- Strong cash flow drives dividend
increase of $0.04 per share
- Reserves replacement tops 150
percent
- Production grows 5 percent; 4 to 7
percent growth targeted for 2018
Chevron Corporation (NYSE: CVX) today reported earnings of $3.1
billion ($1.64 per share – diluted) for fourth quarter 2017,
compared with $415 million ($0.22 per share – diluted) in the 2016
fourth quarter. Included in the quarter were non-cash provisional
tax benefits of $2.02 billion related to U.S. tax reform and a
non-cash charge of $190 million related to a former mining asset.
Foreign currency effects decreased earnings in the 2017 fourth
quarter by $96 million.
Full-year 2017 earnings were $9.2 billion ($4.85 per share –
diluted) compared with a loss of $497 million ($0.27 per share –
diluted) in 2016. Included in 2017 were non-cash provisional tax
benefits of $2.02 billion related to U.S. tax reform, gains on
asset sales of $1.44 billion, and impairments and other non-cash
charges of $840 million. Foreign currency effects decreased
earnings in 2017 by $446 million.
Sales and other operating revenues in fourth quarter 2017 were
$36 billion, compared to $30 billion in the year-ago period.
Earnings Summary
Fourth Quarter Year Millions of
dollars
2017 2016 2017
2016 Earnings by business segment
Upstream $5,291 $930 $8,150 $(2,537 ) Downstream 1,279 357
5,214 3,435 All Other (3,459 ) (872 ) (4,169 )
(1,395 )
Total (1)(2) $3,111
$415 $9,195
$(497 ) (1) Includes foreign currency effects $(96 )
$26 $(446 ) $58 (2) Net income (loss) attributable to Chevron
Corporation (See Attachment 1)
“Earnings and cash flow grew significantly in 2017,” said
Chairman and CEO Michael Wirth. “We achieved our objective of being
cash flow positive through deliberate actions to reduce capital
expenditures, lower our cost structure, start and ramp-up projects,
and conclude planned asset sales. Higher commodity prices helped as
well. These improvements give us the confidence to increase the
dividend by $0.04 per share, which puts us on track to make 2018
the 31st consecutive year with an increase in annual dividend
payout.”
“We replaced more than 150 percent of the reserves we produced,
and reached several significant upstream project milestones in
2017,” Wirth added. “These included our first LNG shipments from
Train 3 at Gorgon and Train 1 at Wheatstone in Australia. We also
posted impressive production growth in the Permian Basin in the
U.S.”
The company added approximately 1.54 billion barrels of net
oil-equivalent proved reserves in 2017. These additions, which are
subject to final reviews, equate to approximately 155 percent of
net oil-equivalent production for the year. The largest additions
were from the Permian Basin in the United States and the Gorgon
Project in Australia. The company will provide additional details
relating to 2017 reserve additions in its Annual Report on Form
10-K scheduled for filing with the SEC on February 22, 2018.
“Our net oil-equivalent production grew by 5 percent in 2017,
including the effects of asset sales,” Wirth commented.
“Importantly, we expect that our 2018 production will continue to
grow by 4 to 7 percent, driven primarily by Australian LNG and the
acceleration of development activities in the Permian, where
investment economics continue to improve.”
“In the downstream, we made significant progress on our growth
investments,” Wirth added. Chevron Phillips Chemical Company LLC,
the company’s 50 percent-owned affiliate, achieved start-up of two
polyethylene units and reached mechanical completion of a new
ethane cracker at its U.S. Gulf Coast Petrochemicals Project in
Texas.
At year-end, balances of cash, cash equivalents and marketable
securities totaled $4.8 billion, a decrease of $2.2 billion from
the end of 2016. Total debt at December 31, 2017 stood at $38.8
billion, a decrease of $7.4 billion from a year earlier.
The company’s Board of Directors approved a $0.04 per share
increase in the quarterly dividend to $1.12 per share, payable in
March 2018.
UPSTREAM
Worldwide net oil-equivalent production was 2.74 million barrels
per day in fourth quarter 2017, compared with 2.67 million barrels
per day from a year ago. Net oil-equivalent production for the full
year 2017 was 2.73 million barrels per day, compared with 2.59
million barrels per day from the prior year.
U.S. Upstream
Fourth Quarter Year Millions of
dollars
2017 2016 2017
2016 Earnings $3,688 $121 $3,640
$(2,054 )
U.S. upstream operations earned $3.69 billion in fourth quarter
2017, compared with earnings of $121 million from a year earlier.
