Chevron Earnings in First Quarter decline
Fri, May 3, 2019 | By publisher
Oil & Gas
Michael Wirth, chief executive officer, Chevron, says results were bolstered by a seven percent jump in oil and natural gas production
By Anayo Ezugwu
CHEVRON Corporation earnings in the first quarter 2019 dropped to $2.6 billion ($1.39 per share – diluted), compared with $3.6 billion ($1.90 per share – diluted) in the first quarter of 2018. The decline has been attributed to lower oil prices and weak profit margins in its refining and chemicals business.
Chevron earnings dropped by 27 percent from a year earlier. It stated that foreign currency effects decreased earnings in the quarter by $137 million. Sales and other operating revenues in first quarter were $34 billion, compared to $36 billion in 2018.
Michael Wirth, chief executive officer, Chevron, said the results were bolstered by a seven percent jump in oil and natural gas production, with oil equivalent output exceeding three million barrels per day for the second quarter in a row.
Chevron pinned the increase on rising volumes from its Permian Basin fields in Texas and New Mexico, as well as its Wheatstone project in Australia. “Upstream production volumes were up seven percent from a year ago, primarily in the Permian Basin and at Wheatstone in Australia. The company’s net oil-equivalent production exceeded three million barrels per day for the second quarter in a row.
“First quarter earnings declined from a year ago, largely due to lower crude oil prices and weaker downstream and chemicals margins. We continue to high-grade our portfolio. In the first quarter we sold our interests in the Rosebank field in the United Kingdom and the Frade field in Brazil. In early April we concluded the sale of our upstream interests in Denmark,” he said.
However, the company recently announced that it entered into a definitive agreement with Anadarko Petroleum Corporation to acquire all of its outstanding shares. Wirth said, “The combination of Anadarko’s high-quality assets and people with Chevron’s portfolio strengthens our leading position in the Permian, builds greater deepwater Gulf of Mexico capabilities and will grow our LNG business. We believe this transaction will unlock significant value for shareholders.”
The report showed that Chevron’s worldwide net oil-equivalent production was 3.04 million barrels per day in first quarter, an increase of seven percent from 2.85 million barrels per day from a year ago. The US upstream operations earned $748 million in the quarter, compared with $648 million a year earlier. The increase was primarily due to higher crude oil production partially offset by lower crude oil and natural gas realisations.
The company’s average sales price per barrel of crude oil and natural gas liquids was $48 in first quarter, down from $56 a year earlier. The average sales price of natural gas was $1.64 per thousand cubic feet in the quarter, down from $2.02 in last year’s first quarter.
Net oil-equivalent production of 884,000 barrels per day in first quarter 2019 was up 151,000 barrels per day from a year earlier. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico, and major capital projects and base business in the Gulf of Mexico, were partially offset by normal field declines and the impact of asset sales. The net liquids component of oil-equivalent production in first quarter 2019 increased 22 percent to 690,000 barrels per day, while net natural gas production increased 17 percent to 1.16 billion cubic feet per day.
International upstream operations earned $2.38 billion in the quarter, compared with $2.70 billion a year ago. Foreign currency effects had an unfavourable impact on earnings of $288 million between periods, largely due to the valuation of the Venezuelan Bolivar. Higher natural gas sales volumes and prices were partially offset by lower crude oil prices.
The average sales price for crude oil and natural gas liquids in first quarter 2019 was $58 per barrel, down from $61 a year earlier. The average sales price of natural gas was $6.57 per thousand cubic feet in the quarter, compared with $5.85 in last year’s first quarter.
“Net oil-equivalent production of 2.15 million barrels per day in first quarter 2019 was up 35,000 barrels per day from a year earlier. Production increases from major capital projects, including Wheatstone, base business, and shale and tight properties, were partially offset by normal field declines and production entitlement effects. The net liquids component of oil-equivalent production was relatively flat at 1.19 million barrels per day in the 2019 first quarter, while net natural gas production increased four percent to 5.81 billion cubic feet per day.
“US downstream operations earned $217 million in first quarter 2019, compared with earnings of $442 million a year earlier. The decrease was primarily due to lower margins on refined product sales and lower earnings from the 50 percent-owned Chevron Philips Chemical Company LLC, partially offset by lower operating expenses due to the absence of a first quarter 2018 turnaround at the El Segundo, California refinery.
“Refinery crude oil input in first quarter 2019 decreased 7 percent to 861,000 barrels per day from the year-ago period, primarily due to weather-related impacts at the El Segundo and Richmond, California refineries. Refined product sales of 1.19 million barrels per day were up 1 percent from first quarter 2018. International downstream operations earned $35 million in first quarter 2019, compared with $286 million a year earlier. The decrease in earnings was largely due to lower margins on refined product sales. Foreign currency effects had a favourable impact on earnings of $20 million between periods.
“Refinery crude oil input of 669,000 barrels per day in first quarter 2019 decreased 43,000 barrels per day from the year-ago period, mainly due to the sale of the company’s interest in the Cape Town Refinery in third quarter 2018. Total refined product sales of 1.42 million barrels per day in first quarter 2019 were down 1 percent from the year-ago period.”
– May 3, 2019 @ 15:35 GMT |Tags: Chevron Earnings in First Quarter decline