News Column

Chevron Reports First Quarter Net Income of $4.5 Billion

May 2, 2014

SAN RAMON, Calif.--(BUSINESS WIRE)-- Chevron Corporation (NYSE: CVX) today reported earnings of $4.5 billion ($2.36 per share – diluted) for the first quarter 2014, compared with $6.2 billion ($3.18 per share – diluted) in the 2013 first quarter.

Sales and other operating revenues in the first quarter 2014 were $51 billion, compared to $54 billion in the year-ago period.

Earnings Summary

   
Three Months
Ended March 31

Millions of dollars

    2014     2013
Earnings by Business Segment    
Upstream $ 4,307 $ 5,916
Downstream 710 701
All Other       (505 )       (439 )
Total (1)(2)     $4,512       $6,178  

(1)Includes foreign currency effects

$(79)$246

(2)Net income attributable to Chevron Corporation (See Attachment 1)

 


“Our first quarter earnings were down from a year ago,” said Chairman and CEO John Watson, “primarily due to lower prices and volumes for crude oil. Crude prices were tempered by global economic factors, while our current year production volumes were affected by weather-related, unplanned downtime, particularly in Kazakhstan.

“We continue to advance our key development projects,” Watson added, “and we are anticipating production growth in 2015 and beyond as a result of these investments. Significant progress has been made on the construction of our Gorgon and Wheatstone projects in Australia. Our Jack/St. Malo and Big Foot projects in the Gulf of Mexico are also progressing, with first production planned for late 2014 and mid-2015, respectively. Our financial strength continues to allow us to fund these important growth projects which are expected to support a 20 percent increase in production by 2017, and to grow shareholder distributions.”

Recent upstream milestones include:

  • Argentina – Signed additional agreements to continue the development of the Loma Campana Project in the Vaca Muerta Shale and to begin exploration in the Narambuena area of the NeuquÉn Basin.
  • Australia – Received and installed the final two Gorgon gas turbine generators. All five of the generators have now been installed in preparation for LNG plant start-up in mid-2015.
  • Australia – Commenced the development well drilling campaign for the Wheatstone Project.
  • Azerbaijan – Achieved first production from the Chirag Oil Project in the Caspian Sea.
  • Myanmar – Announced the acquisition of offshore shallow water acreage.

    In the downstream, mechanical completion of the premium lubricants base-oil facility in Pascagoula, Mississippi, was achieved in April and ramp-up to full production is planned for mid-year. In addition, Chevron Phillips Chemical Company LLC, the company’s 50 percent-owned affiliate, announced the start of construction of its U.S. Gulf Coast Petrochemicals Project.

    The company’s Board of Directors approved a 7 percent increase in the quarterly dividend to $1.07 per share, payable in June 2014. The company purchased $1.25 billion of its common stock in first quarter 2014 under its share repurchase program.

    UPSTREAM

    Worldwide net oil-equivalent production was 2.59 million barrels per day in the first quarter 2014, down from 2.65 million barrels per day in the 2013 first quarter. Production increases from project ramp-ups in Nigeria, Angola and the United States were more than offset by normal field declines and weather-related, unplanned downtime, particularly in Kazakhstan.

    U.S. Upstream

        Three Months
    Ended March 31

    Millions of Dollars

        2014     2013
    Earnings     $ 912     $ 1,132
       


    U.S. upstream earnings of $912 million in the first quarter 2014 were down $220 million from a year earlier due to lower crude oil production and realizations and higher operating and depreciation expenses, partially offset by higher natural gas realizations.

    The company’s average sales price per barrel of crude oil and natural gas liquids was $91 in the first quarter 2014, down from $94 a year ago. The average sales price of natural gas was $4.77 per thousand cubic feet, compared with $3.11 in last year’s first quarter.

    Net oil-equivalent production of 640,000 barrels per day in the first quarter 2014 was down 24,000 barrels per day, or 4 percent, from a year earlier. Production increases in the Marcellus Shale in western Pennsylvania and the Delaware Basin in New Mexico were more than offset by normal field declines.The net liquids component of oil-equivalent production decreased 4 percent in the 2014 first quarter to 438,000 barrels per day, while net natural gas production decreased 3 percent to 1.21 billion cubic feet per day.

    International Upstream

        Three Months
    Ended March 31
    Millions of Dollars     2014     2013
    Earnings*     $ 3,395       $ 4,784

    *Includes foreign currency effects

    $(53)     $172
     


    International upstream earnings of $3.4 billion decreased $1.4 billion from the first quarter 2013. The decrease between quarters was primarily due to lower crude oil production and realizations and higher tax, depreciation and exploration expenses. Foreign currency effects decreased earnings by $53 million in the 2014 quarter, compared with an increase of $172 million a year earlier.

