Nigeria Hits Chevron 4Q Earnings

Chevron reported 4Q 2016 earnings of $415mn, reversing the year-ago loss of $588mn, but net Nigerian production shrank by one-sixth because of the impact of militant attacks on pipelines and infrastructure there - offsetting new Australian LNG production.

Full-year 2016 results were a loss of $497mn, contrasting with 2015 earnings of $4.6bn. The company reported a 2Q2016 loss of $1.47bn in July.

“Our 2016 earnings reflect the low oil and gas prices we saw during the year,” said CEO John Watson January 27: “We responded aggressively to those conditions, cutting capital and operating expenses by $14bn. We are well positioned to improve earnings and be cash flow balanced in 2017 through continued tight spending and cost control and additional revenue from expected production growth.”

Net production was 2.67 million barrels oil equivalent per day (boe/d) in 4Q2016, essentially unchanged year on year, as increases from major projects such as Gorgon LNG and base business were offset by normal field declines, asset sales, and the effects of civil unrest in Nigeria.

US upstream operations in 4Q2016 was down 5% at 682,000 boe/d (up 2% for liquids at 508,000 b/d, down 21% for gas at 1.04bn ft³/d).

International production was up 2% at 1.99mn boe/d (liquids down 3% to 1.24mn b/d, while gas increased 11% to 4.5bn ft³/d). The latter included Nigeria net oil/gas production of 186,000 boe/d, down 17% from 225,000 boe/d in 4Q2015 (and also 11% lower than 3Q2016’s 209,000 boe/d). The Chevron-led Angola LNG also had an unscheduled outage in December 2016; it only restarted production mid-2016 after a two year outage.

Chevron's full year global net 2016 production was 2.59mn boe/d, down 1%.

The US major said, of its major Australian LNG projects, that Gorgon had shipped 39 cargoes to date with first LNG from its 3rd train scheduled 2Q2017, and that Wheatstone's first LNG is expected to be shipped mid-2017, with its train 2 expected six to eight months after T1.

Mark Smedley