95 percent oil and gas reserves replacement;
spending down sharply in 2016
Chevron Corporation (NYSE:CVX) today reported earnings of $415
million ($0.22 per share – diluted) for fourth quarter 2016,
compared with a loss of $588 million ($0.31 per share – diluted) in
the 2015 fourth quarter. Foreign currency effects increased
earnings in the 2016 quarter by $26 million, compared with an
increase of $46 million a year earlier.
Full-year 2016 results were a loss of $497 million ($0.27 per
share – diluted) compared with earnings of $4.6 billion ($2.45 per
share – diluted) in 2015.
Sales and other operating revenues in fourth quarter 2016 were
$30 billion, compared to $28 billion in the year-ago period.
Earnings Summary
Fourth Quarter
Year Millions of dollars
2016
2015 2016 2015 Earnings
by business segment Upstream $ 930 $ (1,361 ) $ (2,537 ) $
(1,961 ) Downstream 357 1,011 3,435 7,601 All Other
(872 ) (238 ) (1,395 )
(1,053 )
Total (1)(2)
$ 415 $ (588
) $ (497 ) $
4,587 (1) Includes foreign currency effects $ 26 $ 46
$ 58 $ 769 (2) Net income (loss) attributable to Chevron
Corporation (See Attachment 1)
“Our 2016 earnings reflect the low oil and gas prices we saw
during the year,” said Chairman and CEO John Watson. “We responded
aggressively to those conditions, cutting capital and operating
expenses by $14 billion. We are well positioned to improve earnings
and be cash flow balanced in 2017 through continued tight spending
and cost control and additional revenue from expected production
growth. That confidence enabled us to increase the 2016 annual
dividend payout for the 29th consecutive year.”
“We were able to reach noteworthy milestones in 2016 on major
capital projects,” Watson added. “We achieved first gas and cargo
shipments at our Gorgon Project in Australia, first gas at our
Chuandongbei Project in China, and increased production from our
Permian Basin shale and tight oil properties. In addition, we
announced the final investment decision on the Future Growth and
Wellhead Pressure Management Project at the company's 50
percent-owned affiliate, Tengizchevroil, in Kazakhstan.”
Watson commented that the company added approximately 900
million barrels of net oil-equivalent proved reserves in 2016.
These additions, which are subject to final reviews, equate to
approximately 95 percent of net oil-equivalent production for the
year. The largest additions were from the Future Growth Project at
Tengizchevroil, the Permian Basin in the United States and the
Wheatstone Project in Australia. The company will provide
additional details relating to 2016 reserve additions in its Annual
Report on Form 10-K scheduled for filing with the SEC on February
23, 2017.
At year-end, balances of cash, cash equivalents and marketable
securities totaled $7.0 billion, a decrease of $4.3 billion from
the end of 2015. Total debt at December 31, 2016 stood at $46.1
billion, an increase of $7.5 billion from a year earlier.
UPSTREAM
Worldwide net oil-equivalent production was 2.67 million barrels
per day in fourth quarter 2016, essentially unchanged from the 2015
fourth quarter. Production increases from major capital projects
and base business were offset by normal field declines, the impact
of asset sales, production entitlement effects in several locations
and the effects of civil unrest in Nigeria. Net oil-equivalent
production for the full year 2016 was 2.59 million barrels per day,
a decrease of 1 percent from the prior year. Production increases
from major capital projects, shale and tight properties, and base
business were more than offset by normal field declines, the impact
of asset sales, the Partitioned Zone shut-in, the effects of civil
unrest in Nigeria and planned turnaround activity.
U.S. Upstream
Fourth Quarter Year Millions of dollars
2016 2015
2016 2015 Earnings
$ 121 $ (1,954 ) $ (2,054 ) $ (4,055 )
U.S. upstream operations earned $121 million in fourth quarter
2016 compared with a loss of $1.95 billion from a year earlier. The
increase was primarily due to lower depreciation, exploration and
operating expenses, and higher crude oil and natural gas
realizations.
