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Chevron reports profit of $5.1 billion

Dividend increased by 4 percent

•• 9 Min
Chevron reports profit of $5.1 billion

Chevron Corporation (NYSE: CVX) today reported fourth-quarter 2021 earnings of $5.1 billion ($2.63 per share - diluted), compared to a loss of $665 million ($0 $.33 per share - diluted) for the fourth quarter of 2020. The current quarter included gains on the sale of assets of $520 million, losses on the prepayment of debt of $260 million and Includes $82 million pension settlement expense. Foreign currency effects reduced earnings by $40 million. Adjusted earnings of $4.9 billion ($2.56 per share - diluted) for the fourth quarter of 2021 compares to adjusted earnings of $298 million ($0.16 per share - diluted) in the fourth quarter fourth quarter of 2020.

Chevron reported full-year 2021 earnings of $15.6 billion ($8.14 per share - diluted) compared to a loss of $5.5 billion ($2.96 per share - diluted) in 2020. Included in 2021 was a net special item charge of $289 million compared to a net special item charge of $5.1 billion in 2020. Foreign currency effects increased earnings in 2021 by $306 million. Adjusted earnings of $15.6 billion ($8.13 per share - diluted) in 2021 translates to adjusted earnings of $172 million ($0.09 per share - diluted) for the year 2020 vs. See Note 5 for a reconciliation of adjusted income/(loss).

Revenue and other operating income were $46 billion for the fourth quarter of 2021 compared to $25 billion for the same period last year.

summary of results

"In 2021, we generated record free cash flow and accelerated our progress toward a lower-carbon future," said Mike Wirth, Chevron's chairman and chief executive officer. "We're an even better company than we were a few years ago. We're more capital and cost efficient, which allows us to return more money to shareholders."

In 2021, Chevron increased its quarterly dividend per share by 4 percent to $1.34 and repurchased $1.4 billion of company stock while increasing return on assets to 9.4 percent and increasing debt by $12.9 billion dollars were reduced. The company earlier this week increased its dividend per share by an additional 6 percent to $1.42 and placed share repurchases in the first quarter of 2022 at the high end of its full-year guidance of $3 billion to $5 billion.

Over the past year, the Company and its subsidiaries have continued to strengthen their businesses, advancing the Future Growth Project and the Wellhead Pressure Management Project in Kazakhstan and the Anchor Project in the Gulf of Mexico, integrating Noble Energy's people and assets, and more in the process achieved twice the synergies originally announced, signed an agreement to extend the Block 0 concession in Angola and started up the olefin mixed feed cracker and associated polyethylene plants in South Korea.

Chevron's net oil equivalent production rose to a record 3.10 million barrels per day in 2021. In addition, the company added 1.3 billion barrels of net proven reserves (oil equivalent) in 2021. These additions, which are subject to final review, represent approximately 112 percent of the year's net oil equivalent production. Investments in the Permian Basin, Gulf of Mexico and Australia accounted for the largest net additions. Investments in Kazakhstan accounted for the largest net reductions, primarily due to higher prices and their negative impact on reserves. The Company will provide further details of its 2021 reserves in its Annual Report on Form 10-K, which is scheduled to be filed with the SEC on February 24, 2022.

In 2021, the company made strides to drive its lower-carbon future by setting targets to reduce the carbon intensity of its operations, adopting a net-zero upstream Scope 1 and Scope 2 emissions target for 2050, expanded its renewable fuels business, formed the Chevron New Energies organization aimed at growing its hydrogen, carbon capture and offsets businesses, and tripled related projected capital investments to approximately $10 billion by 2028.

At year-end, cash, cash equivalents and marketable securities totaled $5.7 billion, a slight increase from year-end 2020. Total debt was $31.4 billion as of December 31, 2021, down $12.9 billion from a year earlier.

"We are delivering greater value to our shareholders today, while working to meet the world's growing energy needs in a lower-carbon future," Wirth concluded.

UPSTREAM

Global net oil equivalent production was 3.12 million barrels per day in the fourth quarter of 2021, down 5 percent year-on-year. Global net oil equivalent production for full year 2021 was 3.10 million barrels per day, up slightly from a year earlier.

US upstream

The US upstream business earned $2.97 billion in the fourth quarter of 2021, compared to $101 million a year ago. The improvement is primarily due to higher realizations, gains on sale of assets, higher sales volumes and lower exploration costs, partially offset by higher employee benefits costs.

The Company's average selling price per barrel of crude oil and liquid natural gas was $63 in the fourth quarter of 2021, compared to $33 a year ago. The average selling price for natural gas was $4.78 per thousand cubic feet in the fourth quarter of 2021, compared to $1.49 in the fourth quarter of last year.

Net production of petroleum equivalents was 1.22 million barrels per day in the fourth quarter of 2021, up 21,000 barrels per day year-on-year. The increase was due to a net production increase in the Permian Basin and the absence of weather effects in the Gulf of Mexico, partially offset by a decrease of 48,000 barrels per day related to the sale of assets in the Appalachian Mountains. The net liquid component of oil equivalent production in the fourth quarter of 2021 increased 6 percent to 929,000 barrels per day and net natural gas production decreased 9 percent to 1.73 billion cubic feet per day compared to the fourth quarter of last year.

