Chevron Doubles Third-Quarter Earnings While Producing Less

On October 31, Chevron Corporation (San Ramon, CA) announced earnings for third quarter 2008. As is becoming a standard story for petroleum-production companies, 3Q08 brought significantly higher earnings compared to last year. According to Industrial Info Resources (Sugar Land, TX), Chevron reported a net income of $7.89 billion for the quarter, more than doubling 3Q07's net income of $3.72 billion, and up 32 percent from last quarter's $5.98 billion.

Income from Chevron's upstream segment rose substantially in both U.S. and international sectors. U.S. upstream income was up more than $1 billion, from $1.14 billion in 3Q07 to $2.19 this year. International upstream income rose to $4 billion, compared with $2.3 billion last year. Oil-equivalent production was actually down from last year by 150,000 barrels per day. Higher prices of oil and natural gas helped bring strong income and offset the estimated $400 million of expenses caused by Hurricanes Gustav and Ike.

"We are pleased to report that there were zero safety incidents associated with the evacuation of personnel from our offshore facilities; 3,500 personnel were safely evacuated for Gustav and 1,500 for Ike," said George Kirkland, Executive Vice President for Global Upstream and Gas. "We did sustain damage from the storms. Overall, there were 13 toppled structures, four leaning structures, and three missing well heads. The long-term impact of this damage on production is not great. It is estimated that between 6,000 to 10,000 barrels a day will be permanently lost."

Before Gustav, Chevron's production from the Gulf of Mexico averaged about 190,000 oil-equivalent barrels per day. "As of this week," said Kirkland, "total restored production is 55 percent of pre-storm levels. Of the remaining production to be restored, about three-quarters is dependent upon the timing of third-party pipeline repairs."

Chevron has more than $19.5 billion of projects scheduled to kick off between now and the end of 2009 in the U.S., Canada, and Australia. In the U.S., one of Chevron's largest groups of projects involves additions to its refinery in southern Mississippi. The company plans to make several additions to the refinery, including a new hydrocracker and sulfur recovery unit. The projects have a combined estimated total investment value of $800 million and will begin construction next year.

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