The company’s average sales price per barrel of crude oil and
natural gas liquids was $40 in fourth quarter 2016, up from $35 a
year ago. The average sales price of natural gas was $1.98 per
thousand cubic feet, compared with $1.54 in last year’s fourth
quarter.
Net oil-equivalent production of 682,000 barrels per day in
fourth quarter 2016 was down 37,000 barrels per day, or 5 percent,
from a year earlier. Production increases from base business in the
Gulf of Mexico and shale and tight properties in the Permian Basin
in Texas and New Mexico were more than offset by the impact of
asset sales of 58,000 barrels per day and normal field declines.
The net liquids component of oil-equivalent production increased 2
percent in the 2016 fourth quarter to 508,000 barrels per day,
while net natural gas production decreased 21 percent to 1.04
billion cubic feet per day.
International Upstream
Fourth Quarter Year Millions of dollars
2016 2015 2016
2015 Earnings* $ 809
$ 593 $ (483 ) $ 2,094 *Includes foreign
currency effects $ 6 $ 91 $ 122 $ 725
International upstream operations earned $809 million in fourth
quarter 2016 compared with $593 million a year earlier. The
increase was due to higher crude oil realizations, higher natural
gas sales volumes, primarily from the Gorgon Project, and lower
operating expenses. Partially offsetting these effects were higher
tax items, lower crude oil sales volumes, higher depreciation
expenses and lower gains on asset sales. Foreign currency effects
increased earnings by $6 million in the 2016 quarter, compared with
an increase of $91 million a year earlier.
The average sales price for crude oil and natural gas liquids in
fourth quarter 2016 was $44 per barrel, up from $39 a year earlier.
The average sales price of natural gas was $4.07 per thousand cubic
feet, compared with $3.99 in last year’s fourth quarter.
Net oil-equivalent production of 1.99 million barrels per day in
fourth quarter 2016 increased 33,000 barrels per day, or 2 percent,
from a year ago. Production increases from major capital projects
were partially offset by normal field declines, production
entitlement effects in several locations and the effects of civil
unrest in Nigeria. The net liquids component of oil-equivalent
production decreased 3 percent to 1.24 million barrels per day in
the 2016 fourth quarter, while net natural gas production increased
11 percent to 4.50 billion cubic feet per day.
DOWNSTREAM
U.S. Downstream
Fourth Quarter Year Millions of dollars
2016 2015 2016
2015 Earnings $ 0 $ 496
$ 1,307 $ 3,182
U.S. downstream operations were breakeven in fourth quarter 2016
compared with earnings of $496 million a year earlier. The decrease
in earnings was due to lower margins on refined product sales and
higher tax items.
Refinery crude oil input in fourth quarter 2016 decreased 21
percent to 721,000 barrels per day from the year-ago period mainly
due to planned turnaround activity at the company’s refinery in
Richmond, California.
Refined product sales of 1.14 million barrels per day decreased
8 percent from fourth quarter 2015. Branded gasoline sales of
525,000 barrels per day were up 2 percent from the 2015 period.
International Downstream
Fourth Quarter Year
Millions of dollars
2016
2015 2016 2015
Earnings* $ 357 $ 515 $
2,128 $ 4,419 *Includes foreign currency effects $ 53
$ (45 ) $ (25 ) $ 47
International downstream operations earned $357 million in
fourth quarter 2016 compared with $515 million a year earlier. The
decrease was primarily due to lower margins on refined product
sales, partially offset by lower operating expenses. Foreign
currency effects increased earnings by $53 million in fourth
quarter 2016, compared with a decrease of $45 million a year
earlier.
Refinery crude oil input of 801,000 barrels per day in fourth
quarter 2016 increased 18,000 barrels per day from the year-ago
period.
Total refined product sales of 1.49 million barrels per day in
fourth quarter 2016 increased 1 percent from the year-ago period
due to higher gas oil sales.
