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.
“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.
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 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 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.
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 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 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 Operations
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 company-wide total in the first three months of 2014.
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