press release

Chevron Press Release - Chevron Reports Third Quarter Net Income More Than Doubled To $655 Million

SAN FRANCISCO, Oct. 21, 1996 -- Chevron Corporation announced today third quarter net income of $655 million, ($1.00 per share), more than double the $282 million ($.44 per share) reported for the 1995 third quarter. This year's third quarter results benefited a net $5 million from special items, while the 1995 quarter included special charges of $222 million. Excluding special items in both periods, 1996 third quarter results of $650 million increased 29 percent from $504 million in last year's third quarter.

Net income for the first nine months of 1996 was $2.143 billion ($3.28 per share), up 59 percent from $1.348 billion ($2.07 per share) reported for the 1995 first nine months. The 1996 nine-month results benefited $177 million from special items, mostly the company's share of its Caltex affiliate's second quarter gain from the sale of refinery interests in Japan. The 1995 nine-month results were reduced $163 million by special charges, mostly related to the company's disposal of its real estate business. Excluding special items, 1996 year-to-date earnings were up 30 percent to $1.966 billion, compared with $1.511 billion in the corresponding 1995 period.

Commenting on the company's performance, Chairman and CEO Ken Derr said, "We had another strong quarter. Our worldwide upstream operations turned in excellent results on higher crude oil and natural gas prices and continued increases in our international production volumes.

"On the downstream side, the higher crude oil prices, coupled with softening product prices, have squeezed product margins, both domestically and internationally," Derr said. "As a result, worldwide downstream operating earnings declined from both this year's second quarter and from the third quarter of last year.

"Overall, we are having an excellent year," continued Derr. "The many programs we've undertaken to improve profitability are paying off, and industry conditions in general have been stronger. Our annualized return on employed capital, excluding special items, has been 12.5 percent so far this year, compared with 9.8 percent for the year 1995. We increased the quarterly dividend 8 percent to $.54 per share, and we've reduced debt by over $850 million this year.

"The merger of our natural gas liquids and natural gas marketing businesses with NGC Corporation was effective September 1. The new NGC has a strong competitive position in the growing deregulated energy services sector. Chevron has a 28 percent ownership interest in NGC and we are very enthusiastic about the growth opportunities in this expanding area," said Derr.

"Production from our 50 percent owned Tengizchevroil affiliate in Kazakhstan has continued to increase, averaging 110,000 barrels per day in the third quarter," said Derr. "Continuing our program to improve returns on our producing portfolio, we have announced sales of mature oil producing properties in Indonesia and the North Sea, which will provide resources to focus on more attractive growth opportunities. In addition, three more chemicals projects were recently announced -- a joint venture in Saudi Arabia to build and operate a $650 million petrochemical complex, a $200 million expansion of paraxylene capacity at the company's Pascagoula, Miss., refinery, and the construction of a polystyrene plant in China.

"These and other important projects that are underway are expected to add profitable growth to Chevron over the next few years," concluded Derr.

Total revenues for the quarter were $11.0 billion, up 18 percent from $9.3 billion in the year earlier quarter. Total revenues for the first nine months were $32.4 billion, a 16 percent increase from $27.9 billion reported for the 1995 nine-month period.

Included in 1996 third quarter net income were foreign exchange gains of $6 million compared with foreign exchange losses of $26 million in 1995. For the first nine months, foreign exchange losses were $14 million in 1996 and $20 million in 1995.

Exploration and Production

U.S. exploration and production net earnings of $237 million were up sharply from the $131 million earned in the 1995 third quarter. Special items benefited third quarter earnings $17 million in 1996 and $19 million in 1995. The merger of Chevron's natural gas marketing and natural gas liquids businesses with NGC Corporation resulted in a $28 million gain in the current quarter, with a further $39 million gain to be recognized over future periods. Partially offsetting the current quarter gain was a loss of $11 million on an unrelated sale of a producing property.

Operationally, the improved 1996 results reflected higher crude oil and natural gas prices. The company's average crude oil realization during the 1996 third quarter was $18.88 per barrel, up nearly $4.00 from $14.91 in last year's third quarter. Average natural gas prices were also significantly higher at $2.06 per thousand cubic feet compared with $1.40 in the prior year quarter. Net liquids production declined two percent to 340,000 barrels per day, while net natural gas production increased slightly to 1.9 billion cubic feet per day.

International exploration and production third quarter net earnings more than doubled to $291 million from $140 million earned in last year's third quarter, when earnings were reduced $22 million by prior year tax adjustments.

