Chevron Reports Second Quarter Net Income of $4.3 Billion

  • Upstream volumes up 9 percent from prior year; includes Permian unconventional production of 421,000 barrels per day
  • Second quarter cash flow from operations of $8.8 billion
  • Share repurchases of $1.0 billion in second quarter

Chevron Corporation (NYSE: CVX) today reported earnings of $4.3 billion($2.27 per share – diluted) for second quarter 2019, compared with $3.4 billion ($1.78 per share – diluted) in the second quarter of 2018. Included in the current quarter were earnings of $740 million associated with the Anadarko merger termination fee and a non-cash tax benefit of $180 million related to a reduction in the Alberta, Canada corporate income tax rate. Foreign currency effects increased earnings in the 2019 second quarter by $15 million.

Sales and other operating revenues in second quarter 2019 were $36 billion, compared to $40 billion in the year-ago period.

Earnings Summary
 
  Three Months 
Ended June 30
Six Months 
Ended June 30
Millions of dollars 2019 2018 2019 2018
Earnings by business segment        
Upstream $3,483 $3,295 $6,606 $6,647
Downstream 729 838 981 1,566
All Other 93 (724) (633) (1,166)
Total (1)(2) $4,305 $3,409 $6,954 $7,047
(1) Includes foreign currency effects $15 $265 $(122) $394
(2) Net income attributable to Chevron Corporation (See Attachment 1)

“Second quarter earnings and cash flow benefited from record quarterly production volumes and the receipt of the Anadarko merger termination fee, partially offset by the impact of lower oil and gas prices,” said Michael Wirth, Chevron’s chairman of the board and chief executive officer. “Net oil-equivalent production was the highest in the company’s history, driven by continued growth in the Permian Basin and at Wheatstone in Australia.”

“Our strong financial and operational results reflect consistent execution, allowing us to pay our dividend, fund our attractive capital program, further strengthen our balance sheet and return surplus cash to our shareholders. After suspending our share repurchases while in merger discussions with Anadarko, we resumed buybacks in May and expect to be at our planned repurchase rate of $5 billion per year in the third quarter,” Wirth added.

“We continue to high-grade our portfolio and made progress on our three-year target of $5-10 billion of asset sale proceeds. During the quarter, we executed a sales agreement for our U.K. Central North Sea upstream assets, which we expect to close later this year. We also completed the acquisition of the Pasadena refinery in Texas, which will enable us to supply more of our retail market with Chevron-produced products and process more domestic light crude oil,” Wirth said.

Additionally, Chevron Phillips Chemical Company LLC, the company’s 50 percent-owned affiliate, recently announced plans to jointly develop petrochemical projects in the U.S. Gulf Coast and Qatar with start-ups expected in 2024 and 2025, respectively.

The company also recently entered into agreements to invest in renewable natural gas plants in California and to purchase renewable power in Texas for its Permian Basin operations.

UPSTREAM

Worldwide net oil-equivalent production was 3.08 million barrels per day in second quarter 2019, an increase of 9 percent from 2.83 million barrels per day from a year ago.

U.S. Upstream
  Three Months 
Ended June 30
Six Months 
Ended June 30
Millions of dollars 2019 2018 2019 2018
Earnings $896 $838 $1,644 $1,486

U.S. upstream operations earned $896 million in second quarter 2019, compared with $838 million a year earlier. The increase was primarily due to higher crude oil production, partially offset by lower crude oil and natural gas realizations, higher operating and depreciation expenses primarily related to increased Permian activity, and higher tax items.

The company’s average sales price per barrel of crude oil and natural gas liquids was $52 in second quarter 2019, down from $59a year earlier. The average sales price of natural gas was $0.68 per thousand cubic feet in second quarter 2019, down from $1.61in last year’s second quarter.

Net oil-equivalent production of 898,000 barrels per day in second quarter 2019 was up 159,000 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 normal field declines. The net liquids component of oil-equivalent production in second quarter 2019 increased 23 percent to 710,000 barrels per day, while net natural gas production increased 15 percent to 1.13 billion cubic feet per day, compared to last year’s second quarter.

Second quarter unconventional production in the Permian Basin was 421,000 barrels per day, representing growth of over 50 percent compared to a year ago, as the company continues to invest in high return opportunities in this key region.

