EX-99.1 2 f32236exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
     
(CHEVRON LOGO)
  Policy, Government and Public Affairs
Chevron Corporation
P.O. Box 6078
San Ramon, CA 94583-0778
www.chevron.com
News Release
EXHIBIT 99.1
FOR RELEASE AT 5:30 AM PDT
JULY 27, 2007
CHEVRON REPORTS SECOND QUARTER NET INCOME OF $5.4 BILLION,
UP 24 PERCENT FROM $4.4 BILLION IN SECOND QUARTER 2006
•   Upstream earnings of $3.6 billion increase approximately $400 million from year earlier
 
•   Downstream profits increase $300 million to $1.3 billion
 
•   Corporate items in 2007 period include $680 million gain on sale of Dynegy stock and $160 million loss on debt redemption
     SAN RAMON, Calif., July 27, 2007 – Chevron Corporation (NYSE: CVX) today reported net income of $5.4 billion ($2.52 per share – diluted) for the second quarter 2007, compared with $4.4 billion ($1.97 per share – diluted) in the corresponding 2006 period.
     For the first half of 2007, net income was $10.1 billion ($4.70 per share – diluted), a 21 percent increase from $8.3 billion ($3.77 per share – diluted) in 2006.
Earnings Summary
                                 
    Three Months   Six Months
    Ended June 30   Ended June 30
Millions of Dollars   2007   2006   2007   2006
 
Income by Business Segment
                                
Upstream – Exploration and Production
   $ 3,639     $ 3,272     $ 6,546     $ 6,730  
Downstream – Refining, Marketing and Transportation
     1,298       998       2,921       1,578  
Chemicals
     104       94       224       247  
All Other
     339       (11 )     404       (206 )
 
Net Income*
   $ 5,380     $ 4,353     $ 10,095     $ 8,349  
 
* Includes foreign currency effects
   $ (138 )   $ (56 )   $ (258 )   $ (164 )
                                 
     “Earnings and cash flows were strong in the second quarter,” said Chairman and CEO Dave O’Reilly. “Upstream profits increased approximately $400 million, mainly reflecting the absence of charges recorded in the 2006 period for uninsured costs associated with hurricane damages. Downstream earnings improved $300 million on higher margins for refined products.
     “We continued to make progress during the quarter in executing our key strategies,” O’Reilly added. “Capital and exploratory expenditures totaled $4.5 billion and included downstream investments to upgrade our refinery network.
     “Construction continued during the quarter at our El Segundo, California, refinery to enable processing of heavier crudes into light products such as gasoline and diesel,” O’Reilly said. “A similar project is under way at our 50 percent-owned refinery in South Korea, and both of these upgrades are expected to be completed by the end of this year.”
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     While these types of selective downstream investments are being made in areas of market strength, O’Reilly said the company is exiting certain other markets. Following the first-quarter sale of Chevron’s interest in a Netherlands refinery, the company announced an agreement to sell its fuels marketing businesses in Belgium, the Netherlands and Luxembourg and completed the sale of its fuels marketing business in Uruguay.
     Also during the second quarter, the company announced a common stock dividend increase of 11.5 percent and bought back $1.75 billion of its common shares.
UPSTREAM – EXPLORATION AND PRODUCTION
     Worldwide oil-equivalent production was 2.63 million barrels per day in the second quarter 2007, a decline of about 1 percent from the corresponding period in 2006, due mainly to the effect of the conversion of operating service agreements in Venezuela to joint-stock companies and lower production in the United States. Production increased between periods in Bangladesh, Angola, Azerbaijan and the United Kingdom.
     U.S. Upstream
                                 
    Three Months   Six Months
    Ended June 30   Ended June 30
Millions of Dollars   2007   2006   2007   2006
 
Income
   $ 1,223     $ 901     $ 2,019     $ 2,115  
 
     U.S. upstream income of $1.2 billion in the second quarter increased by $322 million from the year-ago period. The 2006 quarter included approximately $300 million of charges related to uninsured costs of damages from 2005 hurricanes in the Gulf of Mexico. Earnings in the 2007 quarter benefited from gains on asset sales, but these were offset by an increase in operating and depreciation expenses.
     The average sales price per barrel of crude oil and natural gas liquids was $57 in the second quarter 2007, a decrease of about $3 from the corresponding 2006 period. The average sales price of natural gas increased approximately 11 percent to $6.56 per thousand cubic feet.
     Net oil-equivalent production of 752,000 barrels per day decreased by 2 percent from the 2006 quarter. The net liquids component of production was up 1 percent to 468,000 barrels per day. Net natural gas production decreased 7 percent to approximately 1.7 billion cubic feet per day due mainly to normal field declines.
     International Upstream
                                 
    Three Months   Six Months
    Ended June 30   Ended June 30
Millions of Dollars   2007   2006   2007   2006
 
