to extensive testing of equipment during the commissioning phase, leveraging a lot of the same people, procedures and other practices that were put in service for the wellhead pressure management project over the prior 12 months; applying learnings from some of our other major capital start-up projects over the years. We brought in experienced leaders from the existing operations that are familiar with the field, with the operating conditions and people that have participated in other start-ups. So it was just very, very well executed. We'll continue in the short term to do performance testing of major equipment under actual operating conditions, process optimization, etc. So we are very, very pleased with that start-up and the performance to date. I did travel to Kazakhstan last month and I had an opportunity to meet with President Tokayev. We had a very good visit. We talked about our historic partnership. We talked about our investments in the country and how they've delivered value over the last three decades plus. And with the project behind us, we did turn our discussion to future. There was mutual intent expressed to negotiate an agreement which extends the concession beyond 2033. I took away a very positive outlook on that. We think it's in everyone's best interest to try to complete these negotiations in a timely manner. That said, these are complex discussions. They do take some time to complete, and we'll provide updates on that as appropriate as those efforts advance.

We'll take our next question from Jean Ann Salisbury with Bank of America.

Hi, good morning. A lot has been going on in the California refining market. With the recently announced competitor closures of refineries, how are you thinking about your position there?

Yes. So we've got a strong position. We've got 2 refineries that have good scale, good complexity. We've got strong integrated value chains with a strong brand in the marketplace. I'm not surprised to see the announcements that have come out. We've been pretty vocal that the policy is coming out of the state, particularly making it nearly impossible to invest in California going forward. The result of that has been significantly higher cost for consumers than in the rest of the country. There is the risk that supply of fuels is going to be tighter, which creates future risk. On the last call, I said some of these policies, including the state inserting itself into operational matters like planning turnarounds, I think is an unwise move. I think central planning of the economy hasn't worked in other social states and it won't work in California, is my prediction. We do not have any announcements on our refineries at this time. Thank you, Jean Ann.

We'll take our next question from Biraj Borkhataria, RBC.

Hi. Thanks for taking my question. I just wanted to go back to the financial framework and the decision to slow down the buyback today. If I look at the last 12 months, the payout ratio has been almost 100%, and that was obviously at oil prices much higher than it is today. So I'm just trying to reconcile how our cash generation would look at 60% or maybe below and how I reconcile that with the low end of the $10 billion to $20 billion range, because to me, it looks like the bottom end of the range should be lower than that $10 billion. So how are you thinking between executing the buyback on a consistent basis and then, obviously leaning on the balance sheet, because that balance sheet has allowed you to do countercyclical deals like mobile and things like that? So I appreciate some color on that. Thank you.

Yes. Thanks, Biraj. I'll take you back to our long-standing financial priorities. The first priority is to grow the dividend. We've increased that for 38 years in a row, a 5% increase earlier this year. Second is to invest in the business. We've been very disciplined with capital, lowering organic capital by $1 billion this year and affiliate capital by another billion dollars this year, keeping a strong balance sheet with 14% net debt to a AA credit rating, which is something very few companies in any industry carry. And then buybacks with a through-the-cycle approach. We've repurchased shares in 18 of the last 22 years, including through COVID and the financial crisis. More than two years ago, we introduced guidance on the buybacks with a range of $10 billion to $20 billion based on a view of the external environment. The high end of that was premised on a strong outlook on the commodity. The lower based on a weaker outlook for the commodity. For most of the last two years, we've been in the upper portion of that range; the market has moved to the lower portion of that range. Our guidance remains within that range. I think it's important to look at this through the cycle. The rate at which we're buying shares back now is higher than at any point in our history other than the last three years. In 2022, 2023, and 2024 were the highest buyback years we've had. Before that, we never even had a year that got above $8 billion. We've been much stronger than that here subsequently and continue to do that forward. So the range is unchanged. We've also always said that we would move back towards a 20% to 25% net debt ratio through the cycle. This move is consistent with that. Last thing I'll say is we've been through these cycles before. We know what to do. We know how to manage it. We know that opportunity can present itself as you referenced, and we will remain attentive to those kinds of opportunities if and when they arise, and we'll retain the financial strength to consider them.

Biraj, I might just add a little bit on your point on cash generation. It's $60. As we guided to in the last quarter, we're poised to deliver leading free cash flow growth, $10 billion of incremental free cash flow growth at $70. That's $9 billion at $60. The key catalysts that deliver that are the start-ups of our major projects and the achievement of major milestones, and all that is well underway as well as the completion of our cost reduction program. We feel that that is very resilient even at lower prices, and we're prepared.

