- Upstream earnings of $3.6 billion increase approximately $400 million from year earlier
- Downstream profits increase $300 million to $1.3 billion
- Corporate items in 2007 period include $680 million gain on sale of Dynegy stock and $160 million loss on debt redemption
SAN RAMON, Calif., July 27 /PRNewswire-FirstCall/ -- Chevron Corporation (NYSE: CVX) today reported net income of $5.4 billion ($2.52 per share - diluted) for the second quarter 2007, compared with $4.4 billion ($1.97 per share - diluted) in the corresponding 2006 period.
For the first half of 2007, net income was $10.1 billion ($4.70 per share
- diluted), a 21 percent increase from $8.3 billion ($3.77 per share -
diluted) in 2006.
Earnings Summary
Three Months Six Months
Ended June 30 Ended June 30
Millions of Dollars 2007 2006 2007 2006
Income by Business Segment
Upstream - Exploration and Production $3,639 $3,272 $6,546 $6,730
Downstream - Refining, Marketing and 1,298 998 2,921 1,578
Transportation
Chemicals 104 94 224 247
All Other 339 (11) 404 (206)
Net Income* $5,380 $4,353 $10,095 $8,349
* Includes foreign currency effects $(138) $(56) $(258) $(164)
"Earnings and cash flows were strong in the second quarter," said Chairman and CEO Dave O'Reilly. "Upstream profits increased approximately $400 million, mainly reflecting the absence of charges recorded in the 2006 period for uninsured costs associated with hurricane damages. Downstream earnings improved $300 million on higher margins for refined products.
"We continued to make progress during the quarter in executing our key strategies," O'Reilly added. "Capital and exploratory expenditures totaled $4.5 billion and included downstream investments to upgrade our refinery network.
"Construction continued during the quarter at our El Segundo, California, refinery to enable processing of heavier crudes into light products such as gasoline and diesel," O'Reilly said. "A similar project is under way at our 50 percent-owned refinery in South Korea, and both of these upgrades are expected to be completed by the end of this year."
While these types of selective downstream investments are being made in areas of market strength, O'Reilly said the company is exiting certain other markets. Following the first-quarter sale of Chevron's interest in a Netherlands refinery, the company announced an agreement to sell its fuels marketing businesses in Belgium, the Netherlands and Luxembourg and completed the sale of its fuels marketing business in Uruguay.
Also during the second quarter, the company announced a common stock dividend increase of 11.5 percent and bought back $1.75 billion of its common shares.
UPSTREAM - EXPLORATION AND PRODUCTION
Worldwide oil-equivalent production was 2.63 million barrels per day in the second quarter 2007, a decline of about 1 percent from the corresponding period in 2006, due mainly to the effect of the conversion of operating service agreements in Venezuela to joint-stock companies and lower production in the United States. Production increased between periods in Bangladesh, Angola, Azerbaijan and the United Kingdom.
U.S. Upstream
Three Months Six Months
Ended June 30 Ended June 30
Millions of Dollars 2007 2006 2007 2006
Income $1,223 $901 $2,019 $2,115
U.S. upstream income of $1.2 billion in the second quarter increased by $322 million from the year-ago period. The 2006 quarter included approximately $300 million of charges related to uninsured costs of damages from 2005 hurricanes in the Gulf of Mexico. Earnings in the 2007 quarter benefited from gains on asset sales, but these were offset by an increase in operating and depreciation expenses.
The average sales price per barrel of crude oil and natural gas liquids was $57 in the second quarter 2007, a decrease of about $3 from the corresponding 2006 period. The average sales price of natural gas increased approximately 11 percent to $6.56 per thousand cubic feet.
Net oil-equivalent production of 752,000 barrels per day decreased by 2
percent from the 2006 quarter. The net liquids component of production was up
1 percent to 468,000 barrels per day. Net natural gas production decreased 7
percent to approximately 1.7 billion cubic feet per day due mainly to normal
field declines.
International Upstream
Three Months Six Months
Ended June 30 Ended June 30
Millions of Dollars 2007 2006 2007 2006
Income* $2,416 $2,371 $4,527 $4,615
* Includes foreign currency effects $ (111) $ (96) $ (230) $ (219)
International upstream earnings of approximately $2.4 billion were up 2 percent from the 2006 quarter. Although oil-equivalent production decreased from the year-ago period, sales volumes were higher due to the timing of cargo liftings in certain producing regions. The benefit to earnings from this increase in liftings was mostly offset by higher operating expenses and an increase in depreciation expense, largely asset write-down related.
