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Chevron reports third quarter net income of USD1.3 billion

08th November 2016

Chevron Corporation has reported earnings of USD1.3 billion (USD0.68 per share – diluted) for third quarter 2016, compared with earnings of USD2.0 billion (USD1.09 per share – diluted) in the third quarter of 2015.

Chevron headquarters
Chevron headquarters

Foreign currency effects increased earnings in the 2016 third quarter by USD72 million, compared with an increase of USD394 million a year earlier.

Sales and other operating revenues in third quarter 2016 were USD29 billion, compared to USD33 billion in the year-ago period.

“Third quarter results, though down from a year ago, reflect an improvement from the first two quarters of this year,” chairman and CEO John Watson, said. “Our operational performance in the third quarter was strong. Our refineries continued to run well and Tengizchevroil completed the largest turnaround in its history ahead of schedule and under budget. We have had steady LNG production and cargo shipments from Gorgon Train 1, and we recently started LNG production from Gorgon Train 2. In light of these milestones, we expect December production between 2.65-2.70 million barrels per day in oil-equivalent.”

“We have made progress toward our goals of lowering the cash breakeven in our upstream business and getting cash balanced,” Watson added. “Capital spending and operating and administrative expenses have been reduced by over USD10 billion from the first nine months of 2015 as a result of a series of deliberate actions we have taken.”

The company’s Board of Directors approved a USD0.01 per share increase in the quarterly dividend to USD1.08 per share, payable in December 2016. With this increase, the company has raised the annual dividend payout on its common shares for the 29th consecutive year.

Worldwide net oil-equivalent production was 2.51 million barrels per day in third quarter 2016, compared with 2.54 million barrels per day from a year ago. Production increases from major capital projects, shale and tight properties, and base business were more than offset by normal field declines, the effect of asset sales, maintenance-related downtime primarily reflecting a major planned turnaround at Tengizchevroil, the effects of civil unrest in Nigeria and production entitlement effects in several locations.

U.S. upstream operations incurred a loss of USD212 million in third quarter 2016 compared with a loss of USD603 million from a year ago. The improvement was due to lower operating and depreciation expenses, and lower tax items, partially offset by lower crude oil realizations.

The company’s average sales price per barrel of crude oil and natural gas liquids was USD37 in third quarter 2016, down from USD42 a year ago. The average sales price of natural gas was USD1.89 per thousand cubic feet in third quarter 2016, compared with USD1.96 in last year’s third quarter.

Net oil-equivalent production of 698,000 barrels per day in third quarter 2016 was down 32,000 barrels per day from a year earlier. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico, base business in the Gulf of Mexico and San Joaquin Valley, and the Jack/St. Malo major capital project were more than offset by the effect of asset sales, normal field declines and maintenance-related downtime. The net liquids component of oil-equivalent production in third quarter 2016 increased 3 percent to 519,000 barrels per day, while net natural gas production decreased 20 percent to 1.08 billion cubic feet per day primarily as a result of asset sales.

International upstream operations earned USD666 million in third quarter 2016 compared with earnings of USD662 million a year ago. The increase in earnings was primarily due to lower tax and operating expenses, and higher natural gas sales, partially offset by lower crude oil and natural gas realizations. Foreign currency effects increased earnings by USD85 million in the 2016 third quarter, compared with an increase of USD258 million a year earlier.

The average sales price for crude oil and natural gas liquids in third quarter 2016 was USD41 per barrel, down from USD45 a year earlier. The average price of natural gas was USD4.18 per thousand cubic feet in the quarter, compared with USD4.68 in last year’s third quarter.

Net oil-equivalent production of 1.82 million barrels per day in third quarter 2016 was essentially unchanged from a year ago. Production increases from major capital projects, shale and tight properties, and base business in multiple areas were largely offset by normal field declines, a major planned turnaround at Tengizchevroil, the effects of civil unrest in Nigeria, and production entitlement effects in several locations. The net liquids component of oil-equivalent

production decreased 3 percent to 1.14 million barrels per day in the 2016 third quarter, while net natural gas production increased 6 percent to 4.04 billion cubic feet per day.

U.S. downstream operations earned USD523 million in third quarter 2016 compared with earnings of USD1.25 billion a year earlier. The decrease in earnings was primarily due to lower margins on refined product sales and lower earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC.

Refinery crude oil input in third quarter 2016 increased 3 percent to 970,000 barrels per day from the year-ago period.

Refined product sales of 1.24 million barrels per day were essentially unchanged from third quarter 2015. Branded gasoline sales of 550,000 barrels per day were up 3 percent from the 2015 period.

International downstream operations earned USD542 million in third quarter 2016 compared with USD962 million a year earlier. The decrease in earnings was primarily due to the absence of third quarter 2015 gains on derivative instruments. Lower margins on refined product sales also contributed to the decline, partially offset by lower operating expenses. Foreign currency effects decreased earnings by USD4 million compared with an increase of USD141 million in last year’s third quarter.

Refinery crude oil input of 790,000 barrels per day in third quarter 2016 increased

2 percent from the year-ago period.

Total refined product sales of 1.47 million barrels per day in third quarter 2016 were down 2 percent from the year-ago period due to lower fuel oil and jet fuel sales.

Cash flow from operations in the first nine months of 2016 was USD9.0 billion, compared with USD14.9 billion in the corresponding 2015 period. Excluding working capital effects, cash flow from operations in 2016 was USD10.2 billion, compared with USD17.2 billion in the corresponding 2015 period.

Capital and exploratory expenditures in the first nine months of 2016 were USD17.2 billion, compared with USD25.3 billion in the corresponding 2015 period. The amounts included USD2.7 billion in 2016 and USD2.5 billion in 2015 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 91 percent of the companywide total in third quarter 2016.

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