Thanks, Biraj.

We'll take our next question from Doug Leggate with Wolfe Research.

Sorry, I was on mute. Schoolboy error. I'm so sorry about that. Hey, Mike thanks for taking my question. I was going to ask about the macro, but I didn't want to ask such an asking question, but you seem to be in the crosshairs of probably the two most important macro stories in the market right now. And I just love your perspective on it. The first is obviously Venezuela and the potential loss of production there. The other is what appears to be an impending market share battle going with the declaration of cooperation, single-handedly seemingly pointed at Tengiz. In other words, the start-up of production is exacerbating Kazakhstan's overproduction against their quota, and that seems to be what's driving these accelerated decisions by OPEC+. So I guess my question is, can you offer any perspective on the physical changes you're seeing in your business in Venezuela? And when you met with the President, was there any consideration whatsoever of curtailment to try and help meet their quotas? Because, frankly, if the answer is no, it's pretty bad for the oil price.

Yes. So I'll start with Venezuela, Doug. I think the news coverage on this has been pretty accurate. We've got a long history in the country and believe that our presence has been a good thing for Venezuela and a good thing for the U.S. We've been operating under different forms of sanctions from OFAC going back to the first Trump administration through Biden administration and ongoing under the current one. Recent changes have resulted in us being unable to pay our tax and royalty payments for liftings that were being made to bring Venezuelan oil to the U.S. So those liftings have come to a halt. The barrels are still flowing, but they're going to other markets. China is the biggest importer of Venezuelan oil. There are media reports that government officials from Venezuela have been in China this week discussing even more sales to China. Our current license reaches its end on May 27. We're in dialogue with the government on how that license will be modified and extended if, in fact, that's what they choose to do, and that's certainly been the history over the many years I just referenced. We'll share more about that as we know more. But the barrels are flowing; they're just not flowing to the U.S. today. On OPEC+ and Kazakhstan, there really were not discussions of that. We don't engage in discussions about OPEC or OPEC+ targets. My discussion with the president focused on the start-up of the project, which has been good; and b, the future. The fact is the barrels we produce at TCO are of high value to the government. They're important to their fiscal balance. Historically, those barrels have not been curtailed. Anything beyond that, I would refer you to people that speak on behalf of OPEC+ or the countries.

We'll take our next question from Lloyd Byrne with Jefferies.

Hi, good morning, Mike and team. I was going to ask about the return of capital. And I think that's a really good answer you guys had. But let me try the Gulf of Mexico, the Ballymore is online. Can you just walk through the next steps to get to the 300,000 barrels a day? And are there any hurdles we have to look out for?

Yes, we're very pleased with Ballymore. That project, in particular, has some of the most prolific wells we've encountered in the Gulf of America, and even beyond that. As we increase production there, we expect to see 25,000 barrels a day from each of three wells, totaling 75,000 barrels a day from just those three. Currently, we have two wells online and are boosting their output. The third well is expected to be operational later this year. The project has been delivered on schedule and within budget, achieving this in just three years. Notably, we are seeing some of the highest temperature wells recorded, reaching 325 degrees down to the formation, whereas other productive fields in the Gulf have had temperatures of 275, 250, and 225 degrees. This is a very interesting and prolific field. While I can’t speak for the operator, I can say that the start-up has been smooth, and we anticipate that production will ramp up through 2025; for further details, I recommend reaching out to them. At Anchor, we currently have two wells performing very well, with two more expected to come online this year—one around midyear and another towards year-end—and the remaining wells planned for 2026 and 2027. Overall, in each project, we have strong production, along with ongoing drilling and completion activities, with rigs, vessels, and crews assigned. While weather can pose a risk, everything else from an execution perspective is in good shape across all three projects.

We'll go next to Ryan Todd with Piper Sandler.

Great. Thanks. You've got a slide in the deck looking at Permian formats and the improvement you've seen there in the Delaware Basin in 2024. Can you talk about what drove the difference, whether in terms of well mix, development strategy, completions, etc.? And what you see as the potential implications for the 2025 program or outlook?