The average sales price for crude oil and natural gas liquids in the 2007 quarter decreased by less than $1 from a year earlier to $61 per barrel, while the average price of natural gas was 5 percent lower at $3.64 per thousand cubic feet.
Net oil-equivalent production of 1,878,000 barrels per day decreased 1 percent from the year-ago period, mainly as a result of the October 2006 conversion of operating service agreements to joint-stock companies in Venezuela. Production increased in Bangladesh, Azerbaijan, Angola and the United Kingdom. The net liquids component of production decreased by 36,000 barrels per day to 1,326,000. Natural gas production was 3.3 billion cubic feet per day in the 2007 period, an increase of about 80 million from a year earlier.
DOWNSTREAM - REFINING, MARKETING AND TRANSPORTATION
U.S. Downstream
Three Months Six Months
Ended June 30 Ended June 30
Millions of Dollars 2007 2006 2007 2006
Income $781 $554 $1,131 $764
U.S. downstream earnings of $781 million increased $227 million from the 2006 quarter, due mainly to improved margins for refined products. This benefit was partially offset by an increase in costs for environmental remediation.
Sales volumes for refined products increased 3 percent from the year-ago period to 1,506,000 barrels per day, primarily the result of stronger branded sales. Branded gasoline sales volumes of 630,000 barrels per day increased 3 percent between quarters. Refinery crude input was down 54,000 barrels per day, associated mainly with a planned crude-unit shutdown that started June 1 at the company's El Segundo, California, refinery.
International Downstream
Three Months Six Months
Ended June 30 Ended June 30
Millions of Dollars 2007 2006 2007 2006
Income* $517 $444 $1,790 $814
*Includes foreign currency effects $(35) $14 $(30) $23
International downstream earned $517 million in the 2007 quarter, an increase of $73 million from the year-ago period. The increase resulted mainly from improved margins for refined products, partially offset by higher operating expenses. Foreign exchange effects reduced earnings by $35 million in the 2007 period, vs. a $14 million benefit to income a year earlier.
Total refined-product sales volumes of 1,956,000 barrels per day were 3 percent lower than last year's second quarter, due mainly to the sale in March 2007 of the company's interest in refining and related assets in the Netherlands. Refinery crude input was down 121,000 barrels per day, also related primarily to the sale of these refining assets.
CHEMICALS
Three Months Six Months
Ended June 30 Ended June 30
Millions of Dollars 2007 2006 2007 2006
Income* $104 $94 $224 $247
*Includes foreign currency effects $ - $(5) $(1) $(11)
Chemical operations earned $104 million, compared with $94 million in the year-ago quarter. Earnings benefited from improved margins on sales of lubricant and fuel additives by the company's Oronite subsidiary. This benefit was partially offset by lower margins on sales by the company's 50 percent-owned Chevron Phillips Chemical Company LLC.
ALL OTHER
Three Months Six Months
Ended June 30 Ended June 30
Millions of Dollars 2007 2006 2007 2006
Income (Charges) - Net* $339 $(11) $404 $(206)
*Includes foreign currency effects $8 $31 $3 $43
All Other consists of the company's mining operations and power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies. Also included are results from the company's investment in Dynegy Inc. until the time of its sale in May 2007.
Income in the second quarter 2007 was $339 million, compared with net charges of $11 million in the year-ago period. This year's quarter included a gain of $680 million related to sale of the company's investment in Dynegy Inc. common stock, partially offset by a loss of $160 million related to the early redemption of Texaco Capital Inc. bonds and an increase in environmental remediation expenses for legacy-Texaco and -Unocal sites that had been closed or sold. The 2006 period included a gain from the redemption of Unocal debt.
