The slump in the prices of crude oil has continued to take its tolls on companies' financial results as Chevron Corporation at the weekend reported a loss of $725 million for first quarter 2016, compared with earnings of $2.6 billion in the 2015 first quarter.
Though the company reported production increases from project ramp-ups in the United States, Nigeria and other areas, it added that these increases were offset by what it called the Partitioned Zone shut-in and normal field declines.
However, foreign currency effects decreased earnings in the 2016 quarter by $319 million, compared with an increase of $580 million a year earlier.
According to the company's results, sales and other operating revenues in first quarter 2016 were $23 billion, compared to $32 billion in the year-ago period.
Chairman and Chief Executive Officer of the company, Mr. John Watson acknowledged that the company's first quarter results declined from a year ago.
"Our Upstream business was impacted by a more than 35 percent decline in crude oil prices. Our Downstream operations continued to perform well, although overall industry conditions and margins this quarter were weaker than a year ago," Watson added.
"Our efforts are focused on improving free cash flow. We are controlling our spend and getting key projects under construction online, which will boost revenues. We announced first LNG production and first cargo shipment from Train 1 at the Gorgon Project in March. Production from the Angola LNG plant is imminent and a cargo shipment is expected in May. Earlier in the year, we started up production at the Chuandongbei Project in China, and we continue to ramp up production in the Permian Basin and elsewhere," Watson explained.
"We continue to lower our cost structure with better pricing, work flow efficiencies and matching our organizational size to expected future activity levels," Watson added. "Our capital spending is coming down. We are moving our focus to high-return, shorter-cycle projects and pacing longer-cycle investments," he added.
Worldwide net oil-equivalent production was 2.67 million barrels per day in first quarter 2016, compared with 2.68 million barrels per day in the 2015 first quarter.
According to Chevron, production increases from project ramp-ups in the United States, Nigeria and other areas, and production entitlement effects in several locations, were offset by the Partitioned Zone shut-in and normal field declines.
The results showed that the US upstream operations incurred a loss of $850 million in first quarter 2016 compared to a loss of $460 million from a year earlier.
The decrease was due to lower crude oil and natural gas realisations, partially offset by lower operating expenses.
The company's average sales price per barrel of crude oil and natural gas liquids was $26 in first quarter 2016, down from $43 a year ago.
The average sales price of natural gas was $1.32 per thousand cubic feet, compared with $2.27 in last year's first quarter.
Net oil-equivalent production of 701,000 barrels per day in first quarter 2016 was up 2,000 barrels per day from a year earlier.
International upstream operations incurred a loss of $609 million in first quarter 2016 compared with earnings of $2.02 billion a year earlier.
The decrease was due to lower crude oil and natural gas realizations, the absence of a first quarter 2015 reduction in statutory tax rates in the United Kingdom, and lower gains on asset sales.
Partially offsetting these effects were higher liftings and lower exploration expenses. Foreign currency effects decreased earnings by $298 million in the 2016 quarter, compared with an increase of $522 million a year earlier.
The average sales price for crude oil and natural gas liquids in first quarter 2016 was $29 per barrel, down from $46 a year earlier.
The average price of natural gas was $3.91 per thousand cubic feet, compared with $5.01 in last year's first quarter.
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