SAN FRANCISCO, Oct 31, 2002 /PRNewswire-FirstCall via COMTEX/ --
-- Exploration and production operating earnings of $1.3 billion at same level as year-ago quarter -- Refining, marketing and transportation profits decline 84 percent on poor margins for refined products -- Net special charges of $2.1 billion include $1.5 billion related to investment in Dynegy Inc. -- Merger synergies on track toward savings target of $2.2 billion annually before-tax by early 2003
ChevronTexaco Corp. (Nasdaq: CVX) today reported a net loss of $904 million ($0.85 per share - diluted) for third quarter 2002, compared with third quarter 2001 net income of $1.269 billion ($1.19 per share - diluted). Excluding net charges for special items and merger effects in both periods, operating earnings were $1.237 billion ($1.17 per share - diluted), down from $1.714 billion ($1.61 per share - diluted) in the 2001 quarter.
Earnings Summary
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2002 2001 2002 2001
Operating Earnings
Exploration and Production $1,283 $1,283 $3,682 $5,251
Refining, Marketing and Transportation 92 589 135 1,715
Chemicals and Other (138) (158) (416) (654)
Total 1,237 1,714 3,401 6,312
Special Items (2,068) 109 (2,895) 109
Merger Effects (73) (554) (278) (611)
Net (Loss) Income $(904) $1,269 $228 $5,810
For the nine-month period, net income was $228 million ($0.22 per share - diluted), compared with $5.8 billion ($5.47 per share - diluted) in 2001. Operating earnings were $3.4 billion ($3.21 per share - diluted) in 2002, versus $6.3 billion ($5.94 per share - diluted) in 2001.
Commenting on results for the quarter, Chairman and CEO Dave O'Reilly said, "We experienced oil and gas production disruptions in several areas and faced continued weak markets for refined products and chemicals. When combined with a number of charges against earnings for special items -- most notably an additional write-down of our investment in Dynegy Inc. -- the result was a net loss for the period."
Remarking on progress of the merger that combined Chevron, Texaco and Caltex last October, O'Reilly added, "Our employees have made tremendous strides in integrating the separate companies in this first year after the merger. Much has been accomplished to implement operating and administrative efficiencies in our many businesses around the world.
"And I am pleased to announce that by the end of the third quarter -- slightly less than one year after the merger -- we achieved our objective rate of $1.8 billion in annual before-tax synergy savings. We are also on plan to achieve a $2.2 billion savings rate early next year."
As examples of the company's success in integrating the separate pre-merger businesses, O'Reilly cited recent milestones in strategies to implement a tightly focused and cost-effective exploration program and to expand ChevronTexaco's participation in the global natural gas market. Recent deepwater exploration discoveries include Great White in the Gulf of Mexico, which followed the Tahiti discovery earlier this year, Aparo in Nigeria and Gabela in the prolific Block 14 offshore Angola. The progress on the company's strategy to expand its natural gas business was evidenced by recent announcements of a major agreement to sell Australian liquefied natural gas (LNG) to China and to develop additional gas in the Republic of Trinidad and Tobago for export as LNG into the United States.
Discussing upstream profits for the third quarter, O'Reilly said, "Despite a number of factors that adversely impacted oil and gas production in the period, operating earnings for our exploration and production business were the same as the year-ago quarter. OPEC quotas; production disruptions in Angola, Nigeria and the North Sea; and a tropical storm in the Gulf of Mexico all served to lower oil and gas output from a year ago."
O'Reilly said worldwide oil-equivalent production was down 49,000 barrels per day, or 1.9 percent, from the corresponding period last year. However, absent the effects of OPEC quotas and major production disruptions, output would have increased about 45,000 barrels per day.
The average U.S. crude oil and natural gas liquids realization was up $1.52 per barrel from the 2001 quarter to $23.33. Internationally, the corresponding increase was $1.86 to $25.01. The average U.S. natural gas realization rose 6 percent to $2.77 per thousand cubic feet. Internationally, the average realization was flat at $2.06.