SALES AND OTHER OPERATING REVENUES
Sales and other operating revenues in the second quarter were $54 billion, up from $52 billion a year earlier. First-half 2007 sales and other operating revenues were $101 billion, down from $106 billion in the year-ago period. The decline for the first six months was associated with the impact of an accounting-rule change beginning in the second quarter 2006 that requires certain purchase and sale contracts with the same counterparty to be netted for reporting.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in the first six months of 2007 were $8.6 billion, compared with $7.4 billion in the corresponding 2006 period. The amounts included approximately $1.1 billion and $800 million, respectively, for the company's share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream projects represented 78 percent of the companywide total in 2007.
NOTICE
Chevron's discussion of second quarter 2007 earnings with security analysts will take place on Friday, July 27, 2007, at 8:00 a.m. PDT. A webcast of the meeting will be available in a listen-only mode to individual investors, media and other interested parties on Chevron's Web site at http://www.chevron.com under the "Investors" heading. Additional financial and operating information is contained in the Investor Relations Earnings Supplement that is available under "Financial Reports" on the Web site.
Chevron will issue a press release containing selected third quarter 2007 interim company and industry performance data and post the same information on its Web site on Tuesday, October 9, 2007, at 2:00 p.m. PDT. Interested parties may view this interim data at http://www.chevron.com under the "Investors" heading.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release of Chevron Corporation contains forward-looking statements relating to Chevron's operations that are based on management's current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as "anticipates," "expects," "intends," "plans," "targets," "projects," "believes," "seeks," "schedules," "estimates," "budgets" and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and competitive conditions affecting supply and demand for aromatics, olefins and additives products; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company's joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company's net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude-oil production quotas that might be imposed by OPEC (Organization of Petroleum Exporting Countries); the potential liability for remedial actions under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from pending or future litigation; the company's acquisition or disposition of assets; government-mandated sales, divestitures, recapitalizations, changes in fiscal terms or restrictions on scope of company operations; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading "Risk Factors" on pages 31 and 32 of the company's 2006 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements.
CHEVRON CORPORATION - FINANCIAL REVIEW
(Millions of Dollars, Except Per-Share Amounts)
CONSOLIDATED STATEMENT OF INCOME
(unaudited) Three Months Six Months
Ended June 30 Ended June 30
REVENUES AND OTHER INCOME 2007 2006 2007 2006
Sales and other operating
revenues (1) (2) $54,344 $52,153 $100,646 $105,677
Income from equity
affiliates 894 1,113 1,831 2,096
Other income 856 270 1,844 387
Total Revenues and Other
Income 56,094 53,536 104,321 108,160
COSTS AND OTHER DEDUCTIONS
Purchased crude oil and
products, operating and
other expenses (2) 39,051 38,054 72,228 78,294
Depreciation, depletion
and amortization 2,156 1,807 4,119 3,595
Taxes other than on income
(1) 5,743 5,153 11,168 9,947
Interest and debt expense 63 121 137 255
Minority interests 19 22 47 48
Total Costs and Other
Deductions 47,032 45,157 87,699 92,139
Income Before Income Tax
Expense 9,062 8,379 16,622 16,021
Income tax expense 3,682 4,026 6,527 7,672
NET INCOME $5,380 $4,353 $10,095 $8,349
PER-SHARE OF COMMON STOCK
Net Income -Basic $2.52 $1.98 $4.72 $3.79
-Diluted $2.52 $1.97 $4.70 $3.77
Dividends $0.58 $0.52 $1.10 $0.97
Weighted Average Number of
Shares Outstanding (000's)
