Chevron Reports Third Quarter Net Income of $1.3 Billion

SAN RAMON, Calif.--()--Chevron Corporation (NYSE: CVX) today reported earnings of $1.3 billion ($0.68 per share – diluted) for third quarter 2016, compared with earnings of $2.0 billion ($1.09 per share – diluted) in the third quarter of 2015. Foreign currency effects increased earnings in the 2016 third quarter by $72 million, compared with an increase of $394 million a year earlier.

Sales and other operating revenues in third quarter 2016 were $29 billion, compared to $33 billion in the year-ago period.

         

Earnings Summary

 
Three Months Nine Months
Ended Sept. 30     Ended Sept. 30
Millions of dollars       2016     2015     2016     2015
Earnings by business segment        
Upstream $ 454 $ 59 $ (3,467 ) $ (600 )
Downstream 1,065 2,211 3,078 6,590
All Other         (236 )       (233 )       (523 )       (815 )
Total (1)(2)       $ 1,283       $ 2,037       $ (912 )     $ 5,175  

(1) Includes foreign currency effects

$ 72 $ 394 $ 32 $ 723

(2) Net income (loss) attributable to Chevron Corporation (See Attachment 1)

 

“Third quarter results, though down from a year ago, reflect an improvement from the first two quarters of this year,” said Chairman and CEO John Watson. “Our operational performance in the third quarter was strong. Our refineries continued to run well and Tengizchevroil completed the largest turnaround in its history ahead of schedule and under budget. We have had steady LNG production and cargo shipments from Gorgon Train 1, and we recently started LNG production from Gorgon Train 2. In light of these milestones, we expect December production between 2.65-2.70 million barrels per day in oil-equivalent.”

“We have made progress toward our goals of lowering the cash breakeven in our upstream business and getting cash balanced,” Watson added. “Capital spending and operating and administrative expenses have been reduced by over $10 billion from the first nine months of 2015 as a result of a series of deliberate actions we have taken.”

The company’s Board of Directors approved a $0.01 per share increase in the quarterly dividend to $1.08 per share, payable in December 2016. With this increase, the company has raised the annual dividend payout on its common shares for the 29th consecutive year.

UPSTREAM

Worldwide net oil-equivalent production was 2.51 million barrels per day in third quarter 2016, compared with 2.54 million barrels per day from a year ago. Production increases from major capital projects, shale and tight properties, and base business were more than offset by normal field declines, the effect of asset sales, maintenance-related downtime primarily reflecting a major planned turnaround at Tengizchevroil, the effects of civil unrest in Nigeria and production entitlement effects in several locations.

           

U.S. Upstream

Three Months Nine Months
Ended Sept. 30     Ended Sept. 30
Millions of dollars         2016     2015     2016     2015
Earnings         $(212)     $(603)     $(2,175)     $(2,101)
       

U.S. upstream operations incurred a loss of $212 million in third quarter 2016 compared with a loss of $603 million from a year ago. The improvement was due to lower operating and depreciation expenses, and lower tax items, partially offset by lower crude oil realizations.

The company’s average sales price per barrel of crude oil and natural gas liquids was $37 in third quarter 2016, down from $42 a year ago. The average sales price of natural gas was $1.89 per thousand cubic feet in third quarter 2016, compared with $1.96 in last year’s third quarter.

Net oil-equivalent production of 698,000 barrels per day in third quarter 2016 was down 32,000 barrels per day from a year earlier. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico, base business in the Gulf of Mexico and San Joaquin Valley, and the Jack/St. Malo major capital project were more than offset by the effect of asset sales, normal field declines and maintenance-related downtime. The net liquids component of oil-equivalent production in third quarter 2016 increased 3 percent to 519,000 barrels per day, while net natural gas production decreased 20 percent to 1.08 billion cubic feet per day primarily as a result of asset sales.

