Chevron (NYSE:CVX) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Summary
Chevron Corp reported first-quarter 2026 earnings of $2.2 billion or $1.11 per share, with adjusted earnings of $2.8 billion or $1.41 per share, despite a $360 million charge related to legal reserves.
The company emphasized its disciplined execution despite geopolitical tensions, maintaining strong production and refining operations, with US production over 2 million barrels per day and significant integration benefits across its value chain.
Chevron maintains its 2026 guidance unchanged, expecting 7-10% production growth and consistent capital spending, while continuing to execute strategic projects in Venezuela and optimizing global supply chains.
Share repurchases were consistent with guidance at $2.5 billion, and the company anticipates improvements in working capital in the second half of the year, driven by commodity prices.
Management reiterated the importance of maintaining capital discipline, strong cash flow, and consistent shareholder returns, with a focus on long-term resilience and strategic growth opportunities, particularly in the Permian and Venezuela.
Full Transcript
OPERATOR
Good morning, my name is Katie and I will be your conference facilitator today. Welcome to Chevron's first quarter 2026 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's 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. 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, Jeanine Wei. Please go.
Janine Wei
Thank you, Kayte. Welcome to Chevron's first quarter 2026 earnings conference call and webcast. I'm Janine Wei, Head of Investor Relations. Our Chairman and CEO Mike Wirth and CFO Eimear Bonner are 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 to this presentation. Please review the cautionary statement and additional information presented on slide 2. With that now I'll turn it over to Mike.
Mike Wirth (Chairman and CEO)
All right, thanks Janine, and welcome to your new role. This quarter, Chevron delivered solid performance driven by disciplined execution and a resilient portfolio. Despite market volatility and heightened geopolitical tensions, our people remain focused on safely delivering the reliable energy the world needs. Our approach remains consistent. Maintain capital and cost discipline, generate strong cash flow and deliver superior shareholder returns. Chevron's fundamentals are strong. We have a world class portfolio and upstream assets with peer leading cash margins. And we're carrying strong momentum into the second quarter with US production over 2 million barrels of oil equivalent per day, Gorgon and Wheatstone LNG running at full rates, TCO producing above 1 million barrels of oil equivalent per day and US refineries operating at record crude throughput. The unique combination of Chevron's industry leading refining complexity and our diverse waterborne equity crudes from TCO, Guyana, Permian, Venezuela and Argentina creates opportunities for value capture through integration. Our high quality upstream and downstream portfolios delivered significant integration benefits during the quarter. We maintained strong supply into tight markets and maximized margins across products including fuel oil, sulfur and other secondary products which saw significant price dislocations. We continue to optimize flows across our value chains to maintain high utilization and reliable supply into the market. In the second quarter, we expect global equity crude throughput to more than double to year over year to 40% in Asia. We anticipate over 80% refinery utilization moving to Venezuela. We continue to leverage our deep expertise and long standing position to create an option for the future. Two weeks ago we announced an asset swap with PDVSA. The agreement increases our position in the Orinoco Ayacucho 8 expands our continuous acreage position with PetroPiar offering operating and development synergies along with long term growth potential and optionality. Petroindependencia is a joint venture we've been in for more than 15 years where we've increased our equity stake to 49%. Current operations are running smoothly. We're still in debt recovery mode and expect Venezuela to continue to represent 1 to 2% of cash flow from operations. This transaction is expected to improve resource depth and integration upside supporting potential growth into the future. Now over to EMER to discuss the financials.
