USA: Chevron Profit Drops in 3rd Quarter

Chevron Corporation reported earnings of $5.3 billion ($2.69 per share – diluted) for the third quarter 2012, compared with $7.8 billion ($3.92 per share – diluted) in the 2011 third quarter.

Sales and other operating revenues in the third quarter 2012 were $56 billion, compared to $61 billion in the year-ago period.

“This quarter’s earnings were solid, but off from their near record level of a year ago,” said Chairman and CEO John Watson. “Crude oil prices were down and we had a heavy period of planned oil field maintenance which temporarily reduced oil and gas production in several locations. Foreign currency movements also hurt our results this quarter, while they benefited the year-ago period.”

“We continue to progress our upstream projects,” Watson added. “Gorgon in Australia and Bigfoot and Jack/St. Malo in the deepwater Gulf of Mexico are all over 50 percent complete. The Wheatstone Project in Australia is also off to a good start. Each of these projects is expected to deliver significant future value for our shareholders.”

Additional upstream milestones in recent months include:

• Australia – Completed the acquisition of additional interest in the Clio and Acme fields in the Carnarvon Basin in exchange for Chevron’s interest in the Browse development. Consolidating interests in the Carnarvon Basin fits strategically with long-term plans to grow the Wheatstone area resource base, and create expansion opportunities for the Wheatstone Project.

• Australia – Completed the sale of an equity interest in the Wheatstone Project to Tokyo Electric.

• Australia – Announced two natural gas discoveries, Satyr-2 and Satyr-4, in the Carnarvon Basin in 50 percent-owned Block WA-374-P.

• Sierra Leone – Awarded a 55 percent interest and operatorship in two deepwater exploration blocks.

• United States – Announced an agreement to acquire additional acreage in New Mexico. The acreage is located in the Delaware Basin where the company is already one of the largest leaseholders.

“In the downstream, we continue to reposition the business toward high growth chemical and specialty products and to sell non-core assets,” Watson said. The company’s 50 percent-owned Chevron Phillips Chemical Company LLC (CPChem) announced that its 35 percent-owned Saudi Polymers Company began commercial production at its petrochemical project in Al Jubail, Saudi Arabia. Also in the third quarter, the company completed the sale of its idled Perth Amboy, New Jersey, refinery, which had been operating as a terminal, and two of its fuels marketing businesses in the Caribbean.

Watson noted that, while investing for long-term production growth, the company remained focused on providing near-term shareholder returns as well. The company purchased $1.25 billion of its common stock in the third quarter 2012 under its share repurchase program.

UPSTREAM

Worldwide net oil-equivalent production was 2.52 million barrels per day in the third quarter 2012, down from 2.60 million barrels per day in the 2011 third quarter. Production increases from project ramp-ups in Thailand, Nigeria and the United States were more than offset by the effects of planned maintenance-related downtime, normal field declines, continued shut-in of the Frade Field in Brazil, dispositions and storm-related shut-ins in the Gulf of Mexico. The company expects increased production in the fourth quarter 2012 compared to the current quarter, reflecting the completion of planned turnarounds and restoration of shut-in production in the Gulf of Mexico.

U.S. Upstream

U.S. upstream earnings of $1.12 billion in the third quarter 2012 were down $386 million from a year earlier, primarily due to lower crude oil and natural gas realizations and lower production.

The company’s average sales price per barrel of crude oil and natural gas liquids was $91 in the third quarter 2012, down from $97 a year ago. The average sales price of natural gas was $2.63 per thousand cubic feet, compared with $4.14 in last year’s third quarter.

Net oil-equivalent production of 637,000 barrels per day in the third quarter 2012 was down 25,000 barrels per day, or 4 percent, from a year earlier. The decrease in production was associated with normal field declines, an absence of volumes associated with Cook Inlet, Alaska, assets sold in 2011, and the effects of storm-related shut-ins in 2012 in the Gulf of Mexico. Partially offsetting this decrease was further ramp-up at the Perdido and Caesar/Tonga projects in the Gulf of Mexico. The net liquids component of oil-equivalent production decreased 3 percent in the 2012 third quarter to 440,000 barrels per day, while net natural gas production decreased 6 percent to 1.18 billion cubic feet per day.

International Upstream

International upstream earnings of $4.02 billion decreased $676 million from the third quarter 2011. The decline between quarters was primarily due to lower volumes and realizations for crude oil, as well as higher exploration expense. Mostly offsetting these effects was a nearly $600 million gain on sale of an equity interest in the Wheatstone Project, and lower tax items. Foreign currency effects decreased earnings by $252 million, compared with an increase of $304 million a year earlier.

The average sales price for crude oil and natural gas liquids in the 2012 third quarter was $98 per barrel, down from $103 a year earlier. The average price of natural gas was $6.03 per thousand cubic feet, compared with $5.50 in last year’s third quarter.

Net oil-equivalent production of 1.88 million barrels per day in the third quarter 2012 was down 58,000 barrels per day from a year ago. Production increases from project ramp-ups in Thailand and Nigeria were more than offset by planned maintenance-related downtime, continued shut-in of the Frade Field in Brazil and normal field declines. The net liquids component of oil-equivalent production decreased 8 percent to 1.25 million barrels per day, while net natural gas production increased 8 percent to 3.78 billion cubic feet per day.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first nine months of 2012 were $22.7 billion, compared with $20.8 billion in the corresponding 2011 period. The amounts included approximately $1.4 billion in 2012 and $1.0 billion in 2011 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 90 percent of the companywide total in the first nine months of 2012.

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Press Release, November 02, 2012