- Impairments and lower crude oil
prices reduce earnings
- Continued progress on spend
reduction and major growth projects
Chevron Corporation (NYSE:CVX) today reported a loss of $1.5
billion ($0.78 per share – diluted) for second quarter 2016,
compared with earnings of $571 million ($0.30 per share – diluted)
in the second quarter of 2015. Included in the quarter were
impairments and other non-cash charges totaling $2.8 billion,
partially offset by gains on asset sales of $420 million. Foreign
currency effects increased earnings in the 2016 second quarter by
$279 million, compared with a decrease of $251 million a year
earlier.
Sales and other operating revenues in second quarter 2016 were
$28 billion, compared to $37 billion in the year-ago period.
Earnings Summary
Three Months
Ended June 30
Six Months
Ended June 30
Millions of dollars
2016 2015
2016 2015 Earnings by Business Segment
Upstream $ (2,462 ) $ (2,219 ) $ (3,921 ) $ (659 )
Downstream 1,278 2,956 2,013 4,379 All Other (286 )
(166 ) (287 ) (582 )
Total (1)(2) $ (1,470 )
$ 571 $ (2,195
) $ 3,138 (1) Includes foreign
currency effects $ 279 $ (251 ) $ (40 ) $ 329 (2) Net income (loss)
attributable to Chevron Corporation (See Attachment 1)
“The second quarter results reflected lower oil prices and our
ongoing adjustment to a lower oil price world,” said Chairman and
CEO John Watson. “In our upstream business, we recorded impairment
and other charges on certain assets where revenue from expected oil
and gas production is expected to be insufficient to recover costs.
Our downstream business continued to perform well.”
“We continue to make progress towards our goal of getting cash
balanced,” Watson added. “Our operating expenses and capital
spending were reduced over $6 billion from the first six months of
2015.”
“In addition, we’re bringing our major capital projects to
completion,” Watson stated. “We have restarted LNG production and
cargo shipments at Gorgon and Angola LNG, and started up the third
train at the Chuandongbei Project in China. Construction at our
other key projects is progressing, and we expect additional
start-ups later this year. As these projects continue to ramp up,
they are expected to increase net cash generation in future
quarters.”
“We recently announced the final investment decision on the
Future Growth and Wellhead Pressure Management Project at Tengiz in
Kazakhstan,” Watson added. “The project represents an excellent
opportunity for the company. It builds on our strong track record
at Tengiz and is expected to create future value for our
shareholders.”
UPSTREAM
Worldwide net oil-equivalent production was 2.53 million barrels
per day in second quarter 2016, compared with 2.60 million barrels
per day from a year ago. Production increases from project ramp-ups
in the United States, Angola, Canada and other areas were more than
offset by normal field declines, the effect of asset sales, the
Partitioned Zone shut-in, maintenance-related downtime, and the
effects of civil unrest in Nigeria.
U.S. Upstream
Three Months
Ended June 30
Six Months
Ended June 30
Millions of Dollars
2016
2015 2016
2015 Earnings $ (1,113 ) $ (1,038 )
$ (1,963 ) $ (1,498 )
U.S. upstream operations incurred a loss of $1.11 billion in
second quarter 2016 compared with a loss of $1.04 billion from a
year ago. The decrease in earnings was due to lower crude oil and
natural gas realizations, partially offset by lower depreciation,
operating and exploration expenses. In both quarters, depreciation
expense was impacted by a similar amount of impairments and other
charges.
The company’s average sales price per barrel of crude oil and
natural gas liquids was $36 in second quarter 2016, down from $50 a
year ago. The average sales price of natural gas was $1.21 per
thousand cubic feet in second quarter 2016, compared with $1.92 in
last year’s second quarter.
Net oil-equivalent production of 682,000 barrels per day in
second quarter 2016 was down 48,000 barrels per day from a year
earlier. Production increases due to project ramp-ups in the
Marcellus Shale in western Pennsylvania, the Gulf of Mexico, and
the Permian Basin in Texas and New Mexico were more than offset by
the effect of asset sales, maintenance-related downtime, and normal
field declines. The net liquids component of oil-equivalent
production in second quarter 2016 decreased 2 percent to 501,000
barrels per day, while net natural gas production decreased 17
percent to 1.09 billion cubic feet per day.
