Chevron Reports Second Quarter Net Income of $571 Million

  • Effects of lower crude prices, impairments and other charges of $2.6 billion more than offsets gains on asset sales of $1.8 billion
  • Continued progress on cost containment efforts and major growth projects

SAN RAMON, Calif.--()--Chevron Corporation (NYSE:CVX) today reported earnings of $571 million ($0.30 per share – diluted) for second quarter 2015, compared with earnings of $5.7 billion ($2.98 per share – diluted) in the 2014 second quarter. Included in the quarter were impairments of $1.96 billion and other charges of approximately $670 million relating to project suspensions and adverse tax effects, all of which were non-cash charges stemming from a downward revision in the company’s longer-term crude oil price outlook. Partially offsetting were gains on asset sales totaling $1.80 billion in the current quarter. Foreign currency effects decreased earnings in the 2015 quarter by $251 million, compared with a decrease of $232 million a year earlier.

Sales and other operating revenues in second quarter 2015 were $37 billion, compared to $56 billion in the year-ago period.

 

Earnings Summary

    Three Months   Six Months
Ended June 30   Ended June 30

Millions of dollars

    2015     2014     2015     2014  
Earnings by Business Segment    
Upstream $(2,219 ) $5,264 $(659 ) $9,571
Downstream 2,956 721 4,379 1,431
All Other     (166 )   (320 )   (582 )   (825 )
Total (1)(2)     $571     $5,665     $3,138     $10,177  
(1) Includes foreign currency effects

$(251

) $(232 ) $329 $(311 )

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

 

“Second quarter financial results were weak, reflecting a crude price decline of nearly 50 percent from a year ago. Our Upstream businesses were particularly hard hit, as lower prices reduced revenues and triggered impairments and other charges. Downstream operations continued to deliver strong financial performance, reflecting both high reliability and improved margins,” said Chairman and CEO John Watson.

“Multiple efforts to improve future earnings and cash flows are underway,” Watson continued. “We’re getting our cost structure down, through renegotiations across the supply chain and by sizing our contractor and employee workforce to reflect lower activity levels going forward. We’re actively managing to a smaller capital program, as projects currently under construction come online and as potential new projects are paced and re-bid. In addition, our 4-year divestment program is ahead of pace.”

“Project execution on our Gorgon and Wheatstone Australian LNG projects is a priority for us,” Watson commented. “Incremental production and cash generation from these projects and others, along with a curtailed capital program, should provide support for continuing competitive shareholder distributions.”

Recent company milestones include:

  • Australia – Completed the sale of the company’s 50 percent interest in Caltex Australia Limited.
  • Australia – Progressed commissioning activities at the Gorgon Project. Commissioning of the Jansz-Io Field subsea infrastructure is ongoing. All Train 2 modules are installed on foundations, with Train 3 modules being delivered to site.
  • Australia – Continued construction of the Wheatstone Project, which is now over 65 percent complete. Eleven of 24 Train 1 process modules required for first LNG have been delivered to site. All gas turbine generators are installed on foundations. Subsea infrastructure is being installed, with all three production manifolds now in place.
  • New Zealand – Completed the sale of the company’s interest in The New Zealand Refining Company Limited and reached agreement to sell the company’s marketing interests in New Zealand.
  • United States – Achieved start-up of sixth production well at Jack/St. Malo in the deepwater Gulf of Mexico. Ramp-up of total oil-equivalent production to approximately 80,000 barrels per day continues to exceed expectations.
  • United States – On track to drill 325 gross wells in 2015, including multiple horizontal well development programs, in the Midland and Delaware Basins in Texas and New Mexico.

UPSTREAM

Worldwide net oil-equivalent production was 2.60 million barrels per day in second quarter 2015, up from 2.55 million barrels per day in the 2014 second quarter. This production increase of 2 percent came from project ramp-ups in the United States, Bangladesh and Argentina, production entitlement effects in several locations, and lower maintenance-related downtime, primarily reflecting the absence of a major turnaround at Tengizchevroil in Kazakhstan. Normal field declines, the Partitioned Zone shut-in, and the effect of asset sales partially offset these effects.

