Chevron 2013 Annual Report Download - page 16

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
14 Chevron Corporation 2013 Annual Report
Downstream
South Korea e company’s 50 percent-owned GS Caltex
aliate started commercial operations of its gas oil uid cata-
lytic cracking unit at the Yeosu Renery.
United States e company’s 50 percent-owned
Chevron Phillips Chemical Company LLC (CPChem)
announced a nal investment decision on its U.S. Gulf Coast
Petrochemicals Project. is project will include an ethane
cracker with an annual design capacity of 1.5 million metric
tons per year and two polyethylene facilities, each with an
annual design capacity of 500,000 metric tons per year.
CPChem announced plans to expand annual ethylene
production by 200 million pounds at its Sweeny complex in
Old Ocean, Texas.
Other
Common Stock Dividends e quarterly common stock
dividend was increased by 11.1 percent in April 2013 to
$1.00 per common share, making 2013 the 26th consecutive
year that the company increased its annual dividend pay-
ment.
Common Stock Repurchase Program e company
purchased $5.0 billion of its common stock in 2013 under its
share repurchase program. e program began in 2010 and
has no set term or monetary limits.
Results of Operations
Major Operating Areas e following section presents the
results of operations and variances on an after-tax basis for
the company’s business segments – Upstream and
Downstream – as well as for “All Other.” Earnings are also
presented for the U.S. and international geographic areas of
the Upstream and Downstream business segments. Refer to
Note 11, beginning on page 43, for a discussion of the com-
pany’s “reportable segments.” is section should also be read
in conjunction with the discussion in “Business Environment
and Outlook” on pages 10 through 13.
U.S. Upstream
Millions of dollars 2013 2012 2011
Earnings $ 4,044 $ 5,332 $ 6,512
U.S. upstream earnings of $4.0 billion in 2013 decreased
$1.3 billion from 2012, primarily due to higher operating,
depreciation and exploration expenses of $420 million, $350
million, and $190 million, respectively, and lower crude oil
production of $170 million. Higher natural gas realizations of
approximately $200 million were mostly oset by lower crude
oil realizations of $170 million.
U.S. upstream earnings of $5.3 billion in 2012 decreased
$1.2 billion from 2011, primarily due to lower natural gas and
crude oil realizations of $340 million and $200 million,
respectively, lower crude oil production of $240 million, and
lower gains on asset sales of $180 million.
e company’s average realization for U.S. crude oil and
natural gas liquids in 2013 was $93.46 per barrel, compared
with $95.21 in 2012 and $97.51 in 2011. e average natural
gas realization was $3.37 per thousand cubic feet in 2013,
compared with $2.64 and $4.04 in 2012 and 2011,
respectively.
Net oil-equivalent production in 2013 averaged 657,000
barrels per day, essentially unchanged from 2012 and down
3 percent from 2011. Between 2013 and 2012, new produc-
tion in the Marcellus Shale in western Pennsylvania and the
Delaware Basin in New Mexico, along with the absence of
weather-related downtime in the Gulf of Mexico, was largely
oset by normal eld declines. e decrease in production
between 2012 and 2011 was associated with normal eld
declines and an absence of volumes associated with Cook
Inlet, Alaska, assets sold in 2011. Partially osetting this
decrease was a ramp-up of projects in the Gulf of Mexico and
Marcellus Shale and improved operational performance in the
Gulf of Mexico. e net liquids component of oil-equivalent
production for 2013 averaged 449,000 barrels per day, down
1 percent from 2012 and 3 percent from 2011. Net natural
gas production averaged 1.2 billion cubic feet per day in 2013,
up approximately 4 percent from 2012 and down about 3 per-
cent from 2011. Refer to the “Selected Operating Data” table
on page 18 for a three-year comparative of production vol-
umes in the United States.