The Rising Influence of Rising Affluence

[DewDiligence]

CVX Issues Weak EPS Guidance for 4Q11

[This PR was issued after the close last night; the shares are down about 2% today. The main problem is in the downstream business, where 4Q11 margins were close to breakeven. Moreover, currency swings reduced GAAP income by $450M relative to 3Q11. Apart from currency effects, the upstream business was ok, but not great. 4Q11 production (through Nov) was 2.64M boe/d, up slightly from 2.60 in 3Q11, but down from CVX’s prior guidance of 2.73. Average price realization in 4Q11 (through Nov) was roughly in line with 3Q11 except for US NG, where the price was down 10% QoQ. CVX reports its actual 4Q11 results on Jan 27.

Despite the tepid 4Q11 guidance and CVX’s soap-opera woes in Brazil and Ecuador, the stock is trading at only 6% below its all-time high, which shows a lot of underlying investor support for this quality name.]

http://finance.yahoo.com/news/Chevron-Issues-Interim-Update-bw-1289222374.html?x=0

›Chevron Issues Interim Update for Fourth Quarter 2011

SAN RAMON, Calif.--(BUSINESS WIRE)-- Chevron Corporation (NYSE: CVX) today reported in its interim update that earnings for the fourth quarter 2011 are expected to be significantly below third quarter 2011 results. Absent foreign exchange impacts, upstream earnings are projected to be comparable with third quarter results. Downstream earnings in the fourth quarter are expected to be near breakeven. Lower margins and refinery input volumes, and the absence of an asset sale gain are expected to reduce downstream earnings significantly compared to third quarter results. Full third quarter earnings included foreign exchange gains of nearly $450 million, compared to a loss anticipated in the fourth quarter.

Basis for Comparison in Interim Update

The interim update contains certain industry and company operating data for the fourth quarter 2011. The production volumes, realizations, margins and certain other items in the report are based on a portion of the quarter and are not necessarily indicative of Chevron's full quarterly results to be reported on January 27, 2012. The reader should not place undue reliance on this data.

Readers should be advised that portions of the commentary below compare results for the first two months of the fourth quarter 2011 to full third quarter 2011 results, as indicated.

UPSTREAM

The table that follows includes information on production and price indicators for crude oil and natural gas for specific markets. Actual realizations may vary from indicative pricing due to quality and location differentials and the effect of pricing lags. International earnings are driven by actual liftings, which may differ from production due to the timing of cargoes and other factors.

[See actual PR for table.]

U.S. net oil-equivalent production during the first two months of the fourth quarter was comparable with third quarter results. International net oil-equivalent production increased 42,000 barrels per day during the first two months of the fourth quarter, reflecting the completion of maintenance in Kazakhstan, and resolution of a third party pipeline incident and the ramp up of the Platong II project in Thailand, partly offset by an extended turnaround in Trinidad and reduced natural gas demand in Thailand due to flooding.

U.S. crude oil realizations increased $5.14 per barrel during the first two months of the fourth quarter, while international liquids realizations declined $1.04 to $101.78 per barrel. U.S. natural gas realizations decreased $0.43 to $3.71 per thousand cubic feet, while international natural gas realizations remained relatively flat at $5.51 per thousand cubic feet during the first two months of the fourth quarter.

DOWNSTREAM

The table that follows includes industry benchmark indicators for refining and marketing margins. Actual margins realized by the company will differ due to crude and product mix effects, planned and unplanned shutdown activity and other company-specific and operational factors.

[See actual PR for table.]

In the United States, Gulf Coast refining margins fell substantially in the fourth quarter compared to the third quarter. During the first two months of the fourth quarter, U.S. refinery crude-input volumes decreased by 180,000 barrels per day, largely reflecting a major turnaround at the Richmond, California refinery.

Outside the United States, refining and marketing margins fell in the fourth quarter relative to the third quarter. In addition, daily refinery crude-input volumes were down 90,000 barrels per day for the first two months of the fourth quarter, primarily reflecting the sale of the Pembroke U.K. refinery completed early in the third quarter.

ALL OTHER

The company’s general guidance for the quarterly net after-tax charges related to corporate and other activities is between $250 million and $350 million. Total net charges for the fourth quarter are expected to be notably higher than the general guidance range.‹