Quarterly / Earnings Reports | Third Quarter (3Q) Update

Chevron Details Q3 2019 Results

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Chevron Corp. reported earnings of $2.6 billion ($1.36 per share - diluted) for third quarter 2019, compared with $4.0 billion ($2.11 per share - diluted) in the third quarter 2018. Included in the current quarter was a tax charge of $430 million related to a cash repatriation. Foreign currency effects increased earnings in the third quarter 2019 by $74 million.

Sales and other operating revenues in third quarter 2019 were $35 billion, compared to $42 billion in the year-ago period.

CEO Michael Wirth said: “Third quarter earnings and cash flow were solid, but down from our very strong results of a year ago. Lower crude oil and natural gas prices more than offset a 3 percent increase in net oil-equivalent production from last year's third quarter.

“Strong execution allows us to continue to deliver on our financial priorities, which are to pay the dividend, fund our superior portfolio of capital projects, further strengthen our balance sheet and return cash to shareholders. In the third quarter, we increased share repurchases to $1.25 billion, further demonstrating our commitment to deliver strong shareholder returns through the price cycle.

“We also advanced capital projects and added resource opportunities. In September, we sanctioned a waterflood project in the St. Malo Field in the Gulf of Mexico. We also acquired deepwater exploration blocks in the Mexican Gulf of Mexico and Brazil's Campos and Santos basins, strengthening our deepwater exploration portfolio.

“Global demand for energy continues to grow, and we are committed to meet this demand with less environmental impact. We recently announced new goals to reduce net greenhouse gas emission intensity from upstream oil and natural gas production,” Wirth continued. “During the third quarter, we began capturing and storing carbon dioxide at our Gorgon LNG facility in Australia, one of the world’s largest greenhouse gas mitigation projects. Also, construction is underway on a new solar farm, which will supply low-carbon electricity to the Lost Hills Oil Field in California.”

Upstream

Worldwide net oil-equivalent production was 3.03 million barrels per day in third quarter 2019, an increase of 3 percent from 2.96 million barrels per day from a year ago.

U.S. upstream operations earned $727 million in third quarter 2019, compared with $828 million a year earlier. The decrease was primarily due to lower crude oil and natural gas realizations, the absence of third quarter 2018 asset sale gains, higher operating expenses and higher tax items. These decreases were partially offset by lower exploration and depreciation expenses, primarily due to the absence of the third quarter 2018 write-off of the Tigris Project in the Gulf of Mexico, and higher crude oil and natural gas production.

The company’s average sales price per barrel of crude oil and natural gas liquids was $47 in third quarter 2019, down from $62 a year earlier. The average sales price of natural gas was $0.95 per thousand cubic feet in third quarter 2019, down from $1.80 in last year’s third quarter.

Net oil-equivalent production of 934,000 barrels per day in third quarter 2019 was up 103,000 barrels per day from a year earlier. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico were partially offset by normal field declines in the base business. The net liquids component of oil-equivalent production in third quarter 2019 increased 11 percent to 726,000 barrels per day, while net natural gas production increased 17 percent to 1.24 billion cubic feet per day, compared to last year's third quarter.

Third quarter unconventional net oil-equivalent production in the Permian Basin was 455,000 barrels per day, representing growth of 35 percent compared to a year ago.

International upstream operations earned $1.98 billion in third quarter 2019, compared with $2.55 billion a year ago. The decrease in earnings was mostly due to lower crude oil and natural gas realizations, and lower crude oil volumes, partially offset by lower depreciation and tax expenses. Foreign currency effects had a favorable impact on earnings of $91 million between periods.

The average sales price for crude oil and natural gas liquids in third quarter 2019 was $56 per barrel, down from $69 a year earlier. The average sales price of natural gas was $5.62 per thousand cubic feet in the quarter, compared with $6.73 in last year’s third quarter.

Net oil-equivalent production of 2.10 million barrels per day in third quarter 2019 was down 26,000 barrels per day from a year earlier. Production increases from Wheatstone and other major capital projects were more than offset by normal field declines and the effect of asset sales. The net liquids component of oil-equivalent production decreased 3 percent to 1.10 million barrels per day in the 2019 third quarter, while net natural gas production of 5.97 billion cubic feet per day was essentially unchanged, compared to last year's third quarter.

Downstream

U.S. downstream operations earned $389 million in third quarter 2019, compared with earnings of $748 million a year earlier. The decrease was due to higher operating expenses, primarily turnaround and maintenance costs, and lower margins on refined product sales.

Refinery crude oil input in third quarter 2019 increased 8 percent to 992,000 barrels per day from the year-ago period, primarily due to the acquisition of the Pasadena refinery in Texas. Refined product sales of 1.29 million barrels per day were up 5 percent from third quarter 2018, mainly due to higher gasoline sales.

International downstream operations earned $439 million in third quarter 2019, compared with $625 million a year earlier. The decrease in earnings was largely due to the absence of 2018 gains from the southern Africa asset sale, partially offset by higher margins on refined product sales. Foreign currency effects had a favorable impact on earnings of $34 million between periods.

Refinery crude oil input of 625,000 barrels per day in third quarter 2019 decreased 85,000 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 in the third quarter 2019 at the Singapore Refining Company.

Total refined product sales of 1.36 million barrels per day in third quarter 2019 were down 5 percent from the year-ago period, mainly due to the sale of the southern Africa refining and marketing business in third quarter 2018.

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 2019 were $952 million, compared with net charges of $705 million in the year-ago period. The change between periods was mainly due to higher tax items, including a tax charge of $430 million related to a cash repatriation, partially offset by lower corporate costs. Foreign currency effects did not impact earnings between periods.

Cash Flow

Cash flow from operations in the first nine months of 2019 was $21.7 billion, compared with $21.5 billion in the corresponding 2018 period. Excluding working capital effects, cash flow from operations in 2019 was $20.5 billion, compared with $23.3 billion in the corresponding 2018 period.

Capital Expenditures

Capital and exploratory expenditures in the first nine months of 2019 were $15.0 billion, compared with $14.3 billion in the corresponding 2018 period. The amounts included $4.6 billion in 2019 and $4.1 billion in 2018 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 85 percent of the companywide total in 2019. Included in 2019 were $0.4 billion of inorganic expenditures, primarily associated with the acquisition of the Pasadena refinery in Texas.