The strong 1996 earnings reflected higher crude oil prices and sales volumes. Net liquids production increased almost 11 percent to 712,000 barrels per day, due primarily to new production in Congo and higher production levels from the company's Tengizchevroil affiliate in Kazakhstan, where Chevron's share was up 31,000 barrels to 55,000 barrels per day. Net natural gas production volumes increased to 587 million cubic feet per day from 539 million in the third quarter last year, with increases in Kazakhstan, Indonesia and the United Kingdom.

Refining and Marketing

U.S. refining and marketing net earnings were $80 million, down from $98 million reported for the year-ago third quarter. Earnings for both periods included special charges. Environmental remediation provisions were $29 million in 1996 and $11 million in 1995. In addition, 1996 results included a $4 million gain from pipeline-related aspects of the NGC transaction and a $1 million charge for an employee severance provision. Excluding the special charges, third quarter operating earnings were about flat at $106 million in 1996 and $109 million in 1995.

Average product sales margins weakened during the quarter as products prices softened and crude oil costs increased. Total refined product sales volumes declined one percent to 1.2 million barrels per day.

International refining and marketing net earnings declined to $21 million from $53 million in the 1995 third quarter, which included $15 million of restructuring charges. Results fell in 1996 as product prices were unable to keep pace with escalating crude oil costs. The company's Caltex affiliate's results were also reduced by weak refining margins in Thailand where the new Caltex Star refinery recently started up. Total refined product sales volumes increased about one percent to 901,000 barrels per day.

Chemicals

Chemicals third quarter net earnings declined to $49 million from $127 million in the prior year third quarter, when industry conditions were much stronger. Lower product prices and higher feedstock costs continued to squeeze sales margins. Earnings in both periods were reduced by special charges - $12 million for asset write-offs in the 1996 quarter and $21 million for environmental and other charges in 1995.

Coal and Other Minerals

Coal and other minerals net earnings were $12 million in the 1996 third quarter compared with $10 million in the comparable 1995 quarter. Coal industry conditions have improved, but results continue to reflect competition from lower-priced alternative fuel sources, particularly hydroelectric power. The 1996 quarter results included a $3 million special charge for an employee severance program.

Corporate and Other

Corporate and other net charges declined to $35 million in the 1996 third quarter from $277 million in last year's third quarter; however, both quarters' results were affected by special items. The 1996 third quarter included a net benefit of $29 million, as a favorable prior year income tax adjustment was partially offset by provisions for employee severance and a litigation matter. The 1995 quarter included charges totaling $172 million, almost all related to the write-down of the company's real estate business. Excluding special items in both periods, corporate and other charges were $64 million in 1996 and $105 million in 1995. The 1996 quarter benefited from pension settlement gains, whereas the prior year quarter included unfavorable consolidating income tax adjustments.

Capital and Exploratory Expenditures

Capital and exploratory expenditures, including the company's share of affiliate expenditures, were $1.167 billion in the 1996 third quarter, compared with $1.144 billion spent in last year's third quarter. Total expenditures for the first nine months of 1996 were $3.249 billion, compared with $3.292 billion spent in the same period in 1995.

CHEVRON CORPORATION - FINANCIAL REVIEW
(MILLIONS OF DOLLARS)

Contents:

Consolidated Statement of Income
Earnings by Major Operating Area
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Capital and Exploratory Expenditures
Operating Statistics



Consolidated Statement of Income
(Unaudited)

Third Quarter

Nine Months

Revenues 1996

1995

1996

1995

Sales and other operating revenues(1)
Equity in net income of affiliated companies
Other income
$ 10,846
104
99

------
11,049
--------
$ 9,171
70
73
------
9,314
--------
$ 31,517
686
179

------
32,382
--------
$ 27,388
415
122
------
27,925
--------
Costs and Other Deductions
Purchased crude oil and products
Operating expenses
Exploration expenses
Selling and administrative expenses
Depreciation, depletion and amortization
Taxes other than on income(1)
Interest and debt expense
Income Before Income Tax Expense
Income Tax Expense
Net Income

5,771
1,461
119
303
558
1,493
93

------
9,798
------
1,251
596

------
$ 655
======

4,436
1,655
92
344
560
1,475
93
------
8,655
------
659
377
------
$ 282
======

16,717
4,288
329
1,043
1,613
4,358
274

------
28,622
------
3,760
1,617

------
$ 2,143
======

13,570
4,366
234
987
1,702
4,265
307
------
25,431
------
2,494
1,146
------
$ 1,348
======
Per Share Amounts
Net Income
Dividends