Eimear Bonner
Thanks Mike for the first quarter, Chevron reported earnings of $2.2 billion or $1.11 per share. Adjusted earnings were $2.8 billion, or $1.41 per share. Included in the quarter was $360 million. Charge related to legal reserve foreign currency effects decreased earnings by $223 million. Organic capex was $3.9 billion this quarter, consistent with historical capex trends of lighter spending in the first half of the year. Inorganic capex was approximately $200 million. We expect to finish within full year. Capital guidance adjusted first quarter earnings were $440 million lower than last quarter. Adjusted upstream earnings increased due to higher realizations, lower depreciation, depletion, and amortization and favourable operating expenses and tax impacts. Adjusted downstream earnings decreased primarily due to unfavourable timing effects which were partly offset by higher refining margins. Unfavourable timing effects totalled around $3 billion for the quarter, reflecting a steep rise in commodity prices in March. The effect was evenly split between inventory valuation and mark to market accounting. On paper derivative positions linked to physical cargoes. We anticipate approximately $1 billion of the paper positions to unwind in the second quarter, with the majority of related cargoes delivered in April. Looking forward, we would expect additional timing effects when prices are rising and further unwinds when prices are falling. Chevron generated cash flow from operations, excluding working capital of $7.1 billion in the quarter. This includes unfavorable impacts from special items and timing effects totaling approximately $3 billion. Adjusted free cash flow was $4.1 billion for the quarter and included a $1 billion loan. Repayment from TCO. Share repurchases were $2.5 billion in line with guidance, working capital was impacted by sharp commodity price increases as well as a build in inventory. Consistent with historical trends, we expect an increase in working capital in the first half of the year and a release in the second half, the extent of which will be primarily driven by prices. Over the period. More than $5 billion in commercial paper was issued to manage liquidity and general business needs. About half has already been paid down in April and we expect these short term balances to climb further throughout the second quarter. First quarter 2026 oil equivalent production increased by approximately 500,000 barrels per day compared to the first quarter of 2025. This reflects the integration of legacy Hess assets in addition to continued organic growth across the portfolio. The conflict in the Middle east had a limited impact on production in the quarter. With less than 5% of our portfolio located in the region in the partition zone, we're operating at near minimum rates to manage storage in the Eastern Mediterranean. Both Tamar and Leviathan are operating at full capacity. During the quarter, we continued to execute key expansion projects, completing the offshore scope for both the Tamar optimization project and the Leviathan Third Gathering Line. Let me close by reinforcing that. Despite changes in the external environment, we're executing our plan with discipline, consistent with our long standing financial priorities. This disciplined approach gives us resilience during periods of volatility and the ability to invest and return cash to shareholders through the cycle, all while ensuring we maintain a balance sheet built for the long term. Chevron business is Strong and our 2026 guidance is unchanged. Capital spending and production outlooks are consistent with previous guidance and we're on track to deliver our 3 to 4 billion dollars structural cost reduction target by year end. This consistency underpins our 2030 targets announced in November, including over 10% growth in adjusted free cash flow and earnings per share and 3% improvement in ROC, all at $70. Brent, these aren't aspirational goals. They're grounded in assets that are operating today, a more efficient organizational model and continued capital discipline. I'll now hand it off to Janine.
Janine Wei
Okay, that concludes our prepared remarks. Thank you, Mike Emer As a reminder, additional guidance can be found in the appendix of the presentation as well as in the slides and other information that's posted on chevron.com we're now ready to take your questions. We ask that you please limit yourself to one question and we'll do our best to get all of your questions answered. Katie, please open the lines.
OPERATOR
Thank you. If you have a question at this time, please press Star one on your touchtone telephone. To allow for questions from more participants, we ask you limit yourself to one question. If you wish to remove yourself from the queue because your question has been answered or you wish to remove yourself from the queue, please press star 2. If you are listening on a speakerphone, we ask you please lift your handset before asking your question to provide optimum sound quality. Again, if you have a question, please press star one on your touchtone telephone. Our first question comes from Neil Mehta with Goldman Sachs.
Neil Mehta (Equity Analyst at Goldman Sachs)
Yeah, thank you Mike and Emer and welcome back, Janine. You know Mike, I would love your perspective on the current conflict in the Middle east and if you could share how you, you think about this in the context of your four decade history in oil and gas and how significant of moment is this? What do you think the long term implications are of the current conflict? And I know at the analyst day in November we talked about a flat nominal $70 Brent as a mid cycle planning assumption. But does this event change the way you think about mid cycle pricing?
