Chevron Announces Fourth Quarter 2019 Results

Source Company Press Release
Company Chevron Corporation
Tags Corporate: Corporate Results, Country: United States, Upstream: Drilling Activity, Upstream News
Date January 31, 2020

Delivers on core financial priorities, demonstrates commitment to capital discipline and superior shareholder returns

  • Fourth quarter loss $6.6 billion; earnings excluding special items and FX $2.8 billion
  • Annual earnings $2.9 billion; earnings excluding special items and FX $11.9 billion
  • Cash flow from operations of $27.3 billion in 2019
  • Record annual net oil-equivalent production of 3.06 million barrels per day
  • Dividends and share repurchases of $13.0 billion in 2019

Chevron Corporation (NYSE: CVX) today reported a loss of $6.6 billion ($(3.51) per share - diluted) for fourth quarter 2019, compared with earnings of $3.7 billion ($1.95 per share - diluted) in the fourth quarter 2018. Included in the current quarter were previously announced upstream impairments and write-offs totaling $10.4 billion associated with Appalachia shale, Kitimat LNG, Big Foot and other projects. The company also recognized a $1.2 billion gain on the sale of the U.K. Central North Sea assets in the fourth quarter. Foreign currency effects decreased earnings in the fourth quarter 2019 by $256 million.

Full-year 2019 earnings were $2.9 billion ($1.54 per share - diluted), compared with $14.8 billion ($7.74 per share - diluted) in 2018. Included in 2019 were net charges for special items of $8.7 billion, compared to net charges of $1.2 billion for special items in 2018. Foreign currency effects decreased earnings in 2019 by $304 million.

Earnings excluding special items and FX reflect net income (loss) excluding special items and foreign currency effects. For a reconciliation of earnings excluding special items and FX, see Attachment 5.

Sales and other operating revenues in fourth quarter 2019 were $35 billion, compared to $40 billion in the year-ago period.

Earnings Summary 
    Three Months
Ended Dec. 31 
  Year Ended
Dec. 31 
Millions of dollars    2019    2018    2019    2018 
Earnings by business segment                       
Upstream    $(6,734)    $3,290    $2,576    $13,316   
Downstream    672    859    2,481    3,798   
All Other    (548)    (419)    (2,133)    (2,290)   
Total (1)(2)    $(6,610)    $3,730    $2,924    $14,824   
(1) Includes foreign currency effects      $(256)    $268      $(304)    $611   
(2) Net income attributable to Chevron Corporation (See Attachment 1)   

“Cash flow from operations remained strong in 2019, allowing the company to deliver on all our financial priorities,” said Michael K. Wirth, Chevron’s chairman of the board and chief executive officer. “We paid $9 billion in dividends, repurchased $4 billion of shares, funded our capital program and successfully captured several inorganic investment opportunities, all while reducing debt by more than $7 billion. Earlier this week, we announced a quarterly dividend increase of $0.10 per share, reinforcing our commitment to growing shareholder returns.”

“Organic capital spending held flat at $20 billion in 2019, further demonstrating our commitment to capital discipline. Within this program, we continued the ramp-up of the Permian Basin in Texas and New Mexico and progressed our Future Growth Project at the company’s 50 percent-owned affiliate, Tengizchevroil, in Kazakhstan. For the first time in the company’s history, annual production exceeded 3 million barrels per day of oil equivalent," Wirth added.

The company added approximately 494 million barrels of net oil-equivalent proved reserves in 2019. These additions, which are subject to final reviews, are net of reductions associated with the company's decisions to reduce funding for various gas-related opportunities and asset sales. The largest additions were from the LNG Projects in Australia and deepwater fields in the Gulf of Mexico. The company will provide additional details relating to 2019 reserve additions in its Annual Report on Form 10-K scheduled for filing with the SEC on February 21, 2020.

Significant downstream developments in 2019 included the acquisition of the Pasadena refinery in Texas, and the signing of a conditional agreement to acquire a network of terminals and service stations in Australia. Additionally, Chevron Phillips Chemical Company LLC, the company's 50 percent-owned affiliate, announced plans to jointly develop petrochemical projects in the U.S. Gulf Coast and Qatar".

In 2019, in addition to flaring and methane emission reduction targets, the company also established new performance goals to reduce net greenhouse gas emission intensity from upstream oil and natural gas production. We entered agreements to increase renewable energy in support of our business and invested in emerging low carbon technologies through our Future Energy Fund and other partnerships,” Wirth stated.

At year-end, balances of cash, cash equivalents, time deposits and marketable securities totaled $5.7 billion, a decrease of $4.6 billion from the end of 2018. Total debt at December 31, 2019 stood at $27.0 billion, a decrease of $7.5 billion from a year earlier.

UPSTREAM

Worldwide net oil-equivalent production was 3.08 million barrels per day in fourth quarter 2019, unchanged from a year ago. Worldwide net oil-equivalent production for the full year 2019 was 3.06 million barrels per day, an increase of over 4 percent from 2.93 million barrels per day from the prior year.

U.S. Upstream 
    Three Months
Ended Dec. 31 
  Year Ended
Dec. 31 
Millions of dollars    2019    2018    2019    2018 
Earnings    $(7,465)    $964    $(5,094)    $3,278   

U.S. upstream recorded a loss of $7.5 billion in fourth quarter 2019, compared with earnings of $964 million a year earlier. The decrease was primarily due to $8.2 billion in impairment charges primarily associated with Appalachia shale and Big Foot. Also contributing to the decrease were lower crude oil and natural gas realizations. Partially offsetting these items were higher crude oil and natural gas production.

