Chevron hits record annual net oil-equivalent production in 2018

Feb. 1, 2019
Chevron Corp. reported earnings of $3.7 billion for the fourth quarter of 2018 compared with $3.1 billion in the same quarter in 2017, which included $2.02 billion in tax benefits related to US tax reform. Included in the current quarter was an asset write-off totaling $270 million. Foreign currency effects increased earnings in the 2018 fourth quarter by $268 million.

Chevron Corp. reported earnings of $3.7 billion for the fourth quarter of 2018 compared with $3.1 billion in the same quarter in 2017, which included $2.02 billion in tax benefits related to US tax reform. Included in the current quarter was an asset write-off totaling $270 million. Foreign currency effects increased earnings in the 2018 fourth quarter by $268 million.

The company’s full-year 2018 earnings were $14.8 billion compared with $9.2 billion in 2017. Included in 2018 were impairments and other charges of $1.59 billion and a gain on an asset sale of $350 million. Foreign currency effects increased earnings in 2018 by $611 million.

“We reached significant milestones with upstream major capital projects in 2018, including the start-up of Wheatstone Train 2, our fifth operated LNG train in Australia,” said Michael K. Wirth, chairman and chief executive officer. “We also continued the ramp-up of the Permian basin in Texas and New Mexico, started production from the Big Foot project in the Gulf of Mexico, and continued to progress our Future Growth Project at the company’s 50%-owned affiliate, Tengizchevroil, in Kazakhstan.”

Wirth said that the company’s net oil-equivalent production increased more than 7% in 2018 to a record 2.93 million b/d. The company expects 2019 production to continue to rise by 4-7%, excluding the impact of asset sales, he said.

The company added some 1.46 billion bbl of net oil-equivalent proved reserves in 2018. These additions equate to about 136% of net oil-equivalent production for the year.

Upstream

Worldwide net oil-equivalent production was 3.08 million b/d in fourth quarter 2018 compared with 2.74 million b/d a year ago. Net oil-equivalent production for the full year 2018 was 2.93 million b/d compared with 2.73 million b/d a year prior.

US upstream operations earned $964 million in fourth quarter 2018 compared with $3.69 billion a year earlier. The decrease was primarily due to the absence of the prior year benefit of $3.33 billion from US tax reform, partially offset by higher crude oil production and realizations.

Net oil-equivalent production of 858,000 b/d in fourth quarter 2018 was up 187,000 bbl/d from a year earlier. Production increases from shale and tight properties in the Permian basin in Texas and New Mexico and base business in the Gulf of Mexico were partially offset by normal field declines and the impact of asset sales of 17,000 b/d. The net liquids component of oil-equivalent production in fourth quarter 2018 increased 30% to 674,000 b/d, while net natural gas production increased 20% to 1.1 bcfd.

International upstream operations earned $2.33 billion in fourth quarter 2018, compared with $1.6 billion a year ago. The increase in earnings was mainly due to higher natural gas sales volumes and prices partially offset by higher depreciation expenses from higher production volumes and an asset write-off. Foreign currency effects had a favorable impact on earnings of $264 million between periods.

Net oil-equivalent production of 2.23 million b/d in fourth quarter 2018 was up 156,000 b/d from a year earlier. The net liquids component of oil-equivalent production decreased 1% to 1.19 million b/d in the 2018 fourth quarter, while net natural gas production increased 19% to 6.23 bcfd.

Downstream

US downstream operations earned $256 million in fourth quarter 2018 compared with earnings of $1.2 billion a year earlier. The decrease was primarily due to the absence of the prior year benefit of $1.16 billion from US tax reform and higher operating expenses, partially offset by higher margins on refined product sales.

Refinery crude oil input in fourth quarter 2018 increased 10% to 918,000 b/d from the year-ago period, primarily due to the absence of turnarounds at the El Segundo, Calif., refinery and the absence of impacts from Hurricane Nate at the Pascagoula, Miss., refinery. Refined product sales of 1.21 million b/d were up 3% from fourth-quarter 2017.

International downstream operations earned $603 million in fourth-quarter 2018 compared with $84 million a year earlier. The increase in earnings was largely due to higher margins on refined product sales. Foreign currency effects had a favorable impact on earnings of $85 million between periods.

Refinery crude oil input of 665,000 bbl/d in fourth-quarter 2018 decreased 96,000 bbl/d from the year-ago period, mainly due to the sale of the company’s interest in the Cape Town Refinery in third-quarter 2018 and crude unit maintenance at the Singapore Refining Co.