Remarking on the company's refining, marketing and transportation results, O'Reilly said, "Earnings in our downstream sector were off sharply from last year's strong quarter. Although the year-ago period included profits from operations that were sold as a condition of the merger, earnings still declined more than 80 percent on an adjusted basis. This decline in earnings was driven by refined product margins that have remained exceptionally weak all of this year. As this difficult environment continues into the fourth quarter, we remain focused on operating our refineries reliably and safely and serving our customers well."
With respect to other businesses in the quarter, O'Reilly said that earnings increased for chemicals, coal, and power and gasification. However, these improvements were more than offset by a decline associated with the company's share of Dynegy's operating results.
Net charges for special items in the 2002 third quarter totaled $2.068 billion. Major items were $1.549 billion related to Dynegy and $485 million for asset impairments. Merger-related expenses also reduced earnings $73 million in the 2002 quarter.
Sales and other operating revenues in the third quarter were $25.5 billion, up slightly from the corresponding 2001 period. For the first nine months, sales and other operating revenues were $71.6 billion, versus $83.2 billion in same period last year. The nine-month decline resulted from lower average prices for crude oil, natural gas and refined products.
Foreign currency gains included in net income were $65 million, compared with gains of $8 million in the 2001 third quarter. In the 2002 quarter, gains resulted from fluctuations of the U.S. dollar against the currencies of a number of countries -- primarily Argentina, Canada and Venezuela. For the nine-month period, foreign currency gains were $36 million, compared with gains of $75 million in 2001.
EXPLORATION AND PRODUCTION
U.S. Exploration and Production
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2002 2001 2002 2001
Operating Earnings $553 $550 $1,405 $2,747
Special Items (183) 49 (195) 49
Segment Income $370 $599 $1,210 $2,796
U.S. exploration and production operating earnings of $553 million were essentially unchanged from the year-ago period. The effect of higher crude oil and natural gas realizations was partially offset by a decline in oil-equivalent production. In the 2002 quarter, the combined negative impact on profits from damages and reduced production from Tropical Storm Isidore in the Gulf of Mexico was about $25 million. Also in the same quarter were unfavorable mark-to-market adjustments of about $25 million for contracts treated as derivatives. In the year-ago quarter, the effects from similar items were not significant.
The average liquids realization increased 7 percent between periods to $23.33 per barrel. The average natural gas realization was $2.77 per thousand cubic feet, compared with $2.62 in the year-ago quarter.
Net oil-equivalent production declined 4 percent from the 2001 third quarter. The net liquids production component was down 1.5 percent to 602,000 barrels per day. Net natural gas production averaged 2.406 billion cubic feet per day, down 9 percent. The effect of the tropical storm lowered average daily production in the 2002 third quarter by 9,000 barrels of crude oil and 49 million cubic feet of natural gas.
Special charges in the third quarter 2002 resulted mainly from asset impairments caused by write-downs in quantities of proved oil and gas reserves for fields in various locations across the United States.
International Exploration and Production
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2002 2001 2002 2001
Operating Earnings $730 $733 $2,277 $2,504
Special Items (183) -- (183) --
Segment Income $547 $733 $2,094 $2,504
International exploration and production operating earnings of $730 million were flat compared with the third quarter 2001. The effects of higher crude oil realizations and natural gas production were essentially offset by a combination of lower liquids production, mark-to-market adjustments for contracts treated as derivatives and higher tax expense as a result of a change in the U.K. tax law.
Net oil-equivalent production was about the same as the year-ago period. The net liquids production component declined 4 percent to 1,246,000 barrels per day. Increased production in Kazakhstan was more than offset by declines in Nigeria -- primarily as a result of OPEC-related curtailments, operating incidents and civil protests -- and in Europe and Indonesia. The effect of OPEC quotas on Nigerian production in the 2002 quarter was 40,000 barrels per day, versus having no effect in the corresponding 2001 period. Net natural gas production increased 21 percent to 1.874 billion cubic feet per day. New production from the Philippines, along with higher production in Kazakhstan and several other countries, contributed to the increase and more than offset declines in the United Kingdom and Canada.
