Chevron Press Release - Chevron Reports First Quarter Earnings Of $459 Million
SAN FRANCISCO, April 25 -- Chevron Corporation today reported first quarter net income of $459 million ($.70 per share), up 18 percent from $388 million ($.60 per share) earned in the first quarter of 1994.
Special charges increased 1995 reported earnings by $63 million, but reduced 1994 earnings $36 million. Excluding special items, 1995 first quarter results of $396 million ($.61 per share) were 7 percent lower than comparably adjusted 1994 earnings of $424 million ($.65 per share).
"We had very strong earnings in all our major business segments, with the exception of U.S. downstream," said Chairman and CEO Ken Derr. "In fact, absent the U.S. downstream results, the first quarter was the second best operational quarter in the last decade. Our chemicals business posted a record quarter and our international upstream operating results were near record levels. Our U.S. upstream maintained its strong performance despite low natural gas prices. But all these achievements could not overcome the poor results of our U.S. refining and marketing operations, which lost over $90 million."
Derr said, "Unfortunately, very weak industry margins, particularly on the Gulf Coast, were aggravated by significant refinery downtime associated with major turnarounds at two core refineries, as well as some unscheduled downtime. Maintenance costs related to this downtime were about $38 million after tax, and more costly product purchases were required to supply our marketing system.
"We continue to benefit from our cost reduction programs," said Derr. "Total ongoing operating and administrative expenses were down, despite higher refinery maintenance costs. Also the sales of our Philadelphia and Port Arthur refineries have lowered the company's cost structure."
Total revenues for the quarter were $9.0 billion, up 9 percent from $8.3 billion in last year's first quarter. Higher prices for crude oil, refined products and chemicals more than offset lower refined product sales volumes and natural gas prices.
Exploration and Production
U.S. exploration and production net earnings were $150 million, compared with $124 million earned in the 1994 first quarter, which included a $15 million special charge for the resolution of a regulatory issue.
Operationally, the effects of lower natural gas prices and lower production volumes were offset by the benefit of higher crude oil prices and strong natural gas liquids sales. Depreciation expense declined, reflecting lower production volumes, and exploration expense was down because of lower well write-offs.
Average crude oil realizations of $15.11 per barrel were up $3.55 from $11.56 in the 1994 first quarter, but average natural gas prices of $1.45 per thousand cubic feet were down $.68 from $2.13 in the same prior year period.
Net liquids production declined 5 percent to 356,000 barrels per day due to normal field declines. Net natural gas production declined 12 percent to 1.9 billion cubic feet per day due to normal field declines and production curtailments caused by weak demand.
International exploration and production net earnings for the first quarter were $172 million, a strong increase over the $111 million earned in the prior year first quarter. Results for 1995 included a special charge of $7 million for employee severance in connection with a work force reduction program at the company's Canadian operations.
The earnings increase reflected higher crude oil prices and higher crude oil and natural gas production volumes. Net liquids production volumes increased 7 percent to 648,000 barrels per day, with higher volumes in Angola, the North Sea and Kazakhstan. Natural gas production increased 11 percent to 592 million cubic feet per day, due to higher volumes in Canada and Kazakhstan.
Refining and Marketing
U.S. refining and marketing had a net loss of $102 million in the first quarter compared with earnings of $98 million in the 1994 first quarter. Both quarters' results included special charges for environmental remediation - $10 million in 1995 and $21 million in 1994.
Very weak industry fundamentals coupled with refinery turnarounds at two of our core refineries negatively affected earnings. Product prices did not fully reflect increased crude oil costs. Although both quarters experienced refinery downtime for maintenance, 1995 results included higher maintenance costs and significantly lower refinery utilization, which required more costly third-party product purchases to supply the company's marketing system. Also, market conditions have prevented the recovery of increased manufacturing costs of reformulated gasolines, which comprised about 22 percent of the company's gasoline sales volumes.
Total refined product sales volumes of 1.1 million barrels per day fell 16 percent from the 1994 first quarter, although sales through the company's retail marketing system were maintained at about the same level. Lower fuels production, primarily due to the sales of the Philadelphia refinery in August 1994 and the Port Arthur refinery in late February this year, curtailed unbranded bulk sales.
