Chevron Barrels in $6B for Second Quarter



Chevron Corporation has reported net income of $6.0 billion ($2.90 per share - diluted) for the second quarter 2008, compared with $5.4 billion ($2.52 per share - diluted) in the year-ago period. Earnings in the 2007 quarter included a net gain of approximately $500 million on the sale of an investment and redemption of debt.
For the first half of 2008, net income was $11.1 billion ($5.38 per share - diluted), up 10 percent from $10.1 billion ($4.70 per share - diluted) in the first six months of 2007.

Sales and other operating revenues in the second quarter 2008 were $81 billion, compared with $54 billion in the year-ago quarter. First-half 2008 sales and other operating revenues were $146 billion, versus $101 billion in the corresponding 2007 period.

"Earnings for our upstream operations benefited from prices for crude oil that were significantly higher than a year ago," said Chairman and CEO Dave O'Reilly. "Natural-gas prices also increased between periods, contributing to a doubling of upstream profits from last year's second quarter."

In the second quarter of this year, the company reported capital and exploratory expenditures of $5.2 billion, compared with $4.5 billion a year earlier. Common stock buybacks in the 2008 period totaled $2 billion.
O'Reilly said continued strong cash flows from operations have enabled a record-level of reinvestment in the business. Among recent milestones for the company's major development projects was the previously announced start-up of the 68 percent-owned Agbami Field in Nigeria. The total maximum oil-equivalent production at Agbami is estimated at 250,000 barrels per day by the end of 2009.

UPSTREAM - EXPLORATION AND PRODUCTION

Worldwide oil-equivalent production was 2.54 million barrels per day in the second quarter 2008, compared with 2.63 million barrels per day in the corresponding period in 2007. Absent the impact of higher prices on volumes recoverable under certain production-sharing and variable-royalty contracts outside the United States, production increased slightly between periods.

U.S. upstream income of $2.2 billion in the second quarter 2008 increased nearly $1 billion from the same period last year, driven by higher prices for crude oil and natural gas. Partially offsetting the benefit of higher prices were increases in operating expenses, the impact of lower production and the absence of gains on second quarter 2007 asset sales.

The average sales price per barrel of crude oil and natural gas liquids was $109 in the second quarter 2008, up from $57 in the corresponding 2007 period. The average sales price per thousand cubic feet of natural gas increased $3.28 between quarters to $9.84.

Net oil-equivalent production was 702,000 barrels per day in the 2008 second quarter, down about 7 percent from a year earlier on normal field declines. The net liquids component of production was down 6 percent at 438,000 barrels per day, and net natural-gas production declined 7 percent to 1.6 billion cubic feet per day.
International upstream earnings of $5.1 billion in the second quarter 2008 increased $2.6 billion from the year-ago period due primarily to higher prices for crude oil. Natural-gas prices also increased between periods. Partially offsetting the benefit of higher prices was a reduction of crude-oil sales volumes. Foreign currency effects benefited earnings by $80 million in the 2008 quarter, compared with a $111 million reduction to earnings a year earlier.

The average sales price per barrel of crude oil and natural gas liquids was $110 in the 2008 quarter, up $49 from the year-ago period. The average sales price per thousand cubic feet of natural gas increased $1.80 between periods to $5.44.

Net oil-equivalent production of 1.84 million barrels per day in the 2008 second quarter was about 2 percent lower than the year-ago quarter. Absent the impact of higher prices on volumes recoverable under certain production-sharing and variable-royalty contracts, production increased between periods. The net liquids component of production decreased by 95,000 barrels per day to 1.23 million. Natural-gas production was 3.6 billion cubic feet per day in the 2008 period, an increase of about 300 million cubic feet per day from a year earlier.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first six months of 2008 were $10.3 billion, compared with $8.6 billion in the corresponding 2007 period. The amounts included approximately $900 million and $1.1 billion, respectively, for the company's share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream projects represented 82 percent of the companywide total in 2008.


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