Mike Wirth (Chairman and CEO)
Yeah. Thank you, Neil. You know, this is clearly a very significant disruption to the global energy system. It's a scenario that, you know, we've thought about, we've, you know, included in some of our planning exercises for many, many years. It's early, I think, to have firm conclusions about how the energy system will change in the long term. I do think there will be changes, but I think we have to see how things play out over the coming weeks, hopefully not longer than that as this comes to some sort of a resolution and the energy system begins to be reconstituted in a way that can reach some new equilibrium. I think that new equilibrium will look different than what we've known before, but I'm not sure I could argue with a lot of confidence that I could describe exactly what that looks like. One thing you can expect from us is consistency. You will see capital and cost discipline no matter what. You will see us invest in highly competitive assets with scale and longevity no matter what, assets that are low on the cost curve. You're going to see us invest to drive strong returns and free cash flow, maintain a strong balance sheet so we can create predictable and growing shareholder distributions institutions. We've got great visibility through 2030. Eimear just reiterated our guidance for that. And we've got assets online now that deliver predictable visible cash flow growth for the balance of this decade and we've got a full hopper for beyond that. And so I think the things that Eimear talked about, consistency, discipline, the strength of our portfolio on the ground operating today are all things that will underpin our strategy go forward. And, you know, as we see how this is resolved and as we see, you know, what the energy system begins to look like post the conflict, if we want to fine tune that at all, we'll come back and talk to you about it. But I really think it's early for me to give you anything concrete other than to reiterate. I think the things that you've seen out of us and that in my 44 years have stood us in good stead through unexpected events and cycles are characteristics that you should expect to endure. Thank you.
OPERATOR
Thank you. We'll take our next question from Arun Jayram with JP Morgan.
Arun Jayram (Equity Analyst at JP Morgan)
Yeah, good morning and thanks for taking my question. Mike and Emer. It feels like one of the key themes from the print is the opportunity for Chevron to optimize margins from the refining system as well as your increased exposure to waterborne crudes post the Hess merger. And I'm looking at slide 4. I was wondering if you could help us think about the value capture opportunities
Mike Wirth (Chairman and CEO)
and maybe the experience in 1Q and how should we think about this integration favorably impacting your go forward earnings power? Yeah. Thanks, Arun. As part of the organizational changes that we made last year, we set up a global enterprise optimization team. And they've really got the remit across all of the upstream and the downstream to be sure that we're getting maximum value out of the entire set of assets and we're integrating where it makes sense. They've done a really nice job in the last quarter of keeping our system operating at high, high degrees of utilization, capturing good margins through volatility. Our portfolio provides options to, to move things around in times like this. Our refineries in Asia, which are all in various types of ventures, we expect those to run over 40% Chevron equity crude in the second quarter, much higher than under normal market conditions and probably much higher than we'll see in some of the other refining assets in that region, because we have the ability to direct equity flows to those refineries at a time when access to crude is very important and very difficult. In the US we're operating at over 50% equity crude throughput, some refineries much, much higher than that. We've used the Jones act waiver to move crudes from the Gulf coast around to the West Coast. In Asia, in the first quarter, we ran CPC Blend, we ran Mars, we ran WTI, all in our GS-Caltex refinery in South Korea. And just to give you a point of reference, I used to run our downstream business and in those days we were about 15% equity crude into our refining system and 85% crudes from the market. As I said, we expect to be over 40% in Asia north of 50 and much higher than that in some refineries in the U.S. and so that's a significant change from our history. And at a time when margins are likely to move back and forth across that value chain, they may be in the upstream, they may be in the downstream, we're going to be able to capture those with a much higher degree of confidence. And importantly, in a world that is getting very tight on products, we're going to keep our assets very full and be able to provide significant supply into markets that, dearly needed. And so we're not going to quantify the value that we're capturing. But I think you'll see it flow through in the numbers and it is, it is meaningful. And I think that's continuing already into the second quarter and likely beyond. Thank you.
OPERATOR
Thank you. We'll take our next question from Devin McDermott with Morgan Stanley.
Eimear Bonner
Hey, good morning. Thanks for taking my question. So, Emer, in your prepared remarks, you highlighted Chevron's longstanding and consistent financial priorities. I wanted to build on that a bit and get your latest thinking on capital allocation at higher prices, particularly that balance between shareholder returns, building cash and growth. You did leave the buyback range unchanged quarter over quarter, which I think makes a lot of sense and I commend you for not being pro cyclical on the buyback, but maybe just talk through the strategy there and then on the growth spending side, what would you need to see to shift spending? Maybe add some capital in the Permian and move away from the plateau back toward growth in that asset. That's two parts of the question, but we'd love to hear your thoughts. Yeah, thanks. Thanks, Devin. Well, overall it comes back to staying consistent with our four financial priorities and being really disciplined on that through volatility. So that's why today we're not changing any of our capital allocation framework, we're not changing any of our ranges and we're happy with where we are and with all of those. So just maybe to, to recap, first and foremost, growing the dividend. And this year we've grown it for the 39th consecutive year to investing in the business in the most capital efficient way. Our budget is 18 to 19 billion for the year. We're on track with that budget. Our capital performance is really, really strong with that capital. We're going to grow 7 to 10% production this year. So we're reconfirming that growth. The third is the balance sheet. The balance sheet is in great health. The balance sheet will get stronger with higher cash generation. And then fourth is the buyback, staying within 2.5 to 3 billion for the range. So with only eight weeks into the conflict, as Mike said, it's too early to have a different view on the fundamental outlook around price. It's too early to see or have a view of whether that is structurally changing. And so when it comes to, to capital allocation, we're comfortable with where we are and we're staying consistent and disciplined. Thanks, Devin.
