CHEVRON CORP Quarterly Report for Q3 Ended Sep 30, 2009

Summary

Chevron Corporation's third-quarter and nine-month results for 2009 showed a significant decline compared to the same periods in 2008, primarily driven by lower crude oil and natural gas prices. Total revenues and other income for the third quarter dropped from $78.9 billion to $46.6 billion, and net income attributable to Chevron Corporation fell from $7.9 billion to $3.8 billion. For the nine-month period, revenues decreased from $227.8 billion to $123 billion, and net income declined from $19.1 billion to $7.4 billion. The upstream segment, the largest contributor to earnings, experienced a substantial decrease in profitability due to lower commodity prices, although this was partially offset by increased production volumes and lower operating expenses in some areas. The downstream segment also saw a significant reduction in earnings, impacted by weaker refining and marketing margins and the absence of prior-year gains on derivative instruments. The chemicals segment, however, showed improved performance due to lower costs and higher margins. Despite the reduced earnings, Chevron maintained a strong financial position, with total assets remaining stable and a manageable debt ratio. The company continued to invest in capital and exploratory expenditures, particularly in upstream projects, and returned significant capital to shareholders through dividends. Management expressed confidence in the company's financial strength to navigate the challenging economic environment.

Key Highlights

• 1Net income attributable to Chevron Corporation significantly decreased, with $3.83 billion in Q3 2009 compared to $7.89 billion in Q3 2008, and $7.41 billion for the nine months ended Sep 30, 2009, versus $19.04 billion for the same period in 2008.
• 2Total revenues and other income also saw a substantial decline, with $46.6 billion in Q3 2009 versus $78.9 billion in Q3 2008, and $119.8 billion for the nine months ended Sep 30, 2009, compared to $221.8 billion in 2008.
• 3The upstream segment's earnings were heavily impacted by lower crude oil and natural gas prices, with Q3 2009 earnings at $3.64 billion compared to $6.18 billion in Q3 2008.
• 4Downstream segment earnings decreased sharply, with $194 million in Q3 2009 compared to $1.83 billion in Q3 2008, attributed to weaker margins and derivative impacts.
• 5Capital expenditures for the nine months ended September 30, 2009, were $16.0 billion, slightly higher than the $15.8 billion in the prior year, with upstream projects representing the majority of spending.
• 6The company paid dividends of $3.9 billion to common stockholders in the first nine months of 2009.
• 7Chevron's debt ratio remained low, at 10.4% as of September 30, 2009, indicating a strong balance sheet despite reduced earnings.

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