International Upstream
Three Months
Ended June 30
Six Months
Ended June 30
Millions of Dollars
2016
2015 2016
2015 Earnings* $ (1,349 ) $ (1,181 ) $
(1,958 ) $ 839 *Includes foreign currency effects $ 329
$ (146 ) $ 31 $ 376
International upstream operations incurred a loss of $1.35
billion in second quarter 2016 compared with a loss of $1.18
billion a year ago. The decrease in earnings was due to lower crude
oil and natural gas realizations, higher impairments and other
charges, and lower gains on asset sales. Partially offsetting these
effects were lower exploration and operating expenses. Foreign
currency effects increased earnings by $329 million in the 2016
second quarter, compared with a decrease of $146 million a year
earlier.
The average sales price for crude oil and natural gas liquids in
second quarter 2016 was $40 per barrel, down from $56 a year
earlier. The average price of natural gas was $3.93 per thousand
cubic feet in the quarter, compared with $4.48 in last year’s
second quarter.
Net oil-equivalent production of 1.85 million barrels per day in
second quarter 2016 decreased 20,000 barrels per day, or 1 percent,
from a year ago. Production increases from project ramp-ups in
Angola, Canada and other areas were more than offset by normal
field declines, the Partitioned Zone shut-in and the effects of
civil unrest in Nigeria. The net liquids component of
oil-equivalent production decreased 2 percent to 1.19 million
barrels per day in the 2016 second quarter, while net natural gas
production was essentially unchanged at 3.94 billion cubic feet per
day.
DOWNSTREAM
U.S. Downstream
Three Months
Ended June 30
Six Months
Ended June 30
Millions of Dollars
2016
2015 2016 2015
Earnings $ 537 $ 731 $ 784 $ 1,437
U.S. downstream operations earned $537 million in second quarter
2016 compared with earnings of $731 million a year earlier. The
decrease in earnings was primarily due to lower margins on refined
product sales and lower earnings from the 50 percent-owned Chevron
Phillips Chemical Company LLC. Partially offsetting this decrease
were lower operating expenses and higher gains on asset sales.
Refinery crude oil input in second quarter 2016 increased 4
percent to 955,000 barrels per day from the year-ago period.
Refined product sales of 1.26 million barrels per day were up 3
percent from second quarter 2015, mainly due to higher jet fuel
sales. Branded gasoline sales of 544,000 barrels per day were up 2
percent from the 2015 period.
International Downstream
Three Months
Ended June 30
Six Months
Ended June 30
Millions of Dollars
2016
2015 2016
2015 Earnings* $ 741 $ 2,225
$ 1,229 $ 2,942 *Includes
foreign currency effects $ (26 ) $ (103 ) $ (74 )
$ (49 )
International downstream operations earned $ 741 million in
second quarter 2016 compared with $2.23 billion a year earlier. The
decrease in earnings was primarily due to the absence of a $1.6
billion gain from the sale of the company’s interest in Caltex
Australia Limited in second quarter 2015, partially offset by
second quarter 2016 asset sales gains. Lower margins on refined
product sales also contributed to the decline. Foreign currency
effects decreased earnings by $26 million in second quarter 2016,
compared with a decrease of $103 million a year earlier.
Refinery crude oil input of 764,000 barrels per day in second
quarter 2016 decreased 1 percent from the year-ago period.
Total refined product sales of 1.45 million barrels per day in
second quarter 2016 were down 2 percent from the year-ago period
due to lower gasoline and gas oil sales.
ALL OTHER
Three Months
Ended June 30
Six Months
Ended June 30
Millions of Dollars
2016
2015 2016
2015 Net Charges* $ (286 ) $ (166 )
$ (287 ) $ (582 ) *Includes foreign currency effects
$ (24 ) $ (2 ) $ 3 $ 2
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 2016 were $286 million, compared
with $166 million a year earlier. The change between periods was
mainly due to higher tax items and interest expense, partially
offset by the absence of second quarter 2015 charges related to
reductions in corporate staffs and lower environmental
expenses.
CASH FLOW FROM OPERATIONS
Cash flow from operations in the first six months of 2016 was
$3.7 billion, compared with $9.5 billion in the corresponding 2015
period. Excluding working capital effects, cash flow from
operations in 2016 was $5.8 billion, compared with $11.6 billion in
the corresponding 2015 period.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in the first six months of
2016 were $12.0 billion, compared with $17.3 billion in the
corresponding 2015 period. The amounts included $1.7 billion in
2016 and $1.5 billion in 2015 for the company’s share of
expenditures by affiliates, which did not require cash outlays by
the company. Expenditures for upstream represented 92 percent of
the companywide total in second quarter 2016.