International refining and marketing net earnings increased to $156 million from $63 million in last year's first quarter; however, 1995 earnings benefited a net $80 million from special items, principally a gain related to the sale of land by a Caltex affiliate in Japan. Higher Caltex results were more than offset by lower earnings in Canada and the United Kingdom. Foreign exchange gains were $21 million, mostly Caltex related, compared with $1 million of foreign exchange gains in the prior year quarter. Sales volumes increased 4 percent to almost 1.0 million barrels per day, primarily in the Caltex areas of operations.
Chemicals posted record quarterly earnings of $163 million, up from $26 million in the first quarter of 1994, as strong industry-wide demand continued. The company achieved record production and sales volumes, and prices for major products were strong.
The major factor in the earnings improvement was from the olefins operations, which benefited from increased sales volumes and higher prices for ethylene and polyethylenes. In addition, aromatics results reflected strong demand and prices for styrene and benzene.
The company's restructurings in recent years to concentrate on its core petrochemicals business and cost reduction initiatives have positioned it to improve its competitive performance during the current cycle of significant improvement in industry fundamentals.
Corporate and Other
Corporate and other incurred net charges of $92 million compared with charges of $49 million in the comparable prior year quarter. Foreign exchange losses were $13 million in the 1995 quarter compared with $2 million in 1994's comparable period. The remaining increase was primarily due to increased interest expense, resulting from higher average debt levels and higher interest rates.
Capital and Exploratory Expenditures
Capital and exploratory expenditures, including the company's share of affiliates' expenditures, were $987 million in the first quarter, down from $1.059 billion spent in the first quarter of 1994.
(MILLIONS OF DOLLARS) CONSOLIDATED STATEMENT OF INCOME (unaudited) First Quarter REVENUES: 1995 1994 Sales and Other Operating Revenues (1) $ 8,820 $ 8,105 Equity in Net Income of Affiliated Companies 231 107 Other Income, Net (7) 52 9,044 8,264 COSTS AND OTHER DEDUCTIONS: Purchased Crude Oil and Products 4,518 3,684 Operating Expenses 1,365 1,497 Exploration Expenses 71 105 Selling, General and Administrative Expenses 301 308 Depreciation, Depletion and Amortization 576 592 Taxes Other Than on Income (1) 1,373 1,345 Interest and Debt Expense 110 73 8,314 7,604 Income Before Income Tax Expense 730 660 Income Tax Expense 271 272 NET INCOME $ 459 $ 388PER SHARE AMOUNTS: (2) NET INCOME $ .70 $ .60 DIVIDENDS $ .4625 $ .4625Average Common Shares Outstanding (000's) (2) 651,895 651,625 EARNINGS BY MAJOR OPERATING AREA (unaudited) First Quarter 1995 1994 Exploration and Production United States $ 150 $ 124 International 172 111 Total Exploration and Production 322 235 Refining, Marketing and Transportation United States (102) 98 International 156 63 Total Refining, Marketing and Transportation 54 161 Total Petroleum Operations 376 396 Chemicals 163 26 Coal and Other Minerals 12 15 Corporate and Other (3) (92) (49) NET INCOME $ 459 $ 388 $ 1,185 $ 1,152
(1) Includes consumer excise taxes (2) Shares and per share amounts for 1994 have been restated to reflect a two-for-one stock split in May 1994. (3) "Corporate and Other" includes interest expense, interest income on cash and marketable securities, corporate center costs, and real estate and insurance activities.
(MILLIONS OF DOLLARS) SPECIAL ITEMS BY MAJOR OPERATING AREA First Quarter (unaudited) 1995 1994 U.S. Exploration and Production $ - $ (15) International Exploration and Production (7) - U.S. Refining, Marketing and Transportation (10) (21) International Refining, Marketing and Transportation 80 - Chemicals - - Coal and Other Minerals - - Corporate and Other - - Total Special Items $ 63 $ (36) SUMMARY OF SPECIAL ITEMS First Quarter (unaudited) 1995 1994 Environmental Remediation Provisions $ (10) $ (21) Restructurings & Reorganizations (7) - Other, Net 80 (15) Total Special Items $ 63 $ (36) FOREIGN EXCHANGE (LOSSES) GAINS $ - $ - EARNINGS BY MAJOR OPERATING AREA EXCLUDING SPECIAL ITEMS (unaudited) First Quarter 1995 1994 Exploration and Production United States $ 150 $ 139 International 179 111 Total Exploration and Production 329 250 Refining, Marketing and Transportation United States (92) 119 International 76 63 Total Refining, Marketing and Transportation (16) 182 Total Petroleum Operations 313 432 Chemicals 163 26 Coal and Other Minerals 12 15 Corporate and Other* (92) (49) Earnings Excluding Special Items 396 424Special Items 63 (36) Net Income $ 459 $ 388
* "Corporate and Other" includes interest expense, interest income on cash and marketable securities, corporate center costs, and real estate and insurance activities.
