셰브론(CVX) 2026년 3분기 실적 발표 컨퍼런스 콜: 현금흐름, 사상 최고 생산량 및 베네수엘라 성장

핵심 요약

• 쉐브론은 2026년 3분기 순이익으로 99억 달러, 또는 주당 5.06달러를 기록했다.조정 순이익은 104억 달러, 즉 주당 5.28달러
• 였다.운전자본을 제외한 영업활동 현금흐름은 166억 달러에 달했으며, 조정 잉여현금흐름은 142억 달러였다.쉐브론은 부채를 30억 달러 이상 줄이고 현금을
• 40억 달러 이상 늘렸다.생산량은 하루 거의 400만 석유환산배럴에 달했으며, 여기에는 하루 90억 입방피트 이상의 사상 최대 천연가스 생산량이 포함됐다.
• 미국 업스트림 생산량은 5개 분기 연속으로 200만 BOE/d를 초과했다.쉐브론은 베네수엘라 3개 합작법인의 총생산량을 2031년까지 하루 약 60만 배럴
• 로 두 배 늘릴 계획이다.경영진은 총비용이 배럴당 20달러 미만
• 일 것으로 예상하며, 해당 프로그램은 자체 자금으로 조달되고 주요 인프라 확충이 필요하지 않다.퍼미안 생산량은 6개 분기 연속으로 100만 BOE/d를 상회했다.쉐브론은 잉여현금흐름과 효율성을 강조하면서 이 수준의 생산량을 유지할 방침이다.

경영진은 AI 이니셔티브를 통해 연초 이후

조정 업스트림 이익은 실현 가격 하락, 인수량 감소 및 불리한 타이밍 효과로 인해 전분기 대비 감소했으나, 감가상각비, 감모상각비, 상각비 및 세금 효과 감소로 일부 상쇄되었습니다. 조정 다운스트림 이익은 정제 마진과 판매량 호조에 힘입어 증가하여 불리한 타이밍 효과를 충분히 상쇄했습니다.

사업 및 운영 실적

업스트림 및 주요 생산 지역

미국 업스트림 생산량은 일산 200만 BOE/d 이상을 5분기 연속 유지했습니다. 퍼미안 지역은 일산 100만 BOE/d 이상을 6분기 연속 기록한 한편, 셰브론은 미국 멕시코만 심해 분기 생산 기록과 동지중해 사상 최대 생산량을 발표했습니다.

셰브론은 퍼미안 전략이 생산 최고 수준 유지와 잉여현금흐름 극대화에 지속적으로 집중하고 있다고 밝혔습니다. 배럴당 자본지출은 25% 이상 개선되었으며, 시굴 및 완정 지출은 40%, 설비 지출은 50% 감소하며 회사가 안정적인 운영 범위 내에서 생산량을 유지하고 있습니다.

최근 병목 현상 해소 프로젝트를 통해 업스트림 생산 능력이 일산 8만 5,000배럴 이상 추가되었습니다. 셰브론은 TCO의 3세대 공장 생산 능력을 20% 확대하고, 발리모어에서 7% 증대 및 앵커에서 33%(또는 일산 2만 5,000배럴)의 생산 능력을 증대했다고 발표했습니다.

베네수엘라 성장 계획

셰브론은 베네수엘라 3개 합작법인의 총생산량이 연말까지 일산 약 30만 배럴에 달할 것으로 예상하고 있으며, 이는 이전 12개월 대비 20% 증가한 수치입니다. 회사는 1차 회수 방식을 통해 생산량을 약 2031년까지 일산 60만 배럴로 두 배 늘릴 계획입니다.

경영진은 이 프로그램을 총 자본 및 운영 비용이 배럴당 20달러 미만인 자체 자금 조달 사업으로 설명했습니다. 셰브론은 합작법인에서 생산된 모든 원유를 판매하며, 대부분의 물량은 미국 정유사로 공급됩니다. 회사는 또한 기존 인프라가 잘 유지되어 있어 계획된 확장을 위해 대규모 업그레이드가 필요하지 않다고 밝혔습니다.

정유 및 석유화학

셰브론은 정유 시스템 전반에서 역대 최대 원유 처리량을 달성했습니다. 지난 2년간 진행된 미국 정유공장 정기보수 작업의 80% 이상이 상위 25% 이내의 소요 기간으로 완료되었습니다.