NOTICE
Chevron’s discussion of second quarter 2016 earnings with
security analysts will take place on Friday, July 29, 2016, 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,” “positions,” “may,” “could,” “should,” “budgets,”
“outlook,” “on schedule,” “on track,” “goals,” “objectives” 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 report. 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 the company’s
suppliers, vendors, partners and equity affiliates, particularly
during extended periods of low prices for crude oil and natural
gas; 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 operations due to war,
accidents, political events, civil unrest, severe weather, cyber
threats and terrorist acts, crude oil production quotas or other
actions that might be imposed by the Organization of Petroleum
Exporting Countries or other natural or human causes beyond its
control; changing economic, regulatory and political environments
in the various countries in which the company operates; general
domestic and international economic and political conditions; the
potential liability for remedial actions or assessments under
existing or future environmental regulations and litigation;
significant operational, investment or product changes required by
existing or future environmental statutes and regulations,
including international agreements and national or regional
legislation and regulatory measures to limit or reduce greenhouse
gas emissions; 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; material reductions in
corporate liquidity and access to debt markets; the effects of
changed accounting rules under generally accepted accounting
principles promulgated by rule-setting bodies; the company’s
ability to identify and mitigate the risks and hazards inherent in
operating in the global energy industry; and the factors set forth
under the heading “Risk Factors” on pages 21 through 23 of the
company’s 2015 Annual Report on Form 10-K. Other unpredictable or
unknown factors not discussed in this press release could also have
material adverse effects on forward-looking statements.
CHEVRON
CORPORATION - FINANCIAL REVIEW
Attachment 1 (Millions of Dollars, Except Per-Share
Amounts)
CONSOLIDATED
STATEMENT OF INCOME
(unaudited)
Three MonthsEnded June 30 Six
MonthsEnded June 30 REVENUES AND OTHER INCOME
2016 2015 2016 2015 Sales
and other operating revenues *
$ 27,844 $ 36,829
$ 50,914 $ 69,144 Income from equity affiliates
752 1,169
1,328 2,570 Other income
686
2,359
593 3,201
Total Revenues and Other
Income 29,282 40,357
52,835 74,915
COSTS AND OTHER DEDUCTIONS Purchased crude oil and products
15,278 20,541
26,503 37,734 Operating, selling,
general and administrative expenses
6,087 7,247
12,489 13,586 Exploration expenses
214 1,075
584 1,667 Depreciation, depletion and amortization
6,721 6,958
11,124 11,369 Taxes other than on income
*
2,973 3,173
5,837 6,291 Interest and debt expense
79 -
79 -
Total Costs and Other
Deductions 31,352 38,994
56,616
70,647
Income (Loss) Before Income Tax Expense (2,070
) 1,363
(3,781 ) 4,268 Income tax expense
(benefit)
(607 ) 755
(1,611 ) 1,060
Net Income (Loss) (1,463 ) 608
(2,170
) 3,208 Less: Net income attributable to noncontrolling
interests
7 37
25 70
NET INCOME (LOSS) ATTRIBUTABLE TO
CHEVRON CORPORATION
$ (1,470 ) $ 571
$ (2,195
) $ 3,138
PER-SHARE OF COMMON STOCK Net
Income (Loss) Attributable to Chevron Corporation -
Basic $ (0.78 ) $ 0.30
$
(1.17 ) $ 1.68
- Diluted $ (0.78
) $ 0.30
$ (1.17 ) $ 1.67
Dividends $ 1.07 $ 1.07
$ 2.14 $
2.14
Weighted Average Number of Shares Outstanding
(000's) - Basic 1,871,995 1,867,561
1,870,885 1,867,110
- Diluted 1,871,995
1,876,705
1,870,885 1,876,603 * Includes excise,
value-added and similar taxes.
