Chevron Reports Third Quarter Net Income of $3.83 Billion, Down 51 Percent from $7.89 Billion in Third Quarter 2008
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-- Upstream earnings of $3.64 billion decline 41 percent on lower prices
for crude oil and natural gas
-- Net oil-equivalent production increases nearly 11 percent from year ago
due mainly to ramp-up of new projects
-- Downstream earnings of $194 million fall 89 percent on weak
refined-product margins
SAN RAMON, Calif.--(BUSINESS WIRE)-- Chevron Corporation (NYSE: CVX) today reported earnings of $3.83 billion ($1.92 per share - diluted) for the third quarter 2009, compared with $7.89 billion ($3.85 per share - diluted) in the 2008 third quarter. Earnings in the 2009 period included gains of approximately $400 million ($0.20 per share) from asset sales and tax items. Foreign-currency effects reduced earnings in the 2009 quarter by $170 million, compared with a benefit to income of $303 million a year earlier.
For the first nine months of 2009, earnings were $7.41 billion ($3.71 per share - diluted), down 61 percent from $19.04 billion ($9.23 per share - diluted) in the first nine months of 2008.
Sales and other operating revenues in the third quarter 2009 were $45 billion, compared with $76 billion in the year-ago quarter. For the first nine months of 2009, sales and other operating revenues were $120 billion versus $222 billion in the corresponding 2008 period. The decline in both comparative periods was primarily due to lower prices for crude oil, natural gas and refined products.
Earnings Summary
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2009 2008 2009 2008
Earnings by Business Segment
Upstream- Exploration and $ 3,640 $ 6,182 $ 6,428 $ 18,558
Production
Downstream - Refining, 194 1,831 1,178 1,349
Marketing and Transportation
Chemicals 164 70 311 154
All Other (167 ) (190 ) (504 ) (1,025 )
Total(1) (2) $ 3,831 $ 7,893 $ 7,413 $ 19,036
(1)Includes foreign currency $ (170 ) $ 303 $ (677 ) $ 384
effects
(2)Net income attributable to
Chevron Corporation (See
Attachment 1)
"Our net oil-equivalent production this quarter was nearly 11 percent higher than the same quarter a year ago," said Chairman and CEO Dave O'Reilly. "This operational success helped mitigate a decline in earnings that was driven by sharply lower prices for crude oil and natural gas."
"In our downstream operations, we continued to experience weak margins on the sale of gasoline and other refined products. Weak demand and plentiful supply affected all our major markets," O'Reilly added. "Our refinery reliability remains high, and we continue to focus on the safe and efficient operation of our network."
O'Reilly said continued aggressive cost-management efforts companywide in the first nine months of 2009 contributed to about a 13 percent decrease in recurring operating, selling, general and administrative expenses from the same period a year earlier.
In additional comments on upstream activities, O'Reilly said the recent final investment decision to develop the Gorgon LNG project represented a major milestone in the company's strategy to commercialize its significant natural gas resource base in Australia. Additional achievements in recent months included:
Australia
-- Discoveries of natural gas in the Carnarvon Basin off the northwest
coast in the 67 percent-owned Block WA-205-P, the 50 percent-owned Block
WA-365-P and the 50 percent-owned Block WA-374-P, all Chevron-operated.
-- Agreements signed with two companies to join Chevron's planned
Wheatstone LNG project as combined 25 percent owners and suppliers of
natural gas for the project's first two LNG trains.
Angola
-- Start-up of the 31 percent-owned and operated deepwater Tombua-Landana
project in Block 14, which is expected to reach maximum total production
of approximately 100,000 barrels of crude oil per day in 2011.
-- Discovery of crude oil and natural gas offshore in the 39 percent-owned
and operated Block 0 concession, extending a trend of earlier
discoveries in the Greater Vanza Longui Area.
UPSTREAM - EXPLORATION AND PRODUCTION
Worldwide net oil-equivalent production was 2.70 million barrels per day in the third quarter 2009, up 259,000 from 2.44 million barrels per day in the 2008 period. The increase was driven primarily by project start-ups since last year's third quarter.
U.S. Upstream
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2009 2008 2009 2008
Earnings $878 $2,187 $1,172 $5,977
U.S. upstream earnings of $878 million in the third quarter 2009 were down $1.3 billion from a year earlier. The effects of sharply lower prices for crude oil and natural gas, lower gains on asset sales and higher depreciation expense were partially offset by the benefits of increased production and lower operating expenses.
The company's average sales price per barrel of crude oil and natural gas liquids was approximately $60 in the 2009 quarter, compared with $107 a year ago. The average sales price of natural gas was $3.28 per thousand cubic feet, down from $8.64 in last year's third quarter.
