February 1, 2016 [OPIS] - Chevron's operating expenses and capital spending were reduced by $9 billion in 2015 from 2014, and the company expects similarly large reductions in 2016, said CEO John Watson on Friday.
In addition, asset-sales proceeds were $6 billion in 2015, with additional sales planned for 2016 and 2017, he said.
Watson also said that the company’s massive Gorgon LNG project will begin first production for exports within the next few weeks, which is in line with the original early 2016 schedule.
“Our 2015 earnings were down significantly from the previous year, reflecting a nearly 50 percent year-on-year decline in crude oil prices,” Watson said. “We’re taking significant action to improve earnings and cash flow in this low price environment.”
Chevron reported a loss of $588 million ($0.31 per share, diluted) for fourth-quarter 2015, compared with earnings of $3.5 billion ($1.85 per share, diluted) in the 2014 fourth quarter.
Foreign currency effects increased earnings in the 2015 quarter by $46 million, compared with an increase of $432 million a year earlier. Full-year 2015 earnings were $4.6 billion ($2.45 per share, diluted) compared with $19.2 billion ($10.14 per share, diluted) in 2014.
Sales and other operating revenues in fourth quarter 2015 were $28 billion, compared to $42 billion in the year-ago period.
Improved refinery reliability allowed Chevron to capture the benefits of a favorable margin environment and post excellent downstream results for the year, he said.
Chevron continued to reshape the downstream portfolio with well-timed asset sales and good progress on petrochemical investments, Watson said.
U.S. downstream operations earned $496 million in fourth quarter 2015 compared with earnings of $889 million a year earlier.
The decrease was primarily due to the absence of 2014 gains on asset sales, partially offset by higher margins on refined product sales in fourth quarter 2015 compared to the year-ago period.
Refinery crude oil input in fourth-quarter 2015 decreased 1% to 916,000 b/d from the year-ago period. Refined product sales of 1.23 million b/d were unchanged from fourth-quarter 2014. Branded gasoline sales of 515,000 b/d were up 1% from the 2014 period.
International downstream operations earned $515 million in fourth-quarter 2015 compared with $629 million a year earlier.
The decrease was primarily due to an unfavorable change in effects on derivative instruments and lower margins on refined product sales, partially offset by the absence of certain one-time employee benefits expenses in the year-ago period and lower income tax expense.
Foreign currency effects decreased earnings by $45 million in fourth-quarter 2015, compared with a decrease of $21 million a year earlier. Refinery crude oil input of 783,000 b/d in fourth-quarter 2015 decreased 39,000 b/d from the year-ago period, mainly as a result of the Caltex Australia Ltd. divestment.
Total refined product sales of 1.47 million b/d in fourth-quarter 2015 were down 77,000 b/d from the year-ago period, mainly as a result of the Caltex Australia divestment.
Excluding the effects of the Caltex Australia divestment, refined product sales were up 35,000 b/d, primarily reflecting higher sales of gasoline.