OPERATOR
Thank you. We'll take our next question from Doug Luggett with Wolff Research.
Mike Wirth (Chairman and CEO)
Thank you. Good morning, everyone. Mike and Emer, I wonder if I could follow up on Devin's question and maybe just ask for a little bit more color around two specific assets. Obviously you had some changes in Venezuela, Mike, but my understanding is that's been running essentially as recycling cash flow to maintain the business and obviously pay down your legacy money. You wrote debt and so on. But I'm wondering, are you at a point now where the fiscal terms have changed, the security situation is different. Basically the broad picture for Venezuela where you would be prepared to incrementally put more capital. And I guess I'd ask the same question of the Permian, where not so long ago you did have a growth story there, you stabilized it. But one could argue that in both of those areas there might be a call for incremental or production longer term. And you guys are in a pretty strong position to deploy capital if you did. So I guess it's a capital increase question, but it's also specific to those two assets. Yeah. So, Doug, I guess what I would say, number one is, you know, we are operating now, as I mentioned in my prepared remarks, with TCO, greater than a million barrels a day. Permian solidly above a million barrels a day. The Australian LNG facility is running at full capacity. Gulf of Mexico, I mean, all the, you know, the big pistons in the engine are firing. And as we come into the second quarter, we've got tremendous momentum across the system. Production in the second quarter expected to be higher than production in the first quarter. Emer reiterated 7 to 10% production growth guidance for the year. And so we've got strong growth in the business right now. And so. And then we've got options, right. We've got a portfolio that presents us with options. I think Emer said it pretty well, in response to Devon, it's early into this conflict to be making big changes. We don't know how things will be resolved. You could build a scenario where things get resolved quickly, the strait reopens, and, you know, we get back into a market that's pretty well supplied. You can build another scenario that says this goes on and the market's tighter and it looks different on the other side of it. I don't know exactly how this will play out. So we're not going to make any rash or, you know, immediate changes to a system that's running at a high degree of capital efficiency today and operating efficiency. Really important to stay focused on reliability at a time like this and safety at a time like this. Specific to Venezuela, your understanding is right. We are still recycling cash flow. We still have debt to recover. We're obviously recovering at a faster rate in this kind of a price environment. And there are indicators of positive developments in the country, but there's still questions. And so the fiscal terms are not clear. There's ranges that they've indicated for tax, for royalty. So there's still things that need to be addressed relative to dispute resolution, et cetera. And so we'll continue to operate in the mode we're in right now, which has yielded some growth over the past couple of years and in fact yielded growth this year. But we need to see further progress before we would put more capital to work. We've got a lot of resource there and we could grow it in the Permian. I think Eimear mentioned that. And we, you know, we're running the Permian to deliver strong free cash flow right now. We could, we could hit the gas and begin to grow it again. But I don't know what the future looks like. And at this point, the value that we're seeing in improved asset reliability and reduced loss production to downtime, et cetera, is very real. And we get that because we are so focused on that. And a shift to quickly turn to more production growth might dilute that focus. And so, you know, we'll update you over time if our view on these things changes. But for right now, I think it's really steady as she goes.
OPERATOR
Thank you. Thank you. We'll take our next question from Steve Richardson with Evercore.
Steve Richardson
Hi, good morning. Thank you, Mike. I was wondering if you could talk a little bit about the exclusivity agreement with Microsoft on the power project, specifically. Specifically, you've been at this for a while. No doubt you've learned some things, and it's been a bit of a journey getting to this place in terms of dealing with a different type of counterparty in a different industry. But also could you just update us on time to clarity on contract and FID and all those good things?
