Declining natural gas prices in the last three months of 2006 took a big bite out of Chevron Corp.'s net income, the San Ramon, CA-based major said Friday. Chevron recorded a 9% boost to its U.S. gas output in 4Q2006, but nearly all of it was gas recovered following restorations to Gulf of Mexico (GOM) infrastructure damaged by hurricanes Katrina and Rita in 2005.
Chevron reported worldwide oil-equivalent production was 2.66 million boe/d in 4Q2006, about the same as in the final quarter of 2005. In the United States, net production of 763,000 boe/d increased 6% from a year earlier, mostly because of restoration to volumes following the 2005 hurricanes. The net liquids component of production was up 5% to 466,000 boe/d. Net natural gas production was 9% higher at 1.8 Bcf/d.
Net income in the final quarter fell 9%, but Chevron still ended the year with its third consecutive year of record earnings. The reported net profit of $3.77 billion ($1.74/share) in 4Q2006 was down from $4.14 billion ($1.86) reported in 4Q2005. The quarterly profit decline was Chevron's first in more than a year. For the full year, Chevron earned $17.1 billion, easily exceeding 2005's earnings of $14.1 billion.
Chevron said its average price for gas sold in the United States fell 42% to $5.90/Mcf. Gas prices in 4Q2005 soared when Katrina and Rita created supply shortages.
"Fourth quarter earnings benefited from an improvement in the operating performance of our oil and gas fields and refineries, especially in the United States," said Chevron CEO Dave O'Reilly. "However, this benefit to earnings was more than offset by the effect of a sharp decline in U.S. natural gas prices from a year earlier."
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