Chevron reports earnings of US$ 5.6 billion for Q3, 2014

Chevron Corporation has reported earnings of US$ 5.6 billion (US$ 2.95 per share – diluted) for third quarter 2014, compared with US$ 5.0 billion (US$ 2.57 per share – diluted) in the 2013 third quarter. Foreign currency effects increased earnings in the 2014 quarter by US$ 366 million, compared with a decrease of US$ 276 million a year earlier.

Sales and other operating revenues in third quarter 2014 were US$ 52 billion, compared to US$ 57 billion in the year-ago period.

The company purchased US$ 1.25 billion of its common stock in third quarter 2014 under its share repurchase program.

Highlights

“Despite a decline in crude oil prices, our third quarter earnings were higher than a year ago,” said Chairman and CEO John Watson. “Overall downstream results improved, reflecting the benefits of lower feedstock costs and better refinery reliability, particularly in the US. We also concluded certain asset sales as part of our announced, three-year divestment program. Cash generation in the quarter was solid, and our financial strength enables us to both reward our investors through distributions and fund value-adding projects.”

“We continue to make good progress on our key development projects,” Watson added. “New production was recently achieved at the Bibiyana Expansion Project in Bangladesh. The Tubular Bells and Jack/St. Malo projects in the deepwater Gulf of Mexico are expected to start up during the fourth quarter and important construction milestones continue to be reached on our Gorgon and Wheatstone LNG projects in Australia. In addition, we continue to make steady progress on the development and ramp-up of production from our shale and tight resources, particularly in the Permian. These and other major capital projects are expected to deliver significant growth in production, earnings and cash flows in the years ahead.”

Recent upstream highlights include:

• Australia – Completed construction and testing of the first LNG tank for the Gorgon Project. All 18 Gorgon and Jansz-Io wells have been successfully drilled, and completion activity is ongoing.
• Australia – Installed the offshore platform gravity-based structure for the Wheatstone Project.
• Canada – Announced the sale of a 30% interest in the Duvernay shale play for US$ 1.5 billion.
• United States – Announced a significant crude oil discovery at the Guadalupe prospect in the deepwater Gulf of Mexico.
• United States – Reached a final investment decision for the Stampede Project in the deepwater Gulf of Mexico.
• United States – Drilled approximately 460 wells year-to-date in the Permian Basin and continued the horizontal pad-drilling program.
• United States – Reached an agreement to sell natural gas liquids pipeline assets in Texas and southeastern New Mexico for US$ 800 million.

Upstream

Worldwide net oil-equivalent production was 2.57 million bpd in third quarter 2014, compared with 2.59 million bpd in the 2013 third quarter. Production increases from project ramp-ups in the United States, Argentina, Brazil and Nigeria and improved reliability at Tengizchevroil were more than offset by normal field declines, production entitlement effects in several locations and the effect of asset sales.

US upstream earnings of US$ 929 million in third quarter 2014 were down US$ 97 million from a year earlier, as gains on asset sales, lower exploration expenses and higher crude oil production were more than offset by lower crude oil prices and higher operating expenses.

The company’s average sales price per barrel of crude oil and natural gas liquids was US$ 87 in third quarter 2014, down from US$ 97 a year ago. The average sales price of natural gas was US$ 3.46 per thousand cubic feet, compared with US$ 3.23 in last year’s third quarter.

Net oil-equivalent production of 677,000 bpd in third quarter 2014 was up 22,000 bpd, or 3%, from a year earlier. Production increases in the Permian Basin in Texas and New Mexico and the Marcellus Shale in western Pennsylvania were partially offset by normal field declines elsewhere. The net liquids component of oil-equivalent production increased 4% in the 2014 third quarter to 464,000 bpd, while net natural gas production increased 3%, to 1.28 billion cubic feet per day.

Outside of the USA

International upstream earnings of US$ 3.72 billion decreased US$ 346 million from third quarter 2013. The decrease between quarters was primarily due to lower realizations and sales volumes for crude oil, and higher depreciation and operating expenses. Foreign currency effects increased earnings by US$ 344 million in the 2014 quarter, compared with a decrease of US$ 188 million a year earlier.

The average sales price for crude oil and natural gas liquids in third quarter 2014 was US$ 93 per barrel, down from US$ 104 a year earlier. The average price of natural gas was US$ 5.73 per thousand cubic feet, compared with US$ 5.88 in last year’s third quarter.

Net oil-equivalent production of 1.89 million bpd in third quarter 2014 was down 39,000 bpd, or 2%, from a year ago. Production increases from project ramp-ups in Argentina, Brazil and Nigeria and improved reliability at Tengizchevroil were more than offset by normal field declines, production entitlement effects in several locations and the effect of asset sales. The net liquids component of oil-equivalent production decreased 3% to 1.24 million bpd, while net natural gas production increased 1% to 3.94 billion cubic feet per day.

Downstream

US downstream operations earned US$ 809 million in third quarter 2014 compared with earnings of US$ 249 million a year earlier. The increase was mainly due to higher margins on refined product sales, primarily reflecting higher production volumes in refining and higher marketing and trading margins. Higher gains from asset sales and lower operating expenses, reflecting lower turnaround activity at the company’s refineries, also contributed to the increase.

Refinery crude oil input of 921,000 bpd in third quarter 2014 increased 90,000 bpd from the year-ago period. The increase was primarily due to lower planned turnaround activities at the refinery in El Segundo, California. Refined product sales of 1.22 million bpd were up 27,000 bpd from third quarter 2013, mainly due to higher jet fuel, gas oil and kerosene sales. Branded gasoline sales were essentially unchanged at 526,000 bpd.

Outside of the USA

International downstream operations earned US$ 578 million in third quarter 2014 compared with US$ 131 million a year earlier. The increase was mainly due to a favorable change in effects on derivative instruments and higher margins on refined product sales. Foreign currency effects increased earnings by US$ 21 million in the 2014 quarter, compared with a decrease of US$ 86 million a year earlier.

Refinery crude oil input of 838,000 bpd in third quarter 2014 decreased 47,000 bpd from the year-ago period. Total refined product sales of 1.51 million bpd in the 2014 third quarter decreased 56,000 bpd, mainly due to lower gas oil and kerosene sales.

Cash flow from operations

Cash flow from operations in the first nine months of 2014 was US$ 25.0 billion, compared with US$ 24.6 billion in the corresponding 2013 period.

Capital and exploratory expenditures

Capital and exploratory expenditures in the first nine months of 2014 were US$ 29.0 billion, compared with US$ 28.9 billion in the corresponding 2013 period. The amounts included US$ 2.4 billion in 2014 and US$ 1.8 billion in 2013 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 93% of the companywide total in the first nine months of 2014.

Adapted from press release by Cecilia Rehn

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