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Chevron Annual Report, Year Ended Dec 31, 1999

Filing Date
Filed March 30, 2000
Period End
December 31, 1999
Security
CVX
In the record · 2016–202610-K1110-Q338-K143

CVX filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 143 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Impairment8-K · Dec ’19Dec ’19
  3. Leadership change8-K · Jan ’22Jan ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 30, 2000. Cited figures are marked; the original filing is the authoritative source.

Chevron's 1999 results showed a sharp recovery from the 1998 downturn.

Net income rose 55 percent to $2.070 billiona ($3.14 diluted EPS), up from $1.339 billion in 1998, though still 36 percent below the record $3.256 billion earned in 1997. Sales and other operating revenues climbed to $35.4 billion from $29.9 billion, driven by higher crude oil and refined product prices. Upstream results drove the improvement: exploration and production earnings rose 80 percent to $1.619 billion, while refining, marketing and transportation earnings fell 44 percent to $431 million on compressed margins.

Average U.S. crude realizations rose 41 percent to $16.11b per barrel. Worldwide oil-equivalent reserve additions exceeded production for the seventh straight year, with a 108 percent replacement rate including acquisitions. The company's balance sheet and cash flow were stretched by 1999 acquisitions (Rutherford-Moran in Thailand and Petrolera Argentina San Jorge in Argentina), a $775 million Cities Service litigation settlement, and continued dividend payments of $2.48 per share.

Operating cash flow of $4.48 billionc did not fully cover capital spending and dividends, so total debt rose 18 percent to $8.9 billion and the debt-to-capital ratio increased to 33.4 percent. Management guided 2000 capital and exploratory spending down about 15 percent to $5.2 billion, targeted 15 percent annual EPS growth for 2000-2002, and announced a planned 50-50 chemicals joint venture with Phillips Petroleum.

Cost-reduction and restructuring actions, including roughly 3,472 job eliminations, are expected to be completed by mid-2000. Key risks for investors include commodity price volatility, a pending Unocal gasoline patent ruling that could require royalties and a roughly $75 milliond after-tax charge, MTBE and royalty litigation, and political and operating risk in developing countries such as Angola, Kazakhstan and Nigeria.

02—Key points

Key Highlights

  1. Net income rose 55% to $2.070 billion ($3.14 diluted EPS), but remained 36% below 1997's record $3.256 billion.
  2. Sales and other operating revenues increased to $35.4 billion from $29.9 billion, reflecting higher crude oil and refined product prices.
  3. Exploration and production earnings rose 80% to $1.619 billion; refining, marketing and transportation earnings fell 44% to $431 million on lower margins.
  4. Reserve replacement reached 108% of 1999 production including acquisitions (67% excluding them), the seventh consecutive year above production.
  5. Total debt rose 18% to $8.9 billion, and the debt-to-capital ratio rose to 33.4%, after $4.5 billion operating cash flow failed to cover capital spending, dividends and the $775 million Cities Service settlement.
  6. 2000 capital and exploratory spending is guided down about 15% to $5.2 billion, with a 15% annual EPS growth target for 2000-2002.
  7. Pending Unocal reformulated gasoline patent ruling could require royalties; an after-tax charge of about $75 million is expected in Q1 2000, with further exposure if the patent is ultimately upheld.

03—Questions

Frequently Asked Questions

  1. Why did Chevron's 1999 earnings rebound so strongly?

    Crude oil prices rose sharply after OPEC and non-OPEC producers curtailed output, lifting upstream results. U.S. crude realizations averaged $16.11 per barrel, up 41%, and exploration and production earnings rose 80%. The 1998 results also included a $637 million litigation provision that did not recur in 1999.

  2. Is Chevron's debt load becoming a concern?

    Debt increased to $8.9 billion, and the debt-to-capital ratio rose from 30.7% to 33.4%. Management cites the increase as funding for acquisitions, capital spending, dividends and the $775 million settlement. Credit ratings were AA (S&P) and Aa2 (Moody's), and the company reported $4.75 billion in committed credit facilities.

  3. What are the major strategic moves announced for 2000?

    Chevron plans a 50-50 chemicals joint venture with Phillips Petroleum, expected to be completed by mid-2000, and reduced 2000 capital spending to about $5.2 billion, with most of it directed to upstream projects in Kazakhstan, West Africa, Thailand, Canada and the deepwater Gulf of Mexico. The company also expanded into Argentina and Thailand through acquisitions and is pursuing Internet-based B2B ventures.

  4. What legal and environmental risks should investors monitor?

    The Unocal gasoline patent case could lead to royalty payments and affect the reformulated gasoline business. Chevron also faces numerous lawsuits over royalty and severance tax payments and MTBE use, and environmental remediation reserves stood at $814 million at year-end 1999. Management believes these matters will not materially affect consolidated financial position, although earnings could be hit in any given period.

04—Continue

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