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Form 8-K CHEVRON CORP For: Apr 29

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April 29, 2016 9:02 AM EDT


 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2016
Chevron Corporation
(Exact name of registrant as specified in its charter)
 
Delaware
    
001-00368
  
94-0890210
(State or other jurisdiction
of incorporation )
    
(Commission
File Number)
  
(I.R.S. Employer
Identification No.)
 
 
 
 
6001 Bollinger Canyon Road, San Ramon, CA
  
94583
(Address of principal executive offices)
  
(Zip Code)
Registrant’s telephone number, including area code: (925) 842-1000
 
 
 
 
 
None
 
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 






















Item 2.02     Results of Operations and Financial Condition
On April 29, 2016, Chevron Corporation issued a press release announcing an unaudited loss of $725 million in first quarter 2016. The press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information included herein and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
























































SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 29, 2016
 
 
 
 
CHEVRON CORPORATION
 
 
 
 
By
/s/ Jeanette L. Ourada
 
 
Jeanette L. Ourada

 
 
Vice President and Comptroller
 
 
(Principal Accounting Officer and
 
 
Duly Authorized Officer)
 














































EXHIBIT INDEX
 
 
 
99.1 Press release issued April 29, 2016.
 


-1-

news release

 
 
EXHIBIT 99.1
 
FOR RELEASE AT 5:30 AM PDT
 
APRIL 29, 2016

 

Chevron Reports First Quarter Loss of $725 Million

San Ramon, Calif., April 29, 2016 – Chevron Corporation (NYSE: CVX) today reported a loss of $725 million ($0.39 per share – diluted) for first quarter 2016, compared with earnings of $2.6 billion ($1.37 per share – diluted) in the 2015 first quarter. Foreign currency effects decreased earnings in the 2016 quarter by $319 million, compared with an increase of $580 million a year earlier.
Sales and other operating revenues in first quarter 2016 were $23 billion, compared to $32 billion in the year-ago period.
Earnings Summary
 
Three Months
Ended March 31
Millions of dollars
2016
 
2015
Earnings by business segment
 
 
 
Upstream
$(1,459)
 
$1,560
Downstream
735
 
1,423
All Other
(1)
 
(416)
Total (1)(2)
$(725)
 
$2,567
(1) Includes foreign currency effects
$(319)
 
$580
(2) Net income (loss) attributable to Chevron Corporation (See Attachment 1)
“First quarter results declined from a year ago,” said Chairman and CEO John Watson. “Our Upstream business was impacted by a more than 35 percent decline in crude oil prices. Our Downstream operations continued to perform well, although overall industry conditions and margins this quarter were weaker than a year ago.”
“Our efforts are focused on improving free cash flow,” Watson stated. “We are controlling our spend and getting key projects under construction online, which will boost revenues. We announced first LNG production and first cargo shipment from Train 1 at the Gorgon Project in March. Production from the Angola LNG plant is imminent and a cargo shipment is expected in May. Earlier in the year, we started up production at the Chuandongbei Project in China, and we continue to ramp up production in the Permian Basin and elsewhere.”
“We continue to lower our cost structure with better pricing, work flow efficiencies and matching our organizational size to expected future activity levels,” Watson added. “Our capital spending is coming down. We are moving our focus to high-return, shorter-cycle projects and pacing longer-cycle investments."





 
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-2-

UPSTREAM
Worldwide net oil-equivalent production was 2.67 million barrels per day in first quarter 2016, compared with 2.68 million barrels per day in the 2015 first quarter. Production increases from project ramp-ups in the United States, Nigeria and other areas, and production entitlement effects in several locations, were offset by the Partitioned Zone shut-in and normal field declines.