독자 개발 촉매를 통해 셰브론의 미국 내 최대 정유공장에서 중간유분 생산량이 10% 이상 증가했습니다. 3분기 미국 중간유분 수율은 46%에 달했습니다. 패서디나 정유공장의 생산능력은 최소한의 비용으로 약 15% 증가했으며, 셰브론은 패스카굴라 공장의 생산능력이 2030년까지 추가로 7%.

경영진은 정제 가동률이 회복되고 수출 물량이 늘어남에 따라 정제 마진이 안정을 찾기 전까지 단기적으로 높은 수준을 유지할 것으로 예상합니다. 석유화학 분야의 경우, 경영진은 연말을 지나 2027년까지 마진이 높게 유지될 수 있지만 설비 합리화나 프로젝트 연기가 없을 경우 공급 과잉이 다시 도래할 수 있다고 경고했습니다.

바켄 구조조정

셰브론은 바켄 미드스트림 수송 수수료의 50% 인하를 예상하고 있으며, 경영진은 이를 통해 업스트림 수익성이 개선되고 경제성 있는 인벤토리가 확장되며 운용 유연성이 높아질 것이라고 설명했습니다. 회사는 연말까지 리그를 3대에서 2대로 줄이면서도 약 180,000 BOE/d의 생산량을 유지할 계획입니다.

장경 수평정 작업 비중은 2026년 60%에서 2027년 85% 이상으로 확대될 것으로 전망됩니다. 이번 거래를 통해 기업의 투입자본수익률(ROCE)이 0.5%포인트 상승하고 부채 37억 달러가 연결 대상에서 제외될 것으로 예상됩니다.

탐사 및 AI

셰브론은 2년 동안 2,200만 에이커를 추가해 탐사 영역을 2배로 넓히고 12개 신규 분지에 진출했습니다. 회사는 같은 기간 인프라 연계형 탐사 성공 15건을 달성했으며, 탐사 성공률은 업계 평균보다 40% 높은 수준이라고 경영진은 밝혔습니다.

AI 패턴 인식을 통해 멕시코만에서 150개 이상의 유망 구조를 포착했으며, 16개 유망 광구가 평가 단계로 진입했습니다. 셰브론은 약 연간 20개의 탐사정 시간이 지남에 따라 인프라 중심 기회와 신규 탐사(프론티어) 기회 사이에 거의 균등하게 배분됩니다.

경영진은 셰브론이 운영하는 시설의 타이백 거리 내에 있는 앙골라 광구 발견을 강조했습니다. 1054X 정은 2,000피트를 초과하는 원유 및 가스 콘덴세이트 컬럼과 약 300피트의 순유가층(net pay)을 확인했다고 실적 발표 전화회의에서 밝혔습니다.

경영진 가이던스

• 셰브론은 4분기 자본 지출이 과거 패턴에 맞춰 증가할 것으로 예상하는 한편, 연간 지출은 연간 가이던스의 하단 수준에서 마무리될 것으로 예상하고 있습니다.
• 회사 측은 자사주 매입을 공시된 25억 달러~30억 달러 범위 내에서 유지할 계획입니다.
• 바켄 거래는 2026년 4분기 말 종결을 목표로 순조롭게 진행 중입니다. 셰브론은 일회성 비현금 세후 회계 손실로 30억 달러~40억 달러를 예상하고 있으며, 이를 특수 항목으로 처리할 예정입니다.
• 경영진은 2027년 바켄 업스트림 수익과 현금 흐름이 즉각 개선될 것으로 기대하고 있으나, 주로 세금과 관련된 현금 유출로 인해 일부 상쇄될 것으로 보고 있습니다.
• 셰브론은 탐사 지출을 2025년 대비 50% 늘리고 있으며, 이는 30개의 순 신규 탐사 유망지가 뒷받침합니다.
• 킬비 프로젝트는 2028년 최초 전력 생산 및 2031년 완전 가동을 목표로 하고 있으며, 이는 인허가, 최종 투자 승인, EPC 완료 및 자금 조달을 전제로 합니다. 이 프로젝트는 2.67기가와트 규모로 설계되었으며 마이크로소프트와의 20년 장기 전력 구매 계약(PPA)에 의해 뒷받침됩니다.
• 경영진은 이사회 검토를 거쳐 12월에 셰브론의 2027년 자본 투자 계획에 대한 추가 세부 사항을 발표할 예정입니다.

리스크 및 주요 관전 포인트

원자재 가격 변동성은 여전히 주요 변수로 남아 있습니다. 경영진은 배럴당 64달러의 분기 내 변동 폭을 지적했으며, 유가는 분기 중 배럴당 68달러에서 132달러 사이를 기록했습니다. 분기 말 급격한 가격 상승은 운전자본에 부정적인 영향을 미쳤으며, 셰브론은 가격 상승 시 시차 효과가, 가격 하락 시 반전 효과가 나타날 것으로 예상합니다.

