Chevron reports Q4 net income and 2014 earnings

Chevron Corporation has reported earnings of US$3.5 billion (US$1.85 per share – diluted) for fourth quarter 2014, compared with US$4.9 billion (US$2.57 per share – diluted) in the 2013 fourth quarter. Foreign currency effects increased earnings in the 2014 quarter by US$432 million, compared with an increase of US$202 million a year earlier.

Full-year 2014 earnings were US$19.2 billion (US$10.14 per share – diluted) compared with US$21.4 billion (US$11.09 per share – diluted) in 2013.

Sales and other operating revenues in fourth quarter 2014 were US$42 billion, compared to US$54 billion in the year-ago period.

“Our 2014 earnings were down from the previous year, largely due to the sharp decline in crude oil prices,” said Chairman and CEO John Watson. “Improved downstream results and higher gains on asset sales related to our divestment program partially offset the effect of lower crude prices.”

“In 2014, we continued to fund investments in key major capital projects under construction and raised the dividend payout on our common shares for the 27^th consecutive year,” Watson added. “We enter 2015 with the financial strength to meet the challenges of a volatile crude price environment and with significant efforts underway to manage to a lower cost structure and capital spend rate.”

“We had a number of operational successes in 2014,” Watson continued. “We had first production from the Jack/St. Malo and Tubular Bells deepwater developments in the Gulf of Mexico and the Bibiyana gas expansion project in Bangladesh. In Australia, our Gorgon and Wheatstone LNG projects continue to reach important construction milestones. We also continue to make progress on our shale and tight resource developments in the Permian Basin, Argentina and Canada. At the same time, we had one of our best exploration years, with important discoveries in the deepwater Gulf of Mexico, Australia, West Africa and the Permian Basin, which add to our development queue for the future.”

Watson commented that the company added approximately 840 million bbls of net oil-equivalent proved reserves in 2014. These additions, which are subject to final reviews, equate to approximately 89% of net oil-equivalent production for the year. The largest additions were for the Permian Basin in the United States and the Gorgon Project in Australia. The company will provide additional details relating to 2014 reserve additions in its Annual Report on Form 10-K scheduled for filing with the SEC on February 20, 2015.

“In the downstream, we completed important reliability investments at our U.S. refineries, which contributed to improved financial and operational performance,” Watson added. “We also made significant progress on important growth investments.” In 2014, the company started commercial production at its new premium lubricants base oil facility in Pascagoula, Mississippi, and completed the expansion of its additives plants in Singapore and Gonfreville, France. Chevron Phillips Chemical Company LLC, the company’s 50 percent-owned affiliate, achieved start-up of the world’s largest on-purpose 1-hexene plant and progressed construction of its new ethane cracker and polyethylene units in Texas.

The company purchased US$1.25 billion of its common stock in fourth quarter 2014 under its share repurchase program. Repurchases for the full year totalled US$5 billion. At year-end, balances of cash, cash equivalents, time deposits and marketable securities totalled US$13.2 billion, a decrease of US$3.3 billion from the end of 2013. Total debt at December 31, 2014 stood at US$27.8 billion, an increase of US$7.4 billion from a year earlier.

Upstream

Worldwide net oil-equivalent production was 2.58 million bpd in fourth quarter 2014, unchanged from the 2013 fourth quarter. Production increases from project ramp-ups in the United States, Argentina, Brazil, Nigeria and Bangladesh were offset by normal field declines, and the effect of asset sales.

US upstream earnings of US$432 million in fourth quarter 2014 were down US$371 million from a year earlier, as higher gains on asset sales and higher crude oil production were more than offset by sharply lower crude oil realisations and higher depreciation expense.

The company’s average sales price per barrel of crude oil and natural gas liquids was US$66 in fourth quarter 2014, down from US$90 a year ago. The average sales price of natural gas was US$3.34 per thousand ft/³, essentially unchanged from last year’s fourth quarter.

Net oil-equivalent production of 673 000 bpd in fourth quarter 2014 was up 23 000 bpd, or 4%, from a year earlier. Production increases from project ramp-ups in the Permian Basin in Texas and New Mexico, the Marcellus Shale in western Pennsylvania, and the Gulf of Mexico were partially offset by normal field declines. The net liquids component of oil-equivalent production increased 5% in the 2014 fourth quarter to 462 000 bpd, while net natural gas production increased slightly to 1.27 billion ft/³ per day.

International upstream earnings of US$2.24 billion decreased US$1.81 billion from fourth quarter 2013. Higher gains on asset sales and lower exploration expenses were more than offset by lower crude oil realisations. Higher depreciation and operating expenses, mainly related to impairments and other asset write-offs, and higher tax items, also contributed to the decrease. Foreign currency effects increased earnings by US$453 million in the 2014 quarter, compared with an increase of US$300 million a year earlier.

The average sales price for crude oil and natural gas liquids in fourth quarter 2014 was US$68 per barrel, down from US$101 a year earlier. The average price of natural gas was US$5.38 per thousand ft³, compared with US$5.75 in last year’s fourth quarter.

Net oil-equivalent production of 1.91 million bpd in fourth quarter 2014 was down 17 000 bpd, or 1%, from a year ago. Production increases from project ramp-ups in Argentina, Brazil, Nigeria and Bangladesh were more than offset by normal field declines and the effect of asset sales. The net liquids component of oil-equivalent production decreased 1% to 1.27 million bpd in the 2014 fourth quarter, while net natural gas production of 3.83 billion ft³ per day remained essentially flat.

Adapted from a press release by David Bizley

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