Earnings for the quarter included net foreign currency gains of $60 million, compared with gains of $20 million in 2001. Currency gains in several countries -- particularly Argentina, Canada, Venezuela and the United Kingdom -- were partially offset by losses in Nigeria.
Special-item charges in 2002 were for asset impairments caused by write-downs in quantities of proved oil and gas reserves for fields in Africa and Canada and the effect of tax-law changes in the United Kingdom on prior-years tax liabilities.
REFINING, MARKETING AND TRANSPORTATION
U.S. Refining Marketing and Transportation
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2002 2001 2002 2001
Operating Earnings (Loss) $ 35 $424 $(63) $1,144
Special Items (114) -- (200) --
Segment (Loss) Income $(79) $424 $(263) $1,144
U.S. refining, marketing and transportation operating earnings of $35 million declined 92 percent from $424 million in the year-ago quarter. The decrease was mainly due to significantly lower margins for refined products and the absence in 2002 of $111 million in earnings from operations sold under mandate of the U.S. Federal Trade Commission as a condition of the merger.
The quarter's average refined product sales realization increased 8 percent to $39.00 per barrel. Refined product sales volumes, excluding the company's share of Equilon and Motiva sales in the 2001 period, declined 8 percent to 1,657,000 barrels per day, primarily due to reduced jet fuel sales and fuel oil trading volumes. However, branded gasoline sales volumes increased 4 percent to 591,000 barrels per day from the year-ago quarter.
Special-item charges in the 2002 quarter were for the write-down of assets and environmental remediation costs.
International Refining Marketing and Transportation
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2002 2001 2002 2001
Operating Earnings $ 57 $165 $198 $571
Special Items (136) -- (136) --
Segment (Loss) Income $(79) $165 $62 $571
International refining, marketing and transportation operating earnings of $57 million declined from $165 million due to lower refined product margins in most operating areas and lower freight rates for the international shipping operations. Total refined product sales volumes decreased 14 percent to 2,307,000 barrels per day, primarily the result of reduced fuel oil and diesel trading volumes.
Earnings in the 2002 quarter included foreign currency gains of $9 million, compared with gains of $1 million in 2001.
The special item in 2002 was for a write-down of the company's investment in its Caltex Australia Limited affiliate to the estimated fair value at September 30, 2002.
CHEMICALS
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2002 2001 2002 2001
Operating Earnings (Loss) $ 22 $(5) $73 $(15)
Special Items -- (43) -- (43)
Segment Income (Loss) $22 $(48) $73 $(58)
Chemical operations earned $22 million, an increase of $27 million from last year's quarter, mainly from the company's 50 percent-owned Chevron Phillips Chemical Company LLC affiliate. Product sales margins for the affiliate, while improved as a result of lower feedstock costs in 2002, remained weak. Net income in the third quarter 2002 included foreign currency losses of $1 million, compared with gains of $2 million in the 2001 quarter.
ALL OTHER
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
Millions of Dollars 2002 2001 2002 2001
Net Charges, Excluding Special Items
And Merger Effects $(160) $(153) $(489) $(639)
Special Items (1,452) 103 (2,181) 103
Merger Effects (73) (554) (278) (611)
Segment Net Charges $(1,685) $(604) $(2,948) $(1,147)
All Other consists of the company's interest in Dynegy, coal mining operations, power and gasification businesses, worldwide cash management and debt financing activities, corporate administrative costs, insurance operations, real estate activities and technology companies. Net charges before special items and merger effects were $160 million, slightly more than the year-ago quarter. The favorable effects of improved earnings of the company's coal and power and gasification businesses, lower net interest expense and lower corporate charges were essentially offset by a decline associated with the company's share of Dynegy's operating results. Foreign currency losses were $3 million, versus $15 million in the 2001 quarter.