(MILLIONS OF DOLLARS) CONSOLIDATED BALANCE SHEET March 31, December 31, (unaudited) 1995 1994 ASSETS: Cash and Cash Equivalents $ 608 $ 413 Other Current Assets 6,640 7,178 Total Current Assets 7,248 7,591 Investments and Advances 4,252 3,991 Properties, Plant and Equipment-Net 22,196 22,173 Other 648 652 TOTAL ASSETS $ 34,344 $ 34,407 LIABILITIES: Short-Term Debt $ 4,205 $ 4,014 Other Current Liabilities 4,793 5,378 Total Current Liabilities 8,998 9,392 Long-Term Debt and Capital Lease Obligations 4,080 4,128 Deferred Income Taxes 2,742 2,674 Reserves For Employee Benefit Plans 1,570 1,574 Deferred Credits and Other Noncurrent Obligations 2,028 2,043 TOTAL LIABILITIES 19,418 19,811 STOCKHOLDERS' EQUITY 14,926 14,596 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 34,344 $ 34,407 CONSOLIDATED STATEMENT OF CASH FLOWS Three Months (unaudited) 1995 1994 OPERATING ACTIVITIES Net Income $ 459 $ 388 Adjustments Depreciation, depletion and amortization 576 592 Dry hole expense related to prior 5 24 years' expenditures Distributions less than equity (145) (59) in affiliates' income Net before-tax losses (gains) 15 (12) on asset retirements and sales Net currency translation losses (gains) 31 (2) Net increase in operating working capital (436) (514) Deferred income tax provision 82 65 Other (23) 18 Net cash provided by operating activities 564 500 INVESTING ACTIVITIES Capital expenditures (732) (669) Proceeds from asset sales 243 71 Net sales of marketable securities 257 1 Net cash used for investing activities (232) (597) FINANCING ACTIVITIES Net borrowings of short-term obligations 191 319 Proceeds from issuance of long-term debt 17 2 Repayments of long-term debt (44) (367) and other financing obligations Cash dividends paid (301) (301) Purchases of treasury shares (2) (2) Net cash used for financing activities (139) (349) EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS 2 3 NET CHANGE IN CASH AND CASH EQUIVALENTS 195 (443) CASH AND CASH EQUIVALENTS AT JANUARY 1, 1995 AND 1994 413 1,644 CASH AND CASH EQUIVALENTS AT MARCH 31, 1995 AND 1994 $ 608 $ 1,201
CAPITAL AND EXPLORATORY EXPENDITURES (1) First Quarter (millions of dollars) 1995 1994 United States Exploration and Production $ 163 $ 166 Refining, Marketing and Transportation 183 185 Chemicals 17 16 Other 12 32 Total United States 375 399International Exploration and Production 459 482 Refining, Marketing and Transportation 148 167 Chemicals 4 8 Other 1 3 Total International 612 660 Worldwide $ 987 $ 1,059OPERATING STATISTICS (1) NET LIQUIDS PRODUCTION (MB/D): United States 356 373 International 648 603 Worldwide 1,004 976NET NATURAL GAS PRODUCTION (MMCF/D): United States 1,935 2,189 International 592 531 Worldwide 2,527 2,720SALES OF NATURAL GAS (MMCF/D): United States 2,734 2,724 International 506 466 Worldwide 3,240 3,190SALES OF NATURAL GAS LIQUIDS (MB/D): United States 248 210 International 47 40 Worldwide 295 250SALES OF REFINED PRODUCTS (MB/D): United States 1,098 1,309 International 984 945 Worldwide 2,082 2,254REFINERY INPUT (MB/D): United States 909 1,153 International 616 639 Worldwide 1,525 1,792CHEMICALS SALES & OTHER OPERATING REVENUES (millions of dollars) (2) United States $ 873 $ 597 International 152 128 Worldwide $ 1,025 $ 725
(1) Includes interest in affiliates. (2) Includes sales to other Chevron companies. 1994 restated to conform with 1995 presentation.
Updated: April 1995