CHEVRON Corporation has reported earnings of $2.0 billion ($1.03 per share – diluted) for third quarter 2017, compared with $1.3 billion ($0.68 per share – diluted) in the third quarter of 2016. Included in the quarter was a gain on an asset sale of $675 million and an asset write-off of $220 million.
The quarterly report made available to Realnews showed that foreign currency effects decreased earnings in the 2017 third quarter by $112 million, compared with an increase of $72 million a year earlier. Sales and other operating revenues in third quarter 2017 were $34 billion, compared to $29 billion in the year-ago period.
John Watson, chairman and CEO, Chevron Corporation, said: “We continue to see improvement in the underlying pattern of earnings and cash flow. Cash flow is at a positive inflection point, with oil and gas production increasing and capital spending falling. We’re completing projects that have been under construction and ramping up production, notably at our Gorgon LNG Project in Australia.
“And our shale and tight rock drilling activity in the Permian Basin is exceeding expectations. We expect this pattern to continue. Earlier this month, we announced first LNG production from our Wheatstone LNG development in Australia.”
The report showed that worldwide net oil-equivalent production was 2.72 million barrels per day in third quarter 2017, compared with 2.51 million barrels per day from a year ago. It noted that US upstream operations incurred a loss of $26 million in third quarter 2017, compared with a loss of $212 million from a year earlier.
“The improvement reflected higher crude oil realizations. The company’s average sales price per barrel of crude oil and natural gas liquids was $42 in third quarter 2017, up from $37 a year earlier. The average sales price of natural gas was $1.80 per thousand cubic feet in third quarter 2017, compared with $1.89 in last year’s third quarter. Net oil-equivalent production of 681,000 barrels per day in third quarter 2017 was down 17,000 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 67,000 barrels per day, and normal field declines. The net liquids component of oil-equivalent production in third quarter 2017 increased 1 percent to 525,000 barrels per day, while net natural gas production decreased 13 percent to 932 million cubic feet per day primarily as a result of asset sales,” the report said.
According to the report, international upstream operations earned $515 million in third quarter 2017, compared with $666 million a year ago. The decrease in earnings was mainly due to higher depreciation expense including the effect of catch-up depreciation for Bangladesh operations that the no longer intend to sell and an asset write-off..
Also contributing were higher tax expenses and the absence of an Ecuador arbitration award. More than offsetting the items were higher crude oil and natural gas realisations, higher natural gas and crude oil sales volumes, and higher equity income from the absence of a TCO royalty expense. Foreign currency effects had an unfavourable impact on earnings of $249 million between periods. The average sales price for crude oil and natural gas liquids in third quarter 2017 was $48 per barrel, up from $41 a year earlier. The average price of natural gas was $4.76 per thousand cubic feet in the quarter, compared with $4.18 in last year’s third quarter. Net oil-equivalent production of 2.04 million barrels per day in third quarter 2017 was up 221,000 barrels per day from a year earlier. Production increases from major capital projects, primarily Gorgon and Angola LNG, and lower planned turnaround effects at Tengizchevroil, were partially offset by production entitlement effects in several locations and normal field declines.
It indicated that the net liquids component of oil-equivalent production increased five percent to 1.19 million barrels per day in the 2017 third quarter, while net natural gas production increased 25 percent to 5.05 billion cubic feet per day. The US downstream operations earned $640 million in third quarter 2017, compared with earnings of $523 million a year earlier. The increase in earnings was primarily due to higher margins on refined product sales.
“Refinery crude oil input in third quarter 2017 decreased four percent from the year-ago period to 931,000 barrels per day. Refined product sales of 1.23 million barrels per day decreased two percent from third quarter 2016. Branded gasoline sales of 540,000 barrels per day decreased two percent from the 2016 period. Both refinery crude oil input and refined product sales were lower due to divestment of the Hawaii refining and marketing assets in fourth quarter 2016,” it said.
The report stated that international downstream operations earned $1.17 billion in third quarter 2017, compared with $542 million a year earlier. The increase in earnings was largely due to higher gains on asset sales, primarily from the sale of the company’s Canadian refining and marketing assets. Higher operating expenses and lower margins on refined product sales were partially offsetting.
Foreign currency effects had a favourable impact on earnings of $19 million between periods. Refinery crude oil input of 801,000 barrels per day in third quarter 2017 increased 11,000 barrels per day from the year-ago period mainly due to crude unit optimization and lower maintenance at the company’s affiliate, Singapore Refining Company. Total refined product sales of 1.55 million barrels per day in third quarter 2017 were up six percent from the year-ago period, primarily due to higher diesel and jet fuel sales.