Chevron Rakes in $3.1B; Earnings Down 37%
Chevron Corporation reported earnings of $3.07 billion ($1.53 per share - diluted) for the fourth quarter 2009, compared with $4.90 billion ($2.44 per share - diluted) in the fourth quarter 2008. Earnings in the 2008 quarter included a gain of approximately $600 million on an upstream asset-exchange transaction. Foreign-currency effects reduced earnings in the 2009 quarter by $67 million, compared with a benefit to income of $478 million a year earlier.
Full-year 2009 earnings were $10.48 billion ($5.24 per share - diluted), down 56 percent from $23.93 billion ($11.67 per share - diluted) in 2008.
Sales and other operating revenues in the fourth quarter 2009 were $48 billion, compared with $43 billion in the year-ago quarter. For the full-year 2009, sales and other operating revenues were $167 billion, versus $265 billion in 2008. The decrease in the twelve-month period was primarily due to lower prices for crude oil, natural gas and refined products.
"Earnings decreased in 2009 as a result of lower crude oil and natural gas prices and a decline in refined product sales margins, driven by a weak global economy," said Chevron’s Chairman and CEO, John Watson. "In this challenging environment, Chevron's successes in operational reliability and cost management made valuable contributions to our bottom line. Our financial strength enabled continued investment in our excellent portfolio of capital and exploratory projects and an increase in the annual dividend on our common shares for the 22nd consecutive year.
"In fourth quarter 2009, earnings in our upstream business benefited from higher crude oil prices than in the same quarter in 2008. Net oil-equivalent production for the quarter was over 9 percent higher than in the 2008 quarter, driven by new production from several of our major capital projects.
Watson said on-going, aggressive cost-management efforts companywide resulted in about a 15 percent decrease in operating, selling, general and administrative expenses in 2009 compared with the previous year.
Watson also said that recent developments related to the company's projects in Australia have demonstrated continued progress in building a high-impact natural-gas business. Developments related to Australia projects in recent months include:
Gorgon - Agreements were signed for delivery of liquefied natural gas (LNG) from the Gorgon Project. These include long-term, binding agreements for the delivery of about 4.4 million metric tons per year and non-binding Heads of Agreement (HOAs) for delivery of an additional 2.1 million metric tons per year of LNG from Gorgon. Together, these agreements underpin the final investment decision on the 47.3 percent-owned and operated project and represent about 90 percent of Chevron's share in the 15 million metric-tons-per-year capacity of the LNG facilities.
Wheatstone - Non-binding HOAs were signed with two buyers to take delivery of 4.9 million metric tons per year of LNG from the Wheatstone Project and acquire an equity share in the field licenses and LNG facilities. An agreement was also signed to bring in two other equity partners to the Wheatstone LNG facilities. The project, currently undergoing front-end engineering and design, has a planned capacity of 8.6 million metric tons per year.
Exploration - Additional discoveries of natural gas were made in the Carnarvon Basin off the northwest coast in the Chevron-operated and 50 percent-owned Blocks WA-374-P and WA-268-P.
Another recently-announced achievement was the final investment decision to develop the 37.5 percent-owned, partner-operated Papa Terra Field offshore Brazil. First production is expected in 2013. Project facilities are designed with a capacity to handle up to 140,000 barrels of crude oil per day.
Watson commented that the company added approximately 1.10 billion barrels of net oil-equivalent proved reserves in 2009. These additions, which are subject to final reviews, equate to 112 percent of net oil-equivalent production for the year. Included in the additions were proved reserves related to the Gorgon Project in Australia. Also included were additions for the Athabasca Oil Sands Project in Canada as a result of a change in financial reporting rules. The increase in proved reserves was partially offset by the unfavorable effect of higher crude oil prices on certain production-sharing and variable-royalty contracts. The company will provide additional details relating to 2009 reserve activity in its Annual Report on Form 10-K scheduled for filing with the SEC on February 25.
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