Chevron Reports First Quarter Income

Chevron Corp. has reported earnings of $4.55 billion ($2.27 per share – diluted) for the first quarter 2010, compared with $1.84 billion ($0.92 per share -diluted) in the 2009 first quarter.

Results in the 2009 period included gains of approximately $400 million ($0.20 per share) from downstream asset sales. Foreign-currency effects reduced earnings in the 2010 quarter by $198 million, compared with a reduction of $54 million a year earlier. Earnings in the first quarter 2010 include charges of $175 million ($0.09 per share) associated with employee reductions in the downstream businesses and corporate staffs.

Sales and other operating revenues in the first quarter 2010 were $47 billion, up from $35 billion in the year-ago period due mainly to higher prices for crude oil, natural gas and refined products.

Our first quarter performance was very strong, and our strategy to invest in high-quality, upstream growth assets is paying off,” said Chairman and CEO John Watson. “Current quarter earnings and cash flows benefited significantly from higher prices for crude oil and natural gas. In addition, net oil-equivalent production for the first quarter of this year was 5% higher than a year ago, largely due to the ramp up from our major capital projects and strong performance in our mature business operations.”

Watson also commented on the strength of Chevron’s deepwater U.S. Gulf of Mexico development portfolio. He noted that “first oil” was achieved in first quarter 2010 at the Perdido project, which follows the company’s recent start-ups at its Tahiti and Blind Faith developments. In the quarter, Chevron also added to its exploration acreage in the Gulf of Mexico through successful bids in a recent lease sale and commenced exploratory drilling operations with a second ultra-deepwater drillship.

“In the downstream, sales margins for refined petroleum products remain weak,” Watson noted, adding that the company is progressing the restructuring plans for the downstream business.

Worldwide net oil-equivalent production was 2.78 million barrels per day in the first quarter 2010, up 120,000 barrels per day from 2.66 million barrels per day in the 2009 first quarter. The increase was primarily driven by new production from major project start-ups and ramp-ups in the U.S., Nigeria and Angola, and expansion of capacity at Tengiz in Kazakhstan.

U.S. upstream earnings of $1.16 billion in the first quarter of 2010 were up $1.13 billion from a year earlier, due to sharply higher crude-oil and natural-gas realizations, and increased liquids production in the first quarter 2010.

The company’s average sales price per barrel of crude oil and natural gas liquids was approximately $71 in the 2010 quarter, compared with $36 a year ago. The average sales price of natural gas was $5.29 per thousand cubic feet, up from $4.14 in last year’s first quarter.

Net oil-equivalent production of 734,000 barrels per day in the first quarter 2010 was up 63,000 barrels per day, or about 9%, from a year earlier. The increase was primarily associated with new production, mostly from the start-up of the Tahiti Field in second quarter 2009 and ramp-up of the Blind Faith Field, which began production in late 2008, along with the restoration of volumes that were offline in the first quarter 2009 due to hurricanes in the Gulf of Mexico. The net liquids component of production was up 15% to 505,000 barrels per day in the first quarter 2010 while net natural-gas production of 1.38 billion cubic feet per day was unchanged between periods.

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