Chevron Holds Steady Amid Crude Oil Price Decline in 2012, Expects to Spend $36.7 Billion in 2013

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Researched by Industrial Info Resources (Sugar Land, Texas)--Chevron Corporation (NYSE:CVX) (San Ramon, California) significantly expanded its exploration and production in fourth-quarter and full-year 2012, despite price declines for crude oil. The company added about 1.07 billion barrels of net-oil equivalent proved reserves during the year, beginning exploration in five new countries and newly acquired acreage in the U.S. Net income was reported to be $7.25 billion for the quarter, a 41.42% increase from fourth-quarter 2011, and $26.18 billion for the year, a 2.66% decrease from 2011.

Total revenues stood at $60.55 billion for the quarter, an increase of less than 1% from the same period in 2011, and $241.91 billion for the year, a 4.65% decrease from 2011. In the Upstream segment, U.S. businesses were negatively affected by lower crude and natural gas price realizations, although crude oil production increased following the ramp-up of projects in the Gulf of Mexico and the Delaware Basin, while international businesses benefited from a $1.4 billion gain from an asset exchange in Australia, as well as higher volumes in Bangladesh and project ramp-ups in Nigeria and Thailand.

In the Downstream segment, U.S. businesses benefited from stronger margins on refined products, while international businesses saw solid gains from the sale of Chevron's fuels marketing business in Jamaica, the Dominican Republic and Sint Maarten.

Capital and exploratory expenditures were estimated to be $34.2 billion in full-year 2012, a 17.52% increase from 2011. The company announced six new natural gas discoveries off Australian shores and continued to develop the Gorgon and Wheatstone liquefied natural gas (LNG) projects.

Industrial Info is tracking more than $103 billion in active projects involving Chevron, including the $250 million addition of a hexene unit at the Cedar Bayou Olefins & Resins plant in Baytown, Texas. The project involves the construction of a 250,000-ton-per-year 1-hexene unit using Chevron proprietary technology. S&B Engineers and Constructors Limited (Houston, Texas) has been hired as the engineering, procurement and construction contractor. It is expected to be completed in March 2014.

"In our Upstream business, we are steadily progressing our major capital projects," said John Watson, the chairman and chief executive officer of Chevron, in a conference call. "The Gorgon project was more than 55% complete at year-end, and Wheatstone has made good progress as well, both from a construction standpoint and securing off-take commitments through several new, long-term LNG supply agreements."

The Downstream segment was boosted by a strong rebound in the fourth quarter, while the Upstream and all other segments offset it with slight losses:

• The Upstream segment reported total earnings of $6.86 billion for the quarter, a 19.54% increase from fourth-quarter 2011, and $23.79 billion for the year, a 4.03% decrease:
• The U.S. Upstream business reported total earnings of $1.36 billion for the quarter, a 15.08% decrease from the same period in 2011, and $5.33 billion for the year, an 18.12% decrease.
• The International Upstream business reported total earnings of $5.5 billion for the quarter, a 32.99% increase from fourth-quarter 2011, and $18.46 billion for the year, a 1% increase.
• The Downstream segment reported total earnings of $925 million for the quarter, compared with a loss of $61 million in the same period in 2011, and $4.3 billion for the year, a 19.72% increase:
• The U.S. Downstream business reported total earnings of $331 million for the quarter, compared with a $204 million loss fourth-quarter 2011, and $2.05 billion for the year, a 35.99% increase.
• The International Downstream business reported total earnings of $594 million for the quarter, compared with $143 million in the same period in 2011, and $2.25 billion for the year, a 7.96% increase.
• All other segments reported a total earnings loss of $538 million for the quarter, compared with a $353 million loss in fourth-quarter 2011, and a $1.91 billion loss for the year, compared with a $1.48 billion loss in 2011.

Production and sales volumes mostly tumbled from the same period last year, although sales of natural gas improved:

• Net liquids production was reported to be 1.8 million barrels per day (BBL/d) for the quarter, a 1.16% decrease from fourth-quarter 2011, and 1.76 million BBL/d for the year, a 4.6% decrease.
• Net natural gas production was reported to be 5.24 million metric cubic feet per day for the quarter, a 5.82% increase from the same period in 2011, and 5.07 metric cubic feet per day for the year, a 2.69% increase.
• Total net-oil equivalent production was reported to be 2.67 million BBL/d for the quarter, a 1.02% decrease from fourth-quarter 2011, and 2.61 million BBL/d for the year, a 2.36% decrease.
• Sales of natural gas were reported to be 9.72 million metric cubic feet per day for the quarter, a 6.15% decrease from the same period in 2011, and 9.79 million metric cubic feet per day for the year, a 4.04% decrease.
• Sales of natural gas liquids were reported to be 259,000 BBL/d for the quarter, a 3.19% increase from fourth-quarter 2011, and 245,000 BBL/d for the year, a 1.21% decrease.
• Sales of refined products were reported to be 2.72 million BBL/d for the quarter, a 2.86% decrease from the same period in 2011, and 2.77 million BBL/d for the year, a 6.24% decrease.
• Refinery input was reported to be 1.62 million BBL/d for the quarter, a 3.32% increase from fourth-quarter 2011, and 1.7 million BBL/d for the year, a 4.76% decrease.

Capital and exploratory expenditures are estimated to be $36.7 billion for full-year 2013. Chevron plans to continue increasing its exploration activities in places such as Sierra Leone and the Kurdistan region of Iraq, and is directing a significant portion of its Downstream investment to its premium base oil facility at the Pascagoula Refinery, as well as additives production in Singapore.

"Our net production outlook for the year is 2.65 million barrels of oil equivalent per day, an increase of about 1.1% from 2012 levels," Watson said in the conference call. "This is based on an average Brent price of $112 per barrel, the same price as 2012, and does not assume OPEC curtailments, material security or market impact. Out full-year estimate for 2013 is about on par with fourth-quarter 2012 production. The start-up of Angola LNG, as well as increased production from the deepwater Gulf of Mexico, Thailand and Nigeria are expected to roughly offset base business declines and normal turnaround activities later in the year."

For more information, visit Industrial Info's International Oil and Gas Production Project Database.

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