Slide 3 provides an overview of our financial performance. It was a strong quarter financially, among one of the best we've ever had. The company's first quarter earnings were $6.5 billion or $3.27 per diluted share. Comparing the first quarter 2012 to the same quarter a year earlier, our earnings were up 4%. Upstream benefited from higher crude prices, while Downstream improved on gains from asset sales. Return on capital employed for the trailing 12 months was 21%. Our debt ratio at the end of March was just under 7%. In the first quarter, we repurchased $1.25 billion of our shares. In the second quarter, we expect to repurchase the same amount.Turning to Slide 4. On Wednesday, Chevron's Board of Directors approved a $0.90 per share common stock quarterly dividend. This is an 11.1% increase in the quarterly rate. This is our 25th consecutive year of higher dividend payments. Also, 2012 is an important milestone for us, as it represents a remarkable 100 years of uninterrupted dividend payments to our shareholders. Turning now to Slide 5. Cash generated from operations was $8.4 billion during the first quarter. At quarter end, our cash balances totaled nearly $20 billion. Jeanette will now take us through the quarterly comparison. Jeanette? Jeanette Ourada Thanks, Pat. Turning to Slide 6. I'll compare results of the first quarter 2012 with the fourth quarter 2011. As a reminder, our earnings release compares first quarter 2012 with the same quarter a year ago. First quarter earnings were $6.5 billion, over $1.3 billion higher than the fourth quarter. Upstream earnings were up $434 million, driven by higher crude oil realizations and lower operating expenses, partly offset by lower volumes. Downstream results improved by $865 million between quarters, resulting from lower operating expenses, better margins and gains on asset sales. The variance in the other bar reflects lower corporate charges.
On Slide 7, our Upstream earnings for the first quarter were $76 million lower than the fourth quarter's results. Realizations lowered earnings by $20 million. A 31% drop in natural gas realizations reduced earnings by about $70 million. This was partially offset by a 3% increase in liquids realizations, which improved earnings by $50 million. About 2/3 of our U.S. crude sales are in the Gulf of Mexico and California, where heavy Louisiana sweet, Mars and Midway Sunset crude markers experienced only modest increases in the quarter. The remaining 1/3 of our U.S. crude sales are in the Midcontinent, where West Texas crude markers increased more dramatically.Lower sales volumes decreased earnings by $15 million between periods. We had one fewer day in the first quarter and lower production resulting from the sale of Alaskan assets, partly offset by higher production in the Gulf of Mexico. Lower operating expenses improved earnings by $125 million between periods, primarily due to reduced maintenance activities and employee costs. The other bar reflects a number of unrelated items including the absence of gains on several small asset sales and higher depreciation expenses. Turning to Slide 8. International Upstream earnings were up $510 million relative to the fourth quarter. Higher realizations benefited earnings by $555 million. Average liquids realizations increased 9%, in line with the increase in average Brent spot prices. Natural gas realizations rose 8% between quarters, contributing about $100 million to the positive earnings variance. Lower liftings across multiple countries decreased earnings by $195 million. Lower operating expenses increased earnings by $250 million, driven by -- primarily by a decrease in employee expenses. Moving to the next bar, an unfavorable change in foreign currency effects lowered earnings by $205 million. The first quarter had a loss of $208 million, compared to a loss of $3 million in the fourth quarter. These foreign exchange effects are primarily balance sheet translation effects, for which there are no direct impacts on cash. The other bar reflects a number of unrelated items, including a net favorable tax effect, partly offset by higher exploration expense, including dry holes in China. Read the rest of this transcript for free on seekingalpha.com