Chevron Sees Higher Upstream Earnings for Third Quarter '09

Agbami FPSO
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Tahiti Discovery in the Gulf of Mexico
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Chevron reported in its interim update that earnings for the third quarter 2009 are expected to be higher than in the second quarter 2009. Upstream earnings are projected to increase significantly, reflecting higher prices for crude oil, as well as approximately $400 million of gains related to asset sales and tax items.

Basis for Comparison in Interim Update

The interim update contains certain industry and company operating data for the third quarter 2009. The production volumes, realizations, margins and certain other items in the report are based on a portion of the quarter and are not necessarily indicative of Chevron's quarterly results to be reported on October 30, 2009. The reader should not place undue reliance on this data.

Unless noted otherwise, all commentary is based on two months of the third quarter 2009 versus full second quarter 2009 results.


The table that follows includes information on production and price indicators for crude oil and natural gas for specific markets. Actual realizations may vary from indicative pricing due to quality and location differentials and the effect of pricing lags. International earnings are driven by actual liftings, which may differ from production due to the timing of cargoes and other factors.

Compared with the average for the second quarter 2009, net U.S. oil-equivalent production during the first two months of the third quarter increased 41,000 barrels per day mainly due to the ramp-up of production at Tahiti in the Gulf of Mexico.

International net oil-equivalent production decreased 24,000 barrels per day compared with the second quarter. The liquids component of oil-equivalent production decreased 13,000 barrels per day reflecting disruptions to operations in Nigeria related to local civil unrest. These effects more than offset higher volumes in Kazakhstan following planned maintenance in the second quarter and increased production associated with continued ramp-up at the Agbami Field offshore Nigeria. Net natural gas production decreased 85 million cubic feet per day, largely due to planned maintenance at North Sea fields.

U.S. crude oil realizations for the first two months of the third quarter increased $9.26 per barrel to $62.47. International liquids realizations increased $8.52 to $61.69 per barrel. U.S. natural gas realizations increased $0.20 to $3.47 per thousand cubic feet and average international natural gas realizations increased $0.23 per thousand cubic feet to $3.96.

International upstream results are projected to include gains and related tax effects of about $400 million connected with formal project approval and previously announced sales of partial interests in the Gorgon project in Australia.


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