U.S. Upstream
 
Three Months
Ended March 31
Millions of dollars
2016
 
2015
Earnings
$(850)
 
$(460)
U.S. upstream operations incurred a loss of $850 million in first quarter 2016 compared to a loss of $460 million from a year earlier. The decrease was due to lower crude oil and natural gas realizations, partially offset by lower operating expenses.
The company’s average sales price per barrel of crude oil and natural gas liquids was $26 in first quarter 2016, down from $43 a year ago. The average sales price of natural gas was $1.32 per thousand cubic feet, compared with $2.27 in last year’s first quarter.
Net oil-equivalent production of 701,000 barrels per day in first quarter 2016 was up 2,000 barrels per day from a year earlier. Production increases due to project ramp-ups in the Gulf of Mexico, the Marcellus Shale in western Pennsylvania, and the Permian Basin in Texas and New Mexico were mostly offset by maintenance-related downtime in the Gulf of Mexico, normal field declines and the effect of asset sales. The net liquids component of oil-equivalent production in first quarter 2016 was essentially unchanged at 490,000 barrels per day, while net natural gas production increased 1 percent to 1.27 billion cubic feet per day.

International Upstream
 
Three Months
Ended March 31
Millions of dollars
2016
 
2015
Earnings*
$(609)
 
$2,020
*Includes foreign currency effects
$(298)
 
$522
International upstream operations incurred a loss of $609 million in first quarter 2016 compared with earnings of $2.02 billion a year earlier. The decrease was due to lower crude oil and natural gas realizations, the absence of a first quarter 2015 reduction in statutory tax rates in the United Kingdom, and lower gains on asset sales. Partially offsetting these effects were higher liftings and lower exploration expenses. Foreign currency effects decreased earnings by $298 million in the 2016 quarter, compared with an increase of $522 million a year earlier.
The average sales price for crude oil and natural gas liquids in first quarter 2016 was $29 per barrel, down from $46 a year earlier. The average price of natural gas was $3.91 per thousand cubic feet, compared with $5.01 in last year’s first quarter.
Net oil-equivalent production of 1.97 million barrels per day in first quarter 2016 decreased 17,000 barrels per day, or 1 percent, from a year ago. Production increases from project ramp-ups in Nigeria and other areas, and production entitlement effects in several locations, were more than offset by the Partitioned Zone shut-in and normal field declines. The net liquids component of oil-equivalent production decreased 2 percent to 1.29 million barrels per day in the 2016 first quarter, while net natural gas production was essentially unchanged at 4.04 billion cubic feet per day.



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-3-

DOWNSTREAM
U.S. Downstream
 
Three Months
Ended March 31
Millions of dollars
2016
 
2015
Earnings
$247
 
$706
U.S. downstream operations earned $247 million in first quarter 2016 compared with earnings of $706 million a year earlier. The decrease was primarily due to lower margins on refined products, an asset impairment, higher operating expenses primarily due to planned turnaround activity in first quarter 2016, and lower earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC.
Refinery crude oil input in first quarter 2016 increased 4 percent to 957,000 barrels per day from the year-ago period.
Refined product sales of 1.21 million barrels per day were unchanged from first quarter 2015. Branded gasoline sales of 510,000 barrels per day were up 1 percent from the 2015
period.

International Downstream
 
Three Months
Ended March 31
Millions of dollars
2016
 
2015
Earnings*
$488
 
$717
*Includes foreign currency effects
$(48)
 
$54
International downstream operations earned $488 million in first quarter 2016 compared with $717 million a year earlier. The decrease was primarily due to lower margins on refined product sales, partially offset by lower operating expenses and a favorable change in effects on derivative instruments. Foreign currency effects decreased earnings by $48 million in first quarter 2016, compared with an increase of $54 million a year earlier.
Refinery crude oil input of 795,000 barrels per day in first quarter 2016 increased 13,000 barrels per day from the year-ago period, mainly due to lower turnaround activity, partially offset by the divestment of Caltex Australia Limited.
Total refined product sales of 1.44 million barrels per day in first quarter 2016 were down 144,000 barrels per day from the year-ago period, mainly as a result of the Caltex Australia Limited divestment.

ALL OTHER
 
Three Months
Ended March 31
Millions of dollars
2016
 
2015
Net Charges*
$(1)
 
$(416)
*Includes foreign currency effects
$27
 
$4
All Other consists of worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.
Net charges in first quarter 2016 were $1 million, compared with $416 million in the year-ago period. The change between periods was mainly due to lower corporate tax items.



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CASH FLOW FROM OPERATIONS
Cash flow from operations in first quarter 2016 was $1.1 billion, compared with $2.3 billion in the corresponding 2015 period. Excluding working capital effects, cash flow from operations in first quarter 2016 was $2.1 billion, compared with $4.3 billion in the corresponding 2015 period.

CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in first quarter 2016 were $6.5 billion, compared with $8.6 billion in the corresponding 2015 period. The amounts included $791 million in first quarter 2016 and $730 million in the corresponding 2015 period for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 92 percent of the companywide total in first quarter 2016.


# # #
NOTICE
Chevron’s discussion of first quarter 2016 earnings with security analysts will take place on Friday, April 29, 2016, 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.

CAUTIONARY STATEMENTS 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 or phrases such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “may,” “could,” “should,” “budgets,” “outlook,” “on schedule,” “on track” 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, many 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 report. 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: changing crude oil and natural gas prices; changing refining, marketing and chemicals margins; the company's ability to realize anticipated cost savings and expenditure reductions; 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 the company’s suppliers, vendors, partners and equity affiliates, particularly during extended periods of low prices for crude oil and natural gas; 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 operations due to war, accidents, political events, civil unrest, severe weather, cyber threats and terrorist acts, crude oil production quotas


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-5-

or other actions that might be imposed by the Organization of Petroleum Exporting Countries or other natural or human causes beyond its control; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic and political conditions; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant operational, investment or product changes required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures to limit or reduce greenhouse gas emissions; the potential liability resulting from other pending or future litigation; the company’s future acquisition or disposition of assets and 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; material reductions in corporate liquidity and access to debt markets; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; the company’s ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and the factors set forth under the heading “Risk Factors” on pages 21 through 23 of the company’s 2015 Annual Report on Form 10-K. Other unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements.







































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-6-

 
CHEVRON CORPORATION - FINANCIAL REVIEW
Attachment 1
 
(Millions of Dollars, Except Per-Share Amounts)
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF INCOME
 
(unaudited)
 
Three Months
Ended March 31
 
REVENUES AND OTHER INCOME
 
2016

 
2015

 
 
 
 
 
      Sales and other operating revenues *
 
$
23,070

 
$
32,315

Income from equity affiliates
 
576

 
1,401

Other income
 
(93
)
 
842

Total Revenues and Other Income
 
23,553

 
34,558

COSTS AND OTHER DEDUCTIONS
 
 
 
 
Purchased crude oil and products
 
11,225

 
17,193

Operating, selling, general and administrative expenses
 
6,402

 
6,339

Exploration expenses
 
370

 
592

Depreciation, depletion and amortization
 
4,403

 
4,411

      Taxes other than on income *
 
2,864

 
3,118

Total Costs and Other Deductions
 
25,264

 
31,653

Income (Loss) Before Income Tax Expense
 
(1,711
)
 
2,905

Income tax expense (benefit)
 
(1,004
)
 
305

Net Income (Loss)
 
(707
)
 
2,600

Less: Net income attributable to noncontrolling interests
 
18

 
33

NET INCOME (LOSS) ATTRIBUTABLE TO
  CHEVRON CORPORATION
 
$
(725
)
 
$
2,567

 
 
 
 
 
PER-SHARE OF COMMON STOCK
 
 
 
 
Net Income (Loss) Attributable to Chevron Corporation
 
 
 
                                               - Basic
 
$
(0.39
)
 
$
1.38

                                               - Diluted
 
$
(0.39
)
 
$
1.37

Dividends
 
$
1.07

 
$
1.07

 
 
 
 
 
Weighted Average Number of Shares Outstanding (000's)
 
 
 
                                                     - Basic
 
1,869,775

 
1,866,655

                                                     - Diluted
 
1,869,775

 
1,876,498

 
 
 
 
 
* Includes excise, value-added and similar taxes.
 
