10-QPeriod: Q1 FY2009

CHEVRON CORP Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 7, 2009For Securities:CVX

Summary

Chevron Corporation reported a significant decline in its financial performance for the first quarter of 2009 compared to the same period in 2008, primarily driven by a sharp decrease in crude oil and natural gas prices. Total revenues plummeted from $65.9 billion to $36.1 billion, and net income attributable to Chevron Corporation fell from $5.17 billion to $1.84 billion. This downturn reflects the challenging macroeconomic environment and the commodity price volatility impacting the energy sector. Despite the lower revenues and earnings, Chevron maintained a robust capital expenditure program, with total expenditures of $6.5 billion, an increase from $5.1 billion in the prior year, largely focused on upstream projects. The company also demonstrated financial resilience by managing its debt and liquidity effectively, issuing new debt while repaying short-term obligations and continuing to pay its dividend. The company is actively managing costs and capital deployment in response to the prevailing market conditions.

Financial Highlights

42 data points
Beta

Revenue

$36.13B

Net Income

$1.84B

5.1% Net Margin

EPS (Diluted)

$0.92

Total Assets

$159.43B

Cash & Equivalents

$9.15B

Free Cash Flow

$2.40B

Financial Statements
Beta
Revenue$36.13B
SG&A Expenses$977.00M
Operating Expenses$32.96B
Interest Expense$8.00M
Net Income$1.84B
EPS (Basic)$0.92
EPS (Diluted)$0.92
Shares Outstanding (Basic)1.99B
Shares Outstanding (Diluted)2.00B

Key Highlights

  • 1Net income attributable to Chevron Corporation decreased by approximately 65% to $1.84 billion for Q1 2009 from $5.17 billion in Q1 2008.
  • 2Revenues and other income significantly decreased to $36.1 billion in Q1 2009 from $65.9 billion in Q1 2008, largely due to lower commodity prices.
  • 3Upstream earnings saw a substantial drop to $1.27 billion from $5.13 billion, primarily driven by lower crude oil and natural gas prices.
  • 4Downstream earnings increased to $823 million from $252 million, aided by $400 million in gains from asset sales.
  • 5Capital expenditures increased to $6.5 billion in Q1 2009 from $5.1 billion in Q1 2008, with a significant portion allocated to upstream projects.
  • 6The company issued $5 billion in public bonds and managed its debt, resulting in total debt and capital lease obligations increasing to $12.2 billion from $8.9 billion year-end 2008.
  • 7Chevron paid $1.3 billion in dividends to common stockholders during the quarter, maintaining its dividend payments.

Frequently Asked Questions

The primary reason for the significant decrease in net income was the sharp decline in crude oil and natural gas prices, which directly impacted the company's upstream segment earnings. Lower commodity prices led to reduced revenues and profitability across the exploration and production business.

Chevron's upstream segment experienced a substantial decline in earnings due to lower commodity prices. In contrast, the downstream segment saw an increase in earnings, partly driven by gains from asset sales and slightly improved refining and marketing margins. The downstream segment benefited from strategic asset divestitures, while the upstream segment was heavily influenced by market price volatility.

Chevron maintained a strong capital expenditure program, increasing its spending in Q1 2009 to $6.5 billion, with a majority focused on upstream projects. Despite the challenging market conditions and increased debt, the company highlighted its financial resilience, substantial borrowing capacity, and flexibility to modify capital spending plans if necessary, while aiming to continue dividend payments and maintain its credit ratings.

Chevron is involved in several significant legal proceedings, including MTBE-related lawsuits and a major environmental lawsuit in Ecuador. While the company believes it has strong defenses, the ultimate exposure for these matters is not determinable and could potentially be material. The company also has ongoing environmental remediation obligations and other potential contingent liabilities, though it states that current obligations are unlikely to have a material impact on its consolidated financial position or liquidity.