Chevron Corp. reported a fourth-quarter 2019 loss of $6.6 billion compared with earnings of $3.7 billion in fourth-quarter 2018. Full-year 2019 earnings were $2.9 billion compared with earnings of $14.8 billion in 2018.
Included in the current quarter were previously reported upstream impairments and write-offs totaling $10.4 billion associated with Appalachia shale, Kitimat LNG, Big Foot, and other projects (OGJ Online, Dec. 11, 2019). The company also recognized a $1.2 billion gain on the sale of the UK Central North Sea assets in the fourth quarter. Foreign currency effects decreased earnings in the fourth quarter 2019 by $256 million.
Full-year earnings included net charges for special items of $8.7 billion, compared to net charges of $1.2 billion for special items in 2018. Foreign currency effects decreased earnings in 2019 by $304 million.
Sales and other operating revenues in fourth-quarter 2019 were $35 billion, compared to $40 billion in the year-ago period.
“Cash flow from operations remained strong in 2019,” said Michael K. Wirth, Chevron’s chairman of the board and chief executive officer. “We paid $9 billion in dividends, repurchased $4 billion of shares, funded our capital program and successfully captured several inorganic investment opportunities, all while reducing debt by more than $7 billion.”
Despite contending with “the same challenges of low natural gas prices and weak refining and chemical margins as its peers,” said Pete Speer, a senior vice-president and senior analyst at Moody’s, in 2019, “the company still increased production, generated free cash flow and reduced debt. With the results, “Chevron has the strongest credit metrics of the major oil companies,” he said.
Upstream
Worldwide net oil-equivalent production was 3.08 MMboe/d in fourth quarter 2019, unchanged from a year ago. Worldwide net oil-equivalent production for the full year 2019 was 3.06 million b/d, an increase of 4% from 2.93 MMboe/d from the prior year.
US upstream recorded a loss of $7.5 billion in fourth-quarter 2019, compared with earnings of $964 million a year earlier. The decrease was primarily due to $8.2 billion in impairment charges primarily associated with Appalachia shale and Big Foot. Also contributing to the decrease were lower crude oil and natural gas realizations. Partially offsetting these items were higher crude oil and natural gas production.
Net oil-equivalent production of 998,000 b/d in fourth-quarter 2019 was up 140,000 b/d from a year earlier. Production increases from shale and tight properties in the Permian basin in Texas and New Mexico were partially offset by normal field declines in the base business. The net liquids component of oil-equivalent production in fourth-quarter 2019 increased 14% to 771,000 b/d, while net natural gas production increased 24% to 1.36 bcfd, compared to last year’s fourth quarter.
Fourth quarter unconventional net oil-equivalent production in the Permian basin was 514,000 b/d, representing growth of 36% compared to a year ago.
International upstream operations earned $731 million in fourth-quarter 2019, compared with $2.3 billion a year ago. The decrease in earnings was partially due to write-offs and impairment charges of $2.2 billion associated with Kitimat LNG and other gas projects, partly offset by a gain of $1.2 billion on the sale of the UK Central North Sea assets and the absence of a fourth quarter 2018 asset write-off. Also contributing to the decrease were lower natural gas realizations and volumes, partially offset by lower depreciation expenses. Foreign currency effects had an unfavorable impact on earnings of $476 million between periods.
Net oil-equivalent production of 2.08 MMboe/d in fourth-quarter 2019 was down 145,000 b/d from a year earlier due to the effect of asset sales, major turnarounds, and normal field declines. The net liquids component of oil-equivalent production decreased 6% to 1.12 million b/d in the 2019 fourth quarter, while net natural gas production of 5.75 bcfd decreased 8%, compared to last year’s fourth quarter.
Downstream
US downstream operations earned $488 million in fourth-quarter 2019, compared with earnings of $256 million a year earlier. The increase was mainly due to higher margins on refined product sales and lower operating expenses.
Refinery crude oil input in the quarter increased 6% to 975,000 b/d from the year-ago period, primarily due to the acquisition of the Pasadena refinery in Texas, partially offset by turnaround activity at the El Segundo, California, refinery. Refined product sales of 1.23 million b/d were up 2% from fourth-quarter 2018.
International downstream operations earned $184 million in the quarter, compared with $603 million a year earlier. The decrease in earnings was largely due to lower margins on refined product sales, partially offset by favorable tax items. Foreign currency effects had an unfavorable impact on earnings of $55 million between periods.
Refinery crude oil input of 576,000 b/d in the quarter decreased 89,000 b/d from the year-ago period, mainly due to the major planned turnaround at the Star Petroleum Refining Co. in Thailand.
Refined product sales of 1.28 million b/d in the fourth quarter were down 9% from the year-ago period, mainly due to lower diesel and gasoline sales.
Cash flow, capital expenditures
Cash flow from operations in 2019 was $27.3 billion, compared with $30.6 billion in 2018. Excluding working capital effects, cash flow from operations in 2019 was $25.8 billion, compared with $31.3 billion in 2018.
Capital and exploratory expenditures in 2019 were $21.0 billion, compared with $20.1 billion in 2018. The amounts included $6.1 billion in 2019 and $5.7 billion in 2018 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 85% of the companywide total in 2019. Included in 2019 were $800,000 million of inorganic expenditures, primarily associated with the acquisition of the Pasadena refinery in Texas and upstream lease bonus payments.