U.S. Upstream

       
Three Months Six Months
Ended June 30   Ended June 30
Millions of Dollars       2015   2014   2015   2014
Earnings       $(1,038)   $1,054   $(1,498)   $1,966
   

U.S. upstream operations incurred a loss of $1.04 billion in second quarter 2015 compared to earnings of $1.05 billion from a year earlier. The decrease was due to sharply lower crude oil realizations and higher depreciation expenses, primarily reflecting impairments, partially offset by higher crude oil production and lower operating expenses.

The company’s average sales price per barrel of crude oil and natural gas liquids was $50 in second quarter 2015, down from $92 a year ago. The average sales price of natural gas was $1.92 per thousand cubic feet, compared with $4.09 in last year’s second quarter.

Net oil-equivalent production of 730,000 barrels per day in second quarter 2015 was up 63,000 barrels per day, or 9 percent, from a year earlier. Production increases due to project ramp-ups in the Gulf of Mexico, the Permian Basin in Texas and New Mexico, and the Marcellus Shale in western Pennsylvania were only partially offset by normal field declines. The net liquids component of oil-equivalent production increased 11 percent in the 2015 second quarter to 511,000 barrels per day, while net natural gas production increased 5 percent to 1.31 billion cubic feet per day.

International Upstream

      Three Months   Six Months
Ended June 30   Ended June 30

Millions of Dollars

      2015   2014   2015   2014
Earnings*       $(1,181)   $4,210   $839   $7,605

*Includes foreign currency effects

$(146)   $(147) $376   $(200)
 

International upstream operations incurred a loss of $1.18 billion in second quarter 2015 compared to earnings of $4.21 billion from a year earlier. The decrease was due to sharply lower crude oil realizations, higher depreciation expenses, primarily reflecting impairments, higher income tax items and higher exploration expenses. Foreign currency effects decreased earnings by $146 million in the 2015 quarter, compared with a decrease of $147 million a year earlier.

The average sales price for crude oil and natural gas liquids in second quarter 2015 was $56 per barrel, down from $101 a year earlier. The average price of natural gas was $4.48 per thousand cubic feet, compared with $5.98 in last year’s second quarter.

Net oil-equivalent production of 1.87 million barrels per day in second quarter 2015 decreased 12,000 barrels per day, or less than 1 percent, from a year ago. Production increases from entitlement effects in several locations, lower maintenance-related downtime, primarily reflecting the absence of a major turnaround at Tengizchevroil in Kazakhstan, and project ramp-ups in Bangladesh and Argentina were more than offset by the Partitioned Zone shut-in, normal field declines, and the effect of asset sales. The net liquids component of oil-equivalent production decreased 2 percent to 1.21 million barrels per day in the 2015 second quarter, while net natural gas production increased 2 percent to 3.93 billion cubic feet per day.

DOWNSTREAM

U.S. Downstream

      Three Months   Six Months
Ended June 30   Ended June 30
Millions of Dollars       2015   2014   2015   2014
Earnings       $731   $517   $1,437   $939
   

U.S. downstream operations earned $731 million in second quarter 2015 compared with earnings of $517 million a year earlier. The increase was due to higher margins on refined product sales, partially offset by the absence of a 2014 asset sale gain and lower earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC.

Refinery crude oil input of 916,000 barrels per day in second quarter 2015 increased 155,000 barrels per day from the year-ago period. The increase was primarily due to the absence of the second quarter 2014 major crude unit turnaround at the El Segundo, California refinery.

Refined product sales of 1.23 million barrels per day were up 3 percent from second quarter 2014, primarily reflecting higher gasoline sales. Branded gasoline sales of 535,000 barrels per day were up 2 percent from the 2014 period.

International Downstream

      Three Months   Six Months
Ended June 30   Ended June 30
Millions of Dollars       2015   2014   2015   2014
Earnings*       $2,225   $204   $2,942   $492
*Includes foreign currency effects $(103)   $(84) $(49)   $(112)
 

International downstream operations earned $2.23 billion in second quarter 2015 compared with $204 million a year earlier. The increase was primarily due to a $1.6 billion gain from the sale of the company’s interest in Caltex Australia Limited. Higher margins on refined product sales also contributed to the increase. Foreign currency effects decreased earnings by $103 million in the 2015 quarter, compared with a decrease of $84 million a year earlier.

