- Record annual net oil-equivalent
production of 2.93 million barrels per day, 7 percent higher than a
year earlier; 4 to 7 percent growth targeted for 2019
- Reserves replacement of 136
percent
- Dividend increase of $0.07 per
share
- Share repurchases of $1.0 billion in
fourth quarter
Chevron Corporation (NYSE: CVX) today reported earnings of $3.7
billion ($1.95 per share – diluted) for fourth quarter 2018,
compared with $3.1 billion ($1.64 per share – diluted) in the
fourth quarter of 2017, which included $2.02 billion in tax
benefits related to U.S. tax reform. Included in the current
quarter was an asset write-off totaling $270 million. Foreign
currency effects increased earnings in the 2018 fourth quarter by
$268 million.
Full-year 2018 earnings were $14.8 billion ($7.74 per share –
diluted), compared with $9.2 billion ($4.85 per share – diluted) in
2017. Included in 2018 were impairments and other charges of $1.59
billion and a gain on an asset sale of $350 million. Foreign
currency effects increased earnings in 2018 by $611 million.
Sales and other operating revenues in fourth quarter 2018 were
$40 billion, compared to $36 billion in the year-ago period.
Earnings Summary
Fourth Quarter Year Millions of
dollars
2018 2017 2018
2017 Earnings by business segment
Upstream $ 3,290 $ 5,291 $ 13,316 $ 8,150 Downstream 859
1,279 3,798 5,214 All Other (419 )
(3,459 ) (2,290 ) (4,169 )
Total
(1)(2) $ 3,730 $
3,111 $ 14,824
$ 9,195
(1) Includes foreign currency effects
$ 268 $ (96 ) $ 611 $ (446 )
(2) Net income attributable to Chevron
Corporation (See Attachment 1)
“Financial and operational results were strong in 2018,” said
Michael K. Wirth, Chevron’s chairman of the board and chief
executive officer. “Earnings and cash flow continued to grow, and
we delivered on all of our financial priorities. We increased the
dividend, funded an attractive capital program, strengthened the
balance sheet and returned surplus cash to our shareholders. During
the second half of the year we repurchased $1.75 billion of the
company’s stock, and earlier this week we announced a quarterly
dividend increase of $0.07 per share.”
“We reached significant milestones with upstream major capital
projects in 2018, including the start-up of Wheatstone Train Two,
our fifth operated LNG train in Australia,” Wirth added. “We also
continued the ramp-up of the Permian Basin in Texas and New Mexico,
started production from the Big Foot Project in the Gulf of Mexico,
and continued to progress our Future Growth Project at the
company’s 50 percent-owned affiliate, Tengizchevroil, in
Kazakhstan.”
“Our net oil-equivalent production grew more than 7 percent in
2018 to a record 2.93 million barrels per day. We expect that 2019
production will continue to grow by 4 to 7 percent, excluding the
impact of asset sales,” Wirth commented.
The company added approximately 1.46 billion barrels of net
oil-equivalent proved reserves in 2018. These additions, which are
subject to final reviews, equate to approximately 136 percent of
net oil-equivalent production for the year. The largest additions
were from the Permian Basin in the United States and the LNG
projects in Australia. The company will provide additional details
relating to 2018 reserve additions in its Annual Report on Form
10-K scheduled for filing with the SEC on February 22, 2019.
“Downstream project milestones included the start-up of a new
hydrogen train at the Richmond Refinery, as well as the start-up
and quick ramp-up of the ethane cracker at the Chevron Phillips’
Cedar Bayou plant,” Wirth added. “We also expanded our new retail
marketing network in Mexico to over 100 service stations.”
In late January, the company announced that it has signed an
agreement to acquire a 110,000 barrels per day refinery located in
Pasadena, Texas.
At year-end, balances of cash, cash equivalents, time deposits
and marketable securities totaled $10.3 billion, an increase of
$5.5 billion from the end of 2017. Total debt at December 31, 2018
stood at $34.5 billion, a decrease of $4.3 billion from a year
earlier.
UPSTREAM
Worldwide net oil-equivalent production was 3.08 million barrels
per day in fourth quarter 2018, compared with 2.74 million barrels
per day from a year ago. Net oil-equivalent production for the full
year 2018 was 2.93 million barrels per day, compared with 2.73
million barrels per day from the prior year.
U.S. Upstream
Fourth Quarter Year Millions of
dollars
2018 2017 2018
2017 Earnings $ 964 $ 3,688 $
3,278 $ 3,640
U.S. upstream operations earned $964 million in fourth quarter
2018, compared with $3.69 billion a year earlier. The decrease was
primarily due to the absence of the prior year benefit of $3.33
billion from U.S. tax reform, partially offset by higher crude oil
production and realizations.