Average Common Shares Outstanding (000's)


$ 1.00
$ .54

652,671


$ .44
$ .50

652,156


$ 3.28
$ 1.54

652,649


$2.07
$ 1.425

652,023



Earnings by Major Operating Area
(Unaudited)

Third Quarter

Nine Months

1996

1995

1996

1995

Exploration and Production
United States
International

Total Exploration and Production

$ 237
291

------
528
------

$ 131
140
------
271
------

$ 699
802

------
1,501
------

$ 431
506
------
937
------
Refining, Marketing and Transportation
United States
International Total Refining, Marketing
and Transportation
Total Petroleum Operations


80
21

------
101

------
629

98
53
------
151

------
422

281
398

------
679

------
2,180

104
245
------
349

------
1,286
Chemicals
Coal and Other Minerals
Corporate and Other(2)

Net Income

49
12
(35)

------
$ 655
======
127
10
(277)
------
$ 282
======
164
35
(236)

------
$2,143
======
465
24
(427)
------
$1,348
======

(1) Includes consumer excise taxes
(2) "Corporate and Other" includes interest expense, interest income on cash and marketable securities, corporate center costs, and real estate and insurance activities.

$1,324

$1,290

$3,845

$3,702


Special Items By Major Operating Area
(Unaudited)

Third Quarter

Nine Months

1996

1995

1996

1995

U.S. Exploration and Production
International Exploration and Production
U.S. Refining, Marketing and Transportation
International Refining, Marketing and Transportation
Chemicals
Coal and Other Minerals
Corporate and Other(1)

Total Special Items
$ 17
-
(26)
-
(12)
(3)
29

------
5
$ 19
(22)
(11)
(15)
(21)
-
(172)
------
(222)
$ 8
(7)
(37)
260
(28)
(3)
(16)

------
177
$ 19
(32)
(21)
65
(21)
(1)
(172)
------
(163)


Summary of Special Items
(Unaudited)

Third Quarter

Nine Months

1996

1995

1996

1995

Asset Sales
Asset Write-offs & Write-downs
Environmental Remediation Provisions
Prior-Year Tax Adjustments
Restructurings & Reorganizations
Other, Net

Total Special Items

FOREIGN EXCHANGE GAINS (LOSSES)

$ 21
(12)
(29)
52
(17)
(10)

------
5
====
6
$ -
(168)
(39)
(22)
(20)
27
------
(222)
====
(26)
$ 296
(48)
(53)
52
(17)
(53)

------
177
====
(14)
$ -
(168)
(49)
(22)
(31)
107
------
(163)
====
(20)


Earnings by Major Operating Area Excluding Special Items
(Unaudited)

Third Quarter

Nine Months

1996

1995

1996

1995

Exploration and Production
United States
International

Total Exploration and Production

$ 220
291

------
511
------

$ 112
162
------
274
------

$ 691
809

------
1,500
------

$ 412
538
------
950
------
Refining, Marketing and Transportation
United States
International Total Refining, Marketing
and Transportation
Total Petroleum Operations


106
21

------
127

------
638


109
68

------
177

------
451


318
138

------
456

------
1,956


125
180

------
305

------
1,255

Chemicals
Coal and Other Minerals
Corporate and Other(1)

Earnings Excluding Special Items

61
15
(64)

------
$ 650
======
148
10
(105)
------
$ 504
======
192
38
(220)

------
$1,966
======
486
25
(255)
------
$1,511
======
Special Items

Net Income

5
------
$ 655
(222)
------
$ 282
177
------
$2,143
(163)
------
$1,348

(1) Corporate and Other includes interest expense, interest income on cash and marketable securities, corporate center costs, and real estate and insurance activities.