The improvement reflected a benefit of $3.33 billion from U.S. tax
reform along with higher crude oil realizations, partially offset
by the absence of gains on fourth quarter 2016 asset sales.
The company’s average sales price per barrel of crude oil and
natural gas liquids was $50 in fourth quarter 2017, up from $40 a
year earlier. The average sales price of natural gas was $1.86 per
thousand cubic feet in fourth quarter 2017, compared with $1.98 in
last year’s fourth quarter.
Net oil-equivalent production of 671,000 barrels per day in
fourth quarter 2017 was down 11,000 barrels per day from a year
earlier. Production increases from shale and tight properties in
the Permian Basin in Texas and New Mexico, and base business in the
Gulf of Mexico, were more than offset by the impact of asset sales
of 57,000 barrels per day, normal field declines, higher downtime
and hurricane effects in the Gulf of Mexico. The net liquids
component of oil-equivalent production in fourth quarter 2017
increased 2 percent to 518,000 barrels per day, while net natural
gas production decreased 12 percent to 920 million cubic feet per
day primarily as a result of asset sales.
International Upstream
Fourth Quarter Year Millions of
dollars
2017 2016 2017
2016 Earnings* $1,603 $809 $4,510 $(483 )
*Includes foreign currency effects $(14 ) $6 $(456 ) $122
International upstream operations earned $1.60 billion in fourth
quarter 2017, compared with $809 million a year ago. The increase
in earnings was mainly due to higher crude oil realizations and
higher natural gas sales volumes, partially offset by higher
depreciation expense associated with higher production. Foreign
currency effects had an unfavorable impact on earnings of $20
million between periods.
The average sales price for crude oil and natural gas liquids in
fourth quarter 2017 was $57 per barrel, up from $44 a year earlier.
The average price of natural gas was $4.93 per thousand cubic feet
in the quarter, compared with $4.07 in last year’s fourth
quarter.
Net oil-equivalent production of 2.07 million barrels per day in
fourth quarter 2017 was up 82,000 barrels per day from a year
earlier. Production increases from major capital projects,
primarily Gorgon and Wheatstone in Australia and Angola LNG, were
partially offset by production entitlement effects in several
locations, normal field declines, and the impact of asset sales of
27,000 barrels per day. The net liquids component of oil-equivalent
production decreased 3 percent to 1.20 million barrels per day in
the 2017 fourth quarter, while net natural gas production increased
16 percent to 5.24 billion cubic feet per day.
DOWNSTREAM
U.S. Downstream
Fourth Quarter Year Millions of
dollars
2017 2016 2017
2016 Earnings $1,195 $0 $2,938
$1,307
U.S. downstream operations earned $1.20 billion in fourth
quarter 2017 compared with breakeven a year earlier. The increase
was primarily due to a $1.16 billion benefit from U.S. tax reform.
Also contributing to the increase were higher margins on refined
product sales primarily reflecting the absence of fourth quarter
2016 planned turnaround activity at the Richmond refinery, and
lower operating expenses. Partly offsetting these effects were
impacts from Hurricane Harvey at the 50 percent-owned Chevron
Phillips Chemical Company’s Cedar Bayou, Texas, petrochemical
plant.
Refinery crude oil input in fourth quarter 2017 increased 16
percent to 834,000 barrels per day from the year-ago period,
primarily due to the absence of fourth quarter 2016 planned
turnaround activity at the Richmond refinery, partially offset by a
planned turnaround at the El Segundo refinery and impacts from
Hurricane Nate at the Pascagoula refinery. Refined product sales of
1.17 million barrels per day increased 3 percent from fourth
quarter 2016, primarily due to increased diesel sales. Branded
gasoline sales of 518,000 barrels per day decreased 1 percent from
the 2016 period.
International Downstream
Fourth Quarter Year Millions of
dollars
2017 2016 2017
2016 Earnings* $84 $357 $2,276
$2,128 *Includes foreign currency effects $(62) $53
$(90) $(25)
International downstream operations earned $84 million in fourth
quarter 2017, compared with $357 million a year earlier. The
decrease in earnings was largely due to lower margins on refined
product sales. Foreign currency effects had an unfavorable impact
on earnings of $115 million between periods.
Refinery crude oil input of 761,000 barrels per day in fourth
quarter 2017 decreased 40,000 barrels per day from the year-ago
period mainly due to the sale of the company’s Canadian refining
asset in third quarter 2017, partially offset by increased crude
runs at the company’s affiliate, Singapore Refining Company.
