Chevron Profit Plunges on Refining

Chevron Corporation today reported earnings of $5.0 billion ($2.57 per share – diluted) for the third quarter 2013, compared with $5.3 billion ($2.69 per share – diluted) in the 2012 third quarter.
Sales and other operating revenues in the third quarter 2013 were $57 billion, compared to $56 billion in the year-ago period.

“Our third quarter earnings were down from a year ago,” said Chairman and CEO John Watson, “primarily reflecting lower margins for refined products in the current period.”

“We continue to make good progress on our major capital projects,” Watson added.  “Construction continues, and important milestones are being reached, on our Gorgon and Wheatstone  LNG projects in Australia. Important interim construction goals have been recently reached for our  Jack/St. Malo and Big Foot deepwater projects in the Gulf of Mexico, in preparation for their project  start-ups scheduled for late 2014. We are also moving forward on the development of our liquids-rich  unconventional properties in the United States.”

UPSTREAM
Worldwide net oil-equivalent production was 2.59 million barrels per day in the third quarter 2013, up from 2.52 million barrels per day in the 2012 third quarter. The increase was primarily driven by lower maintenance-related downtime at Tengizchevroil and project ramp-ups in the United States, Nigeria and Angola, partially offset by normal field declines.

International upstream earnings of $4.07 billion increased $49 million from the third quarter 2012. The increase between quarters was primarily due to higher volumes and realizations for crude oil, largely offset by the absence of a 2012 gain of approximately $600 million from the sale of an equity interest in the Wheatstone Project, and higher operating expenses in the current period. Foreign currency effects decreased earnings by $188 million in the 2013 quarter, compared with a decrease of $252 million a year earlier.

The average sales price for crude oil and natural gas liquids in the third quarter 2013 was $104 per barrel, up from $98 a year earlier. The average price of natural gas was $5.88 per thousand cubic feet, compared with $6.03 in last year’s third quarter. Net oil-equivalent production of 1.93 million barrels per day in the third quarter 2013 was up 51,000 barrels per day, or 3 percent, from a year ago. Production increased primarily due to lower
maintenance-related downtime at Tengizchevroil and project ramp-ups in Nigeria and Angola, partially offset by normal field declines. The net liquids component of oil-equivalent production increased 2 percent to 1.28 million barrels per day, while net natural gas production increased 3 percent to 3.91 billion cubic feet per day.

DOWNSTREAM

U.S. downstream operations earned $249 million in the third quarter 2013 compared with earnings of $456 million a year earlier. The decrease was mainly due to lower margins on refined product sales and higher operating expenses reflecting repair and maintenance activities at company refineries.
The decrease was partially offset by higher earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC. Refinery crude oil input of 831,000 barrels per day in the third quarter 2013 increased 52,000
barrels per day from the year-ago period. The increase was primarily due to the absence of effects of an August 2012 incident at the refinery in Richmond, California that shut down the crude unit, partially offset by planned maintenance activities at the refinery in El Segundo, California in the current period.
Refined product sales of 1.19 million barrels per day were up 12,000 barrels per day from the third  quarter 2012, mainly reflecting higher gasoline sales. Branded gasoline sales increased 2 percent to 529,000 barrels per day

International downstream operations earned $131 million in the third quarter 2013 compared with $233 million a year earlier. Current quarter earnings decreased due to lower margins on refined product sales, partially offset by a favorable change in effects on derivative instruments. Foreign currency effects decreased earnings by $86 million in the 2013 quarter, compared with a decrease of $43 million a year earlier.
Refinery crude oil input of 885,000 barrels per day in the third quarter 2013 decreased 24,000 barrels per day from the year-ago period. Total refined product sales of 1.56 million barrels per day in the 2013 third quarter were essentially flat with the year-ago period.

CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in the first nine months of 2013 were $28.9 billion, compared with $22.7 billion in the corresponding 2012 period. The amounts included $1.8 billion in 2013 and $1.4 billion in 2012 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Capital expenditures increased between periods as work progressed on a number of major capital projects, particularly two Australian LNG projects and two deepwater Gulf of Mexico projects. In addition, the company acquired new resource opportunities in Australia, the Permian Basin and the Kurdistan Region of Iraq, along with interests in the Kitimat LNG Project in Canada. Expenditures for upstream represented 92 percent of the companywide total in the first nine months of 2013.

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Press Release, November 01, 2013