Chevron Corporation today reported earnings of $3.4 billion ($1.78 per share – diluted) for second quarter 2018, compared with $1.5 billion ($0.77 per share – diluted) in the second quarter of 2017. Included in the current quarter was a receivable write-down of $270 million charged to operating expense. Foreign currency effects increased earnings in the 2018 second quarter by $265 million, compared with an increase of $3 million a year earlier.
Sales and other operating revenues in second quarter 2018 were $40 billion, compared to $33 billion in the year-ago period.
“Second quarter earnings were up significantly from a year ago,” said Chairman and CEO Michael Wirth. “Results in 2018 benefited from higher crude oil prices, strong operations and higher production.”
“Our cash flow continues to improve with higher upstream margins and volumes, combined with disciplined spending,” Wirth added. “This enables us to initiate share repurchases, which are expected to be $3 billion per year based on our current outlook.”
“We reached a milestone in Australia with the start of production from Wheatstone Train Two. All five trains in our Australian LNG projects are now operating.
“In downstream, Chevron Phillips Chemical Company LLC, the company’s 50 percentowned affiliate, ramped up its recently completed ethane cracker at Cedar Bayou to design capacity.
“We continue to make good progress with our portfolio optimization efforts,” Wirth continued. “In the second quarter, the company completed the sales of its upstream interests in the Elk Hills Field in California and the Democratic Republic of the Congo. Additionally, in July we announced our intent to market our U.K. Central North Sea assets.”
Worldwide net oil-equivalent production was 2.83 million barrels per day in second quarter 2018, compared with 2.78 million barrels per day from a year ago. Growth from project start-ups and ramp-ups was partially offset by asset sales and production entitlement effects.
U.S. upstream operations earned $838 million in second quarter 2018, compared with a loss of $102 million from a year earlier. The improvement reflected higher realizations, lower impairment charges and higher crude
U.S. downstream operations earned $657 million in second quarter 2018, compared with earnings of $634 million a year earlier. The increase was primarily due to higher margins on refined product sales, lower tax expense, and higher equity earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC. These increases were partially offset by higher operating expenses, primarily due to planned turnaround activity.
Refinery crude oil input in second quarter 2018 decreased 8 percent to 856,000 barrels per day from the year-ago period, primarily due to planned turnaround activity. Refined product sales of 1.24 million barrels per day were unchanged from second quarter 2017. Branded gasoline sales of 525,000 barrels per day decreased 3 percent from the 2017 period.
International downstream operations earned $181 million in second quarter 2018, compared with $561 million a year earlier. The decrease in earnings was largely due to lower margins on refined product sales, in part due to negative inventory effects, partially offset by lower operating expenses. The sale of the company’s Canadian refining and marketing business in third quarter 2017 contributed to the lower margins and operating expenses.
Foreign currency effects had a favorable impact on earnings of $41 million between periods.
Refinery crude oil input of 739,000 barrels per day in second quarter 2018 increased 13,000 barrels per day from the year-ago period, mainly due to the absence of the 2017 crude unit maintenance at the Star Petroleum Refining Company in Thailand and GS Caltex in South Korea, partially offset by the sale of the company’s Canadian refining asset in third quarter 2017.
Total refined product sales of 1.48 million barrels per day in second quarter 2018 were up 2 percent from the year-ago period, primarily due to higher fuel oil and jet fuel sales, partially offset by lower gasoline and diesel sales.
All Other consists of worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.-
Net charges in second quarter 2018 were $724 million, compared with $598 million in the year-ago period. The change between periods was mainly due to higher interest expense. Foreign currency effects were unchanged between periods.
CASH FLOW FROM OPERATIONS
Cash flow from operations in the first six months of 2018 was $11.9 billion, compared with $8.7 billion in the corresponding 2017 period. Excluding working capital effects, cash flow from operations in 2018 was $14.2 billion, compared with $10.0 billion in the corresponding 2017 period. The 2017 results were retrospectively adjusted to conform to new accounting standards that became effective for the company in first quarter 2018.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures in the first six months of 2018 were $9.2 billion, compared with $8.9 billion in the corresponding 2017 period. The amounts included $2.7 billion in 2018 and $2.1 billion in 2017 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 88 percent of the companywide total in the first six months of 2018.