SAN RAMON, Calif., Oct. 9 /PRNewswire/ -- Chevron Corporation (NYSE:
CVX) today reported in its interim update for the third quarter 2007 that
net income is expected to be significantly below the record $5.4 billion
earned in the second quarter 2007.
The lower projected earnings are mainly the result of a sharp decline
in refined-product margins for the downstream business and the impact of
nonrecurring items. In the second quarter, nonrecurring items included a
benefit of $680 million from the company's sale of its common stock
investment in Dynegy Inc. Third quarter results are expected to include an
approximate $260 million gain on the sale of the company's marketing assets
in the Benelux countries. Nonrecurring net charges in the third quarter are
projected to be approximately $700 million. These charges include asset
impairments, environmental remediation provisions, income tax adjustments,
asset retirement obligations, and severance provisions.
Basis for Comparison in Interim Update
The interim update contains certain industry and company operating data
for the third quarter. 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 quarterly results to be
reported on November 2, 2007. The reader should not place undue reliance on
this data.
Unless noted otherwise, all commentary is based on two months of the
third quarter 2007 vs. full second quarter 2007 results.
UPSTREAM - EXPLORATION AND PRODUCTION
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 results are
driven by actual liftings, which may differ from production due to the
timing of cargoes and other factors.
2006 2007
3Q 4Q 1Q 2Q 3Q 3Q
thru Aug thru Sep
U.S. Upstream
Net Production:
Liquids MBD 464 466 462 468 461 n/a
Natural Gas MMCFD 1,846 1,782 1,723 1,703 1,704 n/a
BOE MBOED 772 763 749 752 745 n/a
Pricing:
Avg. WTI Spot
Price $/Bbl 70.56 59.98 58.09 64.96 73.23 75.25
Avg. Midway
Sunset Posted
Price $/Bbl 59.08 48.20 47.08 55.18 63.97 65.43
Nat. Gas-Henry
Hub. "Bid Week"
Avg. $/MCF 6.58 6.56 6.80 7.56 6.52 6.16
Nat. Gas-CA
Border "Bid Week"
Avg. $/MCF 6.09 5.82 6.66 6.85 6.03 5.68
Nat. Gas-Rocky
Mountain "Bid Week"
Avg. $/MCF 5.31 4.67 5.40 3.72 3.24 2.83
Average Realizations:
Crude $/Bbl 63.98 52.98 51.60 58.89 67.44 n/a
Liquids $/Bbl 61.99 51.06 49.91 57.27 65.26 n/a
Natural Gas $/MCF 5.93 5.90 6.40 6.56 5.75 n/a
Exploration
Expense $ MM, B/T 76 163 142 67 n/a n/a
International Upstream
Net Production:
Liquids MBD 1,267 1,346 1,317 1,297 1,275 n/a
Other Produced
Volumes MBD 141 35 32 29 31 n/a
Total MBD 1,408 1,381 1,349 1,326 1,306 n/a
Natural Gas MMCFD 3,119 3,067 3,271 3,314 3,294 n/a
BOE - incl.
Other Produced
Volumes MBOED 1,928 1,892 1,894 1,878 1,855 n/a
Pricing:
Avg. Brent Spot
Price $/Bbl 69.72 59.44 58.26 68.73 73.60 74.70
Average Realizations:
Liquids $/Bbl 61.90 51.77 51.15 61.32 66.67 n/a
Natural Gas $/MCF 3.66 3.67 3.85 3.64 3.75 n/a
Exploration
Expense $MM, B/T 208 384 164 206 n/a n/a
Worldwide daily oil-equivalent production for the first two months of
the third quarter declined about 1 percent from 2.63 million barrels per
day in the second quarter. U.S. crude realizations improved by $8.55 per
barrel -- in line with the increase in West Texas Intermediate (WTI) and
California heavy crude prices. International liquids realizations were
higher by $5.35 per barrel, slightly more than the increase in Brent spot
prices. U.S. natural gas realizations decreased $0.81 per thousand cubic
feet, reflecting similar reductions in bid week pricing.
Compared to the second quarter, the benefit of higher crude
realizations for the full third quarter is expected to be more than offset
by the decline in U.S. natural gas prices, volumetric effects (liftings),
and an increase in net charges related to nonrecurring items.
DOWNSTREAM - REFINING, MARKETING AND TRANSPORTATION
The table that follows includes industry benchmark indicators for
refining and marketing margins. Actual margins realized by the company may
differ significantly due to location and product mix effects, planned and
unplanned shutdown activity and other company-specific and operational
factors.
