Chevron Corporation reported earnings of US$5.3 billion for the fourth quarter 2010, compared with $3.1 billion in the 2009 fourth quarter. Results in the 2010 period included gains of nearly $400 million from downstream asset sales. Foreign currency effects decreased earnings in the 2010 quarter by $99 million, compared with a decrease of $67 million a year earlier.
Chevron’s full-year 2010 earnings were $19.0 billion, up from $10.5 billion in 2009.
Sales and other operating revenues in the fourth quarter 2010 were $52 billion, up from $48 billion in the year-ago period mainly due to higher prices for crude oil and refined products.
“Financially and operationally, 2010 was an outstanding year,” said chairman and CEO John Watson. “Earnings and cash flow increased significantly in 2010 as a result of higher prices for crude oil, higher net oil-equivalent production and improved refined product sales margins. Our financial strength enabled us to invest in our attractive development projects and acquire several new resource opportunities. At the same time, we increased the annual dividend on our common shares for the 23rd consecutive year and resumed our common stock repurchase programme. From an operating perspective, safety results were world-class, net oil-equivalent production for the year came in above target, and refinery reliability was strong.”
Watson continued, “During the fourth quarter, we announced the acquisition of Atlas Energy, Inc., which will provide Chevron with an attractive natural gas position, primarily located in southwestern Pennsylvania’s Marcellus Shale. We look forward to the results from the Atlas stockholders’ meeting on February 16 and are very pleased with the talented people and assets that this acquisition will bring.”
Upstream
Worldwide net oil-equivalent production was 2.79 million barrels per day in the fourth quarter 2010, up from 2.78 million barrels per day in the 2009 fourth quarter. Production increases in Brazil, China, Kazakhstan and Thailand were partially offset by normal field declines and the effect of higher prices on cost-recovery volumes and other contractual provisions.
The US oil major had a number of major upstream achievements around the world, namely in the US where it sanctioned development of the Big Foot project in the deepwater Gulf of Mexico. Big Foot will be the company’s sixth operated facility in the deepwater Gulf. Chevron has a 60% working interest in the project.
In Australia it signed an additional binding Sales and Purchase Agreement with an Asian customer for Gorgon liquefied natural gas (GLNG).
The company awarded front-end engineering and design contracts for the deepwater Gendalo-Gehem natural gas development in the Makassar Strait, offshore East Kalimantan in Indonesia.
Chevron reached agreement with the other shareholders and governing bodies of the Caspian Pipeline Consortium for expansion of the Caspian pipeline. The 935-mile pipeline carries crude oil from Western Kazakhstan to a dedicated terminal on the Black Sea in Russia.
In the Republic of the Congo, Chevron confirmed discoveries at the Bilondo Marine 2 and 3 wells within the Moho-Bilondo licence. Chevron has a 31.5% interest in the permit area.
Watson commented that the company added approximately 240 million barrels of net oil-equivalent reserves in 2010. These additions equate to 24% of net oil-equivalent production for the year. Included in the net additions is a 140 million barrel unfavourable effect of higher crude oil prices on certain production-sharing and variable-royalty contracts. Watson added: “We took several major deepwater projects to final investment decision in 2010, and we expect to recognise reserves for these projects in future years, consistent with Securities and Exchange Commission (SEC) rules.”
Downstream
“In the downstream business, we successfully completed the first year of a multiyear plan to improve returns,” Watson added. Efforts continued on streamlining the asset portfolio with completion of the sale of marketing businesses in three countries in southeast Africa. The company also announced an agreement to sell its fuel marketing and aviation businesses in 15 countries in the Caribbean and Central America, with closing of the transactions expected by the third quarter 2011, following receipt of required local regulatory and government approvals.
Also in the fourth quarter, the company commissioned a new continuous catalytic reformer at its Pascagoula, Mississippi refinery and announced plans to construct a 53,000-barrel-per-day heavy oil fluid catalytic cracker at the 50%-owned GS Caltex Yeosu Refinery in South Korea.
The company’s 50%-owned Chevron Phillips Chemical Company started up polyethylene and normal alpha olefins plants at its 49%-owned Q-Chem II Project in Mesaieed, Qatar and announced plans to construct a 1-hexene plant capable of producing in excess of 440 million pounds (200,000 tonnes) per year at its Cedar Bayou Facility in Baytown, Texas.