    The average sales price for crude oil and natural gas liquids in the first quarter 2014 was $99 per barrel, down from $102 a year earlier. The average price of natural gas was $6.02 per thousand cubic feet, compared with $6.07 in last year’s first quarter.

    Net oil-equivalent production of 1.95 million barrels per day in the first quarter 2014 was down 33,000 barrels per day, or 2 percent, from a year ago. Production increases due to project ramp-ups in Nigeria and Angola were more than offset by normal field declines and weather-related, unplanned downtime, particularly in Kazakhstan. The net liquids component of oil-equivalent production decreased 2 percent to 1.28 million barrels per day, while net natural gas production was essentially unchanged at 4.04 billion cubic feet per day.

    DOWNSTREAM

    U.S. Downstream

        Three Months
    Ended March 31
    Millions of Dollars     2014     2013
    Earnings     $ 422     $ 135
       


    U.S. downstream operations earned $422 million in the first quarter 2014 compared with earnings of $135 million a year earlier. The increase was mainly due to higher margins on refined product sales and a gain on the sale of an interest in a pipeline affiliate. Lower operating expenses, in part due to lower planned turnaround activity in first quarter 2014, also contributed to the increase in earnings.

    Refinery crude oil input of 872,000 barrels per day in the first quarter 2014 increased 296,000 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. The absence of first quarter 2013 planned turnaround activities at the refinery in Pascagoula, Mississippi, also contributed to the increase. Refined product sales of 1.20 million barrels per day were up 100,000 barrels per day from the first quarter 2013, mainly reflecting higher gas oil and kerosene sales. Branded gasoline sales increased 1 percent to 505,000 barrels per day.

    International Downstream

        Three Months
    Ended March 31
    Millions of Dollars     2014     2013
    Earnings*     $ 288       $ 566
    *Includes foreign currency effects$(28)     $76
     


    International downstream operations earned $288 million in the first quarter 2014, compared with $566 million a year earlier. The decrease was mainly due to lower margins on refined product sales. Foreign currency effects decreased earnings by $28 million in the 2014 period, compared to an increase of $76 million in the 2013 period.

    Refinery crude oil input of 774,000 barrels per day in the first quarter 2014 decreased 44,000 barrels per day from the year-ago period, mainly as a result of planned downtime at the Star Petroleum Refining Company in Thailand. Total refined product sales of 1.40 million barrels per day in the 2014 first quarter were down 46,000 barrels per day from the year-ago period, mainly due to lower fuel oil sales.

    ALL OTHER

       

    Three Months

    Ended March 31

    Millions of Dollars     2014     2013
    Net Charges*     $ (505 )     $ (439 )
    *Includes foreign currency effects$2     $(2)
     


    All Other consists of mining operations, power and energy services, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels, and technology companies.

    Net charges in the first quarter 2014 were $505 million, compared with $439 million in the year-ago period. The change between periods was mainly due to the impairment of a mining asset, partially offset by lower corporate charges.

    CASH FLOW FROM OPERATIONS

    Cash flow from operations in the first three months of 2014 was $8.4 billion, compared with $5.7 billion in the corresponding 2013 period. Excluding working capital effects, cash flow from operations in 2014 was $8.0 billion, compared with $9.1 billion in 2013, primarily reflecting lower earnings.

    CAPITAL AND EXPLORATORY EXPENDITURES

    Capital and exploratory expenditures in the first three months of 2014 were $9.4 billion, compared with $8.9 billion in the corresponding 2013 period. The amounts included $612 million in 2014 and $453 million in 2013 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Work progressed during 2014 on a number of major capital projects, including the Gorgon and Wheatstone LNG projects in Australia and the Jack/St. Malo and Big Foot projects in the deepwater Gulf of Mexico. Expenditures for the 2013 period included amounts related to the acquisition of interests in the Kitimat LNG Project in Canada. Expenditures for upstream represented 93 percent of the companywide total in the first three months of 2014.

    NOTICE

    Chevron’s discussion of first quarter 2014 earnings with security analysts will take place on Friday, May 2, 2014, 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 such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets,” “outlook” 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 press release. 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; 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 equity affiliates; 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 production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes required by existing or future environmental statutes, regulations and litigation; 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; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on pages 27 through 29 of the company’s 2013 Annual Report on Form 10-K. In addition, such results could be affected by general domestic and international economic and political conditions. Other unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements.