Consolidated Balance Sheet
(Unaudited)

Sep. 30,
1996


Dec. 31,
1995


Assets
Cash and cash equivalents
Other current assets Total current assets
Investments and advances
Properties, plant and equipment - net
Other Total Assets

$ 1,091
7,158

------
8,249
4,471
21,458
901

------
$35,079
======

$ 621
7,246
------
7,867
4,087
21,696
680
------
$34,330
======
Liabilities
Short-term debt
Other current liabilities Total current liabilities
Long-term debt and capital lease obligations
Deferred income taxes
Reserves for employee benefit plans
Deferred credits and other liabilities Total Liabilities
Stockholders' Equity Total Liabilities and Stockholders' Equity

$ 3,452
5,791

------
9,243
4,023
2,676
1,624
2,017

------
19,583
15,496

------
$ 35,079
======

$ 3,806
5,639
------
9,445
4,521
2,433
1,584
1,992
------
19,975
14,355
------
$ 34,330
======


Consolidated Statement of Cash Flows
(Unaudited)

Nine Months

1996

1995

Operating Activities
Net Income
Adjustments
Depreciation, depletion and amortization
Dry hole expense related to prior years' expenditures
Distributions more (less) than equity in affiliates' income
Net before-tax losses on asset retirements and sales
Net currency translation (gains) losses
Deferred income tax provision
Net decrease (increase) in operating working capital
Other

Net cash provided by operating activities


$ 2,143

1,613
39
66
25
(10)
243
38
(370)


------
3,787
------

$ 1,348

1,702
10
(121)
146
53
197
(404)
(200)
------
2,731
------

Investing Activities
Capital expenditures
Proceeds from asset sales
Net sales of marketable securities

Net cash used for investing activities


(2,364)
514
335

------
(1,515)
------

(2,428)
515
93
------
(1,820)
------
Financing Activities
Net repayments of short-term obligations
Proceeds from issuance of long-term debt
Repayments of long-term debt and other financing obligations
Cash dividends paid
Purchases of treasury shares

Net cash used for financing activities


(415)
77
(419)
(1,005)
(34)

------
(1,796)
------

(277)
470
(88)
(929)
(4)
------
(828)
------
Effect of Exchange Rate on Cash and Cash Equivalents

Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Jan. 1, 1996 and 1995

Cash and Cash Equivalents at September 30, 1996 and 1995

(6)
------
470
621

------
$ 1,091
======
(8)
------
75
413
------
$ 488
======


Capital and Exploratory Expenditures (1)
(millions of dollars)

Third Quarter

Nine Months

1996

1995

1996

1995

United States
Exploration and Production
Refining, Marketing and Transportation
Chemicals
Other Total United States

$ 299
74
83
20

------
476
--------

$ 224
197
40
29
------
490
--------

$ 828
261
209
66

------
1,364
--------

$ 607
583
83
82
------
1,355
--------
International
Exploration and Production
Refining, Marketing and Transportation
Chemicals
Other Total International
Worldwide

412
185
90
4

------
691
------
$ 1,167
======

445
200
8
1
------
654
------
$ 1,144
======

1,319
464
97
5

------
1,885
------
$ 3,249
======

1,346
566
24
1
------
1,937
------
$ 3,292
======


Operating Statistics (1)

Third Quarter

Nine Months

1996

1995

1996

1995

Net Liquids Production (MB/D)
United States
International Worldwide

340
712

------
1,052
======

346
644
------
990
======

341
691

------
1,032
======

351
646
------
997
======
Net Natural Gas Production (MMCF/D)
United States
International Worldwide

1,857
587

------
2,444
======

1,816
539
------
2,355
======

1,853
571

------
2,424
======

1,893
562
------
2,455
======
Sales of Natural Gas (MMCF/D)
United States
International Worldwide

3,714
855

------
4,569
======

2,826
578
------
3,404
======

3,514
765

------
4,279
======

2,780
541
------
3,321
======
Sale of Natural Gas Liquids (MB/D)
United States
International Worldwide

194
35

------
229
======

202
54
------
256
======

208
36

------
244
======

214
50
------
264
======
Sale of Refined Products (MB/D)
United States International Worldwide

1,158
901

------
2,059
======

1,175
894
------
2,069
======

1,121
950

------
2,071
======

1,127
940
------
2,067
======
Refinery Input (MB/D)
United States
International

Worldwide


971
506

------
1,477
======

968
595
------
1,563
======

954
542

------
1,496
======

958
587
------
1,545
======
Chemicals Sales and Other Operating
Revenues (2)

United States
International Worldwide


$ 647
130

------
$ 777
=======


$ 821
155
------
$ 976
======


$ 2,218
458

------
$ 2,676
=======


$ 2,633
473
------
$ 3,106
======
(1)Includes interests in affiliates.
(2)Includes sales to other Chevron companies.

Updated: October 1996