The company’s average sales price per barrel of crude oil and
natural gas liquids was $56 in fourth quarter 2018, up from $50 a
year earlier. The average sales price of natural gas was $2.01 per
thousand cubic feet in fourth quarter 2018, up from $1.86 in last
year’s fourth quarter.
Net oil-equivalent production of 858,000 barrels per day in
fourth quarter 2018 was up 187,000 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 partially offset by normal field declines and
the impact of asset sales of 17,000 barrels per day. The net
liquids component of oil-equivalent production in fourth quarter
2018 increased 30 percent to 674,000 barrels per day, while net
natural gas production increased 20 percent to 1.10 billion cubic
feet per day.
International Upstream
Fourth Quarter Year Millions of
dollars
2018 2017
2018 2017 Earnings* $ 2,326 $
1,603 $ 10,038 $ 4,510 *Includes
foreign currency effects $ 250 $ (14 ) $ 545 $
(456 )
International upstream operations earned $2.33 billion in fourth
quarter 2018, compared with $1.60 billion a year ago. The increase
in earnings was mainly due to higher natural gas sales volumes and
prices partially offset by higher depreciation expenses from higher
production volumes and an asset write-off. Foreign currency effects
had a favorable impact on earnings of $264 million between
periods.
The average sales price for crude oil and natural gas liquids in
fourth quarter 2018 was $59 per barrel, up from $57 a year earlier.
The average sales price of natural gas was $6.81 per thousand cubic
feet in the quarter, compared with $4.93 in last year’s fourth
quarter.
Net oil-equivalent production of 2.23 million barrels per day in
fourth quarter 2018 was up 156,000 barrels per day from a year
earlier. Production increases from major capital projects,
primarily Wheatstone and Gorgon in Australia, were partially offset
by normal field declines and production entitlement effects. The
net liquids component of oil-equivalent production decreased 1
percent to 1.19 million barrels per day in the 2018 fourth quarter,
while net natural gas production increased 19 percent to 6.23
billion cubic feet per day.
DOWNSTREAM
U.S. Downstream
Fourth Quarter Year Millions of dollars
2018 2017 2018
2017 Earnings $ 256 $ 1,195 $2,103
$ 2,938
U.S. downstream operations earned $256 million in fourth quarter
2018, compared with earnings of $1.20 billion a year earlier. The
decrease was primarily due to the absence of the prior year benefit
of $1.16 billion from U.S. tax reform and higher operating
expenses, partially offset by higher margins on refined product
sales.
Refinery crude oil input in fourth quarter 2018 increased 10
percent to 918,000 barrels per day from the year-ago period,
primarily due to the absence of turnarounds at the El Segundo,
California refinery and the absence of impacts from Hurricane Nate
at the Pascagoula, Mississippi refinery. Refined product sales of
1.21 million barrels per day were up 3 percent from fourth quarter
2017.
International Downstream
Fourth Quarter Year
Millions of dollars
2018 2017
2018 2017 Earnings* $ 603 $ 84
$1,695 $ 2,276 *Includes foreign
currency effects $ 23 $ (62 ) $71 $ (90 )
International downstream operations earned $603 million in
fourth quarter 2018, compared with $84 million a year earlier. The
increase in earnings was largely due to higher margins on refined
product sales. Foreign currency effects had a favorable impact on
earnings of $85 million between periods.
Refinery crude oil input of 665,000 barrels per day in fourth
quarter 2018 decreased 96,000 barrels per day from the year-ago
period, mainly due to the sale of the company’s interest in the
Cape Town Refinery in third quarter 2018 and crude unit maintenance
at the Singapore Refining Company.
Total refined product sales of 1.40 million barrels per day in
fourth quarter 2018 were down 8 percent from the year-ago period,
primarily due to the sale of the southern Africa refining and
marketing business in third quarter 2018.
ALL OTHER
Fourth Quarter Year
Millions of dollars
2018 2017
2018 2017 Net Charges* $ (419 )
$ (3,459 ) $(2,290 ) $ (4,169 ) *Includes foreign
currency effects $ (5 ) $ (20 ) $(5 ) $ 100
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 2018 were $419 million, compared
with $3.46 billion in the year-ago period. The change between
periods was mainly due to the absence of a prior year tax charge of
$2.47 billion related to U.S. tax reform and the absence of a
reclamation related charge for a former mining asset. Foreign
currency effects had a favorable impact on earnings of $15 million
between periods.