Total refined product sales of 1.52 million barrels per day in
fourth quarter 2017 were up 2 percent from the year-ago period,
primarily due to higher fuel oil sales.
ALL OTHER
Fourth Quarter Year Millions of
dollars
2017 2016 2017
2016 Net charges* $(3,459 ) $(872 )
$(4,169 ) $(1,395 ) *Includes foreign currency
effects $(20 ) $(33 ) $100 $(39 )
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 2017 were $3.46 billion, compared
with $872 million a year earlier. The change between periods was
mainly due to higher tax items, primarily reflecting a $2.47
billion expense from U.S. tax reform, and a reclamation related
charge of $190 million for a former mining asset. Foreign currency
effects decreased net charges by $13 million between periods.
CASH FLOW FROM OPERATIONS
Cash flow from operations in 2017 was $20.5 billion, compared
with $12.8 billion in 2016. Excluding working capital effects, cash
flow from operations in 2017 was $20.0 billion, compared with $13.4
billion in 2016.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in 2017 were $18.8 billion,
compared with $22.4 billion in 2016. The amounts included $4.7
billion in 2017 and $3.8 billion in 2016 for the company’s share of
expenditures by affiliates, which did not require cash outlays by
the company. Upstream expenditures represented 87 percent of the
company’s investments.
NOTICE
Chevron’s discussion of fourth quarter 2017 earnings with
security analysts will take place on Friday, February 2, 2018, 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 www.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.
As used in this press release, the term “Chevron” and such terms
as “the company,” “the corporation,” “our,” “we” and “us” may refer
to Chevron Corporation, one or more of its consolidated
subsidiaries, or to all of them taken as a whole. All of these
terms are used for convenience only and are not intended as a
precise description of any of the separate companies, each of which
manages its own affairs.
The company’s estimates of the impact of the 2017 U.S. tax
legislation, codified as Public Law no. 115-97, in particular the
provisional tax benefit to the company, are based on the company’s
current interpretations and assumptions and are subject to change
based on additional interpretations and analysis or updated
regulatory or accounting guidance that may be issued with respect
to the tax legislation.
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,” “trends,” ”guidance,” “focus,” “on schedule,”
“on track,” "is slated,” “goals,” “objectives,” “strategies,”
“opportunities,” 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 press release. 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 shares or the delay or failure of such
transactions to close based on required closing conditions; 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 impact of the
2017 U.S. tax legislation on the company’s future results; 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 20
through 22 of the company’s 2016 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
2017 2016 2017 2016 Sales
and other operating revenues *
$ 36,381 $ 30,142
$ 134,674 $ 110,215 Income from equity affiliates
936 778
4,438 2,661 Other income
299
577
2,610 1,596
Total Revenues and Other
Income 37,616 31,497
141,722
114,472
COSTS AND OTHER DEDUCTIONS Purchased crude
oil and products
21,158 16,976
75,765 59,321
Operating, selling, general and administrative expenses
6,531 6,688
23,885 24,952 Exploration expenses
356 191
864 1,033 Depreciation, depletion and
amortization
4,735 4,203
19,349 19,457 Taxes other
than on income *
3,182 2,869
12,331 11,668 Interest
and debt expense
173 58
307 201
Total Costs and Other Deductions 36,135 30,985
132,501 116,632
Income (Loss) Before Income
Tax Expense 1,481 512
9,221 (2,160 ) Income tax
expense (benefit)
(1,637 ) 74
(48 )
(1,729 )
Net Income (Loss) 3,118 438
9,269
(431 ) Less: Net income attributable to noncontrolling interests
7 23
74 66
NET INCOME (LOSS) ATTRIBUTABLE TO
CHEVRON CORPORATION
$ 3,111 $ 415
$ 9,195 $
(497 )
PER-SHARE OF COMMON STOCK Net Income (Loss)
Attributable to Chevron Corporation
- Basic $ 1.65 $
0.22
$ 4.88 $ (0.27 )
- Diluted $
1.64 $ 0.22
$ 4.85 $ (0.27 )
Dividends
$ 1.08 $ 1.08
$ 4.32 $ 4.29
Weighted Average Number of Shares Outstanding (000's) -
Basic 1,888,199 1,875,694
1,882,834 1,872,789
- Diluted 1,906,146 1,890,044
1,897,633
1,872,789 * Includes excise, value-added and similar taxes.