Income*
   $ 2,416     $ 2,371     $ 4,527     $ 4,615  
 
*Includes foreign currency effects
   $ (111 )   $ (96 )   $ (230 )   $ (219 )
     International upstream earnings of approximately $2.4 billion were up 2 percent from the 2006 quarter. Although oil-equivalent production decreased from the year-ago period, sales volumes were higher due to the timing of cargo liftings in certain producing regions. The benefit to earnings from this
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increase in liftings was mostly offset by higher operating expenses and an increase in depreciation expense, largely asset write-down related.
     The average sales price for crude oil and natural gas liquids in the 2007 quarter decreased by less than $1 from a year earlier to $61 per barrel, while the average price of natural gas was 5 percent lower at $3.64 per thousand cubic feet.
     Net oil-equivalent production of 1,878,000 barrels per day decreased 1 percent from the year-ago period, mainly as a result of the October 2006 conversion of operating service agreements to joint-stock companies in Venezuela. Production increased in Bangladesh, Azerbaijan, Angola and the United Kingdom. The net liquids component of production decreased by 36,000 barrels per day to 1,326,000. Natural gas production was 3.3 billion cubic feet per day in the 2007 period, an increase of about 80 million from a year earlier.
DOWNSTREAM – REFINING, MARKETING AND TRANSPORTATION
     U.S. Downstream
                                 
    Three Months   Six Months
    Ended June 30   Ended June 30
Millions of Dollars   2007   2006   2007   2006
 
Income
   $ 781     $ 554     $ 1,131     $ 764  
 
     U.S. downstream earnings of $781 million increased $227 million from the 2006 quarter, due mainly to improved margins for refined products. This benefit was partially offset by an increase in costs for environmental remediation.
     Sales volumes for refined products increased 3 percent from the year-ago period to 1,506,000 barrels per day, primarily the result of stronger branded sales. Branded gasoline sales volumes of 630,000 barrels per day increased 3 percent between quarters. Refinery crude input was down 54,000 barrels per day, associated mainly with a planned crude-unit shutdown that started June 1 at the company’s El Segundo, California, refinery.
     International Downstream
                                 
    Three Months   Six Months
    Ended June 30   Ended June 30
Millions of Dollars   2007   2006   2007   2006
 
Income*
   $ 517     $ 444     $ 1,790     $ 814  
 
*Includes foreign currency effects
   $ (35 )   $ 14     $ (30 )   $ 23  
     International downstream earned $517 million in the 2007 quarter, an increase of $73 million from the year-ago period. The increase resulted mainly from improved margins for refined products, partially offset by higher operating expenses. Foreign exchange effects reduced earnings by $35 million in the 2007 period, vs. a $14 million benefit to income a year earlier.
     Total refined-product sales volumes of 1,956,000 barrels per day were 3 percent lower than last year’s second quarter, due mainly to the sale in March 2007 of the company’s interest in refining and related assets in the Netherlands. Refinery crude input was down 121,000 barrels per day, also related primarily to the sale of these refining assets.
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CHEMICALS
                                 
    Three Months   Six Months
    Ended June 30   Ended June 30
Millions of Dollars   2007   2006   2007   2006
 
Income*
   $ 104     $ 94     $ 224     $ 247  
 
*Includes foreign currency effects
   $ —     $ (5 )   $ (1 )   $ (11 )
     Chemical operations earned $104 million, compared with $94 million in the year-ago quarter. Earnings benefited from improved margins on sales of lubricant and fuel additives by the company’s Oronite subsidiary. This benefit was partially offset by lower margins on sales by the company’s 50 percent-owned Chevron Phillips Chemical Company LLC.
ALL OTHER
                                 
    Three Months   Six Months
    Ended June 30   Ended June 30
Millions of Dollars   2007   2006   2007   2006
Income (Charges) – Net*
   $ 339     $ (11 )   $ 404     $ (206 )
 