베네수엘라는 지상(지정학적) 리스크 및 계약상의 리스크를 안고 있습니다. 경영진은 개선된 재정 조건, 안정성 조항, 국제 중재 조항, 원유 마케팅 및 수익 흐름에 대한 셰브론의 통제권, 자체 자금 조달 구조 등을 리스크 관리 방안으로 제시했습니다.

높은 운임, 물류 및 보험 비용이 원유 경제성에 영향을 미치고 있습니다. 셰브론은 현재의 분쟁 발생 전에 많은 계약이 체결되었기 때문에 자체 보유 및 장기 용선 선단이 강점을 제공하지만, 이러한 혜택의 지속 기간은 혼란이 얼마나 오래 지속되느냐에 달려 있다고 밝혔습니다.

TCO 광구 계약 연장의 시기 및 최종 조건은 여전히 협상 중입니다. 경영진은 논의가 핵심 이슈로 축소되었으며 별다른 위험 신호(red flag)는 보이지 않는다고 밝혔으나, 완료 일자는 제시하지 않았습니다.

애널리스트 Q&A 주요 내용

• 자본 배분: 셰브론은 지속적인 배당 성장, 효율적인 투자, 재무제표 건전성 확보, 경기 사이클 전반에 걸친 자사주 매입 등 우선순위에 변화가 없다고 밝혔습니다. 회사는 39년 연속 배당금을 인상해 왔습니다.
• 퍼미안 전략: 경영진은 현재 정점(플래토) 수준을 넘어서는 단기 성장보다는 효율성과 잉여현금흐름을 우선시하고 있습니다. 분기별 생산량은 1일 100만 BOE 이상을 유지하는 가운데 약 3% 안팎으로 변동될 수 있습니다.
• TCO 계약 연장: 셰브론은 카자흐스탄과의 협상을 건설적이라고 평가했습니다. 모든 합의는 해당 국가에 경쟁력 있는 결과를 제공해야 하며 기존 및 향후 파트너 자본에 대해 수용 가능한 수익률을 제공해야 합니다.
• M&A:경영진은 포트폴리오에 인수를 필요로 하는 중대한 공백은 없다고 밝혔다. 셰브론은 거래 검토를 지속하겠지만, 특히 원자재 가격 상승기에는 엄격한 가치 평가 규율을 강조했다.
• 호주 LNG 프로젝트:고르곤과 위트스톤 프로젝트는 이미 설계용량을 상회하여 가동 중이다. 경영진은 백필(추가 가스 개발) 프로젝트 및 지속적인 신뢰성 향상과 더불어 추가적인 병목 해소 가능성이 있다고 보고 있다.
• 이라크 사업 및 장기 성장 전망:셰브론은 이라크에서 더 경쟁력 있는 조건을 협상 중이며 주로 시추 중심의 개발 계획을 수립 중이라고 밝혔다. 인프라 지출은 적정 수준이며 관리 가능할 것으로 예상된다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning. My name is Katie and I will be your conference facilitator today. Welcome to Chevron's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] 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 Wai. Please go ahead.

Jeanine Wai

Thank you, Katie. Welcome to Chevron's Third Quarter 2026 Earnings Conference Call and Webcast. I'm Jeanine Wai, 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.

I'll now turn it over to Mike.

Michael Wirth

Thanks, Jeanine. Chevron delivered another quarter of outstanding operational performance and disciplined execution, reliably supplying the energy the world needs. In the U.S., 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 the discovery in Angola within tieback range of Chevron-operated facilities providing an opportunity for short-cycle, capital-efficient development. Our joint venture with Bunge completed commissioning of a Louisiana oilseed processing plant on schedule, providing additional feedstock for Chevron's leading U.S. biofuels business. We expanded our acreage and established new fiscal terms in Venezuela, 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, where 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. Last month, we announced plans to double production from our 3 joint ventures to roughly 600,000 barrels of oil per day, all on primary recovery by 2031. This development program will be self-funding and could 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. Chevron markets 100% of the crude from the 3 ventures, with the majority going to U.S. refiners, 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.

Now I'll turn it over to Mark to discuss our operational achievements.

Mark Nelson

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. In shale and tight, we achieved first-quartile reliability in the DJ Basin during the third quarter by applying AI to anticipate and minimize downtime and skating learnings from the Permian, reducing loss production events by 50%.