Special items of $1.452 billion in the 2002 quarter were composed of charges of $1.549 billion related to Dynegy that were partially offset by benefits of $97 million for prior-years tax adjustments. The Dynegy charges were composed of $1.095 billion for the write-down of the company's investment in Dynegy common and preferred stock to its estimated fair value at September 30, 2002; $305 million for the company's share of Dynegy's own write-downs and revaluations and $149 million for the share of Dynegy's loss on its sales of Northern Natural Gas Company. At the end of the third quarter 2002, the book value of the company's investment in Dynegy totaled $412 million, made up of $112 million for the common equity interest and $300 million for the preferred stock. An additional charge to fourth quarter 2002 earnings would be required if the fair value of the Dynegy securities at December 31, 2002, is below the carrying value at that time and the decline is deemed to be other than temporary.
Included in merger effects for the third quarter 2001 was a charge of $496 million for a write-down of the assets required to be sold as a condition of the merger.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures during the first nine months of 2002 totaled $6.6 billion, compared with $7.3 billion in 2001. Expenditures in 2002 for exploration and production projects were $4.7 billion or 71 percent of the total. For the 2001 period, upstream spending totaled $5.2 billion -- also 71 percent of the total -- and included an accelerated drilling program in the United States to increase natural gas production and an additional investment in the company's Tengizchevroil affiliate.
NOTICE
The conference call to discuss ChevronTexaco's third quarter 2002 earnings will take place on Thursday, October 31, 2002, at 8:00 a.m. PST. The conference call will be available in a listen-only mode to individual investors, media and other interested parties on ChevronTexaco's Web site at www.chevrontexaco.com under the "Investor Relations" heading. Additional financial and operating information is contained in the Investor Relations Supplement that is available under "Financial Reports" on the Website.
ChevronTexaco will post selected fourth quarter 2002 interim company and industry performance data on its Website on December 19, 2002, at 2:00 p.m. PST. Interested parties may view this interim data at www.chevrontexaco.com under the "Investor Relations" 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 earnings release of ChevronTexaco Corporation contains forward- looking statements relating to ChevronTexaco'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," "estimates" 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. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, ChevronTexaco undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Among the factors that could cause actual results to differ materially 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; future developments in the energy-trading business sector and their effects on the operations of the company and its Dynegy affiliate; inability of the company's joint-venture partners to fund their share of operations and development activities; potential failure to achieve expected production from existing and future oil and gas development projects; potential delays in the development, construction or start-up of planned projects; potential disruption or interruption of the company's production or manufacturing facilities due to accidents or political events; potential liability for remedial actions under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental regulations (including, particularly, regulations and litigation dealing with gasoline composition and characteristics); and potential liability resulting from pending or future litigation. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.