*Includes foreign currency effects
   $ 8     $ 31     $ 3     $ 43  
     All Other consists of the company’s mining operations and power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies. Also included are results from the company’s investment in Dynegy Inc. until the time of its sale in May 2007.
     Income in the second quarter 2007 was $339 million, compared with net charges of $11 million in the year-ago period. This year’s quarter included a gain of $680 million related to sale of the company’s investment in Dynegy Inc. common stock, partially offset by a loss of $160 million related to the early redemption of Texaco Capital Inc. bonds and an increase in environmental remediation expenses for legacy-Texaco and -Unocal sites that had been closed or sold. The 2006 period included a gain from the redemption of Unocal debt.
SALES AND OTHER OPERATING REVENUES
     Sales and other operating revenues in the second quarter were $54 billion, up from $52 billion a year earlier. First-half 2007 sales and other operating revenues were $101 billion, down from $106 billion in the year-ago period. The decline for the first six months was associated with the impact of an accounting-rule change beginning in the second quarter 2006 that requires certain purchase and sale contracts with the same counterparty to be netted for reporting.
CAPITAL AND EXPLORATORY EXPENDITURES
     Capital and exploratory expenditures in the first six months of 2007 were $8.6 billion, compared with $7.4 billion in the corresponding 2006 period. The amounts included approximately $1.1 billion and $800 million, respectively, for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream projects represented 78 percent of the companywide total in 2007.
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NOTICE
Chevron’s discussion of second quarter 2007 earnings with security analysts will take place on Friday, July 27, 2007, at 8:00 a.m. PDT. A webcast of the meeting will be available in a listen-only mode to individual investors, media and other interested parties on Chevron’s Web site at www.chevron.com under the “Investors” heading. Additional financial and operating information is contained in the Investor Relations Earnings Supplement that is available under “Financial Reports” on the Web site.
Chevron will issue a press release containing selected third quarter 2007 interim company and industry performance data and post the same information on its Web site on Tuesday, October 9, 2007, at 2:00 p.m. PDT. Interested parties may view this interim data at www.chevron.com under the “Investors” heading.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
     This press release of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
     Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and competitive conditions affecting supply and demand for aromatics, olefins and additives products; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude-oil production quotas that might be imposed by OPEC (Organization of Petroleum Exporting Countries); the potential liability for remedial actions under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from pending or future litigation; the company’s acquisition or disposition of assets; government-mandated sales, divestitures, recapitalizations, changes in fiscal terms or restrictions on scope of company operations; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on pages 31 and 32 of the company’s 2006 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements.
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CHEVRON CORPORATION — FINANCIAL REVIEW
(Millions of Dollars, Except Per-Share Amounts)
     
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
                                 
    Three Months     Six Months  
    Ended June 30     Ended June 30  
    2007     2006     2007     2006  
REVENUES AND OTHER INCOME
                                
Sales and other operating revenues(1) (2)
   $ 54,344     $ 52,153     $ 100,646     $ 105,677  
Income from equity affiliates
     894       1,113       1,831       2,096  
Other income
     856       270       1,844       387  
 
                        
Total Revenues and Other Income
     56,094       53,536       104,321       108,160  
 
                        
COSTS AND OTHER DEDUCTIONS
                                
Purchased crude oil and products, operating and other expenses(2)
     39,051       38,054       72,228       78,294  
Depreciation, depletion and amortization
     2,156       1,807       4,119       3,595  
Taxes other than on income(1)
     5,743       5,153       11,168       9,947  
Interest and debt expense
     63       121       137       255  
Minority interests
     19       22       47       48  
 
                        
Total Costs and Other Deductions
     47,032       45,157       87,699       92,139  
 
                        
Income Before Income Tax Expense
     9,062       8,379       16,622       16,021  
Income tax expense
     3,682       4,026       6,527       7,672  
 
                        
NET INCOME
   $ 5,380     $ 4,353     $ 10,095     $ 8,349  
 
                        
 
                                
PER-SHARE OF COMMON STOCK
                                
Net Income       – Basic
   $ 2.52     $ 1.98     $ 4.72     $ 3.79  
– Diluted
   $ 2.52     $ 1.97     $ 4.70     $ 3.77  
Dividends
   $ 0.58     $ 0.52     $ 1.10     $ 0.97  
 
                                
Weighted Average Number of Shares Outstanding (000’s)
                                
– Basic
     2,127,763       2,196,134       2,136,591       2,205,008  
– Diluted
     2,141,583       2,206,009       2,149,686       2,214,877  
 
                                 
(1) Includes excise, value-added and similar taxes.
   $ 2,609     $ 2,416     $ 5,023     $ 4,531  
(2) Includes amounts in revenues for buy/sell contracts for periods prior to second quarter 2006; associated costs are included in “Purchased crude oil and products, operating and other expenses.”
   $ —     $ —     $ —     $ 6,725  

 

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CHEVRON CORPORATION — FINANCIAL REVIEW
(Millions of Dollars)
     
INCOME BY MAJOR OPERATING AREA
(unaudited)
                                 
    Three Months     Six Months  
    Ended June 30     Ended June 30  
    2007     2006     2007     2006  
Upstream – Exploration and Production
                                
United States
   $ 1,223     $ 901     $ 2,019     $ 2,115  
International
     2,416       2,371       4,527       4,615  
 
                        
Total Exploration and Production
     3,639       3,272       6,546       6,730  
 
                        
Downstream – Refining, Marketing and Transportation
                                
United States
     781       554       1,131       764  
International
     517       444       1,790       814  
 
                        
Total Refining, Marketing and Transportation
     1,298       998       2,921       1,578  
 
