Chevron Earnings Slide in Second Quarter 2013
U.S. energy giant Chevron Corp.’s second-quarter 2013 year-on-year earnings headed to the downside, the company reported Friday. The slide of more than 20 percent was attributed to higher operating costs, lower prices and decreased production.
Chevron’s second-quarter earnings were $5.4 billion, compared with $7.2 billion from the second quarter of 2012. Revenue was $55 billion in the second quarter of 2013, down from $60 billion in the same quarter a year earlier.
“Our second quarter earnings were down from the very strong level of a year ago,” John Watson, Chevron chairman and CEO, said, in a press statement. “The decrease was largely due to softer market conditions for crude oil and refined products. Earnings were also reduced as a result of repair and maintenance activities in our U.S. refineries.”
Chevron joins a number of energy companies that have reported lower earnings in recent days. Analysts noted much of the slide was from the downstream side.
“Compared to a year ago, downstream earnings were lower on weaker product margins and refinery downtime. Although debt increased as Chevron ran at a free cash-flow deficit last quarter, cash exceeded debt by $2.3 billion with significant financial flexibility to increase shareholders’ distribution, despite spending levels,” analysts at Oppenheimer said.
Downstream earnings were $766 million, off by 54 percent year on year on maintenance issues and lower refining margins. However, they were up 9 percent sequentially on higher volumes.
On the upstream side, Chevron’s earnings for the most recent quarter were $4.95 billion, compared with 2Q 2012 earnings of $5.26 billion.
Chevron’s capital expenditure in the first six months of 2013 was $18.2 billion, up from $14.2 billion for the first-half of 2012.
“We continue to advance our capital projects. An important milestone was achieved in the second quarter with the loading of the first cargo of liquefied natural gas at the Angola LNG project, one of the largest energy projects on the African continent. This marks an important step in the development of our LNG business. Additional LNG growth is expected in the coming years from our Gorgon and Wheatstone projects in Australia,” Watson said.
Chevron’s upstream production in the second quarter was 2.58 million barrels of oil per day (bopd), down from 2.62 million bopd in 2Q 2012. Normal field declines more than offset project start-up in the U.S. and a project start-up in Angola.
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