Chevron Corporation earns $4bn in Third Quarter of 2018

Fri, Nov 9, 2018 | By publisher


Oil & Gas

Chevron Corporation earns $4 billion in the third quarter of 2018 as foreign currency effects decreased earnings compared to the $2 billion it made in 2017

By Anayo Ezugwu

Chevron Corporation earnings in the third quarter of 2018 stood at $4.0 billion ($2.11 per share – diluted) compared with $2.0 billion ($1.03 per share – diluted) in the third quarter of 2017. Included in the current quarter were a write-off, an asset impairment, and a non-recurring contractual settlement totalling $930 million in the upstream segment, and a gain of $350 million on the sale of southern Africa refining, marketing and lubricant assets.

Foreign currency effects decreased earnings in the 2018 third quarter by $51 million, compared with a decrease of $112 million a year earlier. Sales and other operating revenues in third quarter 2018 were $42 billion, compared to $34 billion in the year-ago period. Michael Wirth, Chairman and chief executive officer, Chevron, said the third quarter earnings more than doubled from a year ago. He said the strong financial results of the company reflected higher production and crude oil prices coupled with a continued focus on efficiency and productivity.

“Quarterly cash flow from operations of $9.6 billion was the highest it has been in nearly five years. This allowed us to pay the dividend, fund our capital program, strengthen the balance sheet, and repurchase $750 million of the company’s common stock. Net oil-equivalent production of 2.96 million barrels per day represents our highest quarter ever. Ramp-up of Wheatstone in Australia and the Permian Basin in Texas and New Mexico drove a production increase of 9 percent over the prior year quarter. We also completed the sale of our southern Africa refining, marketing and lubricant assets, keeping us on track to meet our asset sales targets,” Wirth said.

According to the report, worldwide net oil-equivalent production was 2.96 million barrels per day in the quarter under review, compared with 2.72 million barrels per day from a year ago. The US upstream operations earned $828 million in third quarter 2018, compared with a loss of $26 million a year earlier. The improvement reflected higher crude oil realizations and production, partially offset by higher depreciation and exploration expenses, primarily reflecting a $550 million write-off of the Tigris Project in the Gulf of Mexico.

The company’s average sales price per barrel of crude oil and natural gas liquids was $62 in the quarter, up from $42 a year earlier. The average sales price of natural gas was $1.80 per thousand cubic feet, unchanged from the prior year’s third quarter.

Net oil-equivalent production of 831,000 barrels per day in third quarter was up 150,000 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 partially offset by the impact of asset sales of 19,000 barrels per day. The net liquids component of oil-equivalent production in third quarter 2018 increased 25 percent to 654,000 barrels per day, while net natural gas production increased 14 percent to 1.06 billion cubic feet per day.

The report stated that international upstream operations earned $2.55 billion in third quarter 2018, compared with $515 million a year ago. The increase in earnings was mainly due to higher crude oil and natural gas realisations, and higher natural gas sales volumes. Foreign currency effects had a favourable impact on earnings of $122 million between periods. The 2018 quarter included charges totalling $380 million for an asset impairment and a contractual settlement.

The average sales price for crude oil and natural gas liquids in third quarter was $69 per barrel, up from $48 a year earlier. The average sales price of natural gas was $6.73 per thousand cubic feet in the quarter, compared with $4.76 in last year’s third quarter.

Net oil-equivalent production of 2.13 million barrels per day in third quarter 2018 was up 89,000 barrels per day from a year earlier. Production increases from major capital projects, primarily Wheatstone and Gorgon in Australia, were partially offset by maintenance-related downtime, production entitlement effects and normal field declines. The net liquids component of oil-equivalent production decreased 5 percent to 1.13 million barrels per day in the 2018 third quarter, while net natural gas production increased 18 percent to 5.95 billion cubic feet per day.

The third quarter 2018 report also noted that US downstream operations earned $748 million, compared with earnings of $640 million a year earlier. The increase was primarily due to higher equity earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC and lower tax expense, partially offset by higher operating expenses.

Refinery crude oil input in third quarter 2018 decreased 2 percent to 915,000 barrels per day from the year-ago period. Refined product sales of 1.23 million barrels per day were unchanged from third quarter 2017.

Likewise, the international downstream operations earned $625 million in third quarter 2018, compared with $1.17 billion a year earlier. The decrease in earnings was largely due to lower gains on asset sales. The absence of third quarter 2017 gains on asset sales more than offset the current quarter gain from the southern Africa asset sale. Lower margins on refined product sales also contributed to the decrease, partially offset by lower operating expenses.

The sale of the company’s Canadian assets in third quarter 2017 contributed to the lower margins and operating expenses. Foreign currency effects had an unfavourable impact on earnings of $22 million between periods. Refinery crude oil input of 710,000 barrels per day in third quarter 2018 decreased 91,000 barrels per day from the year-ago period, mainly due to the sale of the company’s Canadian refining asset in third quarter 2017 and crude unit maintenance at the refineries in Thailand and Singapore.

Total refined product sales of 1.44 million barrels per day in third quarter 2018 were down 8 percent from the year-ago period, primarily due to lower diesel, gasoline and jet fuel sales partially offset by higher fuel oil sales.

– Nov. 9, 2018 @ 17:32 GMT |

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