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Chevron Q3 profits fall 32% on reduced production, lower crude prices

Chevron Q3 profits fall 32% on reduced production, lower crude prices


Oil giant Chevron Corp. (NYSE:CVX) said third quarter earnings fell 32 per cent as planned maintenance reduced oil and gas production, and foreign exchange effects hurt results.

For the period ended September 30, the company posted earnings of $5.3 billion or $2.69 per diluted share, compared with $7.8 billion or $3.92 per diluted share a year earlier.

Revenues came in at $56 billion, down eight per cent compared to $61 billion in the year-ago period.

Analysts polled by Thomson Reuters expected per share earnings of $2.83 on revenues of $64.09 billion.

“This quarter’s earnings were solid, but off from their near record level of a year ago,” said Chevron's chairman and CEO John Watson. 

“Crude oil prices were down and we had a heavy period of planned oil field maintenance which temporarily reduced oil and gas production in several locations. 

“Foreign currency movements also hurt our results this quarter, while they benefited the year-ago period.”

In its upstream unit, Chevron said worldwide net oil-equivalent production was 2.52 million barrels per day in the third quarter, down from 2.60 million barrels per day a year ago. 

Production increases from project ramp-ups in Thailand, Nigeria and the United States were more than offset by the effects of planned maintenance, normal field declines, continued shut-in of the Frade Field in Brazil, dispositions and storm-related shut-ins in the Gulf of Mexico, the company noted.

U.S. upstream earnings were $1.12 billion, down from $1.5 billion a year earlier, primarily due to lower crude oil and natural gas realizations and lower production.

The company’s average sales price per barrel of crude oil and natural gas liquids was $91 in the third quarter, down from $97 a year ago. The average sales price of natural gas was $2.63 per thousand cubic feet, compared with $4.14 in last year’s third quarter.

International upstream earnings were $4.02 billion, down from $4.69 billion in the year-ago quarter. Chevron noted that the decline was primarily due to lower volumes and realizations for crude oil, as well as higher exploration expense. 

The average sales price for crude oil and natural gas liquids in the 2012 third quarter was $98 per barrel, down from $103 a year earlier. The average price of natural gas was $6.03 per thousand cubic feet, compared with $5.50 in last year’s third quarter.

The company’s U.S. downstream operations earned $456 million, compared with $704 million a year earlier, mainly due to lower margins on refined product sales and higher operating expenses.

Refinery crude oil input fell to 779,000 barrels per day, from 897,000 barrels per day in the year-ago period, primarily due to an early-August fire at the refinery in Richmond, California. 

Chevron said refined product sales fell to 1.18 million barrels per day from 1.25 billion barrels per day a year earlier, while branded gasoline sales declined two per cent percent to 519,000 barrels per day.

International downstream operations posted earnings of $233 million, compared with $1.3 billion a year earlier amid lower gains on asset sales, and foreign currency effects.

Refinery crude oil input of 909,000 barrels per day increased 27,000 barrels per day from the year-ago quarter, the company said. 

Total refined product sales were 1.56 million barrels per day in the third quarter, down two per cent, primarily on the sale of the company’s refining and marketing assets in the UK and Ireland. 

Looking forward, the company said it will continue to progress its upstream projects, with Gorgon in Australia and Bigfoot and Jack/St. Malo in the deepwater Gulf of Mexico all over 50 percent complete. 

The company purchased $1.25 billion of its common stock in the third quarter 2012 under its share repurchase program.

Chevron’s shares slipped 0.67 per cent in premarket trading to $110.71 apiece.


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