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Dow-30 Earnings: Chevron Corp. - Fourth Quarter 2012
Chevron Inc. (CVX - Free Chevron Stock Report), the world's fourth largest oil company based on proven reserves, reported fourth-quarter share net of $3.70, compared to 2011's figure of $2.58, and our estimate of $2.63. The good result included a gain of $1.4 billion ($0.71 a share) from an upstream asset exchange, and was based on a weighted average base of 19.64 billion shares, compared to 2011's 19.81 billion shares.
In the core Upstream (Exploration and Production) business (87% of fourth-quarter profits), worldwide net oil equivalent production came in at 2.67 million barrels a day, compared to 2.64 million barrels per day in 2011's final period. Production increase from ramp-ups in projects in the United States, Nigeria, and Thailand led the way, along with higher cost recovery volumes in Bangladesh, as well as unit volume hikes from the newly-acquired Delaware Basin properties. Partially offsetting these positives, was natural field declines from aging properties, and the continued shut-down of the Frade field in offshore Brazil.
In the U.S. Upstream sector, profits were down 18%, to $1.36 billion, due to lower crude oil and natural gas prices. The company's average price of crude oil was down to $91 a barrel in the fourth quarter, compared to the year-earlier tally of $101. Natural gas selling prices were down to $3.22 per thousand cubic feet, from $3.62 a year prior. International oil and gas selling prices were also down in the quarter, but by less on a percentage basis. Oil declined by a dollar to $100 a barrel, and gas decreased by 7%, to $5.55 per thousand cubic feet. International Upstream earnings were flat at $4.1 billion (excluding the aforementioned $1.4 billion asset exchange gain).
In the Downstream (Marketing and Refining) operation, the company earned $925 million (13% of total profits). This figure compares to a loss of $60 million in 2011's fourth quarter. The better result was thanks to a multi-year plan to streamline the asset portfolio to focus on higher-margined refined products.
In the core Upstream segment, Chevron added about 1.07 billion barrels of net oil equivalent of proved reserves in 2012. These additions equate to 112% of net oil-equivalent production for the year. We look for more of the same in 2013, thanks to significant progress in the Gorgon and Wheatstone LNG projects in Australia, as well as from six additional natural gas discoveries in offshore Australia. Chevron also expanded its exploration activities into five new countries, as well as enhancing its acreage in the U.S. and Canada (via its 50% operator interest in a western Canada LNG project).
About The Company: Chevron has daily gross crude oil and natural gas liquid production of about 1,850 million barrels. Natural gas production averages around 5,100 billion cubic feet. Net proved reserves at 12/11 were 7.173 billion barrels of oil. The company operates a multitude of well sites all over the globe, as well as owning/leasing about 4,100 gas stations, mostly in the United States.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.