In Advanced Chemicals, continued 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. And reliability in Australia continues to be strong, where predictive maintenance, centralized data-driven decision-making and AI help to maximize LNG supply into a tight market.

In Downstream, efficient turnarounds and flexibility to respond to market conditions are essential to meet customer needs. More than 80% of Chevron's U.S. refinery turnarounds over the last 2 years were completed with first quartile duration. We have pure leading complexity, and we're deploying a proprietary catalyst increasing distillate yields by more than 10% at our largest U.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. We announced a 20% capacity increase in TCO's third generation plant, taking total processing capacity to slightly over 1 million barrels of oil per day. At Ballymore, a 7% increase in capacity contributed to record deepwater production in the Gulf of America. 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. We've done the same thing in refining, contributing to record quarterly U.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. We'll continue to pursue additional low-cost debottlenecking projects where practical, including at Pascagoula, where we expect to increase refining capacity by another 7% by 2030. 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 2 years, doubling our footprint. This includes 12 new basins with a focus on both sides of the South Atlantic margin and Eastern Mediterranean.

AI is changing what we see subsurface and how quickly we see it. 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. ScoutAI, now deployed in 10 new basins, build basin assessment 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. AI pattern recognition has identified more than 150 leads in our Gulf of America portfolio alone, with 16 prospects moving into evaluation. All of this is leading to better outcomes.

We've made 15 infrastructure-led discoveries in 2 years at a success rate of 40% above the industry average. Real-time optimization using AI continuously monitors drilling conditions, recommends actions to reduce nonproductive time and maximizes performance. With 30 net new prospects identified, we're increasing exploration spend by 50% relative to 2025 and are focused on executing with capital and cost discipline.

I'll now turn it over to Eimear to discuss the financial results.

Eimear Bonner

Thanks, Mark. For the third quarter, Chevron reported earnings of $9.9 billion or $5.06 per share. Adjusted earnings were $10.4 billion or $5.28 per share. Cash flow from operations, excluding working capital, was $16.6 billion. Organic CapEx was $3.9 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. Chevron's net debt coverage ratio improved in the quarter as a result of the strong cash generation.

Adjusted third quarter earnings were $1.6 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 DD&A and tax effects. Adjusted Downstream earnings increased primarily due to higher refining margins and volumes, more than offsetting unfavorable timing effects. Chevron generated $16.6 billion of cash flow from operations, excluding working capital and $14.2 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.

Net debt to CFFO at the end of the quarter was 0.4x. Working capital was negatively impacted by sharp commodity prices increases late in the quarter. 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.

We delivered a new quarterly natural gas production record, producing more than 9 billion cubic feet per day led by strong performance in Australia and Eastern Mediterranean. In addition, other core assets achieved new performance levels. In the U.S. Gulf of America, they set a new quarterly deepwater production record. The Permian recorded 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. 2026 is also proving to be an inflection year for AI, with more than $100 million in value capture to date with much more building quickly. 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 expand our concession next Kazakhstan and as we pursue growth opportunities in Iraq.

Underpinning all of this is an unwavering commitment to consistent financial priorities and capital cost discipline. We're delivering strong performance today while stocking competitive growth options to reliably deliver the energy the world demands for decades to come.

I'll now hand it back to Jeanine.

Jeanine Wai

Okay. Thank you, Eimear. That concludes our prepared remarks. Additional guidance can be found in the appendix of this presentation as well as on the slides and other information posted on chevron.com. We're now ready to take your questions. We ask that you please limit yourself to 1 question, and we'll do our best to get all of your questions answered.

Katie, please open the line.

Operator

[Operator Instructions] Our first question comes from Arun Jayaram with JPMorgan.

질의응답

Arun Jayaram

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. And maybe you could also elaborate on how you're managing some of the aboveground risk as we think about restarting activity in Venezuela?

Michael Wirth

Yes. So let me comment on the risk question, and then maybe I'll ask Eimear to make some comments on the cost structure. Arun, we manage risk around the world as part of our everyday 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. We also have provisions in this contract relative to stability clauses, international arbitration, et cetera, which are as good as we see anywhere in the world.

Now 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. It 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 in our 100-year history in Venezuela, I'm very proud of the way our company has contributed through jobs, investments in communities generating a lot of tax revenue, bringing our values and focus on safety and reliability. So to me, the best way to manage those risks is to have support of the people in the country and the -- and that leads to an environment where you can resolve any differences that may emerge.

