Chevron's Strong Play in Fourth Quarter Nets $4.9B Income, Up 29%

Chevron Corporation reported net income of $4.9 billion ($2.32 per share - diluted) for the fourth quarter 2007, compared with $3.8 billion ($1.74 per share - diluted) in the year-ago period. For the full year 2007, net income was $18.7 billion ($8.77 per share - diluted), up 9 percent from $17.1 billion ($7.80 per share - diluted) in 2006.

"Fourth quarter earnings for our upstream business benefited from a significant increase in the price of crude oil," said Chairman and CEO Dave O'Reilly. "However, downstream profits were off sharply because of planned and unplanned refinery downtime in the United States, as well as the impact of higher crude-oil costs that were not fully recovered in the sales price of refined products.

"Our results overall capped a successful year for our company," O'Reilly added. "We achieved record earnings in 2007 and invested a record $20 billion in our excellent queue of capital and exploratory projects. Our financial strength also enabled us to increase the common stock dividend payment for the 20th consecutive year and buy back $7 billion of our common shares."

Worldwide oil-equivalent production was 2.61 million barrels per day in the fourth quarter 2007, down 42,000 barrels per day from the corresponding 2006 period. Approximately 25,000 barrels per day of the decline was associated with the impact of higher prices on cost-recovery and variable-royalty volumes under provisions of certain production contracts outside the United States.

U.S. upstream income of $1.38 billion in the fourth quarter increased $492 million from the 2006 period, due mainly to an increase in the price of crude oil. This benefit to income was partially offset by a decline in oil-equivalent production and an increase in operating, exploration and depreciation expenses.

The average sales price per barrel of crude oil and natural gas liquids was approximately $79 in the fourth quarter 2007, an increase of about $28 from the corresponding 2006 period. The average sales price of natural gas increased about 18 cents per thousand cubic feet to $6.08.

Net oil-equivalent production of 730,000 barrels per day declined 4 percent from the 2006 quarter. Net liquids production of 451,000 barrels per day was about 3 percent lower. Net natural gas production was down 6 percent to approximately 1.68 billion cubic feet per day, due mainly to normal field declines.

International upstream earnings of $3.46 billion increased $1.44 billion from the fourth quarter 2006, due mainly to higher prices for crude oil. Partially offsetting this benefit to income were lower crude oil sales volumes due to the timing of certain cargo liftings and higher operating expenses. Results for the 2007 quarter also included approximately $150 million of favorable tax items, including the effect of a tax-law change in Canada reducing the corporate income tax rate.

The average sales price for crude oil and natural gas liquids in the 2007 quarter increased $29 per barrel from a year earlier to about $80, while the average price of natural gas was up 65 cents to $4.32 per thousand cubic feet.

Net oil-equivalent production of 1.88 million barrels per day in the 2007 fourth quarter was essentially flat from a year earlier. Increased output in Bangladesh, Trinidad and Tobago, and Thailand was offset by lower production in Canada, Nigeria and Indonesia. The net liquids component of production, including volumes produced from oil sands in Canada, declined about 5 percent to 1.32 million barrels per day, while net natural gas production increased 11 percent to 3.41 billion cubic feet per day.

Capital and exploratory expenditures for the year 2007 were $20 billion, compared with $16.6 billion in the corresponding 2006 period. The amounts included approximately $2.3 billion and $1.9 billion, respectively, for the company's share of expenditures by affiliates, which did not require cash outlays by Chevron's consolidated companies. Expenditures for upstream projects represented about 78 percent of the companywide total in 2007.