Record production from the Permian Basin and a bevy of oil and natural gas projects worldwide was not enough to stanch the decline in commodity prices during the final quarter, as Chevron Corp. recorded a $10.4 billion impairment for assets that included the Appalachia portfolio, a natural gas export facility planned for British Columbia and a deepwater Gulf of Mexico project.

Chevron wrote down $6.5 billion for the gassy Appalachian assets and recorded a $1.6 billion impairment for the liquefied natural gas export proposal in Kitimat. Slumping oil prices also led to a $1.5 billion impairment of the massive Big Foot facility in the U.S. offshore.

The news was not unexpected as the San Ramon, CA-based major had signaled the impairments in a preliminary earnings report in December. While capital spending is set to be 11% higher this year, some of the impaired projects are being evaluated for “strategic alternatives,” management said.

“While we’re disappointed by these charges, we’re confident that we’re making the right decisions to prioritize our capital on our most advantaged, highest return assets,” CFO Pierre Breber said during a conference call Friday. He was joined at the microphone by CEO Mike Wirth.

New growth is coming in the year ahead from the Permian and global LNG projects, the CEO noted. While there are some “uncertainties” with some overseas LNG efforts, he said Chevron also has some non-operated joint ventures that should pay off down the line.

Natural gas isn’t going away, Wirth noted, echoing comments by ExxonMobil CEO Darren Woods earlier on Friday. In part, it relates to the reality of climate change, Wirth said, as the global economy grows and undeveloped areas will need energy resources. However, he also acknowledged that the world is undergoing a rapid energy transition in a shift to more alternative supplies.

“We really need to continue to adapt,” Wirth said. Chevron has “been around” in some form or fashion for more than 140 years, and “we have reinvented ourselves over that period of time. We live in a world with 7.5 billion people. Twenty years from now, it will be more than 9 billion people” who will need “reliable, affordable access to energy.”

What the company plans to do is “evolve our culture,” applying technologies and cost efficiencies “to be part of the equation for many years to come.”

Bright spots in 4Q2019 once again tied to Chevron’s legacy Permian assets. Domestic production in the quarter was 998,000 boe/d net, up 140,000 boe/d year/year, with increases tied to shale and tight resources.

Liquids output increased 14% to 771,000 boe/d, while gas production was up 24% to 1.36 Bcf/d. Permian production alone climbed 36% to average 514,000 boe/d.

“We’re maintaining our commitment to capital discipline, and in 2020 our capital budget will be flat for the third consecutive year…at $20 billion,” Wirth said.

About $5 billion is to be directed this year to the upstream base business, with another $4 billion allocated to Permian development.

“Our spend profile has low execution risk and is focused primarily on short-cycle, high return investments that are expected to sustain and grow the enterprise for many years to come,” Wirth said.

Assuming a Brent oil price averaging $60/bbl, production is expected to increase by up to 3% year/year excluding asset sales.

“Our projected growth is largely driven by the Permian,” Wirth said. “We expect a fourth consecutive year of production growth…

“We intend to win in any environment. We’re not making excuses for tough commodity prices or margins,” Wirth said. “As a result of our managed portfolio, capital discipline, low execution risk and financial strength, we’re well positioned for 2020 and committed to maintain organic capital spending at $20 billion….”

Net losses in 4Q2019 totaled $6.6 billion (minus $3.51/share), versus year-ago profits of $3.7 billion ($1.95). Sales and other operating revenues in 4Q2019 declined to $35 billion from $40 billion.

Full-year earnings also slumped to $2.9 billion ($1.54/share) from $14.8 billion ($7.74) in 2018. Net charges for the year totaled $8.7 billion, versus charges of $1.2 billion in 2018.

Revenue in 4Q2019 was $36.35 billion, down from $42.35 billion a year earlier. For the year, revenue fell to $146.52 billion from $166.34 billion.

The U.S. upstream segment recorded a loss of $7.5 billion in 4Q2019, compared with year-ago earnings of $964 million. Domestic crude and liquids prices in the final quarter averaged $47/bbl, compared with $56 a year ago. Natural gas prices in the United States averaged $1.10/Mcf, versus $2.01 in 4Q2018.

For the international upstream operations segment, earnings totaled $731 million in 4Q2019, compared with $2.3 billion a year ago. Impairment charges of $2.2 billion were associated with Kitimat LNG and other gas projects. Also contributing to the decrease were lower gas price realizations and volumes.

Overseas oil and liquids fetched $57/bbl on average in the final period, off $2 from a year earlier. The average sales price of overseas gas was $5.71/Mcf, compared with $6.81 in 4Q2018.

International output in the final three months of 2019 averaged 2.08 million boe/d, down 145,000 boe/d year/year because of asset sales, major turnarounds and normal field declines. The net liquids component decreased 6% to 1.12 million boe/d, while net gas production fell 8% to 5.75 Bcf/d.

Cash flow from operations in 2019 was $27.3 billion, compared with $30.6 billion in 2018. Excluding working capital effects, cash flow from operations in 2019 was $25.8 billion, compared with $31.3 billion in 2018.

Capital and exploratory expenditures in 2019 were $21.0 billion, slightly higher from $20.1 billion in 2018. Upstream expenditures represented 85% of the total.