The last thing that I'll say, maybe 2 last things. that are different today than they have been historically is, 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. The second thing is we're covering the last bit of debt that has accrued through loans that were made long ago. 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 investments.

So it will be recovered quickly. It's a factory type 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 that I'll let Eimear talk a little bit about the $20 number we put out there today.

Eimear Bonner

Yes. Thanks, Mike. The cost structure is really competitive. So total cost less than $20 a barrel. So think of that as CapEx on OpEx. And as Mike said, this is a factory like operations. 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 sites and 600 sites and through the end of the decade. So we have the infrastructure we need. And as we build out and as we grow, there'll be more small capital versus anything nature. Those are the key things.

Operator

We'll take our next question from Devin McDermott with Morgan Stanley.

Devin McDermott

So I wanted to check in -- 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 onetime payments or working interest adjustments. And I understand you might not be able to talk specifics or comment on that media speculation, but I was hoping you could talk at a higher level on progress and then you can share on how the dialogue has been going? Any thoughts on time lines? And then I guess the key question is based on your learnings in the process so far what is an ideal win-win outcome look like in your view?

Michael Wirth

Yes. Thanks, Devin. You're right. I'm not going to comment on media reports or specifics, but I can't 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 TCO partners have been at the table and have been actively participating, although 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.

There are the things you would expect here, 35 or so years after the initial deal was put together. And we're working our way through those. So this is a large complex contract and obviously, a very important asset to the Republic. I don't see any red flags. And so we continue to be pleased. I'll give you more meaningful updates as we have milestones 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. And the work on the technical side of this is to have a development plan that we're very aligned around going forward as we continue to steward this massive resource position for decades into the future.

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. And I think each side understands what the other side is looking to accomplish and we're working together to land this in a place that all the parties feel that this is an agreement that meets their needs. So more to follow as we reach significant milestones.

Operator

We will take our next question from Neil Mehta with Goldman Sachs.

Neil Mehta

I just wanted 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, do you view that asset as core or not?

Mark Nelson

Thanks, Neil. This is Mark. I'll give the front end of this, and then we'll have Eimear comment on the -- kind of 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 some midstream are all about enhancing value and increasing flexibility. As Mike mentioned in his comments, the 50% reduction in tariff, quite frankly, makes the Bakken stronger. It improves upstream returns. It expands economic inventory, and it maybe most importantly, increases operational flexibility. 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 3 rigs to 2 rigs at year-end while sustaining 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. We'll go from 60% long laterals this year to over 85% in 2027, and we'll begin to lean into our advanced chemicals opportunity. So I'm encouraged by what I'm seeing today and the future potential. And Eimear, maybe you can help on the economics.

Eimear Bonner

Yes. Thanks, Mark. Neil, we expect to realize several financial benefits with this in addition to simplifying the reporting structure, as you mentioned. So overall, it increases our corporate ROCE by 0.5% deconsolidates $3.7 billion of debt and delivers incremental recurring earnings. So it will close at the end of the fourth quarter. We're still on track. And when it closes, we'll report a onetime noncash after-tax loss of $3 billion to $4 billion. 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 back and upstream earnings and cash flow. It will be partly offset by some cash outflows primarily related to taxes. But we're really excited about this priority operational teams are working together in our centralized shale and tight organization, of which Bakken's and I are part of that, and this transaction does takes a step further and helps us unlock more financial upside. Thanks for the question.

Operator

We'll take our next question from Neal Dingmann with William Blair.

Neal Dingmann

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 manages, 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, have you changed in the way of allocation?

Eimear Bonner

William (sic) [ Neal ], I'll take this one. Yes, 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 the third quarter alone, a $64 inter-quarter spread. I mean we saw prices as low as $68 as high as $132 a barrel. So we're not changing anything in the short term, given that volatility -- I mean our capital allocation framework and our financial priorities are long standards and they've been in place for decades and over high prices and low price environments, they've really stood as well. So no change to capital allocation. Maybe just to recap the first priority within that is to grow the dividend consistently. We've done that for 39 consecutive years. We'll continue to do that. That is a commitment we have to shareholders.

The second is to invest capital efficiently. 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 also enabling us to invest in the future. There's no change there. In fact, we're seeing in places like the Permian that we can deliver on the Gold Star 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. And the fourth is to repurchase shares through the cycle, and we have maintained our rate of $2.5 billion to $3 billion of buybacks. And we intend to be buying back shares within that range. And overall, our track record of using this framework, whether it be dividend growth consistency or buybacks for the cycle, 19 of the last 23 years, it's held up very well. So we're on track with our 2030 plan that we guided we guided in the Investor Day, and we don't see any major challenges there.

