Basis for Comparison in Interim Update
The interim update contains certain industry and company operating data for the first quarter 2009. The production volumes, realizations, margins and certain other items in the report are based on a portion of the quarter and are not necessarily indicative of Chevron’s quarterly results to be reported on May 1, 2009. The reader should not place undue reliance on this data.
Upstream – Exploration And Production:
International earnings are driven by actual liftings, which may differ from production due to the timing of cargoes and other factors.
Total US oil-equivalent production during the first two months of the first quarter improved 41,000 barrels per day mainly due to increased production in the Gulf of Mexico that was associated with ongoing restoration activities following the hurricanes in September 2008 and the ramp-up of production at Blind Faith.
International oil-equivalent production increased 64,000 barrels per day. The liquids component of oil-equivalent production increased 48,000 barrels per day primarily due to the continued ramp-up of production from the expansion project at the Tengiz field in Kazakhstan and at the Agbami field offshore Nigeria. Also contributing was the impact of lower crude-oil prices on the company’s share of production associated with production-sharing contracts and variable-royalty agreements. International natural-gas production increased nearly 4 %.
US crude-oil realizations for the first two months of the first quarter declined about $18 per barrel to $33.37. International liquids realizations fell about $9 to $37.78 per barrel. US natural-gas realizations decreased $0.78 to $4.45 per thousand cubic feet while average international natural-gas realizations fell $0.77 per thousand cubic feet to $4.33.
US upstream results in the first quarter are expected to include charges of about $100 million for write-offs mainly associated with exploration activities, while the fourth quarter included a gain of about $600 million from an asset-exchange transaction. Also in the fourth quarter, international upstream earnings included a nearly $650 million benefit from foreign-exchange effects.
Downstream – Refining, Marketing And Transportation:
The table that follows includes industry benchmark indicators for refining and marketing margins. Actual margins realized by the company may differ significantly due to location and product mix effects, planned and unplanned shutdown activity and other company-specific and operational factors.
For the full first quarter, the US West Coast refining indicator margin improved while the Gulf Coast refining indicator margin declined from the fourth quarter. Outside of the US, refining indicator margins were lower. Marketing indicator margins in the US decreased significantly during the full first quarter. Comparing January and February 2009 with the fourth quarter, marketing margins outside the US were mixed.
Downstream earnings in the fourth quarter included sizeable benefits from provisionally priced crudes, derivatives and other timing effects. The first quarter impact of timing effects is expected to be negative.
During the first two months of the first quarter, US refinery crude-input volumes were essentially unchanged at 931,000 barrels per day. Outside the US, refinery crude-input volumes increased 24,000 barrels per day primarily due to the completion of maintenance in Thailand.
International downstream earnings in the first quarter are expected to include gains of about $350 million from the previously announced sales of the fuels marketing businesses in Brazil and Nigeria.
In the chemicals segment, full first quarter earnings are expected to decline on lower margins and volumes.
All Other:
The company’s general guidance for the quarterly net after-tax charges related to corporate and other activities is between $250 million and $350 million. Due to foreign currency effects and the potential for irregularly occurring accruals related to income taxes, pension settlements and other matters, actual results may significantly differ from the guidance range or current projections.
