Chevron earns $3.1bn in Fourth Quarter of 2017

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Chevron Corporation has earned $3.1 billion in the fourth quarter of 2017 compared to $415 million in 2016

By Anayo Ezugwu

CHEVRON Corporation has reported earnings of $3.1 billion ($1.64 per share – diluted) for fourth quarter 2017, compared with $415 million ($0.22 per share – diluted) in the 2016 fourth quarter. Included in the quarter were non-cash provisional tax benefits of $2.02 billion related to U.S tax reform and a non-cash charge of $190 million related to a former mining asset.

Foreign currency effects decreased earnings in the 2017 fourth quarter by $96 million. Full year 2017 earnings were $9.2 billion ($4.85 per share – diluted) compared with a loss of $497 million ($0.27 per share – diluted) in 2016. Included in 2017 were non-cash provisional tax benefits of $2.02 billion related to U.S. tax reform, gains on asset sales of $1.44 billion, and impairments and other non-cash charges of $840 million. Foreign currency effects decreased earnings in 2017 by $446 million.

Sales and other operating revenues in fourth quarter 2017 were $36 billion, compared to $30 billion in the year-ago period. Michael Wirth, chairman and chief executive officer, CEO, Chevron Corporation, said earnings and cash flow grew significantly in 2017.  “We achieved our objective of being cash flow positive through deliberate actions to reduce capital expenditures, lower our cost structure, start and ramp-up projects, and conclude planned asset sales.

“Higher commodity prices helped as well. These improvements give us the confidence to increase the dividend by $0.04 per share, which puts us on track to make 2018 the 31st consecutive year with an increase in annual dividend payout.

“We replaced more than 150 percent of the reserves we produced, and reached several significant upstream project milestones in 2017. These included our first LNG shipments from Train 3 at Gorgon and Train 1 at Wheatstone in Australia. We also posted impressive production growth in the Permian Basin in the U.S,” he said.

The company added approximately 1.54 billion barrels of net oil-equivalent proved reserves in 2017. These additions, which are subject to final reviews, equate to approximately 155 percent of net oil-equivalent production for the year. The largest additions were from the Permian Basin in the United States and the Gorgon Project in Australia.

The company will provide additional details relating to 2017 reserve additions in its Annual Report on Form 10-K scheduled for filing with the SEC on February 22, 2018. Wirth said: “Our net oil-equivalent production grew by 5 percent in 2017, including the effects of asset sales.

“Importantly, we expect that our 2018 production will continue to grow by 4 to 7 percent, driven primarily by Australian LNG and the acceleration of development activities in the Permian, where investment economics continue to improve. In the downstream, we made significant progress on our growth investments.”

Chevron Phillips Chemical Company LLC, the company’s 50 percent-owned affiliate, achieved start-up of two polyethylene units and reached mechanical completion of a new ethane cracker at its U.S. Gulf Coast Petrochemicals Project in Texas. At year-end, balances of cash, cash equivalents and marketable securities totalled $4.8 billion, a decrease of $2.2 billion from the end of 2016. Total debt at December 31, 2017 stood at $38.8 billion, a decrease of $7.4 billion from a year earlier.

The company’s Board of Directors approved a $0.04 per share increase in the quarterly dividend to $1.12 per share, payable in March 2018. Worldwide net oil-equivalent production was 2.74 million barrels per day in fourth quarter 2017, compared with 2.67 million barrels per day from a year ago. Net oil-equivalent production for the full year 2017 was 2.73 million barrels per day, compared with 2.59 million barrels per day from the prior year.

U.S. upstream operations earned $3.69 billion in fourth quarter 2017, compared with earnings of $121 million from a year earlier. The improvement reflected a benefit of $3.33 billion from U.S. tax reform along with higher crude oil realizations, partially offset by the absence of gains on fourth quarter 2016 asset sales.