Michael Wirth

Neil, welcome back, and we will give you some additional color on the 2027 capital program in December after we meet with our board. .

Operator

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

John Royall

I wanted to see if I could dig in a little on the comments Mark made about increasing distillate yields at the refineries. If you could just provide a little detail around what you've been doing with your catalyst to boost your output on the diesel side. And then maybe just if you could talk more broadly about any other initiatives you're looking at in refining and just other levers that maybe you could pull that are similar to this lever with the catalyst and distillate yields.

Mark Nelson

Yes. Thanks, John. 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-efficient debottlenecking actions, there's a lot of strong momentum. And what's interesting in the manufacturing business is that sometimes repeatability is the best equation. 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, our third quarter distillate yield in the United States was 46% and across our global portfolio was even higher than that, in fact, Pascagoula hit a diesel production record at least over the last 3 or 4 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's 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. We're also bringing AI into our yield equation where we're looking more quickly at how we can produce more of what customers need today. need today. And then when I think we mentioned this in our prepared remarks, for Pascagoula over the next 2 turnaround cycles will increase capacity there by another 7%. So more of the same to come and couldn't be more proud of the team. Thanks for the question, John.

Operator

We will take our next question from James West with Melius Research.

James West

So I wanted to touch on AI a little bit further. I don't know Mark has had a couple of comments on it. But Chevron was really early in the adoption and implementation of AI, not just amongst the super majors, but the oil industry broadly, oil and gas industry broadly. So I'd love to hear how you're using this at both the enterprise level and then maybe some further context on -- in your exploration programs.

Eimear Bonner

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've got our focus on 3 main things. So the business using AI to make better decisions, operate more efficiently to helping meet that growing energy needs. And then the third area is really equipping everyone in the organization with the capabilities that they need. 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 as we scale.

Maybe shale and 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 an identic assistant to help us optimize production on an ongoing basis. So we've got this deployed and in Permian and back end and in our PC assets. So this is something that we have built in high 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. So Mark, maybe on the exploration side, you can cover up.

Mark Nelson

Yes. Thanks, Eimear. James, quite frankly, I think it's reshaping our portfolio and 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, reduce cycle time and then increased success rates. And in our Investor Day, we shared one of the first things we did, which was the system called ApEx, which allows us to get our hands on data more quickly for better and faster decision. This is that 100 years of data at our fingertips. .

The next thing that we did was create something called ScoutAI, 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. I mentioned in my prepared remarks, about the Gulf of America, where we created over 150 leads and then essentially added 16 to our list to evaluate. 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.

Operator

We will take our next question from Biraj Borkhataria with RBC.

Biraj Borkhataria

I wanted to go to Slide 6, which was very interesting. We obviously spent a lot of time looking at major projects, but 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, are there any sort of active debottlenecking projects are ongoing? Where are we now relative to nameplate? And what's the potential there?

Mark Nelson

Yes. Thanks, Biraj. I would view debottlenecking as a mindset, and it just builds on our mindset of capital discipline. I would say historically, manufacturing facilities like refineries were somewhat accustomed to this. But given some of the operating model changes that we've made in centralizing project activity, major capital projects as well as small projects is creating this opportunity to see across the portfolio where we have these opportunities. And we've mentioned some of the examples in the upstream from the 20% increase at FGP to the 7% increase at Balleymore and the 33% increase at Anchor, we are already above nameplate at Oregon 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, the world-class reliability we have in Gorgon and Wheatstone is -- allows the customers to get what they need. And having backfill projects, highly competitive backfill projects for decades into the future allows us to continue to leverage that. So I think I see both things working together, continued reliability potential for capital efficient, expanded capacity and backfill 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, Biraj.

Michael Wirth

Yes. And Biraj, maybe offline, Jeanine will follow-up with you. We've done a lot of debottlenecking already at both Gorgon and Wheatstone. And I think we've talked about that on prior calls. But we can share that information with you. So you can see what's already been done there, which is a really good story Mark's just building on.

Operator

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

Jean Ann Salisbury

If permits for behind-the-meter projects in the U.S. become harder to get, is there more value in already permitted sites like Project Kilby. And I guess, as a related question, how large could Project Kilby get? And what are the gating factors to grow them in your mind?