Net oil-equivalent production of 745,000 barrels per day in the third quarter 2009 was up 98,000 barrels per day, or about 15 percent, from a year earlier. The increase in production was primarily associated with start-up of the Blind Faith Field in late 2008 and the Tahiti Field in second quarter 2009, along with the restoration of volumes that were offline in September 2008 due to hurricanes in the Gulf of Mexico. The net liquids component of production was up 24 percent to 509,000 barrels per day in the 2009 third quarter, while net natural-gas production of 1.42 billion cubic feet per day was down about 1 percent from a year ago.
International Upstream
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2009 2008 2009 2008
Earnings* $ 2,762 $ 3,995 $ 5,256 $ 12,581
*Includes foreign currency effects $ (81 ) $ 316 $ (524 ) $ 229
International upstream earnings of $2.8 billion decreased $1.2 billion from the third quarter 2008 due mainly to the impact of lower prices for crude oil and natural gas, partially offset by an increase in sales volumes of crude oil and about $400 million of gains from asset sales and tax items related to the Gorgon project in Australia. Foreign-currency effects decreased earnings by $81 million in the 2009 quarter, compared with an increase of $316 million a year earlier.
The average sales price for crude oil and natural gas liquids in the 2009 quarter was $62 per barrel, compared with $103 a year earlier. The average price of natural gas was $3.92 per thousand cubic feet, down from $5.37 in last year's third quarter.
Net oil-equivalent production of 1.96 million barrels per day in the third quarter 2009 was up 9 percent, or 160,000 barrels per day, from a year ago. The increase included approximately 220,000 barrels per day associated with two projects - Agbami in Nigeria, which commenced operations in the third quarter of last year and expansion at Tengiz in Kazakhstan. Partially offsetting this increase was the effect of civil unrest in Nigeria. The net liquids component of production increased about 15 percent from a year ago to 1.38 million barrels per day, while net natural-gas production declined about 4 percent to 3.48 billion cubic feet per day.
DOWNSTREAM - REFINING, MARKETING AND TRANSPORTATION
U.S. Downstream
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2009 2008 2009 2008
Earnings $34 $1,014 $72 $336
U.S. downstream earned $34 million in the third quarter 2009, compared with $1.0 billion a year earlier. The decline was mainly the result of significantly weaker margins on the sale of gasoline and other refined products. Operating expenses were lower between periods.
Refinery crude-input of 879,000 barrels per day in the third quarter 2009 decreased 43,000 barrels per day from the year-ago period, primarily due to the effects of a planned shutdown in this year's third quarter at the refinery in Richmond, California.
Refined-product sales of 1.42 million barrels per day were essentially unchanged from the third quarter of 2008. Branded gasoline sales increased 4 percent to 623,000 barrels per day.
International Downstream
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2009 2008 2009 2008
Earnings* $ 160 $ 817 $ 1,106 $ 1,013
*Includes foreign currency effects $ (97 ) $ 63 $ (187 ) $ 220
International downstream earned $160 million in the third quarter 2009, compared with $817 million a year earlier. The decline was associated mainly with narrower margins on the sale of gasoline and other refined products. Operating expenses were lower between periods. Foreign-currency effects reduced earnings by $97 million in the 2009 quarter, compared with a benefit of $63 million in the same period last year.
Refinery crude-input was 985,000 barrels per day in the 2009 third quarter, up 9,000 barrels per day from the year-ago period.
Total refined-product sales of 1.82 million barrels per day in the 2009 third quarter were 9 percent lower than a year earlier, due mainly to asset sales since the third quarter of last year. Excluding the impact of asset sales, sales volumes were down 2 percent between periods on lower demand for jet fuel and fuel oil.
CHEMICALS
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2009 2008 2009 2008
Earnings* $ 164 $ 70 $ 311 $ 154
*Includes foreign currency effects $ 1 $ (5 ) $ 14 $ (5 )
Chemical operations earned $164 million in the third quarter of 2009, compared with $70 million in the year-ago period. Earnings of the 50 percent-owned Chevron Phillips Chemical Company LLC (CPChem) and Chevron's Oronite subsidiary were both higher between periods. For CPChem, a benefit from lower utility costs was partially offset by lower margins on the sale of commodity chemicals. For Oronite, margins on the sales of lubricant and fuel additives were higher between periods.
ALL OTHER
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2009 2008 2009 2008
Net Charges* $ (167 ) $ (190 ) $ (504 ) $ (1,025 )
*Includes foreign currency $ 7 $ (71 ) $ 20 $ (60 )
effects
All Other consists of mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies.