CASH FLOW FROM OPERATIONS
Cash flow from operations in 2018 was $30.6 billion, compared
with $20.3 billion in 2017. Excluding working capital effects, cash
flow from operations in 2018 was $31.3 billion, compared with $19.8
billion in 2017 period. The 2017 results were retrospectively
adjusted to conform to new accounting standards that became
effective for the company in first quarter 2018.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in 2018 were $20.1 billion,
compared with $18.8 billion in 2017. The amounts included $5.7
billion in 2018 and $4.7 billion in 2017 for the company’s share of
expenditures by affiliates, which did not require cash outlays by
the company. Expenditures for upstream represented 88 percent of
the companywide total in 2018.
NOTICE
Chevron’s discussion of fourth quarter 2018 earnings with
security analysts will take place on Friday, February 1, 2019, 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 news release, the term “Chevron” and such terms
as “the company,” “the corporation,” “our,” “we,” “us” and “its”
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.
CAUTIONARY STATEMENTS RELEVANT TO
FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR”
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This news 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,”
“will,” “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 news 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 the
company’s 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, tariffs,
sanctions, 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 19 through 22 of the company’s 2017 Annual Report
on Form 10-K. Other unpredictable or unknown factors not discussed
in this news release could also have material adverse effects on
forward-looking statements.
CHEVRON CORPORATION - FINANCIAL REVIEW Attachment
1 (Millions of Dollars, Except Per-Share Amounts)
(unaudited)
CONSOLIDATED
STATEMENT OF INCOME
Three Months Year Ended Ended December 31
December 31
REVENUES AND OTHER INCOME
2018 2017 2018 2017 Sales and other
operating revenues (1)
$ 40,338 $ 36,381
$
158,902 $ 134,674 Income from equity affiliates
1,642
936
6,327 4,438 Other income
372 299
1,110 2,610
Total Revenues and Other Income
42,352 37,616
166,339 141,722
COSTS AND OTHER DEDUCTIONS
Purchased crude oil and products
23,920 21,158
94,578
75,765 Operating, selling, general and administrative expenses (2)
6,725 6,368
24,382 23,237 Exploration expenses
250 356
1,210 864 Depreciation, depletion and
amortization
5,252 4,735
19,419 19,349 Taxes other
than on income (1)
901 3,182
4,867 12,331 Interest
and debt expense
190 173
748 307 Other components of
net periodic benefit costs (2)
216 163
560 648
Total Costs and Other Deductions
37,454 36,135
145,764 132,501
Income Before Income Tax
Expense
4,898 1,481
20,575 9,221 Income tax expense (benefit)
1,175 (1,637 )
5,715 (48 )
Net Income
3,723 3,118
14,860 9,269 Less: Net income (loss)
attributable to noncontrolling interests
(7 ) 7
36 74
NET INCOME ATTRIBUTABLE TO CHEVRON
CORPORATION
$ 3,730 $ 3,111
$ 14,824
$ 9,195
PER-SHARE OF COMMON STOCK
Net Income Attributable to Chevron
Corporation
- Basic $ 1.97 $ 1.65
$ 7.81 $
4.88
- Diluted $ 1.95 $ 1.64
$
7.74 $ 4.85
Weighted Average Number of Shares
Outstanding (000's)
- Basic 1,893,405 1,888,199
1,897,623
1,882,834
- Diluted 1,906,823 1,906,146
1,914,107 1,897,633
(1 )The three-month and twelve-month
comparative periods ended December 31, 2017, include excise,
value-added and similar taxes of $1,874 million and $7,189 million,
respectively, collected on behalf of third parties. Beginning in
2018, these taxes are netted in "Taxes other than on income" in
accordance with Accounting Standards Update ("ASU") 2014-09.
(2) 2017 adjusted to conform to ASU
2017-07 - Employee Compensation (Topic 715).
CHEVRON CORPORATION - FINANCIAL REVIEW
Attachment 2 (Millions of Dollars) (unaudited)
EARNINGS BY MAJOR
OPERATING AREA
Three Months Year Ended Ended December 31
December 31 2018 2017 2018 2017
Upstream
United States
$ 964 $ 3,688
$ 3,278 $
3,640 International
2,326 1,603
10,038
4,510 Total Upstream
3,290 5,291
13,316 8,150
Downstream
United States
256 1,195
2,103 2,938 International
603 84
1,695 2,276 Total
Downstream
859 1,279
3,798 5,214
All Other (1)
(419 ) (3,459 )
(2,290 ) (4,169 )
Total (2) $ 3,730 $ 3,111
$ 14,824 $ 9,195
SELECTED BALANCE
SHEET ACCOUNT DATA (Preliminary)
Dec 31, 2018
Dec 31, 2017
Cash and Cash Equivalents
$ 9,342 $ 4,813 Time
Deposits
$ 950 $ - Marketable Securities
$
53 $ 9 Total Assets
$ 253,863 $ 253,806 Total
Debt
$ 34,459 $ 38,763 Total Chevron Corporation
Stockholders' Equity
$ 154,554 $ 148,124
Three Months Year Ended Ended December
31 December 31
CAPITAL AND
EXPLORATORY EXPENDITURES (3)
2018 2017 2018 2017
United States
Upstream
$ 1,962 $ 1,739
$ 7,128 $
5,145 Downstream
427 607
1,582 1,656 Other
87
107
243 239
Total United
States 2,476 2,453
8,953 7,040
International
Upstream
3,005 2,742
10,529 11,243 Downstream
270 237
611 534 Other
10 3
13 4
Total International 3,285
2,982
11,153 11,781
Worldwide $ 5,761 $ 5,435
$ 20,106 $ 18,821
(1) Includes worldwide cash management and
debt financing activities, corporate administrative functions,
insurance operations, real estate activities, and technology
companies
(2) Net Income attributable to Chevron
Corporation (See Attachment 1).
