Chevron Corporation (CVX) today reported earnings of $4.55 billion ($2.27 per share - diluted) for the first quarter 2010, compared with $1.84 billion ($0.92 per share - diluted) in the 2009 first quarter. Results in the 2009 period included gains of approximately $400 million ($0.20 per share) from downstream asset sales.
Foreign-currency effects reduced earnings in the 2010 quarter by $198 million, compared with a reduction of $54 million a year earlier. Earnings in the first quarter 2010 include charges of $175 million ($0.09 per share) associated with employee reductions in the downstream businesses and corporate staffs.
Sales and other operating revenues in the first quarter 2010 were $47 billion, up from $35 billion in the year-ago period due mainly to higher prices for crude oil, natural gas and refined products.
"Our first quarter performance was very strong, and our strategy to invest in high-quality, upstream growth assets is paying off," said Chairman and CEO John Watson. "Current quarter earnings and cash flows benefitted significantly from higher prices for crude oil and natural gas. In addition, net oil-equivalent production for the first quarter of this year was 5 percent higher than a year ago, largely due to the ramp up from our major capital projects and strong performance in our mature business operations."
Watson also commented on the strength of Chevron's deepwater U.S. Gulf of Mexico development portfolio. He noted that "first oil" was achieved in first quarter 2010 at the Perdido project, which follows the company's recent start-ups at its Tahiti and Blind Faith developments. In the quarter, Chevron also added to its exploration acreage in the Gulf of Mexico through successful bids in a recent lease sale and commenced exploratory drilling operations with a second ultra-deepwater drillship.
Watson continued, "In the downstream, sales margins for refined petroleum products remain weak." Watson added that the company is progressing the restructuring plans for the downstream business.
Worldwide net oil-equivalent production was 2.78 million barrels per day in the first quarter 2010, up 120,000 barrels per day from 2.66 million barrels per day in the 2009 first quarter. The increase was primarily driven by new production from major project start-ups and ramp-ups in the United States, Nigeria and Angola, and expansion of capacity at Tengiz in Kazakhstan.
U.S. upstream earnings of $1.16 billion in the first quarter of 2010 were up $1.13 billion from a year earlier, due to sharply higher crude-oil and natural-gas realizations, and increased liquids production in the first quarter 2010.
The company's average sales price per barrel of crude oil and natural gas liquids was approximately $71 in the 2010 quarter, compared with $36 a year ago. The average sales price of natural gas was $5.29 per thousand cubic feet, up from $4.14 in last year's first quarter.
Net oil-equivalent production of 734,000 barrels per day in the first quarter 2010 was up 63,000 barrels per day, or about 9 percent, from a year earlier. The increase was primarily associated with new production, mostly from the start-up of the Tahiti Field in second quarter 2009 and ramp-up of the Blind Faith Field, which began production in late 2008, along with the restoration of volumes that were offline in the first quarter 2009 due to hurricanes in the Gulf of Mexico. The net liquids component of production was up 15 percent to 505,000 barrels per day in the first quarter 2010 while net natural-gas production of 1.38 billion cubic feet per day was unchanged between periods.
International upstream earnings of $3.57 billion increased $2.22 billion from the first quarter 2009 due mainly to the impact of higher prices and sales volumes for crude oil and natural gas, and various tax benefits.
The average sales price for crude oil and natural gas liquids in the 2010 quarter was $70 per barrel, compared with $39 a year earlier. The average price of natural gas was $4.61 per thousand cubic feet, up from $4.21 in last year's first quarter.
Net oil-equivalent production of 2.05 million barrels per day in the first quarter 2010 increased 3 percent, or 57,000 barrels per day, from a year ago. The increase included approximately 115,000 barrels per day associated with the ramp-up of several major capital projects - the expansion at Tengiz in Kazakhstan, Agbami in Nigeria, and Tombua-Landana and Mafumeira Norte in Angola. The absence of the first quarter 2009 OPEC production curtailments was more than offset by the impact in first quarter 2010 of higher prices on certain production-sharing and variable-royalty agreements. The net liquids component of production increased about 3 percent from a year ago to 1.43 million barrels per day and net natural gas production was up about 2 percent to 3.72 billion cubic feet per day.
U.S. downstream earned $82 million in the first quarter 2010, compared with earnings of $136 million a year earlier. The decline was primarily due to lower refined products sales margins and charges related to employee reductions. These declines were partially offset by higher earnings from chemical operations, primarily from the 50 percent-owned Chevron Phillips Chemical Company LLC.
Refinery crude-input of 889,000 barrels per day in the first quarter 2010 decreased 49,000 barrels per day from the year-ago period primarily due to weak demand for refined products and a planned shutdown at the company's refinery in Richmond, California.
Refined-product sales of 1.35 million barrels per day were down 54,000 barrels per day from the first quarter 2009, mainly due to lower jet fuel and fuel oil sales. Branded gasoline sales decreased 5 percent to 581,000 barrels per day due mainly to lower demand.
International downstream earned $114 million in the first quarter 2010, compared with earnings of $617 million a year earlier. The decline was due mainly to the absence of 2009 gains from asset sales and 2010 charges for employee reductions.
Refinery crude-input of 992,000 barrels per day was essentially unchanged from the first quarter of 2009. Total refined-product sales of 1.7 million barrels per day in the 2010 first quarter were 12 percent lower than a year earlier, due mainly to asset sales in certain countries in Africa and Latin America since the first quarter of last year. Excluding the impact of 2009 asset sales, sales volumes were down 5 percent between periods mainly due to reduced trading activities in Europe.
Capital and Exploratory Expenditures
Capital and exploratory expenditures in the first quarter 2010 were $4.4 billion, compared with $6.5 billion in 2009. The amounts included approximately $298 million in 2010 and $285 million in 2009 for the company's share of expenditures by affiliates, which did not require cash outlays by the company. Outlays in the 2009 quarter included $2 billion for the extension of an upstream concession. Expenditures for upstream projects represented approximately 90 percent of the companywide total in the first quarter 2010.