Net charges in the third quarter 2009 were $167 million, compared with $190 million in the year-ago period. Foreign-currency effects reduced net charges by $7 million in the 2009 quarter, compared with a $71 million increase in net charges last year. Other net charges were higher between periods.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in the first nine months of 2009 were $16.0 billion, compared with $15.8 billion in the corresponding 2008 period. The amounts included approximately $900 million in 2009 and $1.6 billion in 2008 for the company's share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream projects represented 80 percent of the companywide total in 2009.
NOTICE
Chevron's discussion of third quarter 2009 earnings with security analysts will take place on Friday, October 30, 2009, at 8:00 a.m. PDT. A webcast of the meeting will be available in a listen-only mode to individual investors, media, and other interested parties on Chevron's Web site at www.chevron.com under the "Investors" section. Additional financial and operating information will be contained in the Earnings Supplement that will be available under "Events and Presentations" in the "Investors" section on the Web site.
Chevron will post selected fourth quarter 2009 interim performance data for the company and industry on its Web site on Monday, January 11, 2010, at 2:00 p.m. PST. Interested parties may view this interim data at www.chevron.com under the "Investors" section.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
FOR
THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements relating to Chevron's operations that are based on management's current expectations, estimates and projections about the petroleum, chemicals, and other energy-related industries. Words such as "anticipates," "expects," "intends," "plans," "targets," "projects," "believes," "seeks," "schedules," "estimates," "budgets" and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are crude-oil and natural-gas prices; refining, marketing and chemicals margins; actions of competitors or regulators; timing of exploration expenses; timing of crude-oil liftings, the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company's joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude-oil and natural-gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company's net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude-oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries (OPEC); the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from pending or future litigation; the company's acquisition or disposition of assets; gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign-currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading "Risk Factors" on pages 30 and 31 of the company's 2008 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements.
CHEVRON CORPORATION - FINANCIAL REVIEW Attachment
1
(Millions of Dollars, Except Per-Share Amounts)
CONSOLIDATED STATEMENT OF INCOME
(unaudited) Three Months Nine Months
Ended September 30 Ended September 30
REVENUES AND OTHER 2009 2008(1) 2009 2008(1)
INCOME
Sales and other $ 45,180 $ 76,192 $ 119,814 $ 221,813
operating revenues (2)
Income from
equity 1,072 1,673 2,418 4,480
affiliates
Other 373 1,002 728 1,509
income
Total Revenues and 46,625 78,867 122,960 227,802
Other Income
COSTS AND OTHER
DEDUCTIONS
Purchased crude oil 26,969 49,238 71,047 147,822
and products
Operating, selling,
general and 5,580 6,954 16,155 19,643
administrative
expenses (3)
Exploration 242 271 1,061 831
expenses
Depreciation,
depletion and 2,988 2,449 8,954 6,939
amortization
Taxes other
than on 4,644 5,614 13,008 16,756
income(2)
Interest and 14 - 28 -
debt expense
Total Costs and Other 40,437 64,526 110,253 191,991
Deductions
Income Before Income 6,188 14,341 12,707 35,811
Tax Expense
Income tax 2,342 6,416 5,246 16,681
expense
Net Income 3,846 7,925 7,461 19,130
Less: Net income
attributable to 15 32 48 94
noncontrolling interests
NET INCOME ATTRIBUTABLE
TO
CHEVRON $ 3,831 $ 7,893 $ 7,413 $ 19,036
CORPORATION
PER-SHARE OF COMMON
STOCK(4)
Net Income Attributable to Chevron
Corporation
- Basic $ 1.92 $ 3.88 $ 3.72 $ 9.29
- $ 1.92 $ 3.85 $ 3.71 $ 9.23
Diluted
Dividends $ 0.68 $ 0.65 $ 1.98 $ 1.88
Weighted Average Number of Shares
Outstanding (000's)
- Basic 1,992,452 2,032,433 1,991,733 2,049,812
- 2,000,586 2,044,616 1,999,925 2,063,149
Diluted
(1) Amounts have been reclassified in the consolidated financial statements
to reflect the adoption of a new accounting standard for noncontrolling
interests effective January 1, 2009.
(2) Includes excise,
value-added and similar $ 2,079 $ 2,577 $ 6,023 $ 7,766
taxes.
(3) Decrease between the nine-month comparative periods is 18 percent. Excluding the impact of
nonrecurring items mainly in the 2008 period associated with hurricane damages and a contract
settlement, the decline is 13 percent.
(4) Amounts are calculated on a basis consistent with prior periods, using "Net Income
Attributable to Chevron Corporation."