International Upstream
  Three Months 
Ended June 30
Six Months 
Ended June 30
Millions of dollars 2019 2018 2019 2018
Earnings* $2,587 $2,457 $4,962 $5,161
*Includes foreign currency effects $22 $217 $(146) $337

International upstream operations earned $2.59 billion in second quarter 2019, compared with $2.46 billion a year ago. The increase in earnings was mostly due to higher natural gas sales volumes, tax benefits mostly associated with a reduction in the Alberta, Canada corporate income tax rate, lower operating expenses, and higher gains on asset sales. Partially offsetting these effects were lower crude oil and natural gas realizations. Foreign currency effects had an unfavorable impact on earnings of $195 million between periods.

The average sales price for crude oil and natural gas liquids in second quarter 2019 was $62 per barrel, down from $68 a year earlier. The average sales price of natural gas was $5.43 per thousand cubic feet in the quarter, compared with $5.64 in last year’s second quarter.

Net oil-equivalent production of 2.19 million barrels per day in second quarter 2019 was up 99,000 barrels per day from a year earlier. Production increases from Wheatstone and other major capital projects, base business, and shale and tight properties, were partially offset by normal field declines and the effect of asset sales. The net liquids component of oil-equivalent production was relatively flat at 1.15 million barrels per day in the 2019 second quarter, while net natural gas production increased 10 percent to 6.20 billion cubic feet per day, compared to last year’s second quarter.

DOWNSTREAM

U.S. Downstream
  Three Months 
Ended June 30
Six Months 
Ended June 30
Millions of dollars 2019 2018 2019 2018
Earnings $465 $657 $682 $1,099

U.S. downstream operations earned $465 million in second quarter 2019, compared with earnings of $657 million a year earlier. The decrease was primarily due to lower margins on refined product sales and lower equity earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC.

Refinery crude oil input in second quarter 2019 increased 12 percent to 960,000 barrels per day from the year-ago period, primarily due to the absence of second quarter 2018 planned turnaround activity and the purchase of the Pasadena refinery in Texas. Refined product sales of 1.28 million barrels per day were up 3 percent from second quarter 2018.

International Downstream
  Three Months 
Ended June 30
Six Months 
Ended June 30
Millions of dollars 2019 2018 2019 2018
Earnings* $264 $181 $299 $467
*Includes foreign currency effects $(9) $44 $22 $55

International downstream operations earned $264 million in second quarter 2019, compared with $181 million a year earlier. The increase in earnings was largely due to higher margins on refined product sales and a post-close working capital true-up related to the 2018 sale of the Cape Town refinery in South Africa. Foreign currency effects had an unfavorable impact on earnings of $53 million between periods.

Refinery crude oil input of 599,000 barrels per day in second quarter 2019 decreased 140,000 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 and maintenance at the GS Caltex refinery in Yeosu, South Korea in second quarter 2019.

Total refined product sales of 1.26 million barrels per day in second quarter 2019 were down 14 percent from the year-ago period, mainly due to the sale of the southern Africa refining and marketing business in third quarter 2018.

ALL OTHER

  Three Months 
Ended June 30
Six Months 
Ended June 30
Millions of dollars 2019 2018 2019 2018
Earnings/(Net Charges)* $93 $(724) $(633) $(1,166)
*Includes foreign currency effects $2 $4 $2 $2

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

Net earnings in second quarter 2019 were $93 million, compared with net charges of $724 million in the year-ago period. The change between periods was mainly due to the receipt of the Anadarko termination fee and lower corporate expenses. Foreign currency effects had an unfavorable impact on earnings of $2 million between periods.

CASH FLOW FROM OPERATIONS

Cash flow from operations in the first six months of 2019 was $13.8 billion, compared with $11.9 billion in the corresponding 2018 period. Included in cash flow from operations during second quarter 2019 was $1.0 billion associated with the receipt of the Anadarko merger termination fee. Excluding working capital effects, cash flow from operations in 2019 was $14.1 billion, compared with $14.2 billion in the corresponding 2018 period.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first six months of 2019 were $10.0 billion, compared with $9.2 billion in the corresponding 2018 period. The amounts included $3.1 billion in 2019 and $2.7 billion in 2018 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 85 percent of the companywide total in 2019. Included in 2019 were $0.4 billion of inorganic expenditures, primarily associated with the acquisition of the Pasadena refinery in Texas.

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