Yes. So just to ground everybody, roughly 80% of our development program last year was in the Delaware, and we saw a strong improvement in performance there versus the prior year, in particular, the second Bone Spring in New Mexico outperformed expectations. We also had good performance in the Texas portion of the Delaware and the Wolfcamp C and the Wolfcamp A, which showed good year-on-year performance improvement. So, we expect 2025 type curves to look pretty similar to what we saw last year in the Delaware. And again, most of our program is in the Delaware, 85% as we look at 2025, so even a little bit more than we saw last year. Last thing maybe I'll say on that, Ryan, is sometimes we had questions when I meet with investors on gas oil ratio. We are right now seeing an oil cut that's somewhere in the range of 43% to 45%. We think that's going to continue as we move through the end of the decade. It may move around a little bit by quarter based on POP timing and geography. But we expect that to be pretty stable. Also, on New Mexico, we're going to see more POPs into Mexico this year than we did last year. Overall, those tend to be bigger wells. They're more productive wells. They produce more oil and gas. But we are very pleased with performance in the Permian and feel very good about the outlook for this year. Thank you, Ryan.

We'll go next to Paul Cheng with Scotiabank.

Thank you. Good morning.

Good morning, Paul.

It seems like there's some good news from Cyprus. You guys signed with the government to allow the gas project to proceed. Can you give us some idea, maybe update us on terms of the timeline, what's the next step, size of the project in terms of gas output? And any color that you can provide? Thank you.

Yes, you bet, Paul. I'll start by saying we're excited about our entire portfolio in the Eastern Mediterranean, and that is a tribute to the people at Noble. This is largely a legacy Noble Energy position. We've got some good exploration acreage in the offshore Egypt area that we brought to the table as well, with expectations for some exploration wells there in the coming couple of years. But it was a nice milestone to see that we've got an agreed field development plan for Aphrodite, along with some updates to the PSA there. The initial development plan, Paul, is going to be a flow production unit in Cypriot waters, producing about 800 million cubic feet of gas per day. The gas would flow to Egypt, where the market is growing and has a need for more gas. The demand there is very strong. We entered pre-FEED activities in the first quarter. We're working to ensure that we can get competitive returns out of this project; there's some commercial work that needs to be done as well, and all that needs to be completed before we move to a potential FID. We are again pleased that we've got an agreement on that. That gives you a little bit of the scale of the project in the first phase here, and we'll talk about it more as we move through the pre-FEED and into FEED.

Thank you. We'll go next to Stephen Richardson with Evercore ISI.

Hi. Good morning, Mike.

Good morning, Steve.

I was wondering if you could give us your recent thoughts on CPChem. Obviously, in the middle of some significant investments in that business through what looks to be a trough, at least in the olefins side of the business. But maybe your current thoughts on the business and also how you are thinking about potentially owning more of it over time and how that fits into your current thoughts?

Sure. Thanks, Steve. First of all, I'll say we like the longer-term fundamentals of the Chemicals business. We've been in a tough part of the cycle here recently as we've seen some capacity additions into the market, so it's going to take time for the market to absorb those. We think we're still a few years away from returning to mid-cycle. CPChem has been a great business for us, and we've got 25 years of history roughly now. They've been a good operator and a good project executor. It's a portfolio that's significantly advantaged due to their feedstock position, primarily ethane in the U.S. Gulf Coast and the Middle East. They've had a very good low-cost operation. We've got a couple of growth projects underway, one in Qatar, one in Texas, on track to come online end of 2026, early 2027-ish. It's been a very successful partnership for us over more than two decades. Getting more share of a business that you like is always something that you would take a look at. We have advised our partner in CPChem that we would be interested in acquiring the other half at a reasonable value for both parties, and we'll see how that plays out. Thanks, Steve.

We'll take our next question from Josh Silverstein with UBS.

Good morning, guys. Chevron has a pretty unique asset in the Permian given your mix of operated, non-op, and royalty volumes. Can you provide us some details as to what you're seeing across the non-op royalty side now and any reduction in activity there and how that may play into the kind of plateau level for Chevron? Thanks.

Yes. At this moment, we don't observe any significant pullback from our partners. While we have not consistently identified who our partners are, approximately seventy-five percent of our production originates from larger well-known companies. Much of this production is from the core areas of the basin, which have low breakeven points and are well-established. In terms of NOJV, we can see that essentially all of the AFEs are in view, and most of the planned POPs have already commenced. The scheduled POPs for this year in NOJV have already started. I am quite confident that we will experience growth. While the number may not be as high for royalty, it is similar for the POPs that are already in progress. We have interests in approximately one out of every four acres in the Permian, which allows us to monitor what other operators are doing. Currently, it seems that people are maintaining their course. Thank you, Josh.