Eimear Bonner

Jean Ann, we're really excited about Kilby. It's a great project, 2.67 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 from the really -- from the very beginning, we designed our solution to kind of consider some of the concerns that are being expressed in terms of the grid. And so this is behind the meter power project. It won't put any pressure on the grid in the short term won't raise prices. It's usually non-portable water. And so that's why Governor Abbott on the 6th of August denies that it complies with the standards. So right now, we do have a 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 subject to permitting. Overall, I would just say we're working towards our FID. We have our EPC contract that we're finalizing. We're working through the permit process. We have to secure our financing, but we're on track with Kilby to have first power in 2028 and full energization in 2031.

Operator

We will take our next question from Sam Margolin with Wells Fargo.

Sam Margolin

Maybe just circling back to 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, you were able to, in a matter of months, commit a significant development to the resource owner. And globally, it does seem like there's a lot of kind of mega resources or resource whales that are more willing to accept for an investment in partnership than in the past. And so the question is if the process with Venezuela is representative of maybe what your capabilities are globally and if other resource owners are paying attention and if you think there's a transferable opportunity with the process.

Michael Wirth

Yes. It's an interesting question, Sam. 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. We've got a very talented workforce. We've got the service providers that are prepared to ramp up with us, et cetera. 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 the -- maybe an analog as you talk about large resource holders and willingness and interest in bringing in new investments.

I mentioned already that the terms interact are more attractive than what we've historically seen there. And there -- 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. And I think it will have things in common with Venezuela in terms of it will be primarily drilled. There may be some infrastructure work, but I think that, 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 are -- 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.

And so we have been, I think, Eimear mentioned today's stacking growth options, very active in business development, very active in exploration with some success there and addressing the longer-term growth outlook post 2030 with a very deep set of resource opportunities that have longevity that have attractive breakeven costs, attractive financial returns and working to line those up so that we can pick and choose amongst the best of those and allocate capital to continue to supply this energy that the world is going to need well into the future. So stay tuned as we bring things to a point where we can be more specific as we were today about Venezuela, we will lay that out for you.

Operator

We will take our next question from Doug Leggate with Wolf Research.

Douglas George Blyth Leggate

I wonder if I could -- I mean, there's obviously been a lot of chartered by the government, the U.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 is a priority and so on. I guess my question is, whether organically or given where your share price is inorganically, what would it take for you to go back to growth in the Permian beyond your current plan?

Michael Wirth

Well, 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 were pretty modest production levels. And as we reached and surpassed 1 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 -- we've got 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 we continue to look at other technologies related to drilling stimulation of the reservoir and different types of fracturing technologies, all of which will provide optionality into the future. And what they can do is they can extend the economic life of the plateau. They can make it economic to grow to a higher level. They can take benches that are currently subeconomic 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 a few 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 it's one of the things I've learned coming up through the refining side of the business is sweating the assets, challenging people to innovate and find more value every year in the way we operate can deliver significant improvement. And that's the key focus right now. Going forward, like I said, we've got a long resource life. We've got the advantaged royalty position, 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 if and when, within our overall set of opportunities and cognizant of global demand and other things within our portfolio, we may choose to do that. Thanks for the question, Doug.

Operator

We will take our next question from Manav Gupta with UBS.

Manav Gupta

I was wondering if I can pick up in 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. So just trying to understand global supply dynamics, how much capacity is offline? And also I'm trying to understand, between refining margins and ethylene chain margins, where do you see normalization happening first?

Mark Nelson

Well, thanks, Manav. You picked a couple of topics very difficult to predict. I'll start with refining maybe and then go to pet chem margins. On the refining side, I would expect margins to stay elevated in the short term. And the world has 10% of its refining capacity off-line today. Exports are reduced due to the conflicts. And quite frankly, the products businesses have less shock absorbers. So I would expect margins to eventually moderate as refinery runs recover and export flows increase, but that will take sometime. 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 pet chem 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 2 observations. First, without rationalization and some project deferrals, markets may very well return to oversupply as flow normalizes? 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 2 large crackers, 1 in the Gulf Coast, 1 in Qatar full production both will be next year, but we want those to come online safely and reliably, and they're working hard at that. Thanks for the question, Manav.

Operator

We'll take our next question from Lucas Herrmann with BNP Paribas.

Lucas Herrmann

Question on freight and freight rates and the elevation that we've seen. It's been a sort of a central topic on a number of the calls over here. But just to get some idea, if possible, on the extent to which elevated freight rates are likely to impact upon the refining business, refining profitability. The profitability probably of the organization overall the extent to which you are long short both on shipping and long-term charter shipping at this point and how it plays to the business if we should be thinking about it, what we should be thinking about it, but whether it's relevant to you with on a quarterly basis in any way?