International upstream business

The international upstream business generated profit of $2.19 billion in the fourth quarter of 2021, compared to $400 million a year ago. The increase in profit was primarily due to higher realizations, partially offset by lower volumes and higher depreciation and employee benefit costs. Foreign currency effects had a positive impact of $375 million on earnings between periods.

The average selling price for crude oil and liquid natural gas was $74 per barrel in the fourth quarter of 2021, compared to $40 a year ago. The average selling price for natural gas was $7.90 per thousand cubic feet in the fourth quarter, compared to $4.23 in the fourth quarter last year.

Net oil equivalent production of 1.90 million barrels per day in the fourth quarter of 2021 was 181,000 barrels per day lower than in the fourth quarter of 2020. The decrease is primarily due to the loss of 186,000 barrels per day as a result of the Rokan spill -Concession in Indonesia and adverse entitlement effects, partially offset by lower production cuts. Net liquid component of oil equivalent production decreased 18 percent to 899,000 barrels per day in the fourth quarter of 2021, while net natural gas production of 6.01 billion cubic feet per day increased 2 percent compared to the fourth quarter of last year.

DOWNSTREAM

The US Downstream business reported a profit of $660 million in the fourth quarter of 2021, compared to a loss of $174 million a year earlier. The increase was primarily due to higher margins on sales of refined products, higher earnings from the 50 percent owned Chevron Phillips Chemical Company and higher volumes, partially offset by higher transportation and employee benefits costs.

Crude oil use at the refinery increased 9 percent year-on-year to 882,000 barrels per day in the fourth quarter of 2021 as the Company increased refinery utilization in response to higher demand and an improved refining margin environment.

Refined product sales were 1.16 million barrels per day, up 14 percent from the year-ago period, mainly due to higher demand for gasoline and jet fuel as travel restrictions related to the pandemic continue to ease.

International downstream business

The international downstream business reported a profit of $100 million in the fourth quarter of 2021, compared to a loss of $164 million in the same period last year. The increase was primarily due to higher margins on sales of refined products and a favorable foreign exchange impact of $142 million between periods, partially offset by higher transportation and employee benefits costs.

The refinery's crude oil usage of 602,000 barrels per day in the fourth quarter of 2021 increased 11 percent compared to the same period last year, driven by higher demand and an improving environment for refining margins.

Refined product sales in the fourth quarter of 2021 rose 8 percent year-on-year to 1.33 million barrels per day, primarily due to higher demand for gasoline and jet fuel as pandemic-related restrictions continue to ease and higher sales in Australia.

EVERYTHING ELSE

The Other division includes global cash management and debt financing activities, central administration functions, insurance businesses, real estate activities and technology companies.

Net expenses for the fourth quarter of 2021 were $860 million compared to $828 million a year earlier. The increase in net expense between periods was primarily due to losses on the prepayment of debt, higher employee benefit costs and the lack of prior year's favorable tax effects, partially offset by prior year's lower pension expense and lack of Noble Energy acquisition costs . Foreign currency effects increased net costs by $23 million between periods.

CASH FLOW FROM OPERATING BUSINESS

Cash flow from operations was $29.2 billion in 2021 compared to $10.6 billion in 2020. Excluding the impact on working capital, cash flow from operations in 2021 was 30, $6 billion compared to $12.2 billion in 2020.

CAPITAL AND EXPLORATION EXPENSES

Capital and exploration expenditures were $11.7 billion in 2021 compared to $13.5 billion in 2020. Included in these amounts are $3.2 billion in 2021 and $4.0 billion Included in 2020 for the Company's share of affiliated company expenses that did not require Company cash outlays. Upstream spend accounts for 82 percent of the company-wide total in 2021.

Chevron is one of the world's leading integrated energy companies. We believe that affordable, reliable and increasingly cleaner energy is essential to a more prosperous and sustainable world. Chevron produces petroleum and natural gas, manufactures fuels, lubricants, petrochemicals and additives, and develops technologies that improve our business and industry. We are focused on reducing the carbon intensity of our operations and are looking to expand lower carbon businesses alongside our traditional businesses. For more information about Chevron, visit www.chevron.com.

NOTICE

Chevron's fourth quarter 2021 results meeting with security analysts will be held on Friday, January 28, 2022 at 8:00 am PT. A webcast of the meeting will be available to individual investors, the media and other interested parties on Chevron's website at www.chevron.com under the "Investors" section. Prepared comments for today's conference call, additional financial and operating information and other ancillary materials will be available prior to the conference call at approximately 4:00 am PT under Events and Presentations under the Investors section of Chevron's website.

In this press release, the term "Chevron" and words such as "the company", "the company", "our", "we", "us" and "be" may refer to Chevron Corporation, one or more of its consolidated subsidiaries or relate to all of them as a whole. All of these terms are used for convenience only and are not intended as an accurate description of each company, each of which conducts its own business.

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