-Basic 2,127,763 2,196,134 2,136,591 2,205,008
-Diluted 2,141,583 2,206,009 2,149,686 2,214,877
(1) Includes excise, value-
added and similar taxes $2,609 $2,416 $5,023 $4,531
(2) Includes amounts in revenues
for buy/sell contracts for
periods prior to second
quarter 2006; associated
costs are included in
"Purchased crude oil and
products, operating and
other expenses." $ - $ - $ - $6,725
CHEVRON CORPORATION - FINANCIAL REVIEW
(Millions of Dollars)
INCOME BY MAJOR OPERATING AREA Three Months Six Months
(unaudited) Ended June 30 Ended June 30
2007 2006 2007 2006
Upstream - Exploration and
Production
United States $1,223 $901 $2,019 $2,115
International 2,416 2,371 4,527 4,615
Total Exploration and Production 3,639 3,272 6,546 6,730
Downstream - Refining, Marketing
and Transportation
United States 781 554 1,131 764
International 517 444 1,790 814
Total Refining, Marketing and
Transportation 1,298 998 2,921 1,578
Chemicals 104 94 224 247
All Other (1) 339 (11) 404 (206)
Net Income $5,380 $4,353 $10,095 $8,349
SELECTED BALANCE SHEET ACCOUNT DATA
June 30, 2007 Dec. 31, 2006
(unaudited)
Cash and Cash Equivalents $11,216 $10,493
Marketable Securities $887 $953
Total Assets $139,606 $132,628
Total Debt $8,189 $9,838
Stockholders' Equity $74,179 $68,935
CAPITAL AND EXPLORATORY Three Months Six Months
EXPENDITURES (2) Ended June 30 Ended June 30
2007 2006 2007 2006
United States
Exploration and Production $970 $1,151 $1,890 $1,971
Refining, Marketing and
Transportation 325 252 558 444
Chemicals 38 24 67 41
Other 133 108 396 154
Total United States 1,466 1,535 2,911 2,610
International
Exploration and Production 2,579 1,998 4,826 3,691
Refining, Marketing and
Transportation 460 767 809 1,039
Chemicals 11 11 22 17
Other - - 3 2
Total International 3,050 2,776 5,660 4,749
Worldwide $4,516 $4,311 $8,571 $7,359
(1) Includes the company's
interest in Dynegy prior to
its sale in May 2007, mining
operations, power generation
businesses, worldwide cash
management and debt financing
activities, corporate
administrative functions,
insurance operations, real
estate activities, alternative
fuels and technology
companies.
(2) Includes interest in
affiliates:
United States $40 $38 $72 $70
International 582 435 1,024 714
Total $622 $473 $1,096 $784
CHEVRON CORPORATION - FINANCIAL REVIEW
Three Months Six Months
OPERATING STATISTICS (1) Ended June 30 Ended June 30
NET LIQUIDS PRODUCTION (MB/D): 2007 2006 2007 2006
United States 468 463 464 458
International 1,297 1,239 1,307 1,234
Worldwide 1,765 1,702 1,771 1,692
NET NATURAL GAS PRODUCTION (MMCF/D):
(2)
United States 1,703 1,832 1,713 1,807
International 3,314 3,234 3,293 3,199
Worldwide 5,017 5,066 5,006 5,006
OTHER PRODUCED VOLUMES-INTERNATIONAL
(MB/D) (3) 29 123 31 130
TOTAL NET OIL-EQUIVALENT PRODUCTION
(MB/D): (4)
United States 752 768 750 759
International 1,878 1,901 1,887 1,897
Worldwide 2,630 2,669 2,637 2,656
SALES OF NATURAL GAS (MMCF/D):
United States 8,153 6,839 8,004 6,899
International 3,839 3,865 3,865 3,481
Worldwide 11,992 10,704 11,869 10,380
SALES OF NATURAL GAS LIQUIDS (MB/D):
United States 170 128 155 118
International 123 89 116 99
Worldwide 293 217 271 217
SALES OF REFINED PRODUCTS (MB/D): (5)
(6)
United States 1,506 1,468 1,477 1,501
International 1,956 2,026 2,009 2,150
Worldwide 3,462 3,494 3,486 3,651
REFINERY INPUT (MB/D):
United States 881 935 805 937
International 942 1,063 1,006 1,073
Worldwide 1,823 1,998 1,811 2,010
(1) Includes interest in affiliates.
(2) Includes natural gas consumed on
lease (MMCF/D):
United States 52 58 60 44
International 411 411 420 383
(3) Other produced volumes -
International (MB/D):
Athabasca Oil Sands (Canada) 29 16 31 20
Boscan Operating Service
Agreement (Venezuela);
converted to an equity
affiliate effective
October 2006. - 107 - 110
29 123 31 130
(4) Oil-equivalent production is
the sum of net liquids
production, net gas production
and other produced liquids. The
oil-equivalent gas conversion
ratio is 6,000 cubic feet of
natural gas = 1 barrel of crude
oil.
(5) 2006 conformed to 2007
presentation.
(6) Includes volumes for buy/sell
contracts (MB/D):
United States - - - 53
International - - - 49
Total - - - 102
SOURCE Chevron Corporation