Record production volumes lift Chevron profit
- Business & Finance
Oil major Chevron Corporation saw an increase in its quarterly earnings boosted by record production volumes driven by growth in the Permian Basin and at Wheatstone in Australia.
Chevron on Friday reported earnings of $4.3 billion for second quarter 2019, compared with $3.4 billion in the second quarter of 2018.
Included in the current quarter were earnings of $740 million associated with the Anadarko merger termination fee and a non-cash tax benefit of $180 million related to a reduction in the Alberta, Canada corporate income tax rate. Foreign currency effects increased earnings in the 2019 second quarter by $15 million.
Sales and other operating revenues in second quarter 2019 were $36 billion, compared to $40 billion in the year-ago period.
Michael Wirth, Chevron’s chairman of the board and chief executive officer, said: “Second quarter earnings and cash flow benefited from record quarterly production volumes and the receipt of the Anadarko merger termination fee, partially offset by the impact of lower oil and gas prices.
“Net oil-equivalent production was the highest in the company’s history, driven by continued growth in the Permian Basin and at Wheatstone in Australia.”
Wirth added: “We continue to high-grade our portfolio and made progress on our three-year target of $5-10 billion of asset sale proceeds. During the quarter, we executed a sales agreement for our U.K. Central North Sea upstream assets, which we expect to close later this year. We also completed the acquisition of the Pasadena refinery in Texas, which will enable us to supply more of our retail market with Chevron-produced products and process more domestic light crude oil.”
Chevron’s worldwide net oil-equivalent production was 3.08 million barrels per day in second quarter 2019, an increase of 9 percent from 2.83 million barrels per day from a year ago.
U.S. upstream operations earned $896 million in second quarter 2019, compared with $838 million a year earlier. The increase was primarily due to higher crude oil production, partially offset by lower crude oil and natural gas realizations, higher operating and depreciation expenses primarily related to increased Permian activity, and higher tax items.
The company’s average sales price per barrel of crude oil and natural gas liquids was $52 in second quarter 2019, down from $59a year earlier. The average sales price of natural gas was $0.68 per thousand cubic feet in second quarter 2019, down from $1.61in last year’s second quarter.
International upstream operations earned $2.59 billion in second quarter 2019, compared with $2.46 billion a year ago. The increase in earnings was mostly due to higher natural gas sales volumes, tax benefits mostly associated with a reduction in the Alberta, Canada corporate income tax rate, lower operating expenses, and higher gains on asset sales. Partially offsetting these effects were lower crude oil and natural gas realizations. Foreign currency effects had an unfavorable impact on earnings of $195 million between periods.
The average sales price for crude oil and natural gas liquids in second quarter 2019 was $62 per barrel, down from $68 a year earlier. The average sales price of natural gas was $5.43 per thousand cubic feet in the quarter, compared with $5.64 in last year’s second quarter.
Capital and exploratory expenditures in the first six months of 2019 were $10 billion, compared with $9.2 billion in the corresponding 2018 period.
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