Chevron Reports 2Q Net Income of $3.7 Billion

Downstream profits decline 7%

SAN RAMON, Calif. -- Chevron Corp. has reported net income of $3.7 billion ($1.76 per diluted share) for second-quarter 2005, compared with $4.1 billion ($1.94 per diluted share) in the year-ago period. The amount in 2004 included a special-item gain of $600 million (28 cents per share) from asset sales and a benefit of $200 million (12 cents per share) from a tax-law change for certain international operations.

For the first six months of 2005, net income was $6.4 billion ($3.04 per diluted share), versus $6.7 billion ($3.14 per diluted share) in the 2004 [image-nocss] first half, which included $800 million (37 cents per share) of benefits for the effect of special items and the tax-law change.

Sales and other operating revenues in second-quarter 2005 were $47 billion, up $11 billion from the 2004 period. Six-month sales and other operating revenues were $88 billion, up $18 billion. The increase in both periods was mainly attributable to higher prices for crude oil, natural gas and refined products.

Earnings were strong in the second quarter despite some refinery downtime for maintenance and repairs, said Chairman and CEO Dave O'Reilly. Strategically, we continued to advance our major initiatives in the period.

O'Reilly said upstream earnings of $2.8 billion in the second quarter were higher than a year ago, absent the effect of a special-item gain in the 2004 period, as prices increased for both crude oil and natural gas.

Downstream profits of approximately $1 billion, while up significantly from the 2005 first quarter, were off about 7% from the year-earlier period due mainly to the refinery downtime.

Worldwide oil-equivalent production, including volumes produced from oil sands and production under an operating service agreement, declined 6% from the 2004 second quarter but was up slightly from the first quarter of this year. The majority of the decline from the year-ago period was associated with asset sales and cost-recovery provisions of certain production agreements.

Average U.S. prices for crude oil and natural gas liquids in second-quarter 2005 increased more than $11 to $44 per barrel. Internationally, prices were up nearly $13 per barrel to more than $45.

U.S. exploration and production income of $972 million in the second quarter increased 2% from the 2004 period.

U.S. refining, marketing and transportation earnings of $398 million decreased $119 million from the 2004 quarter. The decline was associated mainly with the effects of downtime for maintenance and repairs at two of the company's refineries. Average refined-product margins for operations on the West Coast were also lower. Sales volumes for refined products decreased 3% from the 2004 second quarter to 1.51 million barrels per day. Although sales of fuel oil and jet fuel were lower, branded gasoline sales volumes of 585,000 bpd increased 6% on the strength of the reintroduction of the Texaco brand.