We'll go next to Lucas Hermann with BNP Paribas.

Hello, thank you for the opportunity. I have a question regarding cash flow for Eimear. It appears that the equity or dividend contribution you expect this year is now $2 billion, compared to your previous guidance of about $1 billion in excess. Am I right to say that you've adjusted your expectation? If so, is this due to higher anticipated dividends, or is it not related to a decrease in net income? Any comments would be appreciated.

Yes. Lucas, I think maybe the two things to point are the impact of the TCO DD&A. So given that we started up the project in January and ramped up ahead of our original schedule, the earnings guidance going forward reflects the DD&A update. In addition to that, we've got some CPChem outlook for margins that has been updated as well. Those will be the two main factors. Everything else is consistent.

And Lucas, the affiliate dividend guidance for the full year is unchanged as it was. So it's just a difference between the two.

We'll take our next question from Roger Read with Wells Fargo.

Thanks, good morning. I guess, maybe with the macro in a lot of people's minds at risk of lower oil prices. Just wondering, Mike, with all the changes here or project completions, Gulf of Mexico, fairly essentially through its process, Kazakhstan up and running, the Permian kind of flat lining. When we think about the resiliency of Chevron in a $50 oil world, what do you think has been sort of the change in the, whether you want to call it a base decline rate or the sustaining CapEx? Like how should we think about kind of cash flows and cash CapEx commitments in a possibly softer oil price world?

Yes, I mean there's two things that I might point to, Roger. Number one is we've got a portfolio now that has a much larger percentage of it in large, low decline production profile assets, i.e., low decline assets. So big LNG projects in Australia and Western Africa, the expansion of TCO, and frankly, the way we've been able in a very capital efficient way move towards a plateau-ish production with relatively highly efficient investments in some of the unconventionals. If I go back a decade ago, we were facing decline, and that required a lot of capital investments just to hold even, let alone show some growth. We've been showing growth in recent years with a much lower capital budget. The second thing that's really important is the flexibility that we have in our capital budget. We've already come down $1 billion from last year from $16 billion to $15 billion. Our CapEx as a percentage of cash from ops is, I think, the lowest in the industry. Almost two-thirds of our capital is either short-cycle shale or project spend that is completing over the next year or so. We've got a lot of flexibility if we need to exercise that. We've shown, I would call discipline coming into this year by tightening our belt a notch and bringing capital down a little bit. If we needed to bring capital down further, we certainly could do so. We showed in 2020, we started the year at $20 million capital budget. I think we finished the year at $12 million. So, we've got the ability to flex that capital if we need to. We've not made that decision at this point. But certainly, those are the two big things that are different if you look back to days gone by.

We'll go next to Phillip Jungwirth with BMO.

Thanks. Good morning. Congrats on the start-up of Ballymore anchor well before that. As we think about what's next in the Gulf of America, can you just talk about your optimism around future prospects, Paleogene or brownfield tiebacks? And generally, how do you see the cost structure or breakeven now for deepwater versus shale?

Yes. So thanks for the congratulations. What I would say is in the relative near term, you're going to see us focus on infill and stage developments. We've got a long history of projects that, once we've got a new hub in place, have multiple stages of development. We've seen that at Jack/St. Malo, at Tahiti, at Mad Dog, and Perdido. We're working on future stages of some of these recent start-ups. So an anchor Phase 2, a Ballymore 2, a Wale 2, and I would fully expect that you'll see us extend the life of those projects with some highly efficient, very returns accretive further development. If you look at our exploration portfolio, 80% of it is within tieback range of existing hubs. Ballymore is a great example of a strategy to really focus on identifying opportunities to develop accumulations that might not support a new greenfield development but are highly economic to tie in as a brownfield project. We'll continue to focus on that. We've been a participant in a discovery that's already been announced earlier this year and are very optimistic about our exploration program. The other 20% would be more frontier. Breakevens have come down a lot. Development costs were once in the 20s and headed to the 30s and higher. We're now down in the teens and pushing to the low-teens on development costs through a different approach to facility design and standardization. We've seen breakevens there become very competitive; they had to because we had such good opportunities in other parts of our business. We've got one of the best portfolios in the industry, and Wood Mackenzie data shows that we've got the lowest upstream breakeven in the industry. A big part of that is what we've been able to see in deepwater development. Thank you. Phil.

