Chevron Sees Mixed Results in Third-Quarter 2010, Mostly Flat from Same Period Last Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Global oil and gas leader Chevron Corporation (NYSE:CVX) (San Ramon, California) saw mixed results in the third quarter of 2010 as improved pricing was offset by higher expenses, rendering total revenues and earnings essentially flat with those of third-quarter 2009. Net income was reported to be $3.77 billion, a 1.64% decrease from the same period last year.

Total revenues stood at $49.72 billion, a 6.63% increase from third-quarter 2009. Chevron officials attributed the gain to higher prices for crude oil, natural gas and other refined products, which boosted the Upstream businesses, and improved margins on refined products and higher earnings from chemical operations, which proved profitable for the Downstream businesses. However, the Upstream businesses were negatively affected by higher depreciation, exploration and operating expenses.

"Our base business is healthy and robust, we're on track to meet our revised production target for the year, we're meeting key milestones in progressing our major capital projects, and our Downstream is delivering on its restructuring commitment," said Pat Yarrington, the vice president and chief financial officer, in a conference call.

Losses for the quarter came largely from Chevron's "other" segments, which include mining operations, power generation businesses, administrative functions, and alternative fuels and technology companies. Of the major businesses, only the International Upstream segment showed an overall loss in earnings, which was marginal:

• The Upstream segment reported total earnings of $3.56 billion, a 4.6% decrease from third-quarter 2009:
• The U.S. Upstream business reported total earnings of $946 million, a 6.41% increase from the same period last year.
• The International Upstream business reported total earnings of $2.62 billion, an 8.04% decrease from third-quarter 2009.
• The Downstream segment reported total earnings of $565 million, compared with $262 million in the same period last year:
• The U.S. Downstream business reported total earnings of $349 million, compared with $127 million in third-quarter 2009.
• The International Downstream business reported total earnings of $216 million, a 60% increase from the same period last year.
• All other segments reported a total earnings loss of $361 million, compared with a $167 million loss in third-quarter 2009.

Production and sales volumes were generally in line with results from the same period last year:

• Net liquids production was reported to be 1.9 million barrels per day (BBL/d), a 0.95% increase from third-quarter 2009.
• Net natural gas production was reported to be 5 million metric cubic feet per day, a 2.21% increase from the same period last year.
• Total net-oil equivalent production was reported to be 2.74 million BBL/d, a 1.33% increase from third-quarter 2009.
• Sales of natural gas were reported to be 10.69 million metric cubic feet per day, an 8.32% increase from the same period last year.
• Sales of natural gas liquids were reported to be 261,000 BBL/d, a 1.51% decrease from third-quarter 2009.
• Sales of refined products were reported to be 3.1 million BBL/d, a 4.2% decrease from the same period last year.
• Refinery input was reported to be 1.91 million BBL/d, a 2.31% increase from third-quarter 2009.

Chevron officials say the company is continuing to show improvement in Upstream production and Downstream restructuring, and noted that the recent lifting of the drilling moratorium in the Gulf of Mexico, which had been imposed by the U.S. government following the early summer BP plc (NYSE:BP) (London, England) rig disaster, bodes well for Chevron, which plans to submit several deepwater drilling permit applications for the Gulf area in the coming months.

"We are pleased that the drilling moratorium has been lifted," Yarrington said. "This is the first step needed to return thousands of people to work and to begin drilling in the Gulf."

Industrial Info is tracking 109 active Chevron projects worldwide that are worth a total of more than $69 billion, including the $18.5 billion Gorgon liquefied natural gas (LNG) production plant on Barrow Island in Western Australia. The project involves the construction of three 5 million-ton-per-year LNG production trains, condensate production units, and liquefied natural gas storage units with a marine export terminal. For more information, visit Industrial Info's International Projects Database.

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