Mike Wirth (Chairman and CEO)
Sure. So it has been reported, I think we've confirmed that we're in an exclusive discussion with Microsoft right now. We're very pleased to be in those discussions with such a high quality customer as Microsoft. And it's a company we know well. They've been a partner of ours for a long time. They're our primary cloud provider. They've been a key technology provider to us for many, many years. And we've got a deep and very good relationship with Microsoft. The project that we're advancing in West Texas is progressing well. We've submitted an air permit. We've, we've secured not only the large turbines that we've talked about before, but also small block generation that's useful in early scale up. And for some reliability we've selected an EPC who's doing engineering work on that. We've agreed with a water provider, et cetera. So we're advancing the project with a lot of pace. We're beginning to take delivery on turbines this year. So, you know, subject to definitive agreements which we are in negotiations for, we will move towards FID later this year. And I think we'll, you know, deliver a project with speed, with scale and that's differentiated. We'll remain disciplined on turns. The negotiations thus far look like we can find a place to meet where Microsoft's expectations on power prices and our expectations on return on investment can both be satisfied. And so like I say, we're very, very pleased. You know, I think we'll probably have more to say about this on the next call, so stay tuned.
OPERATOR
Thank you. We'll take our next question from Bharaj Burkhattarya with Royal bank of Canada.
Bharaj Burkhattarya (Equity Analyst at Royal Bank of Canada)
Hi there. Thanks for taking my question. Just wanted to follow up on Venezuela again and this situation is obviously evolving quite quickly. You know, at the start of the year comments from the US Administration was essential around oil companies not looking backwards at the receivables balance and looking forward. And then more recently you today and some of your peers have been talking about the potential to get some of that paid back. So my question is really how should we think about what is a reasonable time frame to assume for you to get your couple billion dollars receivables balance back? Thank you.
Mike Wirth (Chairman and CEO)
Yeah, Bharaj, we came into the year with round number, something closer to a Billion and a half dollars in a receivable. As I said, you know, the rate at which that gets paid down is somewhat a function of the price, and we're receiving it faster this year than last year. Obviously, I think we'll still carry some sort of a balance on that as we get to the end of this year, but much lower than where we are. And I think that would probably be fully paid off at some point in 2027, and subsequently we would, you know, update you on what the model would be for cash distributions, distributions going forward. And I think by the time we get to 2027, some of these open questions that I referred to in response to the prior question relative to tax, royalty, contract terms, et cetera, are likely to be clarified, and we'll be able to give you more guidance on what we might do relative to capital investment. You know, I think in any scenario, we remain the advantaged incumbent with people on the ground, with operations, with supply chains and contract resources, et cetera. That put us in a very good position to be a big player there, presuming that we see further progress.
OPERATOR
Thank you. We'll take our next question from Sam Margolin with Wells Fargo.
Sam Margolin (Equity Analyst at Wells Fargo)
Hey, good morning. Thank you for taking the question. Appreciate the view that the visibility on the long term is very limited right now, but in the near term, there's some extraordinary things happening, too. Localized shortages could start to become an issue in some of the places that you operate in the next couple of months, depending on how the situation plays out. Chevron is exposed to these kind of idiosyncratic market events, volatility events, not just in regular operations, but also in the way you manage the supply chain. So I wonder, in the context of the timing effect in 1q and the derivatives exposure, if anything's changed or if you're adjusting kind of your operating posture within this highly volatile and extraordinary environment.
Mike Wirth (Chairman and CEO)
Yes, Sam, it is an unusual environment. We've got experience working in unusual environments. In 2020, we saw kind of the inverse of this with the collapse of demand and excess supply. In 2022, we saw a version of this when the conflict in Ukraine began. And so, you know, we've got a playbook to deal with these things. And you, you work on optimizing supply into these markets. You look at your financial exposures and counterparty circumstances and manage your risks there. The timing effects that were reported are the kinds of things you expect in a market like this and the kinds of things we've seen before. And so there's nothing unusual there. It was a big run up in crude price over the the course of the quarter. And things that normally don't really appear in our financials relative to derivatives become very evident in a market like that. In a market that goes the other way, you know, you see those effects and they go the other direction. And so I wouldn't overreact any things in our numbers. We're very focused on supply in the markets. And I mentioned, you know, Asia, where there is clearly, you know, some of the nearest term stresses. We are working to keep our refineries in Asia running at, I would argue, probably the highest degree of utilization of anybody out there, because we can direct crude.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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