We'll take our next question from Betty Jiang with Barclays.

Good morning. Thank you for taking my question. I want to ask about the progress on the Power Ventures. I mean, it's clear that the AI power demand is not slowing down, and you guys have the timing advantage. How are the customer conversations going? You've spent $400 million of inorganic CapEx in the JV in 1Q. Just want to see how that spending trends over time, especially considering some of the inflationary pressure that we're hearing in the space?

Yes. We've been actively engaging with prospective customers and are still seeing very strong demand in those conversations. We're trying to narrow, frankly, because there are so many people that are interested in trying to partner with us when we can move quickly with these turbines. We're also narrowing down the potential sites. We screened a lot of potential locations in different geographies around the country. We have narrowed those significantly and are moving towards engineering and EPC options on the sites that we find to work the best for us and for customers, which is an important part of that. We're working toward an FID before the end of the year. As you note, speed to market is an important differentiator here. We will remain disciplined. There are cost pressures on some of the components of building out a power complex like this. We secured pricing on the turbines themselves. There are other elements of the build-outs that are also required, and between market demand, potential tariffs and other effects, we have to keep an eye on that. So we're going to stay very disciplined because this needs to generate returns that will compete in our portfolio. If we can achieve those returns, these projects will move forward. If we can't, we will need to look at our alternatives. But right now, I would say everything is moving fast, as you said. There's a tremendous amount of interest, and I'm very pleased that we're in a first-mover position on this, call it an early mover position. Thank you, Betty.

We'll go next to Devin McDermott with Morgan Stanley.

Hey, thanks for taking my question. So Mike, in your response to Roger's question before, you talked a bit about flexibility of the capital program and Eimear, you had similar comments in your prepared remarks. Given the cash flow growth you've already highlighted, the low upstream breakeven, and the strength of the balance sheet, there's probably no need to make adjustments on capital even in somewhat softer oil prices, probably more just about optimizing returns. But I wanted to ask about how you think about some of the parameters or market conditions that might make you make some adjustments to some of your short-cycle investments in places like the Permian.

Yes, I think you've read the situation right, Devin. We're prepared. You get into an environment like this, and you pull out the playbook. We’ve looked at different market scenarios in both the depth and duration of potential commodity cycles. We've looked at our business and how we're postured today from a production standpoint, a cash generation standpoint, a debt standpoint and all the different levers that we have to pull, and have identified the things we could do based on time posts and a view on the market. It's very early to have a high degree of confidence in terms of how this all plays out. The trade and tariff situation has been dynamic, and we need to see how that manifests itself over time. The OPEC change is one that is relatively recent as well, and we have to see how that plays out. We've been through these kinds of things before. I would say, I've been in one of the senior positions in 2008 when we had the financial crisis, in 2014 when we saw prices drop, in 2020 when we had COVID, and again now, I don't think we've ever been in a better position to navigate it and have had more levers available at our disposal and more strength to come through a cycle than we have today.

Devin, I would just add that our balance sheet is in a really strong position at 14% net debt. Our credit rating is AA. So as part of being prepared, it's ensuring that our balance sheet is strong. I'd also mention that the cost reduction program and the capital reduction underway, actions that we took last year put us in a strong position as well. Cost and capital discipline always matter in our business. We are focused on delivering on the plans that are behind those reductions, and they're picking up pace, and we're doing well there. It's preparation, and we have leading indicators that we're monitoring, signposts, and we don't need to do anything additional today, but we'll be ready with those signposts if needed.

We'll take our next question from John Royall with JPMorgan.

Hi, good morning. Thanks for taking my question. So I was hoping for a little more color on the expansion at Pasadena and how that's running and the benefits you're seeing overall to your Gulf Coast system? I know it was partly about synergies with Pascagoula. So maybe just a little more color on that and how the project is contributing several months into the start-up.