                        
Chemicals
     104       94       224       247  
All Other (1)
     339       (11 )     404       (206 )
 
                        
Net Income
   $ 5,380     $ 4,353     $ 10,095     $ 8,349  
 
                        
SELECTED BALANCE SHEET ACCOUNT DATA
                 
    June 30, 2007     Dec. 31, 2006  
    (unaudited)          
Cash and Cash Equivalents
   $ 11,216     $ 10,493  
Marketable Securities
   $ 887     $ 953  
Total Assets
   $ 139,606     $ 132,628  
Total Debt
   $ 8,189     $ 9,838  
Stockholders’ Equity
   $ 74,179     $ 68,935  
CAPITAL AND EXPLORATORY EXPENDITURES (2)
                                 
    Three Months     Six Months  
    Ended June 30     Ended June 30  
    2007     2006     2007     2006  
United States
                                
Exploration and Production
   $ 970     $ 1,151     $ 1,890     $ 1,971  
Refining, Marketing and Transportation
     325       252       558       444  
Chemicals
     38       24       67       41  
Other
     133       108       396       154  
 
                        
Total United States
     1,466       1,535       2,911       2,610  
 
                        
 
                                
International
                                
Exploration and Production
     2,579       1,998       4,826       3,691  
Refining, Marketing and Transportation
     460       767       809       1,039  
Chemicals
     11       11       22       17  
Other
     —       —       3       2  
 
                        
Total International
     3,050       2,776       5,660       4,749  
 
                        
Worldwide
   $ 4,516     $ 4,311     $ 8,571     $ 7,359  
 
                        
 
                                 
(1) Includes the company’s interest in Dynegy prior to its sale in May 2007, mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies.
                                
(2) Includes interest in affiliates:
                                
United States
   $ 40     $ 38     $ 72     $ 70  
International
     582       435       1,024       714  
 
                        
Total
   $ 622     $ 473     $ 1,096     $ 784  
 
                        

 

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CHEVRON CORPORATION — FINANCIAL REVIEW
OPERATING STATISTICS (1)
                                 
    Three Months     Six Months  
    Ended June 30     Ended June 30  
    2007     2006     2007     2006  
NET LIQUIDS PRODUCTION (MB/D):
                                
United States
     468       463       464       458  
International
     1,297       1,239       1,307       1,234  
 
                        
Worldwide
     1,765       1,702       1,771       1,692  
 
                        
NET NATURAL GAS PRODUCTION (MMCF/D): (2)
                                
United States
     1,703       1,832       1,713       1,807  
International
     3,314       3,234       3,293       3,199  
 
                        
Worldwide
     5,017       5,066       5,006       5,006  
 
                        
OTHER PRODUCED VOLUMES-INTERNATIONAL (MB/D) (3)
     29       123       31       130  
 
                        
TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D): (4)
                                
United States
     752       768       750       759  
International
     1,878       1,901       1,887       1,897  
 
                        
Worldwide
     2,630       2,669       2,637       2,656  
 
                        
SALES OF NATURAL GAS (MMCF/D):
                                
United States
     8,153       6,839       8,004       6,899  
International
     3,839       3,865       3,865       3,481  
 
                        
Worldwide
     11,992       10,704       11,869       10,380  
 
                        
SALES OF NATURAL GAS LIQUIDS (MB/D):
                                
United States
     170       128       155       118  
International
     123       89       116       99  
 
                        
Worldwide
     293       217       271       217  
 
                        
SALES OF REFINED PRODUCTS (MB/D): (5) (6)
                                
United States
     1,506       1,468       1,477       1,501  
International
     1,956       2,026       2,009       2,150  
 
                        
Worldwide
     3,462       3,494       3,486       3,651  
 
                        
REFINERY INPUT (MB/D):
                                
United States
     881       935       805       937  
International
     942       1,063       1,006       1,073  
 
                        
Worldwide
     1,823       1,998       1,811       2,010  
 
                        
 
                                 
(1) Includes interest in affiliates.
                                
(2) Includes natural gas consumed on lease (MMCF/D):
                                
United States
     52       58       60       44  
International
     411       411       420       383  
(3) Other produced volumes – International (MB/D):
                                
Athabasca Oil Sands (Canada)
     29       16       31       20  
Boscan Operating Service Agreement (Venezuela); converted to an equity affiliate effective October 2006.
     —       107       —       110  
 
                        
 
     29       123       31       130  
 
                        
(4) Oil-equivalent production is the sum of net liquids production, net gas production and other produced liquids. The oil-equivalent gas conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil.
                                
(5) 2006 conformed to 2007 presentation.
                                
(6) Includes volumes for buy/sell contracts (MB/D):
                                
United States
     —       —       —       53  
International
     —       —       —       49  
 
                        
Total
     —       —       —       102