10-QPeriod: Q3 FY2011

CHEVRON CORP Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 3, 2011For Securities:CVX

Summary

Chevron Corporation reported a strong financial performance for the third quarter and the first nine months of 2011. Net income attributable to Chevron Corporation surged to $7.83 billion for the third quarter and $21.77 billion for the nine-month period, representing significant increases compared to the same periods in 2010. This growth was driven by higher crude oil and natural gas realizations, particularly in the Upstream segment, which saw earnings jump to $6.2 billion for the quarter and $19.0 billion year-to-date. The Downstream segment also showed substantial improvement, with earnings reaching $2.0 billion for the quarter and $3.7 billion for the nine months, bolstered by improved refining margins and gains on asset sales. Operationally, Chevron maintained significant capital expenditures, investing $20.8 billion in the first nine months of 2011, with the majority allocated to Upstream projects, including major developments in Australia and the U.S. Gulf of Mexico. The company also continued its commitment to shareholder returns by increasing its quarterly dividend and actively engaging in share repurchases, spending $1.25 billion on buybacks in the third quarter alone. Despite positive operational and financial results, the company faces ongoing litigation, notably the significant environmental lawsuit in Ecuador, which remains a material uncertainty, although the company believes it lacks merit.

Financial Highlights

44 data points
Beta

Revenue

$64.43B

Net Income

$7.83B

12.2% Net Margin

EPS (Diluted)

$3.92

Total Assets

$204.10B

Cash & Equivalents

$14.23B

Free Cash Flow

$11.52B

Financial Statements
Beta
Revenue$64.43B
SG&A Expenses$1.11B
Operating Expenses$51.09B
Net Income$7.83B
EPS (Basic)$3.94
EPS (Diluted)$3.92
Shares Outstanding (Basic)1.98B
Shares Outstanding (Diluted)2.00B

Key Highlights

  • 1Net income attributable to Chevron Corporation more than doubled year-over-year for the third quarter, reaching $7.83 billion from $3.77 billion in Q3 2010.
  • 2Total revenues and other income increased significantly, to $64.43 billion in Q3 2011 from $49.72 billion in Q3 2010, driven by higher sales and equity affiliate income.
  • 3Upstream segment earnings showed substantial growth, rising to $6.20 billion in Q3 2011 from $3.56 billion in Q3 2010, primarily due to higher crude oil realizations.
  • 4Downstream segment earnings saw a significant jump, reaching $1.99 billion in Q3 2011 compared to $0.57 billion in Q3 2010, attributed to improved margins and asset sale gains.
  • 5Capital expenditures for the nine-month period totaled $20.8 billion, a significant increase from $15.5 billion in the prior year, reflecting continued investment in large-scale projects.
  • 6The company repurchased $1.25 billion of its common stock in the third quarter of 2011 under its ongoing share repurchase program.
  • 7Chevron's balance sheet remains strong with $14.2 billion in cash and cash equivalents and a debt-to-equity ratio of 7.5% as of September 30, 2011.

Frequently Asked Questions

Chevron's net income attributable to Chevron Corporation more than doubled to $7.83 billion in the third quarter of 2011, up from $3.77 billion in the same period of 2010. The primary drivers were significantly higher crude oil and natural gas realizations in the Upstream segment and improved refining margins and gains from asset sales in the Downstream segment.

The Upstream segment's earnings increased substantially from $3.56 billion in Q3 2010 to $6.20 billion in Q3 2011, driven by higher commodity prices. The Downstream segment also showed a remarkable improvement, with earnings growing from $0.57 billion in Q3 2010 to $1.99 billion in Q3 2011, boosted by better margins and asset sale gains.

Chevron continues to be a defendant in a civil lawsuit in Ecuador seeking environmental remediation damages. While the company believes the lawsuit lacks legal and factual merit and that any judgment is illegitimate and unenforceable, an adverse judgment of approximately $8.6 billion in damages was rendered in February 2011. Both Chevron and the plaintiffs have appealed. Chevron is also pursuing arbitration against the Republic of Ecuador and has filed a civil lawsuit in the U.S. alleging fraud and misconduct related to the Ecuadorian case. The ultimate outcome remains uncertain and material financial effects cannot be reasonably estimated.

Chevron invested $20.8 billion in capital and exploratory expenditures in the first nine months of 2011, an increase from $15.5 billion in the prior year, with most of this investment directed towards Upstream projects. These expenditures are being funded by operating cash flows, which were strong at $32.0 billion for the nine-month period. The company also used its cash flow to pay dividends and repurchase shares.