CHEVRONTEXACO CORPORATION - FINANCIAL REVIEW
(Millions of Dollars Except Per-Share Amounts)
CONSOLIDATED STATEMENT OF INCOME
(unaudited) Three Months Nine Months
Ended September 30 Ended September 30
REVENUES AND OTHER INCOME: 2002 2001(A) 2002 2001(A)
Sales and Other
Operating Revenues (B) $25,528 $25,430 $71,595 $83,170
(Loss) Income from
Equity Affiliates (193) 320 -- 1,182
Other Income 15 217 243 433
25,350 25,967 71,838 84,785
COSTS AND OTHER DEDUCTIONS:
Purchased Crude Oil
and Products 14,718 14,431 41,225 48,599
Operating Expenses 2,118 1,939 5,569 5,661
Selling, General and
Administrative Expenses 1,032 964 3,048 2,749
Exploration Expenses 166 168 386 579
Depreciation, Depletion
and Amortization 1,514 1,172 3,960 3,497
Write-down of Investments
in Equity Affiliates 1,230 -- 1,932 --
Taxes Other
Than on Income (B) 4,369 4,023 12,286 11,600
Merger-Related Expenses (C) 111 83 413 156
Minority Interests 13 18 35 90
Interest and Debt Expense 117 186 424 662
25,388 22,984 69,278 73,593
(LOSS) INCOME BEFORE
INCOME TAX EXPENSE (38) 2,983 2,560 11,192
Income Tax Expense 866 1,218 2,332 4,886
NET (LOSS) INCOME BEFORE
EXTRAORDINARY ITEM $(904) $1,765 $228 $6,306
Extraordinary Loss,
Net of Income Tax -- (496) -- (496)
NET (LOSS) INCOME $(904) $ 1,269 $228 $ 5,810
PER-SHARE AMOUNTS:
NET (LOSS) INCOME BEFORE EXTRAORDINARY ITEM
(Loss) Earnings - Basic $(0.85) $1.66 $0.22 $5.95
(Loss) Earnings - Diluted $(0.85) $1.66 $0.22 $5.94
NET INCOME
(Loss) Earnings - Basic $(0.85) $1.19 $0.22 $5.48
(Loss) Earnings - Diluted $(0.85) $1.19 $0.22 $5.47
Average Common Shares Outstanding (000's)
- Basic 1,061,633 1,060,955 1,060,721 1,059,879
- Diluted 1,063,662 1,062,080 1,062,660 1,062,876
NET INCOME BY MAJOR OPERATING AREA Three Months Nine Months
(unaudited) Ended September 30 Ended September 30
2002 2001 2002 2001
Exploration and Production
United States $ 370 $599 $1,210 $2,796
International 547 733 2,094 2,504
Total Exploration
and Production 917 1,332 3,304 5,300
Refining, Marketing and Transportation
United States (79) 424 (263) 1,144
International (79) 165 62 571
Total Refining, Marketing
and Transportation (158) 589 (201) 1,715
Chemicals 22 (48) 73 (58)
All Other (D) (1,685) (604) (2,948) (1,147)
NET (LOSS) INCOME $(904) $1,269 $228 $5,810
(A) Certain items were reclassified to conform to the 2002 presentation.
(B) Includes consumer
excise taxes: $1,782 $1,680 $5,221 $4,913
(C) Includes employee severance and other benefits associated with
workforce reductions, professional service fees, employee and office
relocations, facility closure costs, etc.
(D) Includes the company's interest in Dynegy Inc., coal mining
operations, power and gasification ventures, corporate administrative
costs, worldwide cash management and debt financing activities,
technology investments, real estate and insurance activities, and
expenses and net losses connected with the merger (merger effects).
CHEVRONTEXACO CORPORATION - FINANCIAL REVIEW
(Millions of Dollars)
SPECIAL ITEMS AND MERGER
EFFECTS (A) BY MAJOR Three Months Nine Months
OPERATING AREA Ended September 30 Ended September 30
(unaudited) 2002 2001 2002 2001
U. S. Upstream $(183) $49 $(195) $49
International Upstream (183) -- (183) --
U. S. Downstream (114) -- (200) --
International Downstream (136) -- (136) --
Chemicals -- (43) -- (43)
All Other (B) (1,525) (451) (2,459) (508)
Total Special Items
and Merger Effects $(2,141) $(445) $(3,173) $(502)
SUMMARY OF SPECIAL Three Months Nine Months
ITEMS AND MERGER EFFECTS (A) Ended September 30 Ended September 30
(unaudited) 2002 2001 2002 2001