(3) Includes interest in affiliates:
United States
$ 84 $ 269
$ 302 $ 745
International
1,517 1,222
5,414
3,998 Total
$ 1,601 $ 1,491
$ 5,716 $ 4,743
CHEVRON CORPORATION - FINANCIAL REVIEW Attachment 3
(Billions of Dollars) (unaudited)
SUMMARIZED
STATEMENT OF CASH FLOWS (Preliminary)(1)
Year Ended December 31
OPERATING ACTIVITIES
2018 2017 Net Income
$ 14.9 $ 9.3
Adjustments Depreciation, depletion and amortization
19.4
19.3 Distributions less than income from equity affiliates
(3.6 ) (2.4 ) Net before-tax gains on asset
retirements and sales
(0.6 ) (2.2 ) Deferred income
tax provision
1.1 (3.2 ) Net decrease (increase) in
operating working capital
(0.7 ) 0.5 Other operating
activity
0.1 (1.0 )
Net Cash
Provided by Operating Activities $ 30.6 $
20.3
INVESTING ACTIVITIES
Capital expenditures
(13.8 ) (13.4 ) Proceeds and
deposits related to asset sales and returns of investment
2.4 5.1 Other investing activity (2)
(0.9
) -
Net Cash Used for Investing
Activities $ (12.3 ) $ (8.3 )
FINANCING ACTIVITIES
Net change in debt
(4.5 ) (7.5 ) Cash dividends -
common stock
(8.5 ) (8.1 ) Other financing activity
(0.7 ) 1.0
Net Cash Used for
Financing Activities $ (13.7 ) $ (14.6 )
Effect of Exchange Rate Changes on
Cash, Cash Equivalents and Restricted Cash
$ (0.1 ) $ 0.1
Net Change in Cash, Cash Equivalents
and Restricted Cash
$ 4.5 $ (2.5 )
(1) 2017 adjusted to conform to ASUs
2016-15 and 2016-18 - Statement of Cash Flow (Topic 230).
(2) Primarily purchases of time deposits
with maturities in excess of 90 days.
CHEVRON CORPORATION - FINANCIAL REVIEW
Attachment 4 Three Months
Year Ended
OPERATING
STATISTICS (1)
Ended December 31 December 31 NET LIQUIDS
PRODUCTION (MB/D): (2) 2018 2017
2018 2017 United States
674 518
618 519 International
1,188 1,195
1,164 1,204
Worldwide 1,862 1,713
1,782 1,723
NET NATURAL GAS PRODUCTION (MMCF/D):
(3) United States
1,101 920
1,034 970
International
6,227 5,242
5,855 5,062
Worldwide 7,328 6,162
6,889 6,032
TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D): (4)
United States
858 671
791 681 International
2,225 2,069
2,139 2,047
Worldwide 3,083
2,740
2,930 2,728
SALES OF NATURAL GAS
(MMCF/D): United States
3,891 3,456
3,481 3,331
International
6,271 5,270
5,604 5,081
Worldwide 10,162 8,726
9,085 8,412
SALES OF NATURAL GAS LIQUIDS (MB/D): United States
203 129
184 139 International
95 90
96
93
Worldwide 298 219
280 232
SALES
OF REFINED PRODUCTS (MB/D): United States
1,211 1,172
1,218 1,197 International (5)
1,400 1,518
1,437 1,493
Worldwide 2,611 2,690
2,655
2,690
REFINERY INPUT (MB/D): United States
918
834
905 901 International
665 761
706 760
Worldwide 1,583 1,595
1,611 1,661
(1) Includes interest in affiliates.
(2) Includes net production of synthetic
oil:
Canada
55 49
53 51 Venezuela Affiliate
24 23
24 28
(3) Includes natural gas consumed in
operations (MMCF/D):
United States
35 35
35 37 International
629
545
584 528
(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):
383 385
373 366
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