The company’s average sales price per barrel of crude oil and natural gas liquids was $50 in fourth quarter 2017, up from $40 a year earlier. The average sales price of natural gas was $1.86 per thousand cubic feet in fourth quarter 2017, compared with $1.98in last year’s fourth quarter.

Net oil-equivalent production of 671,000 barrels per day in fourth quarter 2017 was down 11,000 barrels per day from a year earlier. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico, and base business in the Gulf of Mexico, were more than offset by the impact of asset sales of 57,000 barrels per day, normal field declines, higher downtime and hurricane effects in the Gulf of Mexico.

The net liquids component of oil-equivalent production in fourth quarter 2017 increased 2 percent to 518,000 barrels per day, while net natural gas production decreased 12 percent to 920 million cubic feet per day primarily as a result of asset sales.

International upstream operations earned $1.60 billion in fourth quarter 2017, compared with $809 million a year ago. The increase in earnings was mainly due to higher crude oil realizations and higher natural gas sales volumes, partially offset by higher depreciation expense associated with higher production. Foreign currency effects had an unfavourable impact on earnings of $20 million between periods.

The average sales price for crude oil and natural gas liquids in fourth quarter 2017 was $57 per barrel, up from $44 a year earlier. The average price of natural gas was $4.93 per thousand cubic feet in the quarter, compared with $4.07 in last year’s fourth quarter.

Net oil-equivalent production of 2.07 million barrels per day in fourth quarter 2017 was up 82,000 barrels per day from a year earlier. Production increases from major capital projects, primarily Gorgon and Wheatstone in Australia and Angola LNG, were partially offset by production entitlement effects in several locations, normal field declines, and the impact of asset sales of 27,000 barrels per day. The net liquids component of oil-equivalent production decreased 3 percent to 1.20 million barrels per day in the 2017 fourth quarter, while net natural gas production increased 16 percent to 5.24 billion cubic feet per day.

U.S. downstream operations earned $1.20 billion in fourth quarter 2017 compared with breakeven a year earlier. The increase was primarily due to a $1.16 billion benefit from U.S. tax reform. Also contributing to the increase were higher margins on refined product sales primarily reflecting the absence of fourth quarter 2016 planned turnaround activity at the Richmond refinery, and lower operating expenses. Partly offsetting these effects were impacts from Hurricane Harvey at the 50 percent-owned Chevron Phillips Chemical Company’s Cedar Bayou, Texas, petrochemical plant.

Refinery crude oil input in fourth quarter 2017 increased 16 percent to 834,000 barrels per day from the year-ago period, primarily due to the absence of fourth quarter 2016 planned turnaround activity at the Richmond refinery, partially offset by a planned turnaround at the El Segundo refinery and impacts from Hurricane Nate at the Pascagoula refinery.

Refined product sales of 1.17 million barrels per day increased 3 percent from fourth quarter 2016, primarily due to increased diesel sales. Branded gasoline sales of 518,000 barrels per day decreased 1 percent from the 2016 period.

International downstream operations earned $84 million in fourth quarter 2017, compared with $357 million a year earlier. The decrease in earnings was largely due to lower margins on refined product sales. Foreign currency effects had an unfavourable impact on earnings of $115 million between periods.

Refinery crude oil input of 761,000 barrels per day in fourth quarter 2017 decreased 40,000 barrels per day from the year-ago period mainly due to the sale of the company’s Canadian refining asset in third quarter 2017, partially offset by increased crude runs at the company’s affiliate, Singapore Refining Company.

Total refined product sales of 1.52 million barrels per day in fourth quarter 2017 were up 2 percent from the year-ago period, primarily due to higher fuel oil sales. 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 fourth quarter 2017 were $3.46 billion, compared with $872 million a year earlier. The change between periods was mainly due to higher tax items, primarily reflecting a $2.47 billion expense from U.S. tax reform, and a reclamation related charge of $190 million for a former mining asset. Foreign currency effects decreased net charges by $13 million between periods.

– Feb. 9, 2018 @ 13:18 GMT |

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