Refinery crude oil input of 774,000 barrels per day in second quarter 2015 decreased 70,000 barrels per day from the year-ago period as a result of the Caltex Australia Limited divestment.

Total refined product sales of 1.48 million barrels per day in the 2015 second quarter were down 69,000 barrels per day from the year-ago period, due to lower gasoline and gas oil sales resulting from the Caltex Australia Limited divestment.

ALL OTHER

      Three Months   Six Months
Ended June 30   Ended June 30

Millions of Dollars

      2015   2014   2015   2014
Net Charges*       $(166)   $(320)   $(582)   $(825)

*Includes foreign currency effects

$(2)   $(1) $2   $1
 

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 second quarter 2015 were $166 million, compared with $320 million in the year-ago period. The change between periods was mainly due to lower corporate tax items and lower corporate charges, partially offset by the effects of charges related to reductions in corporate staffs and higher environmental expenses.

CASH FLOW FROM OPERATIONS

Cash flow from operations in the first six months of 2015 was $9.5 billion, compared with $16.3 billion in the corresponding 2014 period. Excluding working capital effects, cash flow from operations in 2015 was $11.6 billion, compared with $17.0 billion in 2014.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first six months of 2015 were $17.3 billion, compared with $19.6 billion in the corresponding 2014 period. The amounts included $1.5 billion in 2015 and $1.5 billion in 2014 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 93 percent of the companywide total in the first six months of 2015.

NOTICE

Chevron’s discussion of second quarter 2015 earnings with security analysts will take place on Friday, July 31, 2015, 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,” “may,” “could,” “should,”“budgets,” “outlook,” “on schedule,” “on track” 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 press release. 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 equity affiliates; 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 production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather, other natural or human factors, or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes required by existing or future environmental statutes, regulations and litigation; 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; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on pages 22 through 24 of the company’s 2014 Annual Report on Form 10-K. In addition, such results could be affected by general domestic and international economic and political conditions. 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 Six Months
Ended June 30 Ended June 30
REVENUES AND OTHER INCOME 2015 2014 2015 2014
Sales and other operating revenues * $ 36,829 $ 55,583 $ 69,144 $ 106,561
Income from equity affiliates 1,169 1,709 2,570 3,631
Other income 2,359 646 3,201 1,011
Total Revenues and Other Income 40,357 57,938 74,915 111,203
COSTS AND OTHER DEDUCTIONS
Purchased crude oil and products 20,541 33,844 37,734 64,667
Operating, selling, general and administrative expenses 7,247 7,364 13,586 14,314
Exploration expenses 1,075 694 1,667 1,109
Depreciation, depletion and amortization 6,958 3,842 11,369 7,972
Taxes other than on income * 3,173 3,167 6,291 6,186
Total Costs and Other Deductions 38,994 48,911 70,647 94,248
Income Before Income Tax Expense 1,363 9,027 4,268 16,955
Income tax expense 755 3,337 1,060 6,744
Net Income 608 5,690 3,208 10,211
Less: Net income attributable to noncontrolling interests 37 25 70 34

NET INCOME ATTRIBUTABLE TO CHEVRON CORPORATION

$ 571 $ 5,665 $ 3,138 $ 10,177
 
PER-SHARE OF COMMON STOCK
Net Income Attributable to Chevron Corporation
- Basic $ 0.30 $ 3.00 $ 1.68 $ 5.38
- Diluted $ 0.30 $ 2.98 $ 1.67 $ 5.34
Dividends $ 1.07 $ 1.07 $ 2.14 $ 2.07
 
Weighted Average Number of Shares Outstanding (000's)
- Basic 1,867,561 1,887,543 1,867,110 1,891,266
- Diluted 1,876,705 1,902,321 1,876,603 1,905,853
 
* Includes excise, value-added and similar taxes. $ 1,965 $ 2,120 $ 3,842 $ 4,066
 