ALL OTHER
Fourth Quarter
Year Millions of dollars
2016
2015 2016
2015 Net Charges* $ (872 )
(238 ) $ (1,395 ) $ (1,053 ) *Includes
foreign currency effects $ (33 ) $ 0 $ (39 ) $ (3 )
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 2016 were $872 million, compared
with $238 million in the year-ago period. The change between
periods was mainly due to higher tax items and other corporate
charges.
CASH FLOW FROM OPERATIONS
Cash flow from operations in 2016 was $12.8 billion, compared
with $19.5 billion in 2015. Excluding working capital effects, cash
flow from operations in 2016 was $13.4 billion, compared with $21.4
billion in 2015.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in 2016 were $22.4 billion,
compared with $34.0 billion in 2015. The amounts included $3.8
billion in 2016 and $3.4 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 90 percent of
the companywide total in 2016.
NOTICE
Chevron’s discussion of fourth quarter 2016 earnings with
security analysts will take place on Friday, January 27, 2017, at
8:00 a.m. PST. 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,” “pursues,” “may,” “could,” “should,”
“budgets,” “outlook,” “on schedule,” “on track,” “goals,”
“objectives,” “strategies” 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 or the delay or failure of such transactions
to close based on required closing conditions set forth in the
applicable transaction agreements; the potential for 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.
Attachment 1
CHEVRON CORPORATION - FINANCIAL
REVIEW
(Millions of Dollars, Except Per-Share Amounts)
CONSOLIDATED
STATEMENT OF INCOME
(unaudited)
Three Months Year Ended Ended December
31 December 31 REVENUES AND OTHER INCOME
2016 2015 2016 2015 Sales
and other operating revenues *
$ 30,142 $ 28,014
$ 110,215 $ 129,925 Income from equity affiliates
778 919
2,661 4,684 Other income
577 314
1,596 3,868
Total Revenues and Other
Income 31,497 29,247
114,472
138,477
COSTS AND OTHER DEDUCTIONS Purchased crude oil and
products
16,976 14,570
59,321 69,751 Operating,
selling, general and administrative expenses
6,688 7,273
24,952 27,477 Exploration expenses
191 1,358
1,033 3,340 Depreciation, depletion and amortization
4,203 5,400
19,457 21,037 Taxes other than on income
*
2,869 2,856
11,668 12,030 Interest and debt expense
58 -
201 -
Total Costs and Other
Deductions 30,985 31,457
116,632
133,635
Income (Loss) Before Income Tax Expense 512
(2,210 )
(2,160 ) 4,842 Income tax expense (benefit)
74 (1,655 )
(1,729 ) 132
Net Income
(Loss) 438 (555 )
(431 ) 4,710 Less: Net
income attributable to noncontrolling interests
23 33
66 123
NET INCOME (LOSS) ATTRIBUTABLE TO
CHEVRON CORPORATION
$ 415 $ (588 )
$ (497 ) $ 4,587
PER-SHARE OF COMMON STOCK Net Income (Loss)
Attributable to Chevron Corporation - Basic $
0.22 $ (0.31 )
$ (0.27 ) $ 2.46
-
Diluted $ 0.22 $ (0.31 )
$ (0.27
) $ 2.45
Dividends $ 1.08 $ 1.07
$ 4.29 $ 4.28
Weighted Average Number of
Shares Outstanding (000's) - Basic 1,875,694
1,869,072
1,872,789 1,867,941
- Diluted
1,890,044 1,869,072
1,872,789 1,874,971 *
Includes excise, value-added and similar taxes.