The company’s average sales price per barrel of crude oil and natural gas liquids was $47 in fourth quarter 2019, down from $56 a year earlier. The average sales price of natural gas was $1.10 per thousand cubic feet in fourth quarter 2019, down from $2.01 in last year’s fourth quarter.

Net oil-equivalent production of 998,000 barrels per day in fourth quarter 2019 was up 140,000 barrels per day from a year earlier. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico were partially offset by normal field declines in the base business. The net liquids component of oil-equivalent production in fourth quarter 2019 increased 14 percent to 771,000 barrels per day, while net natural gas production increased 24 percent to 1.36 billion cubic feet per day, compared to last year's fourth quarter.

Fourth quarter unconventional net oil-equivalent production in the Permian Basin was 514,000 barrels per day, representing growth of 36 percent compared to a year ago.

International Upstream 
    Three Months
Ended Dec. 31 
  Year Ended
Dec. 31 
Millions of dollars    2019    2018    2019    2018 
Earnings*    $731    $2,326    $7,670    $10,038   
*Includes foreign currency effects      $(226)    $250    $(323)    $545   

International upstream operations earned $731 million in fourth quarter 2019, compared with $2.3 billion a year ago. The decrease in earnings was partially due to write-offs and impairment charges of $2.2 billion associated with Kitimat LNG and other gas projects, partly offset by a gain of $1.2 billion on the sale of the U.K. Central North Sea assets and the absence of a fourth quarter 2018 asset write-off. Also contributing to the decrease were lower natural gas realizations and volumes, partially offset by lower depreciation expenses. Foreign currency effects had an unfavorable impact on earnings of $476 million between periods.

The average sales price for crude oil and natural gas liquids in fourth quarter 2019 was $57 per barrel, down from $59 a year earlier. The average sales price of natural gas was $5.71 per thousand cubic feet in the quarter, compared with $6.81 in last year’s fourth quarter.

Net oil-equivalent production of 2.08 million barrels per day in fourth quarter 2019 was down 145,000 barrels per day from a year earlier due to the effect of asset sales, major turnarounds and normal field declines. The net liquids component of oil-equivalent production decreased 6 percent to 1.12 million barrels per day in the 2019 fourth quarter, while net natural gas production of 5.75 billion cubic feet per day decreased 8 percent, compared to last year's fourth quarter.

DOWNSTREAM

U.S. Downstream 
    Three Months
Ended Dec. 31 
  Year Ended
Dec. 31 
Millions of dollars    2019    2018    2019    2018 
Earnings    $488    $256    $1,559    $2,103   

U.S. downstream operations earned $488 million in fourth quarter 2019, compared with earnings of $256 million a year earlier. The increase was mainly due to higher margins on refined product sales and lower operating expenses.

Refinery crude oil input in fourth quarter 2019 increased 6 percent to 975,000 barrels per day from the year-ago period, primarily due to the acquisition of the Pasadena refinery in Texas, partially offset by turnaround activity at the El Segundo, California refinery. Refined product sales of 1.23 million barrels per day were up 2 percent from fourth quarter 2018.

International Downstream 
    Three Months
Ended Dec. 31 
  Year Ended
Dec. 31 
Millions of dollars    2019    2018    2019    2018 
Earnings*    $184    $603    $922    $1,695   
*Includes foreign currency effects      $(32)    $23      $17    $71   

International downstream operations earned $184 million in fourth quarter 2019, compared with $603 million a year earlier. The decrease in earnings was largely due to lower margins on refined product sales, partially offset by favorable tax items. Foreign currency effects had an unfavorable impact on earnings of $55 million between periods.

Refinery crude oil input of 576,000 barrels per day in fourth quarter 2019 decreased 89,000 barrels per day from the year-ago period, mainly due to the major planned turnaround at the Star Petroleum Refining Company in Thailand.

Refined product sales of 1.28 million barrels per day in fourth quarter 2019 were down 9 percent from the year-ago period, mainly due to lower diesel and gasoline sales.

ALL OTHER

    Three Months
Ended Dec. 31 
  Year Ended
Dec. 31 
Millions of dollars    2019    2018    2019    2018 
Net Charges*    $(548)    $(419)    $(2,133)    $(2,290)   
*Includes foreign currency effects      $2    $(5)      $2    $(5)   

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 2019 were $548 million, compared with $419 million in the year-ago period. The change between periods was mainly due to higher tax items. Foreign currency effects were immaterial between periods.

CASH FLOW FROM OPERATIONS

Cash flow from operations in 2019 was $27.3 billion, compared with $30.6 billion in 2018. Excluding working capital effects, cash flow from operations in 2019 was $25.8 billion, compared with $31.3 billion in 2018.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in 2019 were $21.0 billion, compared with $20.1 billion in 2018. The amounts included $6.1 billion in 2019 and $5.7 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 $0.8 billion of inorganic expenditures, primarily associated with the acquisition of the Pasadena refinery in Texas and upstream lease bonus payments.

NOTICE

Chevron’s discussion of fourth quarter 2019 earnings with security analysts will take place on Friday, January 31, 2020, 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 website at chevron.com under the “Investors” section. Additional financial and operating information and other complementary materials will be available under “Events and Presentations” in the “Investors” section on the Chevron website.

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