CHEVRON CORPORATION - FINANCIAL REVIEW Attachment
2
(Millions of Dollars)
(unaudited)
EARNINGS BY MAJOR Three Months Nine Months
OPERATING AREA
Ended September 30 Ended September 30
2009 2008 2009 2008
Upstream - Exploration
and Production
United States $ 878 $ 2,187 $ 1,172 $ 5,977
International 2,762 3,995 5,256 12,581
Total Exploration 3,640 6,182 6,428 18,558
and Production
Downstream - Refining,
Marketing and Transportation
United States 34 1,014 72 336
International 160 817 1,106 1,013
Total Refining,
Marketing and 194 1,831 1,178 1,349
Transportation
Chemicals 164 70 311 154
All Other (1) (167 ) (190 ) (504 ) (1,025 )
Total(2) $ 3,831 $ 7,893 $ 7,413 $ 19,036
SELECTED BALANCE SHEET Sept. 30, Dec. 31,
ACCOUNT DATA 2009 2008
Cash and Cash $ 7,568 $ 9,347
Equivalents
Marketable $ 121 $ 213
Securities
Total Assets $ 162,561 $ 161,165
Total Debt $ 10,542 $ 8,901
Total Chevron
Corporation $ 90,646 $ 86,648
Stockholders' Equity
Three Months Nine Months
Ended September 30 Ended September 30
CAPITAL AND EXPLORATORY 2009 2008 2009 2008
EXPENDITURES(3)
United States
Upstream - Exploration $ 662 $ 1,296 $ 2,474 $ 3,986
and Production
Downstream - Refining,
Marketing and 446 497 1,369 1,397
Transportation
Chemicals 57 195 131 322
All Other (1) 100 153 256 418
Total United 1,265 2,141 4,230 6,123
States
International
Upstream - Exploration 2,698 2,938 10,070 8,661
and Production
Downstream - Refining,
Marketing and 610 395 1,653 949
Transportation
Chemicals 23 18 57 40
All Other (1) - 1 1 4
Total 3,331 3,352 11,781 9,654
International
Worldwide $ 4,596 $ 5,493 $ 16,011 $ 15,777
(1) Includes mining operations, power generation businesses, worldwide cash
management and debt financing activities, corporate administrative functions,
insurance operations, real estate activities, alternative fuels and technology
companies.
(2) Net Income Attributable to Chevron Corporation (See Attachment 1)
(3) Includes interest in affiliates:
United States $ 65 $ 211 $ 145 $ 383
International 281 435 778 1,204
Total $ 346 $ 646 $ 923 $ 1,587
CHEVRON CORPORATION - FINANCIAL Attachment
REVIEW 3
Three Months Nine Months
OPERATING Ended September Ended September 30
STATISTICS(1) 30
NET LIQUIDS PRODUCTION 2009 2008 2009 2008
(MB/D):
United States 509 409 472 428
International 1,350 1,167 1,352 1,201
Worldwide 1,859 1,576 1,824 1,629
NET NATURAL GAS PRODUCTION (MMCF/D):
(2)
United States 1,420 1,431 1,398 1,561
International 3,475 3,618 3,570 3,669
Worldwide 4,895 5,049 4,968 5,230
OTHER PRODUCTION - OIL SANDS 27 26 26 26
(INTERNATIONAL) (MB/D):
TOTAL NET OIL-EQUIVALENT PRODUCTION
(MB/D):(3)
United States 745 647 705 688
International 1,957 1,796 1,973 1,838
Worldwide 2,702 2,443 2,678 2,526
SALES OF NATURAL GAS
(MMCF/D):
United States 5,832 7,142 5,974 7,591
International 4,035 4,224 4,084 4,201
Worldwide 9,867 11,366 10,058 11,792
SALES OF NATURAL GAS LIQUIDS
(MB/D):
United States 161 155 158 156
International 104 105 110 122
Worldwide 265 260 268 278
SALES OF REFINED PRODUCTS
(MB/D):
United States 1,416 1,422 1,420 1,413
International 1,822 2,008 1,867 2,042
(4)
Worldwide 3,238 3,430 3,287 3,455
REFINERY INPUT
(MB/D):
United States 879 922 913 878
International 985 976 980 965
Worldwide 1,864 1,898 1,893 1,843
(1) Includes interest in affiliates.
(2) Includes natural gas consumed in
operations (MMCF/D):
United States 56 69 57 77
International 455 434 467 447
(5)
(3) Oil-equivalent production is the
sum of net liquids production, net
gas production and oil sands
production. The oil-equivalent gas
conversion ratio is 6,000 cubic feet
of natural gas = 1 barrel of crude
oil.
(4) Includes share of 519 501 504 503
affiliate sales (MB/D):
(5) 2008 conformed to the
2009 presentation
Source: Chevron Corporation
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