Michael Wirth

Yes. I think has been the big mover here this last quarter, Lucas. And it's got a lot of attention. The crude oil prices historically on 2 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 got it on a pipe and not in a ship. And -- and on the other hand, if you're very distant, if you got to source your crude from a conflict region, the logistics are expensive. The insurance is expensive, time is much longer. And all that works its way from the refinery right back into the netback for your production. 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-term time charter where we charter both the boat and the crew or a bare boat charter where we put our crew on that vessel. These are contracts we entered into before the conflict began, they reflect charter rates before pre conflict, which are significantly different than they are today. And so we capture that transportation margin in our economics.

And so the other thing that's been 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 we've got the ability to ensure reliable supply from the wellhead all the way through to the loading rack with transportation that we control. and make sure that our refineries are as advantaged as they can be, to make sure that our uplift and capture on our crude production is as great as it can be. 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. Thanks for the question, Lucas.

Operator

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

Wei Jiang

If I take a step back and actually asked 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? How do you think about the inorganic opportunities in general?

Michael Wirth

Yes. 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 to get better. And you've seen over the last several years, we have engaged in transactions that have 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. for owners. And so we'll always look to be doing that.

I think M&A is a core competency of our company. I think we've got a track record of staying very disciplined through market cycles 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. The history books aren't full of great deals that were done at $100 oil or $10 gas or high commodity prices. And so I think those lessons are important to always bear in mind.

Operator

We will take our next question from Phillip Jungwirth with BMO.

Phillip Jungwirth

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, I 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? And just while it's not maybe deepwater, do you see much exploration potential in Kazakhstan where the government is making a larger push?

Mark Nelson

Well, thanks, Phillip. 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 -- our opportunity set is the largest and highest quality I have seen in years. We talked about doubling our acreage since 2024 into 12 new basins. In the third quarter alone, we added 6 blocks in the Gulf of America, and blocks in Angola, Nigeria, Guinea-Bissau and Egypt. And 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 the 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 15 discoveries. I would expect at least half of those to be turn into tieback positions. The one I just want to emphasize in case you haven't seen it would be our Angola 1054X well. This is in the prolific lower Congo basin. The materials that have been a public indicated an oil and gas condensate column over 2,000 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, it has outperformed our pre-drill expectation, and we're working the kind of project definition right now for a tieback to our Sana facility in Angola. So a lot more to come, but we are definitely building momentum in our exploration business.

Michael Wirth

And what I might add on to that is that the -- Mark Eimear 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, but we've got a very different model for making decisions now and prioritizing this work. And I think all of that stuff comes together to yield the optimism that you heard from Mark. .

Operator

We'll take our next question from Bob Brackett with Bernstein Research.

Bob Brackett

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 is it -- does it actually reduce your exploration budget because your chance of successes are improving? How do you frame that?

Mark Nelson

Yes. 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 kind of the new team and the new approach we've 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 because the opportunity set is so strong. Over time, you would expect to see us maybe drilling around 20 wells a year and think about that as half infrastructure half frontier, 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.

Operator

We will take our next final question from Jason Gabelman with TD Cowen.

Jason Gabelman

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 our 1 million-barrel a day target. I 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. And then the other part on the Permian, if I could, do you see kind of maintaining this stable production helping to mitigate some of the rising gas oil ratios we're seeing in the basin from Pierce?

Mark Nelson

Yes. 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 1 million barrels a day, as Mike mentioned earlier, but now 6 quarters at this 1 million barrels of oil equivalent. We are driving significant efficiencies. You can expect to see this number go up 3%, down 3%, but we're going to sustain this above 1 million barrels of oil equivalent concept going forward because it is leading to the numbers that Mike mentioned. I think I'm just going to reinforce one thing that get greater than 25% improvement in CapEx per barrel of oil, that's pretty significant.

Our drilling and completion spend is down 40%. Our facility 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. But I think you should expect us to continue to use the factory model. And our NOJV activities have remained fairly stable through the course of this year. There might have been a little bit of an uptick on workover rigs from our JVs, but is not material to our capital or production. Thanks for the question.

Jeanine Wai

Okay. I think that was our last question. Great. Sorry about that. We need to thank everyone today for your time being on the call. We appreciate your interest in Chevron and your participation again. Please be safe and stay healthy. Katie, back to you.

Operator

Thank you. This concludes Chevron's Third Quarter 2026 Earnings Conference Call. You may now disconnect.