Yes. Thanks, John. The project is complete and online. We had feed in the crude unit the first week of December, and we've been ramping up to full capacity here this quarter. We had stable operations in the first quarter at about 110,000 barrels a day of crude feed, and we're really learning how to optimize that plant now at these higher feed rates. It will allow us to run more of our own equity from the Permian. As we look at export markets, capturing full value chain margins here in the U.S. is essential. It will take us up by about 50% before we could run about 85,000 barrels a day. This will take us up to about 125,000 barrels a day. We've got the ability to support supply more products to our customers in the Gulf Coast. We have a big market position in Texas, which historically has been served through product exchanges or purchases. We can integrate fully into that now with our own production. There are very significant synergies we can realize with Pascagoula on immediate streams that can be moved for upgrading to high-value products. It also helps during turnarounds to be able to store inventories, to move intermediates back and forth or finished products between the two facilities. We've got U.S.-flagged tonnage that allows us to move those streams between the two facilities. A good project to improve flexibility and margin capture here on the Gulf Coast.

We'll go next to Jason Gabelman with TD Cowen.

Hi Mike and team. Thanks for taking my question. I wanted to go back to the buyback guidance, if I could. You've cut to the low end of the range, but it is still a pretty wide range. I think we see your peers either guiding to a percentage of cash flow or a fixed amount that gives more visibility to where the buyback will be quarter-to-quarter and year-to-year. I was wondering if you could provide any additional color on how to think of the pace of buybacks through the balance of the year, if it's going to oscillate between the low end to the high end of the range, or where it will oscillate in between? The other point on that is if you could just talk about where the buybacks are going to be following the Hess acquisition; you had a prior guidance of $5 billion per quarter. I'm wondering if you have any update on that figure? Thanks.

Yes, Jason. First of all, it's not a formula that we're going to announce a percentage of this or that because that really, in some ways, defeats the purpose of what we've tried to do, which is to be steady through cycles and not expose investors to the uncertainty that volatile markets can introduce into this. Our range has been consistent. We introduced guidance more than two years ago, and as we’ve issued quarterly guidance and executed, that's also been consistent with the guidance and with the then current market conditions, and as we have seen market conditions change, we've modified our guidance. I would expect to remain consistent if we're in a market like the one that we're in right now. We don't intend to yo-yo this around if that was kind of the question. Our track record, if you lay it out and look at it versus others, it speaks for itself that we have been able to stay steadfast and consistent, as I mentioned earlier, 18 out of 22 years, including during some significant downturns. The absolute of the range that we've issued now, $10 billion to $20 billion is above anything we ever did prior to COVID. Even in the late 2000s, before the financial crisis when we were seeing $140-$150 oil markets, we were repurchasing at max one year $8 billion. We've now had three years with a trailing three-year total of $50 billion in buybacks. The $10 billion to $20 billion guidance for going forward is very strong and robust, and you can expect us to stay within that range.

Hey Jason, and then maybe just specific to the guidance rate that we issued for the quarter, $2.5 billion to $3 billion. If we were to rule that forward, it would keep us well within the $10 billion to $20 billion annual range that Mike talked about. So it's still a very strong program. Putting it into the context of what we've done in the last couple of years, prices have been $15 to $20 higher when we've delivered a $15 billion program, and we’ll deliver something between $11 and $13 if we just project it. So it’s still a very strong program. We're still buying a significant amount of our shares, on top of a dividend that's growing faster than our peers in the S&P 500.

Thanks Jason.

Thank you. We'll take our final question from Bob Brackett with Bernstein Research.

Good morning. Thanks for getting me in. Question around the tariff situation and how it might impact either CapEx or projects. What are some of the things you can do to adjust to tariffs in terms of controlling costs?

Yes, Bob, we're watching this very closely and preparing and actually in the process of taking some actions to mitigate the impacts. Our direct exposure is relatively limited. Energy has been largely exempted from tariffs. If you look at our cost structure of goods that we buy of our third-party spend, roughly 80% of it is on services, not on goods. Of the 20% that is spent on goods, a lot of it tends to be sourced locally or regionally. In the U.S., for example, where our largest portion of our capital spend is, we've got strong domestic sourcing on most of the goods that we use in our unconventional programs in the DJ and the Permian. Our current estimate is we may see a 1% impact on the cost of shale well. It's a dynamic environment, and we'll watch how these things evolve. We’ve got strong engagement with our suppliers, sourcing from multiple locations, and we've been anticipating this and preparing for it. The impact is not zero, but I think it is manageable. You've seen announcements in other industries where they're more directly exposed than we are.

Thank you, Bob. I would like to thank everyone for your time today. We appreciate your interest in Chevron and your participation on today's call. Please stay safe and healthy. Katie, back to you.

Thank you. This concludes Chevron's first quarter 2025 earnings conference call. You may now disconnect.