Chevron Corp. Earnings Call Nuggets: Cash Position, Operating Costs
Evan Calio – Morgan Stanley: Thanks for the color on the PSC impact and disclosure; that is helpful. My first question is on the large cash position that you oversee net cash is growing again in the quarter and first on the dividend with the 11% raise versus a 6% CAGR that drives the high dividend yield and a more publicized raise by one of your peers. Is this a onetime increase or a design to draw down some of your excess cash position over time, can you provide some color on why and how you made the relatively higher raise in this quarter; and then secondly, with a larger portfolio of capital projects and our view of higher capital budget in ’13, should we expect you to run a relatively higher cash position through 2014, when the free cash flow yield really jumps on and the new project queues begin to come onstream?
Patricia E. Yarrington – VP and CFO: Let me take a shot at that. First, with respect to our dividend. The 11% rate we felt was fully in line with the cash generation capability of the firm. Currently, and also as we look out, we have strong confidence in our cash flows coming forward, and also, if you look at our history really, since oil prices began to appreciate back in 2004, we had a CAGR on dividends that has been just about at the 11%. So I think of it as being fairly typical with our previous patterns. Last year, you will recall that we had two dividend increases, that combined gave us 12.5% quarterly rate increase. So we feel we have been very competitive on the dividend. I don’t want to get into a position of having to step out in front of our Board of Directors on this, so I can’t provide any future guidance, as to what the remainder part of the year might look like. But suffice it to say, that dividends are a very important priority in terms of our uses of cash. It is our, in fact a number one priority. So we will look carefully at that every quarter. In terms of the second part of your question about our cash balances, and as we look out in terms of funding these, I think we have been pretty specific in saying that 2012 is really at the high C&E year. We have got significant LNG commitments. We’ve got significant deepwater commitments and as we get further along into having some of these projects moved into past the 50% mark on their construction phase, I think we will feel better about relinquishing some of our cash cushion. We really think of that cash cushion as being a risk mitigator to be able to handle commodity price swings and margin swings. These are really important projects that we keep completely on track from a finding standpoint and so having a little bit of cash cushion as we are in this heavy investment phase seems to make a great deal of sense to us.
Evan Calio – Morgan Stanley: I appreciate that. Second if I may, I know you recently signed Chubu, a Japanese power company and long-term off take for Wheatstone. I mean have you seen any changes here and the slope or the oil price linkage versus other off take signs for Gorgon and Wheatstone and any comments just on maybe general demand levels, I know you are going to market an additional 10% to 20% of that gas?
Patricia E. Yarrington – VP and CFO: Actually we’ve been very heartened by discussions that we’ve had most recently with potential buyers of LNG, whether it would Wheatstone or Gorgon. I would say in a post-Fukushima environment, we haven’t had seen any degradation of terms on these contracting discussions that we have had. Our objective for both of the projects really is to get into an 85%-ish of the off-take under secure long-term agreements and we’re really well on path for both of those major projects.
Doug Terreson – ISI: First a second, there had been PSC comments, those were very helpful Jeanette, and my question has to do with Slide 15, I think indicates that operating costs have increased by around 10% to 15% annually during the past five years, so my question is that with your global perspective, I want to see how you envision this trend evolving in coming years or what you’re seeing over the intermediate-term, when using the Chevron (NYSE:CVX) oil price deck?
Patricia E. Yarrington – VP and CFO: Actually Doug, I think the way we look at this as over time there has been a fairly steady pattern between an increase in the overall cost structure as associated with an increase in the overall revenue structure, so we have not seen any discontinuities in any way shape or form to show that and so I think it would be reasonable if you’re thinking about how to project out using your own oil price forecast, I think keeping somewhat common relationship in that profile would make sense.
Doug Terreson – ISI: Secondly, I want to see if we could get kind of a summary update or brief update to a degree possible on situations in Brazil and Ecuador, there has been movement on both and just any color or the next steps that you can provide on these two situations please?
Patricia E. Yarrington – VP and CFO: I’ll start with the Ecuador here, I think the most important thing that has happened off late is that the Hague has accepted jurisdiction for the case and has basically reiterated their requirement that Ecuador do take all means that it can through the judiciary through the executive branch through the legislative branch to prevent enforcement of the judgment anywhere in the globe, so that has been a positive step. In terms of the local Lago Agrio case, it has been remanded or sent to the equivalent of the Supreme Court in Ecuador, but has not yet been accepted there. So I can’t give you any more color there, I can’t speak to timing. I do encourage everybody to continue to look at our website because we put everything that’s happening out there on that website. In terms of Brazil, the criminal case against our employees and the two civil cases against the company have been sent or remanded to the Rio de Janeiro Court out of the Campos and we are still very confident that a transparent and an impartial review of the facts will demonstrate that Chevron and its employees acted very responsibly, acted very appropriately to the incident that we didn’t violate any laws or regulation and we will continue to defend our employees to the fullest extent and as Jeanette said, we have a technical review of the Frade field underway to better understand the entire geology there and we won’t restart production until we have complete confidence ourselves in the reliability and the safety and the ability to do so and we are working lockstep with the regulators and with our partner on that.