$
1,652

 
$
1,877
















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CHEVRON CORPORATION - FINANCIAL REVIEW
Attachment 2
 
(Millions of Dollars)
 
 
 
(unaudited)
 
 
EARNINGS BY MAJOR OPERATING AREA
 
Three Months
Ended March 31
 
 
 
2016

 
2015

Upstream
 
 
 
 
United States
 
$
(850
)
 
$
(460
)
International
 
(609
)
 
2,020

Total Upstream
 
(1,459
)
 
1,560

Downstream
 
 
 
 
United States
 
247

 
706

International
 
488

 
717

Total Downstream
 
735

 
1,423

All Other (1)
 
(1
)
 
(416
)
Total (2)
 
$
(725
)
 
$
2,567

SELECTED BALANCE SHEET ACCOUNT DATA
 
 
 
 
 
Mar. 31, 2016

 
Dec. 31, 2015

Cash and Cash Equivalents
 
 
 
 
 
$
8,562

 
$
11,022

Marketable Securities
 
 
 
 
 
$
317

 
$
310

Total Assets (3)
 
 
 
 
 
$
263,842

 
$
264,540

Total Debt (3)
 
 
 
 
 
$
42,339

 
$
38,549

Total Chevron Corporation Stockholders' Equity
 
 
 
 
 
$
150,307

 
$
152,716

 
 
Three Months
Ended March 31
 
CASH FLOW FROM OPERATIONS
2016

 
2015

Net Cash Provided by Operating Activities
$
1,141

 
$
2,319

Net increase in Operating Working Capital
$
(993
)
 
$
(1,985
)
Net Cash Provided by Operating Activities Excluding Working Capital
$
2,134

 
$
4,304

 
 
Three Months
Ended March 31
 
CAPITAL AND EXPLORATORY EXPENDITURES (4)
2016

 
2015

United States
 
 
 
 
Upstream
 
$
1,276

 
$
2,318

Downstream
 
421

 
285

Other
 
22

 
63

Total United States
 
1,719

 
2,666

International
 
 
 
 
Upstream
 
4,690

 
5,842

Downstream
 
59

 
75

Other
 
1

 
—

Total International
 
4,750

 
5,917

Worldwide
 
$
6,469

 
$
8,583

(1)  Includes worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, and technology companies.
 
 
 
(2)    Net Income (Loss) Attributable to Chevron Corporation (See Attachment 1)
 
 
 
(3)    2015 conforms to 2016 presentation.
 
 
 
 
(4)    Includes interest in affiliates:
 
 
 
 
   United States
 
$
336

 
$
234

   International
 
455

 
496

Total
 
$
791

 
$
730



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-8-

 
CHEVRON CORPORATION - FINANCIAL REVIEW
Attachment 3
 
 
 
 
 
OPERATING STATISTICS (1)
 
Three Months
Ended March 31
 
NET LIQUIDS PRODUCTION (MB/D): (2)
 
2016

 
2015

United States
 
490

 
489

International
 
1,291

 
1,312

Worldwide
 
1,781

 
1,801

NET NATURAL GAS PRODUCTION (MMCF/D): (3)
 
 
 
 
United States
 
1,266

 
1,257

International
 
4,044

 
4,026

Worldwide
 
5,310

 
5,283

TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D): (4)
 
 
 
United States
 
701

 
699

International
 
1,965

 
1,982

Worldwide
 
2,666

 
2,681

SALES OF NATURAL GAS (MMCF/D):
 
 
 
 
United States
 
3,808

 
4,139

International
 
4,558

 
4,445

Worldwide
 
8,366

 
8,584

SALES OF NATURAL GAS LIQUIDS (MB/D):
 
 
 
 
United States
 
129

 
128

International
 
88

 
107

Worldwide
 
217

 
235

SALES OF REFINED PRODUCTS (MB/D):
 
 
 
 
United States
 
1,210

 
1,206

International (5)
 
1,436

 
1,580

Worldwide
 
2,646

 
2,786

REFINERY INPUT (MB/D):
 
 
 
 
United States
 
957

 
918

International
 
795

 
782

Worldwide
 
1,752

 
1,700

 
 
 
 
 
(1)    Includes interest in affiliates.
 
 
 
 
(2)    Includes net production of synthetic oil:
 
 
 
 
Canada
 
49

 
51

Venezuela Affiliate
 
27

 
30

(3)    Includes natural gas consumed in operations (MMCF/D):
 
 
 
 
United States
 
67

 
69

International
 
428

 
451

(4)    Oil-equivalent production is the sum of net liquids production. net natural gas production and synthetic production. The oil-equivalent gas conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil.
 
 
 
 
(5) Includes share of affiliate sales (MB/D):
 
369

 
485

 
 
 
 
 


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