$ 1,874 $ 1,697
$ 7,189 $ 6,905
Attachment 2
CHEVRON CORPORATION - FINANCIAL REVIEW (Millions of
Dollars) (unaudited)
EARNINGS BY MAJOR
OPERATING AREA
Three Months Year Ended Ended
December 31 December 31 2017 2016
2017 2016 Upstream United States
$
3,688 $ 121
$ 3,640 $ (2,054 ) International
1,603 809
4,510 (483 ) Total
Upstream
5,291 930
8,150 (2,537
) Downstream United States
1,195 -
2,938 1,307
International
84 357
2,276 2,128
Total Downstream
1,279 357
5,214
3,435 All Other (1)
(3,459 ) (872 )
(4,169 ) (1,395 )
Total (2) $
3,111 $ 415
$ 9,195 $
(497 )
Dec 31, Dec 31,
SELECTED BALANCE
SHEET ACCOUNT DATA
2017 2016 Cash and Cash Equivalents
$
4,813 $ 6,988 Marketable Securities
$ 9 $ 13
Total Assets
$ 253,806 $ 260,078 Total Debt
$
38,763 $ 46,126 Total Chevron Corporation Stockholders'
Equity
$ 148,124 $ 145,556
Year Ended
December 31
CASH FLOW FROM
OPERATIONS (Preliminary)
2017 2016 Net Cash Provided by Operating Activities
$ 20,515 $ 12,846 Net Increase in Operating Working
Capital
$ 476 $ (550 ) Net Cash Provided by Operating
Activities Excluding Working Capital
$ 20,039 $
13,396
Three Months Year Ended Ended
December 31 December 31
CAPITAL AND
EXPLORATORY EXPENDITURES (3)
2017 2016 2017 2016 United
States Upstream
$ 1,739 $ 1,243
$
5,145 $ 4,713 Downstream
607 435
1,656 1,545
Other
107 98
239 235
Total United States 2,453 1,776
7,040 6,493
International Upstream
2,742 3,246
11,243 15,403 Downstream
237 237
534 527 Other
3 2
4 5
Total
International 2,982 3,485
11,781
15,935
Worldwide $ 5,435
$ 5,261
$ 18,821 $ 22,428
(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
$ 269 $ 232
$ 745 $ 1,037 International
1,222 845
3,998 2,733
Total
$ 1,491 $ 1,077
$
4,743 $ 3,770
Attachment 3
CHEVRON CORPORATION - FINANCIAL REVIEW
Three Months Year Ended
OPERATING
STATISTICS (1)
Ended December 31 December 31 NET LIQUIDS
PRODUCTION (MB/D): (2) 2017
2016 2017 2016 United States
518 508
519 504 International
1,195 1,237
1,204 1,215
Worldwide 1,713 1,745
1,723
1,719
NET NATURAL GAS PRODUCTION (MMCF/D): (3)
United States
920 1,044
970 1,120 International
5,242 4,502
5,062 4,132
Worldwide 6,162
5,546
6,032 5,252
TOTAL NET OIL-EQUIVALENT
PRODUCTION (MB/D): (4) United States
671 682
681 691 International
2,069 1,987
2,047 1,903
Worldwide 2,740 2,669
2,728 2,594
SALES OF NATURAL GAS (MMCF/D): United States
3,456
3,045
3,331 3,317 International
5,270 4,598
5,081 4,491
Worldwide 8,726 7,643
8,412
7,808
SALES OF NATURAL GAS LIQUIDS (MB/D): United
States
129 149
139 145 International
90 92
93 85
Worldwide 219 241
232 230
SALES OF REFINED PRODUCTS (MB/D): United States
1,172
1,136
1,197 1,213 International (5)
1,518 1,493
1,493 1,462
Worldwide 2,690 2,629
2,690
2,675
REFINERY INPUT (MB/D): United States
834
721
901 900 International
761 801
760 788
Worldwide 1,595 1,522
1,661 1,688
(1) Includes interest in affiliates. (2) Includes net production of
synthetic oil: Canada
49 51
51 50 Venezuela Affiliate
23 29
28 28 (3) Includes natural gas consumed in
operations (MMCF/D): United States
35 34
37 54
International
545 434
528 432
(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):
385 386
366 377
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version on businesswire.com: http://www.businesswire.com/news/home/20180202005099/en/
Chevron CorporationMelisa Ritchiemritchie@chevron.com
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