USA: Outstanding Financial Year Behind Chevron, CEO Says

Chevron Corporation today reported earnings of $5.1 billion ($2.58 per share – diluted) for the fourth quarter 2011, compared with $5.3 billion ($2.64 per share – diluted) in the 2010 fourth quarter.

Full-year 2011 earnings were $26.9 billion ($13.44 per share – diluted), up 41 percent from $19.0 billion ($9.48 per share – diluted) earned in 2010.

“Chevron had an outstanding year financially,” said Chairman and CEO John Watson, “with record earnings and cash flow. This reflects our exceptionally strong upstream portfolio, as well as higher 2011 crude prices. Full-year earnings also benefited from improved downstream sales margins. Our financial strength enabled us to both invest in our development projects and to acquire several new resource opportunities. At the same time, we raised the annual dividend twice and  increased outlays for our common stock repurchase program. Beyond our strong financial performance, we also had an outstanding year in terms of oil and gas reserves replacement.”

Wheatstone LNG Construction

Watson continued, “In the fourth quarter, we took another important step forward in our efforts to commercialize the company’s significant natural gas resources with the start of construction at the Wheatstone liquefied natural gas project in Australia. We also recently announced two additional natural gas discoveries in the Carnarvon Basin that will help underpin future LNG expansion opportunities. At the same time, we ramped up production to over 330 million cubic feet per day at the Platong II natural gas project in the Gulf of Thailand.”

Chevron added approximately 1.67 billion barrels of net oil- equivalent reserves in 2011. These additions, which are subject to final reviews, equate to 171 percent of net oil-equivalent production for the year. “The Wheatstone Project was the largest component of our reserve adds this year,” noted Watson, “and we continued to build legacy positions with additions from acquisitions in the Marcellus Shale and multiple development projects in the  deepwater Gulf of Mexico.”

International upstream earnings of $4.13 billion increased $215 million from the fourth quarter 2010. Higher realizations for crude oil increased earnings between quarters. This benefit was partly offset by higher tax charges, lower volumes and higher operating expenses. Foreign currency effects had little net impact on earnings in the 2011 fourth quarter, compared with a decrease of $53 million a year earlier. The average sales price for crude oil and natural gas liquids in the 2011 fourth quarter was $101 per barrel, up from $79 a year earlier. The average price of natural gas was $5.55 per thousand cubic feet, compared with $4.81 in last year’s fourth quarter.

Net oil-equivalent production of 1.98 million barrels per day in the fourth quarter 2011 was down 108,000 barrels per day from a year ago. Production increases from project ramp-ups in Thailand, Nigeria and Brazil were more than offset by maintenance-related downtime, normal field declines, and a 25,000 barrels per day negative effect of higher prices on entitlement volumes. The net liquids component of oil- equivalent production decreased 7 percent to 1.37 million barrels per day, while net natural gas production declined 2 percent to 3.66 billion cubic feet per day.

U.S. upstream earnings of $1.61 billion in the fourth quarter 2011 were up $675 million from a year earlier. The benefit of higher crude oil realizations was partly offset by lower production.

Capital and exploratory expenditures

Capital and exploratory expenditures in 2011 were $29.1 billion, compared with $21.8 billion in 2010. The amounts included $1.7 billion in 2011 and $1.4 billion in 2010 for the company’s share of expenditures by affiliates, which did not  require cash outlays by the company. Expenditures for upstream  represented 89 percent of the companywide total in 2011. These amounts exclude the acquisition of Atlas Energy, Inc., which was accounted for as a business combination.

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Offshore Energy Today Staff, January 27, 2012