$ 1,784 $ 1,965
$ 3,436 $ 3,842
CHEVRON
CORPORATION - FINANCIAL REVIEW
Attachment 2 (Millions of Dollars)(unaudited)
EARNINGS BY MAJOR
OPERATING AREA
Three Months Six Months Ended June 30 Ended
June 30 2016 2015 2016
2015 Upstream United States
$ (1,113
) $ (1,038 )
$ (1,963 ) $ (1,498 )
International
(1,349 ) (1,181 )
(1,958
) 839 Total Upstream
(2,462 ) (2,219 )
(3,921 ) (659 ) Downstream United States
537
731
784 1,437 International
741 2,225
1,229 2,942 Total Downstream
1,278
2,956
2,013 4,379 All Other (1)
(286 ) (166 )
(287 ) (582 )
Total (2) $ (1,470 ) $ 571
$ (2,195 ) $ 3,138
SELECTED BALANCE
SHEET ACCOUNT DATA
Jun 30, 2016 Dec. 31, 2015 Cash and Cash
Equivalents
$ 8,764 $ 11,022 Marketable Securities
$ 320 $ 310 Total Assets
$ 261,478 $
264,540 Total Debt
$ 45,085 $ 38,549 Total Chevron
Corporation Stockholders' Equity
$ 147,163 $ 152,716
Six MonthsEnded June 30
CASH FLOW FROM
OPERATIONS
2016 2015 Net Cash Provided by
Operating Activities
$ 3,672 $ 9,539 Net Increase in
Operating Working Capital
$ (2,091 ) $ (2,025
) Net Cash Provided by Operating Activities Excluding Working
Capital
$ 5,763 $ 11,564
Three
MonthsEnded June 30 Six MonthsEnded June
30
CAPITAL AND
EXPLORATORY EXPENDITURES (3)
2016 2015 2016
2015 United States Upstream
$
1,204 $ 1,876
$ 2,480 $ 4,194 Downstream
332 531
753 816 Other
53 88
75 151
Total United States 1,589
2,495
3,308 5,161
International Upstream
3,818 6,114
8,508 11,956 Downstream
116 114
175 189 Other
- 1
1 1
Total International 3,934 6,229
8,684 12,146
Worldwide $
5,523 $ 8,724
$ 11,992 $
17,307
(1)
Includes worldwide cash management and
debt financing activities, corporate administrative functions,
insurance operations, real estate activities, and technology
companies.
(2)
Net Income (Loss) Attributable to Chevron
Corporation (See Attachment 1)
(3)
Includes interest in affiliates:
United States
$ 232 $ 306
$ 568 $ 540
International
680 490
1,135 986
Total
$ 912 $ 796
$
1,703 $ 1,526
CHEVRON
CORPORATION - FINANCIAL REVIEW
Attachment 3
Three Months Six Months
OPERATING
STATISTICS (1)
Ended June 30 Ended June 30 NET LIQUIDS PRODUCTION
(MB/D): (2) 2016 2015
2016 2015 United States
501 511
495 500 International
1,188 1,211
1,240 1,261
Worldwide 1,689 1,722
1,735 1,761
NET NATURAL GAS PRODUCTION (MMCF/D): (3) United
States
1,088 1,312
1,177 1,285 International
3,943 3,931
3,994 3,978
Worldwide 5,031
5,243
5,171 5,263
TOTAL NET OIL-EQUIVALENT
PRODUCTION (MB/D): (4) United States
682 730
692 714 International
1,846 1,866
1,905 1,924
Worldwide 2,528 2,596
2,597 2,638
SALES OF NATURAL GAS (MMCF/D): United States
3,154
3,777
3,481 3,957 International
4,503 4,130
4,531 4,286
Worldwide 7,657 7,907
8,012
8,243
SALES OF NATURAL GAS LIQUIDS (MB/D): United
States
141 163
135 146 International
92 84
90 95
Worldwide 233 247
225 241
SALES OF REFINED PRODUCTS (MB/D): United States
1,263
1,229
1,237 1,218 International (5)
1,449 1,478
1,442 1,529
Worldwide 2,712 2,707
2,679
2,747
REFINERY INPUT (MB/D): United States
955
916
956 918 International
764 774
780 777
Worldwide 1,719 1,690
1,736 1,695
(1)
Includes interest in affiliates.
(2)
Includes net production of synthetic
oil:
Canada
43 28
46 39 Venezuela Affiliate
28 29
28 30
(3)
Includes natural gas consumed in
operations (MMCF/D):
United States
71 66
69 68 International
430
423
430 438
(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):
362 367
366 426
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Chevron CorporationMelissa Ritchie, +1 925-842-0455
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