Attachment 2

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

EARNINGS BY MAJOR OPERATING AREA

Three Months Six Months
Ended June 30 Ended June 30
2015   2014   2015   2014  
Upstream
United States $ (1,038 ) $ 1,054 $ (1,498 ) $ 1,966
International (1,181 ) 4,210   839   7,605  
Total Upstream (2,219 ) 5,264   (659 ) 9,571  
Downstream
United States 731 517 1,437 939
International 2,225   204   2,942   492  
Total Downstream 2,956   721   4,379   1,431  
All Other (1) (166 ) (320 ) (582 ) (825 )
Total (2) $ 571   $ 5,665   $ 3,138   $ 10,177  
 
 

SELECTED BALANCE SHEET ACCOUNT DATA

June 30, 2015 Dec. 31, 2014
Cash and Cash Equivalents $ 12,156 $ 12,785
Time Deposits $ - $ 8
Marketable Securities $ 365 $ 422
Total Assets $ 266,455 $ 266,026
Total Debt $ 31,910 $ 27,818
Total Chevron Corporation Stockholders' Equity $ 154,669 $ 155,028
 
Six Months
Ended June 30

CASH FLOW FROM OPERATIONS

2015   2014  
Net Cash Provided by Operating Activities $ 9,539 $ 16,298
Net increase in Operating Working Capital $ (2,025 ) $ (741 )
Net Cash Provided by Operating Activities Excluding Working Capital $ 11,564 $ 17,039
 
Three Months Six Months
Ended June 30 Ended June 30

CAPITAL AND EXPLORATORY EXPENDITURES (3)

2015   2014   2015   2014  
United States
Upstream $ 1,876 $ 2,130 $ 4,194 $ 4,088
Downstream 531 411 816 768
Other 88   122   151   221  
Total United States 2,495 2,663 5,161 5,077
 
International
Upstream 6,114 7,281 11,956 14,109
Downstream 114 230 189 415
Other 1   11   1   15  
Total International 6,229   7,522   12,146   14,539  
Worldwide $ 8,724   $ 10,185   $ 17,307   $ 19,616  
 

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

(2) Net Income Attributable to Chevron Corporation (See Attachment 1)

(3) Includes interest in affiliates:
United States $ 306 $ 236 $ 540 $ 431
International 490   669   986   1,086  
Total $ 796   $ 905   $ 1,526   $ 1,517  
 

Attachment 3

CHEVRON CORPORATION - FINANCIAL REVIEW
                 
Three Months Six Months

OPERATING STATISTICS (1)

Ended June 30 Ended June 30
NET LIQUIDS PRODUCTION (MB/D): (2) 2015 2014 2015 2014
United States 511 460 500 449
International 1,211 1,234 1,261 1,255
Worldwide 1,722 1,694 1,761 1,704
 
NET NATURAL GAS PRODUCTION (MMCF/D): (3)
United States 1,312 1,244 1,285 1,228
International 3,931 3,861 3,978 3,950

Worldwide

5,243 5,105 5,263 5,178
 
TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D): (4)
United States 730 667 714 654
International 1,866 1,878 1,924 1,913

Worldwide

2,596 2,545 2,638 2,567
 
SALES OF NATURAL GAS (MMCF/D):
United States 3,777 3,676 3,957 4,303
International 4,130 4,132 4,286 4,347
Worldwide 7,907 7,808 8,243 8,650
 
SALES OF NATURAL GAS LIQUIDS (MB/D):
United States 163 135 146 132
International 84 81 95 85
Worldwide 247 216 241 217
 
SALES OF REFINED PRODUCTS (MB/D):
United States 1,229 1,188 1,218 1,193
International (5) 1,478 1,547 1,529 1,475
Worldwide 2,707 2,735 2,747 2,668
 
REFINERY INPUT (MB/D):
United States 916 761 918 816
International 774 844 777 809
Worldwide 1,690 1,605 1,695 1,625
 
(1) Includes interest in affiliates.
(2) Includes: Canada - Synthetic Oil 28 42 39 41
Venezuela Affiliate - Synthetic Oil 29 32 30 32
(3) Includes natural gas consumed in operations (MMCF/D):
United States 66 69 68 71
International 423 452 438 466

(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): 367 470 426 464

Contacts

Chevron Corporation, San Ramon
Kurt Glaubitz, +1-925-790-6928
Kurt.Glaubitz@Chevron.com

Contacts

Chevron Corporation, San Ramon
Kurt Glaubitz, +1-925-790-6928
Kurt.Glaubitz@Chevron.com