Chevron Issues Interim Update for Second Quarter 2012
Jul 11, 2012 3:20:00 PM
Copyright Business Wire 2012
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SAN RAMON, Calif.--(BUSINESS WIRE)-- Chevron Corporation (NYSE: CVX) today reported in its interim update that earnings for the second quarter 2012 are expected to be higher than first quarter 2012. Upstream results are projected to be lower between sequential quarters, due to lower average crude oil prices, partially offset by foreign exchange gains. Downstream earnings in the second quarter are expected to be significantly higher, reflecting improved refining margins and gains on asset sales.
Basis for Comparison in Interim Update
This interim update contains certain industry and company operating data for the second quarter 2012. 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 July 27, 2012. The reader should not place undue reliance on this data.
Readers are advised that portions of the commentary below compare results for the first two months of the second quarter 2012 to full first quarter 2012 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 reflect actual liftings, which may differ from production due to the timing of cargoes and other factors.
2011 2012
2Q 3Q 4Q 1Q
2Q thru
May
2Q thru
Jun
U.S. Upstream
Net Production:
Liquids MBD 478 453 447 456 466 n/a
Natural Gas MMCFD 1,299 1,260 1,290 1,170 1,196 n/a
Total Oil-Equivalent MBOED 694 662 661 651 665 n/a
Pricing:
Avg. WTI Spot Price $/Bbl 102.34 89.51 93.98 103.00 98.81 93.34
Avg. Midway Sunset Posted Price1 $/Bbl 108.67 102.99 107.83 112.01 108.42 102.72
Nat. Gas-Henry Hub "Bid Week" Avg. $/MCF 4.32 4.20 3.55 2.73 2.11 2.21
Nat. Gas-CA Border "Bid Week" Avg. $/MCF 4.24 4.32 3.74 2.96 2.27 2.40
Nat. Gas-Rocky Mountain "Bid Week" Avg. $/MCF 3.88 3.81 3.35 2.56 1.74 1.88
Average Realizations:
Crude $/Bbl 108.80 101.27 105.37 108.37 108.80 n/a
Liquids $/Bbl 103.63 96.75 100.65 101.93 102.14 n/a
Natural Gas $/MCF 4.35 4.14 3.62 2.48 2.05 n/a
International Upstream
Net Production:
Liquids MBD 1,388 1,353 1,369 1,338 1,305 n/a
Natural Gas MMCFD 3,670 3,496 3,658 3,849 3,868 n/a
Total Oil Equivalent MBOED 2,000 1,937 1,980 1,980 1,950 n/a
Pricing:
Avg. Brent Spot Price 2 $/Bbl 117.04 113.41 109.35 118.60 114.52 108.29
Average Realizations:
Liquids $/Bbl 106.84 102.82 101.33 110.03 104.47 n/a
Natural Gas $/MCF 5.49 5.50 5.55 5.88 6.23 n/a
1 As of second quarter 2012, Avg. Midway Sunset Posted Price is based on the average of four companies’ posted prices to better reflect realizations. Prior to second quarter 2012, the price is based only on the Chevron average posting.
2 The Avg. Brent Spot Price is based on Platts daily assessments, using Chevron’s internal formula to produce a quarterly average.
U.S. net oil-equivalent production increased 14,000 barrels per day during the first two months of the second quarter, largely reflecting increased production in the Gulf of Mexico. International net oil-equivalent production during the first two months of the second quarter decreased 30,000 barrels per day. Continued shut-in of production at the Frade field in Brazil and planned maintenance in Kazakhstan contributed to the majority of the decline. Production ramp-up at Usan in Nigeria partially offset these effects.
U.S. crude oil realizations during the first two months of the second quarter were in line with first quarter prices, reflecting the typical monthly lag on pricing in the Gulf of Mexico. International liquids realizations decreased $5.56, to $104.47 per barrel. U.S. natural gas realizations decreased $0.43 to $2.05 per thousand cubic feet, while international natural gas realizations increased $0.35 per thousand cubic feet during the first two months of the second 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.
2011 2012
2Q 3Q 4Q 1Q
2Q thru
May
2Q thru
Jun
Downstream
Market Indicators:
$/Bbl
Refining Margins
U.S. West Coast – Blended 5-3-1-1 19.41 14.31 14.45 19.64 23.20 21.32
U.S. Gulf Coast – Maya 5-3-1-1 27.72 24.45 11.84 20.56 25.01 24.89
Singapore – Dubai 3-1-1-1 9.00 10.39 8.77 9.73 9.78 9.30
Marketing Margins
U.S. West – Weighted DTW to Spot 7.26 5.07 5.39 4.16 7.62 10.14
U.S. East – Houston Mogas Rack to Spot 4.49 4.46 4.35 3.90 5.33 5.10
Asia-Pacific / Middle East / Africa 5.74 6.19 5.65 4.75 6.42 n/a
Actual Volumes:
U.S. Refinery Input MBD 875 897 763 926 921 n/a
Int’l Refinery Input
MBD
1,017 882 805 779 853 n/a
U.S. Branded Mogas Sales MBD 510 529 515 505 519 n/a
For the full second quarter, U.S. refining and marketing margins increased compared to first quarter 2012, while international refining margins decreased over the same period.
International downstream earnings in the second quarter are expected to include gains of approximately $200 million from asset sales. Additionally, favorable inventory effects are projected to benefit earnings consistent with the sharp decline in crude and product prices toward the end of the second quarter.
During the first two months of the second quarter, U.S. refinery crude-input volumes were in line with the first quarter. International refinery crude-input volumes increased 74,000 barrels per day compared to the first quarter, largely reflecting completion of planned maintenance at the Yeosu, South Korea and Cape Town, South Africa refineries.
ALL OTHER
The company’s general guidance for the quarterly net after-tax charges related to corporate and other activities is between $300 million and $400 million. Due to the potential for non-ratable accruals related to income taxes, pension settlements, environmental and other matters, actual results may significantly differ from the guidance range.
NOTICE
Chevron’s discussion of second quarter 2012 earnings with security analysts will take place on Friday, July 27, 2012, 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 website at www.chevron.com under the “Investors” section. Additional financial and operating information will be contained in the Earnings Supplement that will be available under “Events & Presentations” in the “Investors” section on the website.
AI