           

International Upstream

Three Months Nine Months
Ended Sept. 30     Ended Sept. 30
Millions of dollars         2016     2015     2016   2015
Earnings*         $ 666     $ 662     $ (1,292 )   $ 1,501
*Includes foreign currency effects $ 85     $ 258 $ 116   $ 634
 

International upstream operations earned $666 million in third quarter 2016 compared with earnings of $662 million a year ago. The increase in earnings was primarily due to lower tax and operating expenses, and higher natural gas sales, partially offset by lower crude oil and natural gas realizations. Foreign currency effects increased earnings by $85 million in the 2016 third quarter, compared with an increase of $258 million a year earlier.

The average sales price for crude oil and natural gas liquids in third quarter 2016 was $41 per barrel, down from $45 a year earlier. The average price of natural gas was $4.18 per thousand cubic feet in the quarter, compared with $4.68 in last year’s third quarter.

Net oil-equivalent production of 1.82 million barrels per day in third quarter 2016 was essentially unchanged from a year ago. Production increases from major capital projects, shale and tight properties, and base business in multiple areas were largely offset by normal field declines, a major planned turnaround at Tengizchevroil, the effects of civil unrest in Nigeria, and production entitlement effects in several locations. The net liquids component of oil-equivalent production decreased 3 percent to 1.14 million barrels per day in the 2016 third quarter, while net natural gas production increased 6 percent to 4.04 billion cubic feet per day.

DOWNSTREAM

           

U.S. Downstream

Three Months Nine Months
Ended Sept. 30     Ended Sept. 30
Millions of dollars         2016     2015     2016     2015
Earnings         $523     $1,249     $1,307     $2,686
       

U.S. downstream operations earned $ 523 million in third quarter 2016 compared with earnings of $1.25 billion a year earlier. The decrease in earnings was primarily due to lower margins on refined product sales and lower earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC.

Refinery crude oil input in third quarter 2016 increased 3 percent to 970,000 barrels per day from the year-ago period.

Refined product sales of 1.24 million barrels per day were essentially unchanged from third quarter 2015. Branded gasoline sales of 550,000 barrels per day were up 3 percent from the 2015 period.

           

International Downstream

Three Months Nine Months
Ended Sept. 30     Ended Sept. 30
Millions of dollars         2016     2015     2016     2015
Earnings*         $ 542       $ 962     $ 1,771       $ 3,904
*Includes foreign currency effects $ (4 )     $ 141 $ (78 )     $ 92
 

International downstream operations earned $542 million in third quarter 2016 compared with $962 million a year earlier. The decrease in earnings was primarily due to the absence of third quarter 2015 gains on derivative instruments. Lower margins on refined product sales also contributed to the decline, partially offset by lower operating expenses. Foreign currency effects decreased earnings by $4 million compared with an increase of $141 million in last year’s third quarter.

Refinery crude oil input of 790,000 barrels per day in third quarter 2016 increased 2 percent from the year-ago period.

Total refined product sales of 1.47 million barrels per day in third quarter 2016 were down 2 percent from the year-ago period due to lower fuel oil and jet fuel sales.

ALL OTHER

        Three Months     Nine Months
Ended Sept. 30     Ended Sept. 30
Millions of dollars         2016     2015     2016     2015
Net Charges*         $ (236 )     $ (233 )     $ (523 )     $ (815 )
*Includes foreign currency effects $ (9 )     $ (5 ) $ (6 )     $ (3 )
 

All Other consists of worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.

Net charges in third quarter 2016 were $236 million, compared with $233 million a year earlier. The change between periods was mainly due to higher corporate charges and interest expense, offset by lower tax items.

CASH FLOW FROM OPERATIONS

Cash flow from operations in the first nine months of 2016 was $9.0 billion, compared with $14.9 billion in the corresponding 2015 period. Excluding working capital effects, cash flow from operations in 2016 was $10.2 billion, compared with $17.2 billion in the corresponding 2015 period.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first nine months of 2016 were $17.2 billion, compared with $25.3 billion in the corresponding 2015 period. The amounts included $2.7 billion in 2016 and $2.5 billion in 2015 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 91 percent of the companywide total in third quarter 2016.