Asset Write-offs and Revaluations
- Write-down of
Dynegy Investment $(1,095) $-- $(1,626) $--
- Equity share of
Dynegy's write-offs
and revaluations (305) -- (479) --
- Other Write-offs (485) (43) (485) (43)
Asset Dispositions
- Share of Dynegy's (149) -- (149) --
Asset Dispositions - Other -- 49 -- 49
Environmental
Remediation Provisions (48) -- (113) --
Other, Net 14 103 (43) 103
Total Special Items (2,068) 109 (2,895) 109
Merger Effects (73) (554) (278) (611)
Total Special Items
and Merger Effects $(2,141) $(445) $(3,173) $(502)
FOREIGN EXCHANGE GAINS $65 $8 $36 $75
EARNINGS BY MAJOR OPERATING AREA,
EXCLUDING SPECIAL ITEMS Three Months Nine Months
AND MERGER EFFECTS Ended September 30 Ended September 30
(unaudited) 2002 2001 2002 2001
Exploration and Production
United States $553 $550 $1,405 $2,747
International 730 733 2,277 2,504
Total Exploration
and Production 1,283 1,283 3,682 5,251
Refining, Marketing and Transportation
United States 35 424 (63) 1,144
International 57 165 198 571
Total Refining, Marketing
and Transportation 92 589 135 1,715
Chemicals 22 (5) 73 (15)
All Other (B) (160) (153) (489) (639)
Earnings Excluding Special
Items and Merger Effects 1,237 1,714 3,401 6,312
Special Items
and Merger Effects (2,141) (445) (3,173) (502)
Net (Loss) Income $(904) $1,269 $228 $5,810
(A) Includes employee termination and other benefits associated with
workforce reductions, professional service fees, employee and office
relocations, facility closure costs, etc.; 2001 also includes net
charges related to assets sold as a condition of the merger.
(B) Includes the company's interest in Dynegy Inc., coal mining
operations, power and gasification ventures, corporate administrative
costs, worldwide cash management and debt financing activities,
technology investments, real estate and insurance activities, and
expenses and net losses connected with the merger (merger effects).
Sept. 30, 2002
SELECTED BALANCE SHEET DATA (unaudited) Dec. 31, 2001
Cash, Cash Equivalents
and Marketable Securities $3,578 $3,150
Total Assets $76,447 $77,572
Total Debt $16,517 $17,418
Shareholders' Equity $32,121 $33,958
CHEVRONTEXACO CORPORATION - FINANCIAL REVIEW
CAPITAL AND
EXPLORATORY EXPENDITURES (A) Three Months Ended Nine Months Ended
(Millions of Dollars) September 30 September 30
2002 2001 2002 2001
United States
Exploration and Production $547 $559 $1,366 $1,792
Refining, Marketing
and Transportation 230 234 488 600
Chemicals 164 36 235 102
Other 124 108 622 671
Total United States 1,065 937 2,711 3,165
International
Exploration and Production 1,041 933 3,309 3,408
Refining, Marketing
and Transportation 157 331 540 734
Chemicals 11 5 21 17
Other 14 2 30 5
Total International 1,223 1,271 3,900 4,164
Worldwide $2,288 $2,208 $6,611 $7,329
Three Months Ended Nine Months Ended
September 30 September 30
OPERATING STATISTICS (A) 2002 2001 2002 2001
NET LIQUIDS PRODUCTION (MB/D):
United States 602 611 616 612
International (B) 1,246 1,302 1,298 1,328
Worldwide 1,848 1,913 1,914 1,940
NET NATURAL GAS PRODUCTION (MMCF/D):
United States 2,406 2,630 2,472 2,766
International 1,874 1,555 1,918 1,667
Worldwide 4,280 4,185 4,390 4,433
SALES OF REFINED PRODUCTS (MB/D)(C):
United States 1,657 1,805 1,632 1,691
International 2,307 2,687 2,210 2,489
Worldwide 3,964 4,492 3,842 4,180
REFINERY INPUT (MB/D)(C):
United States 1,048 1,029 987 978
International 1,067 1,117 1,116 1,131
Worldwide 2,115 2,146 2,103 2,109
(A) Includes interest in affiliates.
(B) Excludes volumes produced
under operating
service agreements: 99 104 96 106
(C) Excludes volumes from Equilon and Motiva.
SOURCE ChevronTexaco Corporation
CONTACT: Fred Gorell of ChevronTexaco Corporation,
1-415-894-4443
Copyright (C) 2002 PR Newswire. All rights reserved.