Chevron's 3Q Profit Trimmed More Than 50% on Weak Prices
Chevron has reported earnings of $3.83 billion ($1.92 per share -- diluted) for the third quarter 2009, compared with $7.89 billion ($3.85 per share -- diluted) in the 2008 third quarter. Earnings in the 2009 period included gains of approximately $400 million ($0.20 per share) from asset sales and tax items. Foreign-currency effects reduced earnings in the 2009 quarter by $170 million, compared with a benefit to income of $303 million a year earlier. For the first nine months of 2009, earnings were $7.41 billion ($3.71 per share -- diluted), down 61 percent from $19.04 billion ($9.23 per share -- diluted) in the first nine months of 2008. Sales and other operating revenues in the third quarter 2009 were $45 billion, compared with $76 billion in the year-ago quarter. For the first nine months of 2009, sales and other operating revenues were $120 billion versus $222 billion in the corresponding 2008 period. The decline in both comparative periods was primarily due to lower prices for crude oil, natural gas and refined products.
"Our net oil-equivalent production this quarter was nearly 11 percent higher than the same quarter a year ago," said Chairman and CEO Dave O'Reilly. "This operational success helped mitigate a decline in earnings that was driven by sharply lower prices for crude oil and natural gas."
"In our downstream operations, we continued to experience weak margins on the sale of gasoline and other refined products. Weak demand and plentiful supply affected all our major markets," O'Reilly added. "Our refinery reliability remains high, and we continue to focus on the safe and efficient operation of our network."
O'Reilly said continued aggressive cost-management efforts companywide in the first nine months of 2009 contributed to about a 13 percent decrease in recurring operating, selling, general and administrative expenses from the same period a year earlier.
In additional comments on upstream activities, O'Reilly said the recent final investment decision to develop the Gorgon LNG project represented a major milestone in the company's strategy to commercialize its significant natural gas resource base in Australia. Additional achievements in recent months included:
- Discoveries of natural gas in the Carnarvon Basin off the northwest coast in the 67 percent-owned Block WA-205-P, the 50 percent-owned Block WA-365-P and the 50 percent-owned Block WA-374-P, all Chevron-operated.
- Agreements signed with two companies to join Chevron's planned Wheatstone LNG project as combined 25 percent owners and suppliers of natural gas for the project's first two LNG trains.
- Start-up of the 31 percent-owned and operated deepwater Tombua-Landana project in Block 14, which is expected to reach maximum total production of approximately 100,000 barrels of crude oil per day in 2011.
- Discovery of crude oil and natural gas offshore in the 39 percent-owned and operated Block 0 concession, extending a trend of earlier discoveries in the Greater Vanza Longui Area.
UPSTREAM -- EXPLORATION AND PRODUCTION
Worldwide net oil-equivalent production was 2.70 million barrels per day in the third quarter 2009, up 259,000 from 2.44 million barrels per day in the 2008 period. The increase was driven primarily by project start-ups since last year’s third quarter.
U.S. upstream earnings of $878 million in the third quarter 2009 were down $1.3 billion from a year earlier. The effects of sharply lower prices for crude oil and natural gas, lower gains on asset sales and higher depreciation expense were partially offset by the benefits of increased production and lower operating expenses.
The company's average sales price per barrel of crude oil and natural gas liquids was approximately $60 in the 2009 quarter, compared with $107 a year ago. The average sales price of natural gas was $3.28 per thousand cubic feet, down from $8.64 in last year's third quarter.
Net oil-equivalent production of 745,000 barrels per day in the third quarter 2009 was up 98,000 barrels per day, or about 15 percent, from a year earlier. The increase in production was primarily associated with start-up of the Blind Faith field in late 2008 and the Tahiti Field in second quarter 2009, along with the restoration of volumes that were offline in September 2008 due to hurricanes in the Gulf of Mexico. The net liquids component of production was up 24 percent to 509,000 barrels per day in the 2009 third quarter, while net natural-gas production of 1.42 billion cubic feet per day was down about 1 percent from a year ago.
International upstream earnings of $2.8 billion decreased $1.2 billion from the third quarter 2008 due mainly to the impact of lower prices for crude oil and natural gas, partially offset by an increase in sales volumes of crude oil and about $400 million of gains from asset sales and tax items related to the Gorgon project in Australia. Foreign-currency effects decreased earnings by $81 million in the 2009 quarter, compared with an increase of $316 million a year earlier.
The average sales price for crude oil and natural gas liquids in the 2009 quarter was $62 per barrel, compared with $103 a year earlier. The average price of natural gas was $3.92 per thousand cubic feet, down from $5.37 in last year’s third quarter.
Net oil-equivalent production of 1.96 million barrels per day in the third quarter 2009 was up 9 percent, or 160,000 barrels per day, from a year ago. The increase included approximately 220,000 barrels per day associated with two projects -- Agbami in Nigeria, which commenced operations in the third quarter of last year and expansion at Tengiz in Kazakhstan. Partially offsetting this increase was the effect of civil unrest in Nigeria. The net liquids component of production increased about 15 percent from a year ago to 1.38 million barrels per day, while net natural-gas production declined about 4 percent to 3.48 billion cubic feet per day.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in the first nine months of 2009 were $16.0 billion, compared with $15.8 billion in the corresponding 2008 period. The amounts included approximately $900 million in 2009 and $1.6 billion in 2008 for the company's share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream projects represented 80 percent of the companywide total in 2009.
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