     
    Attachment 1
    CHEVRON CORPORATION - FINANCIAL REVIEW
    (Millions of Dollars, Except Per-Share Amounts)
     

    CONSOLIDATED STATEMENT OF INCOME

           
    (unaudited) Three Months
    Ended March 31
    REVENUES AND OTHER INCOME20142013

    Sales and other operating revenues*

    $50,978 $ 54,296
    Income from equity affiliates 1,922 2,284
    Other income 365 238
    Total Revenues and Other Income53,265 56,818
    COSTS AND OTHER DEDUCTIONS
    Purchased crude oil and products 30,823 32,910
    Operating, selling, general and administrative expenses 6,950 6,760
    Exploration expenses 415 247
    Depreciation, depletion and amortization 4,130 3,481

    Taxes other than on income*

    3,019 3,137
    Total Costs and Other Deductions45,337 46,535
    Income Before Income Tax Expense7,928 10,283
    Income tax expense 3,407 4,044
    Net Income$4,521 $ 6,239
    Less: Net income attributable to noncontrolling interests 9 61
    NET INCOME ATTRIBUTABLE TO
    CHEVRON CORPORATION$4,512 $ 6,178
     
    PER-SHARE OF COMMON STOCK
    Net Income Attributable to Chevron Corporation
    - Basic

    $

    2.38

    $

    3.20

    - Diluted

    $

    2.36

    $

    3.18

    Dividends

    $

    1.00

    $

    0.90

     
    Weighted Average Number of Shares Outstanding (000's)
    - Basic1,895,032 1,929,014
    - Diluted1,909,424 1,943,931
     
    *Includes excise, value-added and similar taxes. $1,946 $ 2,033
     
     
    Attachment 2
    CHEVRON CORPORATION - FINANCIAL REVIEW
    (Millions of Dollars)
    (unaudited)
     

    EARNINGS BY MAJOR OPERATING AREA

        Three Months
    Ended March 31  
    2014       2013  
    Upstream
    United States$912 $ 1,132
    International 3,395   4,784  
    Total Upstream 4,307   5,916  
    Downstream
    United States422 135
    International 288   566  
    Total Downstream 710   701  
    All Other (1)(505) (439 )
    Total (2)$4,512   $ 6,178  
     
     

    SELECTED BALANCE SHEET ACCOUNT DATA

      Mar. 31, 2014     Dec. 31, 2013  
    Cash and Cash Equivalents $15,612 $ 16,245
    Time Deposits $308 $ 8
    Marketable Securities$263 $ 263
    Total Assets $258,238 $ 253,753
    Total Debt $23,054 $ 20,431
    Total Chevron Corporation Stockholders' Equity $150,661 $ 149,113
     
    Three Months
    Ended March 31  

    CASH FLOW FROM OPERATIONS

    2014   2013  
    Net Cash Provided by Operating Activities $8,417 $ 5,714
    Net decrease (increase) in Operating Working Capital$382 $ (3,360 )
    Net Cash Provided by Operating Activities Excluding Working Capital$8,035 $ 9,074
     
    Three Months
    Ended March 31  

    CAPITAL AND EXPLORATORY EXPENDITURES(3)

    2014   2013  
    United States
    Upstream $1,958 $ 1,843
    Downstream 357 339
    Other 99   127  
    Total United States2,414   2,309  
     
    International
    Upstream 6,828 6,401
    Downstream 185 168
    Other 4   4  
    Total International7,017   6,573  
    Worldwide$9,431   $ 8,882  

     

    (1) Includes mining operations, power and energy services, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies.

    (2) Net Income Attributable to Chevron Corporation (See Attachment 1)
    (3) Includes interest in affiliates:
    United States$195 $ 93
    International 417   360  
    Total $612   $ 453  
     
     
    Attachment 3
    CHEVRON CORPORATION - FINANCIAL REVIEW
     
        Three Months

    OPERATING STATISTICS(1)

    Ended March 31
    NET LIQUIDS PRODUCTION (MB/D): (2)2014     2013
    United States438 455
    International 1,275 1,305
    Worldwide1,713 1,760
     
    NET NATURAL GAS PRODUCTION (MMCF/D): (3)
    United States1,212 1,255
    International 4,041 4,054
    Worldwide5,253 5,309
     
    TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D): (4)
    United States640 664
    International 1,948 1,981
    Worldwide2,588 2,645
     
    SALES OF NATURAL GAS (MMCF/D):
    United States(5)4,936 6,095
    International 4,566 4,498
    Worldwide9,502 10,593
     
    SALES OF NATURAL GAS LIQUIDS (MB/D):
    United States129 135
    International 89 95
    Worldwide218 230
     
    SALES OF REFINED PRODUCTS (MB/D):
    United States1,198 1,098
    International (5)1,403   1,449
    Worldwide2,601   2,547
     
    REFINERY INPUT (MB/D):
    United States872 576
    International 774 818
    Worldwide1,646 1,394
     
    (1) Includes interest in affiliates.
    (2) Includes: Canada - Synthetic Oil 38 45
    Venezuela Affiliate - Synthetic Oil 32 23
    (3) Includes natural gas consumed in operations (MMCF/D):
    United States74 68
    International (6)492 444
    (4) Net 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): 459 459
    (6) 2013 conforms to 2014 presentation
     





    Chevron Corporation

    Kurt Glaubitz, +1 925-790-6928

    Source: Chevron Corporation


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