Chevron Corporation (NYSE:CVX) today reported earnings of $2.0 billion ($1.09 per share – diluted) for third quarter 2015, compared with earnings of $5.6 billion ($2.95 per share – diluted) in the 2014 third quarter. Foreign currency effects increased earnings in the 2015 quarter by $394 million, compared with an increase of $366 million a year earlier.

Sales and other operating revenues in third quarter 2015 were $33 billion, compared to $52 billion in the year-ago period.

“Third quarter earnings were down substantially from a year ago,” said Chairman and CEO John Watson. “While downstream earnings remained strong, lower overall earnings reflected weaker market prices for both crude oil and natural gas, which depressed upstream profitability. We are focused on improving results by changing outcomes within our control. Operating and administrative expenses are 7 percent lower than last year, and we expect further reductions in the quarters ahead.”

“We expect capital and exploratory expenditures for 2016 to be $25-28 billion, roughly 25 percent lower than this year’s budget,” Watson continued. “We expect further reductions in spending for 2017 and 2018, to the $20 to $24 billion range, depending on business conditions at the time. With the lower investment, we anticipate reducing our employee workforce by 6–7,000.”

“We continue to make good progress on our asset sales program,” Watson continued. “In the last two years we’ve generated $11 billion in proceeds. We expect $5-10 billion in additional proceeds by the end of 2017.”

Recent company milestones include:

• Australia – Continued to progress commissioning activities in preparation for start-up of Train 1 of the Gorgon Project. The Jansz-Io Field subsea infrastructure is fully complete. The first two wells have been opened to the Jansz pipeline, confirming the full operability of these subsea systems. All Train 2 modules are set on foundations and construction is progressing on critical path activities. Nine of 13 Train 3 modules have been delivered to site and set on foundations.
• Australia – Continued progress on construction of the Wheatstone Project. All subsea equipment and flowlines are installed and offshore platform hook-up and commissioning is progressing on plan. Seventeen of 24 Train 1 process modules required for first LNG have been delivered to site.
• United States – Announced a successful appraisal well at the Anchor prospect in the deepwater Gulf of Mexico.

UPSTREAM

Worldwide net oil-equivalent production was 2.54 million barrels per day in third quarter 2015, down from 2.57 million barrels per day in the 2014 third quarter. Production increases from project ramp-ups in the United States and Bangladesh, and production entitlement effects in several locations, were more than offset by the Partitioned Zone shut-in, normal field declines, the effect of asset sales and higher planned maintenance-related downtime at Tengizchevroil in Kazakhstan.

U.S. upstream operations incurred a loss of $603 million in third quarter 2015 compared to earnings of $929 million from a year earlier. The decrease was due to sharply lower crude oil realizations, higher depreciation expenses and the absence of gains on asset sales. Partially offsetting these effects were higher crude oil production and lower operating expenses.

The company’s average sales price per barrel of crude oil and natural gas liquids was $42 in third quarter 2015, down from $87 a year ago. The average sales price of natural gas was $1.96 per thousand cubic feet, compared with $3.46 in last year’s third quarter.

Net oil-equivalent production of 730,000 barrels per day in third quarter 2015 was up 53,000 barrels per day, or 8 percent, from a year earlier. Production increases due to project ramp-ups in the Gulf of Mexico, the Permian Basin in Texas and New Mexico, and the Marcellus Shale in western Pennsylvania were only partially offset by normal field declines and the effect of asset sales. The net liquids component of oil-equivalent production increased 9 percent in the 2015 third quarter to 505,000 barrels per day, while net natural gas production increased 6 percent to 1.35 billion cubic feet per day.

International upstream earned $662 million in third quarter 2015 compared to earnings of $3.72 billion from a year earlier. The decrease was due to sharply lower crude oil realizations and higher tax items, partially offset by lower operating expenses. Foreign currency effects increased earnings by $258 million in the 2015 quarter, compared with an increase of $344 million a year earlier.

The average sales price for crude oil and natural gas liquids in third quarter 2015 was $45 per barrel, down from $93 a year earlier. The average price of natural gas was $4.68 per thousand cubic feet, compared with $5.73 in last year’s third quarter.

Net oil-equivalent production of 1.81 million barrels per day in third quarter 2015 decreased 82,000 barrels per day, or 4 percent, from a year ago. Production increases from entitlement effects in several locations and a project ramp-up in Bangladesh were more than offset by the Partitioned Zone shut-in, normal field declines, and higher planned maintenance-related downtime at Tengizchevroil in Kazakhstan. The net liquids component of oil-equivalent production decreased 5 percent to 1.17 million barrels per day in the 2015 third quarter, while net natural gas production decreased 3 percent to 3.81 billion cubic feet per day.

DOWNSTREAM

U.S. downstream operations earned $1.2 billion in third quarter 2015 compared with earnings of $809 million a year earlier. The increase was due to higher margins on refined product sales and lower tax items, partially offset by the absence of a 2014 asset sale gain.

Refinery crude oil input in third quarter 2015 increased 2 percent to 942,000 barrels per day from the year-ago period.

Refined product sales of 1.25 million barrels per day were up 2 percent from third quarter 2014, primarily reflecting higher jet fuel sales. Branded gasoline sales of 536,000 barrels per day were up 2 percent from the 2014 period.

International downstream operations earned $962 million in third quarter 2015 compared with $578 million a year earlier. The increase was primarily due to higher margins on refined product sales and a favorable change in effects on derivative instruments. Foreign currency effects increased earnings by $141 million in third quarter 2015, compared with an increase of $21 million a year earlier.

Refinery crude oil input of 777,000 barrels per day in third quarter 2015 decreased 61,000 barrels per day from the year-ago period, mainly as a result of the Caltex Australia Limited divestment.

Total refined product sales of 1.5 million barrels per day in third quarter 2015 were essentially unchanged from the year-ago period. Excluding the effects of the Caltex Australia Limited divestment, refined product sales were up 133,000 barrels per day, primarily reflecting higher sales of jet fuel and gas oil.

ALL OTHER

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 third quarter 2015 were $233 million, compared with $443 million in the year-ago period. The change between periods was mainly due to lower environmental reserve additions and other corporate charges.

CASH FLOW FROM OPERATIONS

Cash flow from operations in the first nine months of 2015 was $14.9 billion, compared with $25.0 billion in the corresponding 2014 period. Excluding working capital effects, cash flow from operations in 2015 was $17.2 billion, compared with $25.4 billion in 2014.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first nine months of 2015 were $25.3 billion, compared with $29.0 billion in the corresponding 2014 period. The amounts included $2.5 billion in 2015 and $2.4 billion in 2014 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 the first nine months of 2015.