Boosted by higher crude oil prices, Chevron Corp.’s upstream unit is expected to deliver higher earnings sequentially for the first quarter from the final period of 2010, the producer said late Monday in an interim earnings report.
The San Ramon, CA-based oil major issued a financial breakdown for January and February; it is scheduled to issue a full quarterly report on April 29.
“Upstream results are projected to improve between sequential quarters, benefiting from higher crude oil prices, offset in part by lower liftings,” Chevron stated. Downstream earnings, however, are expected to be slightly lower, “reflecting reduced asset sales gains, largely offset by higher U.S. margins.”
U.S. net oil-equivalent production in the first two months of this year was lower sequentially than in the previous three months, down by 12,000 boe/d. The drop in production, said Chevron, reflected “small declines across multiple assets.”
International output also declined, down by 26,000 boe/d in the first two months from the final period of 2010. Chevron blamed the production decline in higher crude oil prices, which reduced production under cost recovery and variable royalty provisions on some production contracts. Maintenance activity in Angola and weather-related downtime in Australia and the United Kingdom also cut into output, the company said.
In the U.S. upstream, Chevron’s net natural gas production in January and February was 1,222 MMcf/d, versus 1,378 MMcf/d for the full reporting period of 1Q2010. U.S. net liquids output stood at 482,000 b/d in the first two months of this year, compared with 505,000 b/d in the full year-ago quarter.
U.S. natural gas realizations in January and February increased sequentially by 50 cents to $4.14/Mcf from $3.65, but the average gas price was well below 1Q2010’s gas price of $5.29/Mcf. International gas realizations sequentially were up 15 cents/Mcf.
Crude oil realizations in the United States rose by $8.67 to $88.23/bbl in the first two months of the quarter from 4Q2010. International liquids realizations also improved by $12.24 to $91.33/bbl, with the earnings benefit from higher realizations partly offset by lower liftings, Chevron said.
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