Hurricane restoration efforts in the Gulf of Mexico (GOM) have lifted Chevron Corp.’s natural gas and oil production from late 2008, but lower commodity prices likely will send profits “sharply lower” in 1Q2009, the company reported in an interim earnings update.
“Upstream earnings are expected to decline substantially, in part due to lower prices for crude oil and natural gas,” said the San Ramon, CA-based producer. Downstream earnings also are forecast to be “much lower,” with average margins on the sale of refined products “off significantly.”
The interim update provided partial quarterly operating data based on statistics for January and February. Chevron compared the partial data to 4Q2008 data. The producer, the second largest U.S.-based producer after ExxonMobil Corp., is scheduled to issue 1Q2009 earnings on May 1.
Chevron’s U.S. gas output averaged 1.36 Bcf/d through February, compared with an average 1.32 Bcf/d in 4Q2008. U.S. liquids production was 433,000 b/d in the first two months, compared with 399,000 b/d in 4Q2008.
“Total U.S. oil-equivalent production during the first two months of the first quarter improved 41,000 b/d mainly due to increased production in the Gulf of Mexico that was associated with ongoing restoration activities following the hurricanes last September and the ramp-up of production at Blind Faith,” Chevron said. International output also rose in the first two months from 4Q2008.
U.S. gas realizations for January and February fell 78 cents to $4.45/Mcf from 4Q2008, Chevron said. U.S. crude oil realizations declined about $18/bbl to $33.37.
U.S. upstream results in 1Q2009, which ended March 31, are expected to include charges of $100 million for write-offs mainly associated with exploration activities, Chevron said. In 4Q2008 Chevron had a $600 million gain in its U.S. upstream results because of an asset exchange.
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