Chevron Corporation has reported earnings of US$2.6 billion (US$1.37 per share – diluted) for 1Q15, compared with US$4.5 billion (US$2.36 per share – diluted) in 1Q14. Foreign currency effects increased earnings in 1Q15 by US$580 million, compared with a decrease of US$79 million a year earlier.Sales and other operating revenues in 1Q15 were US$32 billion, compared to US$51 billion in the same period a year earlier.
“First quarter earnings declined from a year ago due to sharply lower oil prices, which reduced revenue and earnings in our upstream business,” said Chairman and CEO John Watson. “Downstream operations were strong, benefitting from lower feedstock costs and improved refinery reliability.”
“We’re responding to the current price environment by capturing cost reductions, pacing new project approvals and further streamlining our portfolio as planned. We’re taking a number of deliberate actions to lower our cost structure, and I expect these efforts to increasingly show through in our financial results as the year progresses.”
“Production increased over 3% in the period, and we are hitting major milestones on our development projects under construction, like Gorgon and Wheatstone in Australia,” Watson added. “We remain on track to deliver significant cash flow and production growth by 2017.”
Worldwide net oil equivalent production was 2.68 million bpd in 1Q15, up from 2.59 million bpd in 1Q14. This production increase of over 3% came from project ramp ups in the United States, Bangladesh and Argentina, along with production entitlement effects in several locations. Normal field declines and the effect of asset sales partially offset these effects.
US Upstream operations incurred a loss of US$460 million in 1Q15 compared to earnings of US$912 million from a year earlier, largely due to sharply lower crude oil realisations. Higher depreciation expenses, in part due to impairments, and lower natural gas realisations, were largely offset by higher crude oil production and lower operating expenses.
The company’s average sales price per barrel of crude oil and natural gas liquids was US$43 in 1Q15, down from US$91 a year ago. The average sales price of natural gas was US$2.27/thousand ft3, compared with US$4.77 in last year’s first quarter.
Net oil equivalent production of 699 000 bpd in 1Q15 was up 59 000 bpd, or 9%, from a year earlier. Production increased 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. The net liquids component of oil equivalent production increased 12% in 1Q15 to 489 000 bpd, while net natural gas production increased 4% in 1Q15 to 1.26 billion ft3/d.
International Upstream earnings of US$2.02 billion decreased US$1.38 billion from 1Q14. Sharply lower crude oil realisations were partially offset by lower tax items, including a reduction in statutory tax rates in the UK, higher gains on asset sales and lower operating expenses.
Foreign currency effects increased earnings by US$522 million in 1Q15, compared with a decrease of US$53 million a year earlier. The average sales price for crude oil and natural gas liquids in 1Q15 was US$46/bbl, down from US$99 a year earlier. The average price of natural gas was US$5.01/thousand ft3 compared with US$6.02 in last year’s first quarter.
Net oil equivalent production of 1.98 million bpd in 1Q15 was up 34 000 bpd, or 2%, from a year ago. Production increases from entitlement effects in several locations, project ramp ups in Bangladesh and Argentina, and improved weather conditions were partially offset by normal field declines and the effect of asset sales. The net liquids component of oil equivalent production increased 3% to 1.31 million bpd in 1Q15, while net natural gas production was essentially unchanged at 4.03 billion ft3/d.
US Downstream operations earned US$706 million in 1Q15 compared with earnings of US$422 million a year earlier. The increase was due to higher margins on refined product sales, partially offset by the absence of a 2014 gain on sale of an interest in a pipeline affiliate and lower earnings fromthe 50% owned Chevron Phillips Chemical Company LLC.
Refinery crude oil input of 918 000 bpd in 1Q15 increased 46 000 bpd from the year ago period. The increase was primarily due to lower 2015 downtime at refineries in Richmond and El Segundo, California.
Refined product sales of 1.21 million bpd were up 1% from 1Q14. Branded gasoline sales of 504 000 bpd were essentially flat with the 2014 period.
International Downstream operations earned US$717 million in 1Q15 compared with US$288 million a year earlier. The increase was due to higher margins on refined product sales, partially offset by an unfavourable change in effects on derivative instruments. Foreign currency effects increased earnings by US$54 million in 1Q15, compared with a decrease of US$28 million a year earlier.
Refinery crude oil input of 782 000 bpd in 1Q15 increased 8000 bpd from the year ago period. Increased crude runs due to the absence of 2014 planned downtime at the Star Petroleum Refining Company in Thailand were largely offset by the decrease due to the October 2014 conversion of an affiliate refinery into an import terminal in Kurnell, Australia.
Total refined product sales of 1.58 million bpd in the 2015 first quarter were up 177 000 bpd from the year ago period, mainly due to higher gasoline and jet fuel sales.
Adapted from press release by Rosalie Starling