NOTICE

Chevron’s discussion of third quarter 2016 earnings with security analysts will take place on Friday, October 28, 2016, at 8:00 a.m. PDT. A webcast of the meeting will be available in a listen-only mode to individual investors, media, and other interested parties on Chevron’s Web site at www.chevron.com under the “Investors” section. Additional financial and operating information will be contained in the Earnings Supplement that will be available under “Events and Presentations” in the “Investors” section on the Web site.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words or phrases such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “positions,” “may,” “could,” “should,” “budgets,” “outlook,” “on schedule,” “on track,” “goals,” “objectives” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices; changing refining, marketing and chemicals margins; the company's ability to realize anticipated cost savings and expenditure reductions; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of the company’s suppliers, vendors, partners and equity affiliates, particularly during extended periods of low prices for crude oil and natural gas; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats and terrorist acts, crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries or other natural or human causes beyond its control; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic and political conditions; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant operational, investment or product changes required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures to limit or reduce greenhouse gas emissions; the potential liability resulting from other pending or future litigation; the company’s future acquisition or disposition of assets and gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; material reductions in corporate liquidity and access to debt markets; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; the company’s ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and the factors set forth under the heading “Risk Factors” on pages 21 through 23 of the company’s 2015 Annual Report on Form 10-K. Other unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements.

Attachment 1

CHEVRON CORPORATION - FINANCIAL REVIEW
(Millions of Dollars, Except Per-Share Amounts)
               

CONSOLIDATED STATEMENT OF INCOME

(unaudited) Three Months Nine Months
Ended September 30 Ended September 30
REVENUES AND OTHER INCOME 2016 2015 2016 2015
Sales and other operating revenues * $ 29,159 $ 32,767 $ 80,073 $ 101,911
Income from equity affiliates 555 1,195 1,883 3,765
Other income 426   353 1,019   3,554
Total Revenues and Other Income 30,140   34,315 82,975   109,230
COSTS AND OTHER DEDUCTIONS
Purchased crude oil and products 15,842 17,447 42,345 55,181
Operating, selling, general and administrative expenses 5,775 6,618 18,264 20,204
Exploration expenses 258 315 842 1,982
Depreciation, depletion and amortization 4,130 4,268 15,254 15,637
Taxes other than on income * 2,962 2,883 8,799 9,174
Interest and debt expense 64   - 143   -
Total Costs and Other Deductions 29,031   31,531 85,647   102,178
Income (Loss) Before Income Tax Expense 1,109 2,784 (2,672 ) 7,052
Income tax expense (benefit) (192 ) 727 (1,803 ) 1,787
Net Income (Loss) 1,301 2,057 (869 ) 5,265
Less: Net income attributable to noncontrolling interests 18   20 43   90

NET INCOME (LOSS) ATTRIBUTABLE TO CHEVRON CORPORATION

$ 1,283   $ 2,037   $ (912 ) $ 5,175
 
PER-SHARE OF COMMON STOCK
Net Income (Loss) Attributable to Chevron Corporation
- Basic $ 0.68 $ 1.09 $ (0.49 ) $ 2.77
- Diluted $ 0.68 $ 1.09 $ (0.49 ) $ 2.76
Dividends $ 1.07 $ 1.07 $ 3.21 $ 3.21
 
Weighted Average Number of Shares Outstanding (000's)
- Basic 1,873,649 1,868,444 1,871,813 1,867,560

- Diluted

1,883,342 1,872,420 1,871,813 1,875,193
 
* Includes excise, value-added and similar taxes. $ 1,772 $ 1,800 $ 5,208 $ 5,642
 
             

Attachment 2

CHEVRON CORPORATION - FINANCIAL REVIEW
(Millions of Dollars)
(unaudited)
 

EARNINGS BY MAJOR OPERATING AREA

Three Months Nine Months
Ended September 30 Ended September 30
2016 2015   2016 2015
Upstream
United States $ (212 ) $ (603 ) $ (2,175 ) $ (2,101 )
International 666   662   (1,292 ) 1,501  
Total Upstream 454   59   (3,467 ) (600 )
Downstream
United States 523 1,249 1,307 2,686
International 542   962   1,771   3,904  
Total Downstream 1,065   2,211   3,078   6,590  
All Other (1) (236 ) (233 ) (523 ) (815 )
Total (2) $ 1,283   $ 2,037   $ (912 ) $ 5,175  
 
