Chevron announces 1Q20 results

Included in the current quarter was a gain of US$240 million associated with the sale of upstream assets in the Philippines and favourable tax items totalling US$440 million attributable to international upstream. Foreign currency effects increased earnings in 1Q20 by US$514 million.

Sales and other operating revenues in 1Q20 were US$30 billion, compared to US$34 billion in the year-ago period.

“First quarter earnings were up from a year ago,” said Michael K. Wirth, Chevron’s chairman of the board and CEO, “driven by downstream margins and increased Permian production. However, commodity prices fell significantly in March and the weakness continued into the second quarter, primarily due to reduced demand resulting from the Covid-19 pandemic.” Financial results in future periods are expected to be depressed as long as current market conditions persist.

“Chevron is responding to these unprecedented challenges by making changes to what we control, and with a commitment to protect the long-term health and value of the company,” Wirth added. “Our company entered this crisis well positioned with a strong balance sheet, flexible capital program and low breakeven price. These advantages will be important as we respond to challenging market conditions.”

Chevron is further reducing its 2020 CAPEX guidance by up to US$2 billion to US$14 billion. In addition, the company estimates that 2020 operating costs will decrease by US$1 billion. This follows the previously announced suspension of share repurchases and the completion of additional asset sales.

“Together these actions are consistent with our longstanding financial priorities: to protect the dividend; to prioritise capital that drives long-term value; and to maintain a strong balance sheet,” said Wirth.

“Our primary focus continues to be the safety of our people and operations, and providing the energy essential to everyday life and vital to combat the pandemic. Our products support the efforts of health care providers and first responders around the globe and fuel the transportation that keeps global supply chains moving,” Wirth concluded.

Meanwhile, Chevron's portfolio high-grading continued with the close of asset sales in the Philippines in March and Azerbaijan in April, which together generated over US$1.6 billion in proceeds this year.

Upstream

Worldwide net oil-equivalent production was 3.24 million bpd in 1Q20, an increase of over 6% from a year ago, and a new quarterly record.

US upstream operations earned US$241 million in 1Q20, compared with earnings of US$748 million a year earlier. The decrease was primarily due to lower crude oil and natural gas realisations and higher depreciation expense, partially offset by higher crude oil and natural gas production.

The company’s average sales price per barrel of crude oil and natural gas liquids was US$37 in 1Q20, down from US$48 a year earlier. The average sales price of natural gas was US$0.60 per thousand cubic feet in 1Q20, down from US$1.64 in last year’s first quarter.

Net oil-equivalent production of 1.06 million bpd in 1Q20 was up 180 000 bpd 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. The net liquids component of oil-equivalent production in 1Q20 increased 16% to 803 000 bpd, while net natural gas production increased 35% to 1.56 billion ft³/d, compared to last year's first quarter.

First quarter unconventional net oil-equivalent production in the Permian Basin was 580 000 bpd, representing growth of 48% compared to a year ago.

International upstream operations earned US$2.7 billion in 1Q20, compared with US$2.4 billion a year ago. Foreign currency effects had a favourable impact on earnings of US$636 million between periods. Favourable tax items, the gain on the Philippines asset sale and favourable trading effects also contributed to the increase. Partially offsetting these items were lower crude oil and natural gas prices.

The average sales price for crude oil and natural gas liquids in 1Q20 was US$43/bbl, down from US$58 a year earlier. The average sales price of natural gas was US$5.66/1000 ft³ in the quarter, compared with US$6.57 in last year’s first quarter.

Net oil-equivalent production of 2.17 million bpd in 1Q20 increased 17 000 bpd from 1Q19. Increases from production entitlement effects, the absence of 1Q19 downtime at Gorgon, and other factors were largely offset by asset sale decreases of 95 000 bpd and normal field declines. The net liquids component of oil-equivalent production decreased 2% to 1.16 million bpd in 1Q20, while net natural gas production of 6.05 billion ft³/d increased 4%, compared to last year's first quarter.

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/01052020/chevron-announces-1q20-results/