$
1,697 $ 1,717
$ 6,905 $ 7,359
Attachment 2
CHEVRON CORPORATION - FINANCIAL REVIEW (Millions of
Dollars) (unaudited)
EARNINGS BY MAJOR
OPERATING AREA
Three Months Year Ended Ended December 31
December 31 2016
2015 2016 2015 Upstream
United States
$ 121 $ (1,954 )
$ (2,054
) $ (4,055 ) International
809 593
(483 ) 2,094 Total Upstream
930
(1,361 )
(2,537 ) (1,961 ) Downstream United States
- 496
1,307 3,182 International
357 515
2,128 4,419 Total Downstream
357
1,011
3,435 7,601 All Other (1)
(872 ) (238 )
(1,395 ) (1,053 )
Total (2) $ 415 $ (588 )
$ (497 ) $ 4,587
Dec 31, Dec. 31,
SELECTED BALANCE
SHEET ACCOUNT DATA
2016 2015 Cash and Cash
Equivalents
$ 6,988 $ 11,022 Marketable Securities
$ 13 $ 310 Total Assets
$ 260,078 $
264,540 Total Debt
$ 46,126 $ 38,549 Total Chevron
Corporation Stockholders' Equity
$ 145,556 $ 152,716
Year Ended December 31
CASH FLOW FROM
OPERATIONS
2016 2015 Net Cash Provided by
Operating Activities
$ 12,846 $ 19,456 Net Increase
in Operating Working Capital
$ (550 ) $ (1,979
) Net Cash Provided by Operating Activities Excluding Working
Capital
$ 13,396 $ 21,435
Three Months
Year Ended Ended December 31 December
31
CAPITAL AND
EXPLORATORY EXPENDITURES (3)
2016 2015 2016
2015 United States Upstream
$
1,243 $ 1,670
$ 4,713 $ 7,582 Downstream
435 541
1,545 1,923 Other
98 171
235 418
Total United States
1,776 2,382
6,493 9,923
International
Upstream
3,246 6,104
15,403 23,535 Downstream
237 215
527 513 Other
2 6
5 8
Total International 3,485
6,325
15,935 24,056
Worldwide $ 5,261 $ 8,707
$ 22,428 $ 33,979
(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 $ 358
$ 1,037 $ 1,344
International
845 583
2,733
2,053 Total
$ 1,077 $ 941
$ 3,770 $ 3,397
Attachment 3
CHEVRON CORPORATION - FINANCIAL REVIEW
Three Months Year Ended
OPERATING
STATISTICS (1)
Ended December 31 December 31 NET LIQUIDS
PRODUCTION (MB/D): (2) 2016 2015
2016 2015 United States
508 499
504 501 International
1,237 1,276
1,215 1,243
Worldwide
1,745 1,775
1,719 1,744
NET NATURAL GAS
PRODUCTION (MMCF/D): (3) United States
1,044
1,320
1,120 1,310 International
4,502 4,065
4,132 3,959
Worldwide 5,546 5,385
5,252
5,269
TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D):
(4) United States
682 719
691 720
International
1,987 1,954
1,903 1,902
Worldwide 2,669 2,673
2,594 2,622
SALES OF NATURAL GAS (MMCF/D): United States
3,045
3,843
3,317 3,913 International
4,598 4,519
4,491 4,299
Worldwide 7,643 8,362
7,808
8,212
SALES OF NATURAL GAS LIQUIDS (MB/D): United
States
149 157
145 153 International
92 87
85 89
Worldwide 241 244
230 242
SALES OF REFINED PRODUCTS (MB/D): United States
1,136
1,229
1,213 1,228 International (5)
1,493 1,471
1,462 1,507
Worldwide 2,629 2,700
2,675
2,735
REFINERY INPUT (MB/D): United States
721
916
900 924 International
801 783
788 778
Worldwide 1,522 1,699
1,688 1,702 (1)
Includes interest in affiliates. (2) Includes net production of
synthetic oil: Canada
51 51
50 47 Venezuela Affiliate
29 28
28 29 (3) Includes natural gas consumed in
operations (MMCF/D): United States
34 66
54 66
International
434 433
432 430
(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):
386 412
377 420
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Chevron CorporationMelissa Ritchie, 925-842-0455
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