2006 2007
3Q 4Q 1Q 2Q 3Q 3Q
thru Aug thru Sep
Downstream
Market
Indicators $/Bbl
Refining Margins
USWC - ANS 5-3-1-1 19.36 20.55 26.69 30.28 14.47 14.11
USGC LHD - Avg of
Mogas + Dist, less
Fuel Oil 34.10 27.58 28.85 37.17 30.91 31.50
Singapore - Dubai
3-1-1-1 4.07 1.96 5.79 8.87 6.39 5.84
N.W. Europe - Brent
3-1-1-1 (0.22) (2.06) (0.53) 2.08 (0.14) 0.06
Marketing Margins
U.S. West - LA Mogas
DTW to Spot 11.08 4.32 2.63 5.12 3.45 2.42
U.S. East - Houston
Mogas Rack to
Spot 7.31 4.64 5.21 3.99 3.02 2.63
Asia-Pacific /
Middle East / Africa 4.42 5.91 4.39 3.66 3.84 n/a
United Kingdom 7.31 4.89 4.98 5.45 6.71 n/a
Latin America 5.92 5.84 6.08 7.39 6.03 n/a
Actual Volumes:
U.S. Refinery
Input MBD 967 916 729 881 812 n/a
Int'l Refinery
Input MBD 1,055 987 1,070 942 1,040 n/a
U.S. Branded
Mogas Sales MBD 625 622 622 630 653 n/a
The U.S. West Coast industry refining margin indicator for the full
third quarter declined more than 50 percent from about $30 per barrel in
the second quarter. The U.S. Gulf Coast light-heavy-differential marker
averaged $31.50 per barrel, down over 15 percent in the full third quarter.
Outside the United States, benchmark refining margins were also
considerably lower.
During the full third quarter, the Los Angeles mogas marketing margin
indicator fell by more than 50 percent to $2.42 per barrel, while the
Houston mogas indicator declined over 30 percent to $2.63 per barrel.
U.S. refinery daily crude-input volumes for the first two months of the
third quarter decreased primarily due to planned and unplanned shutdowns at
the company's refineries in El Segundo, California, and Pascagoula,
Mississippi. On August 16, the company experienced a fire in the Number 2
crude unit at the Pascagoula refinery, and the unit remains out of service.
No fire-related injuries occurred, and the company has been able to
maintain uninterrupted product supplies to customers during this outage.
Outside the United States, refinery input volumes increased due to the
completion of a planned shutdown at the company's refinery in Capetown,
South Africa, and higher volumes at the Yeosu Refinery in South Korea.
Compared to the second quarter, the benefit of an approximate $260 million
gain on the sale of the company's marketing assets in Belgium, the
Netherlands, and Luxembourg is expected to be much more than offset during the
full third quarter by the worldwide impacts of lower refined-product margins,
U.S. refinery shutdowns and an increase in net charges related to nonrecurring
items.
CHEMICALS
2006 2007
3Q 4Q 1Q 2Q 3Q 3Q
thru Aug thru Sep
Chemicals
Source: CMAI Cents/lb
Ethylene Industry
Cash Margin 17.03 16.10 11.08 10.86 12.39 11.47
HDPE Industry
Contract Sales
Margin 13.00 12.10 13.62 14.58 15.85 16.71
Styrene Industry
Contract Sales
Margin 11.24 11.51 11.09 11.57 11.46 11.51
Footnote
Prices, economics, and views expressed by CMAI are strictly the opinion
of CMAI and Purvin & Gertz and are based on information collected within
the public sector and on assessments by CMAI and Purvin & Gertz staff
utilizing reasonable care consistent with normal industry practice. CMAI
and Purvin & Gertz make no guarantee or warranty and assume no liability as
to their use.
In the Chemicals segment, industry indicator margins for the full third
quarter in general were slightly higher than the second quarter.
ALL OTHER
The company's standard guidance for quarterly net after-tax charges
related to corporate and other activities is between $160 million and $200
million. Due to the potential for irregularly occurring accruals related to
tax items, pension settlements, and other corporate items, actual results
may differ.
The second quarter included a gain of approximately $680 million on the
sale of the company's investment in Dynegy and charges of about $160
million related to the redemption of Texaco Capital Bonds. For the full
third quarter, net charges are expected to be at or above the $200 million
high end of the standard range.
NOTICE
Chevron's discussion of third quarter 2007 earnings with security
analysts will take place on Friday, November 2, 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 will be contained in the Investor Relations
Earnings Supplement that will be available under "Events and Presentations"
in the "Investors" section on the Web site.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF
1995
This Interim Update 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 Interim
Update. 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; timing
of exploration expenses; 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; gains and losses from asset
dispositions or impairments; government-mandated sales, divestitures,
recapitalizations, changes in fiscal terms or restrictions on scope of
company operations; foreign currency movements compared with the U.S.
dollar; 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.
SOURCE Chevron Corporation
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Related links:
http://www.chevron.com/
CONTACT:
Don Campbell of Chevron Corporation,
+1-925-842-0050
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