 
Sep 30, Dec. 31,

SELECTED BALANCE SHEET ACCOUNT DATA

  2016 2015
Cash and Cash Equivalents $ 7,351 $ 11,022
Marketable Securities $ 321 $ 310
Total Assets $ 259,863 $ 264,540
Total Debt $ 45,585 $ 38,549
Total Chevron Corporation Stockholders' Equity $ 146,800 $ 152,716
 
Nine Months
Ended September 30

CASH FLOW FROM OPERATIONS

2016   2015  
Net Cash Provided by Operating Activities $ 8,983 $ 14,899
Net Increase in Operating Working Capital $ (1,266 ) $ (2,321 )
Net Cash Provided by Operating Activities Excluding Working Capital $ 10,249 $ 17,220
 
Three Months Nine Months
Ended September 30 Ended September 30

CAPITAL AND EXPLORATORY EXPENDITURES (3)

2016   2015   2016   2015  
United States
Upstream $ 990 $ 1,718 $ 3,470 $ 5,912
Downstream 357 566 1,110 1,382
Other 62   96   137   247  
Total United States 1,409 2,380 4,717 7,541
 
International
Upstream 3,649 5,475 12,157 17,431
Downstream 115 109 290 298
Other 2   1   3   2  
Total International 3,766   5,585   12,450   17,731  
Worldwide $ 5,175   $ 7,965   $ 17,167   $ 25,272  
 

(1) Includes worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, and technology companies.

(2) Net Income (Loss) Attributable to Chevron Corporation (See Attachment 1)
(3) Includes interest in affiliates:
United States $ 237 $ 446 $ 805 $ 986
International 753   484   1,888   1,470  
Total $ 990   $ 930   $ 2,693   $ 2,456  
 
             

Attachment 3

CHEVRON CORPORATION - FINANCIAL REVIEW

 

   
Three Months Nine Months

OPERATING STATISTICS (1)

Ended September 30 Ended September 30
NET LIQUIDS PRODUCTION (MB/D): (2) 2016 2015 2016 2015
 
United States 519 505 503 502
International 1,142 1,173 1,207 1,231
Worldwide 1,661 1,678 1,710 1,733
 
NET NATURAL GAS PRODUCTION (MMCF/D): (3)
United States 1,077 1,351 1,144 1,307
International 4,036 3,814 4,009 3,923
Worldwide 5,113 5,165 5,153 5,230
 
TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D): (4)
United States 698 730 694 720
International 1,815 1,809 1,875 1,885
Worldwide 2,513 2,539 2,569 2,605
 
SALES OF NATURAL GAS (MMCF/D):
United States 3,263 3,896 3,408 3,937
International 4,306 4,105 4,455 4,225
Worldwide 7,569 8,001 7,863 8,162
 
SALES OF NATURAL GAS LIQUIDS (MB/D):
United States 164 164 145 152
International 67 79 82 90
Worldwide 231 243 227 242
 
SALES OF REFINED PRODUCTS (MB/D):
United States 1,244 1,246 1,239 1,228
International (5) 1,469 1,503 1,451 1,519
Worldwide 2,713 2,749 2,690 2,747
 
REFINERY INPUT (MB/D):
United States 970 942 960 925
International 790 777 784 778
Worldwide 1,760 1,719 1,744 1,703
 
(1) Includes interest in affiliates.
(2) Includes net production of synthetic oil:
Canada 58 56 50 45
Venezuela Affiliate 29 29 28 29
(3) Includes natural gas consumed in operations (MMCF/D):
United States 46 64 61 66
International 435 412 431 429

(4) Oil-equivalent production is the sum of net liquids production, net natural gas production and synthetic production. The oil-equivalent gas conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil.

(5) Includes share of affiliate sales (MB/D): 391 416 374 422

Contacts

Chevron Corporation
Melissa Ritchie, +1 925-842-0455

Contacts

Chevron Corporation
Melissa Ritchie, +1 925-842-0455