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CHEVRON ANNOUNCES SECOND QUARTER FINANCIAL RESULTS

CHEVRON ANNOUNCES SECOND QUARTER FINANCIAL RESULTS
 SAN FRANCISCO, July 27 /PRNewswire/ -- Chevron Corporation today reported second quarter earnings of $350 million, a 9 percent decrease from the $384 million earned in the second quarter of 1991; however, because of fewer shares outstanding in 1992, earnings per share declined only 6 percent to $1.03 from $1.09. Earnings were up 15 percent from the $304 million reported for this year's first quarter. Special items reduced second quarter 1992 earnings $39 million, but increased last year's second quarter earnings by $120 million.
 Excluding the effect of special items in all quarters, the company's earnings increased 47 percent from the 1991 second quarter and 79 percent from the 1992 first quarter.
 Net income for the first six months of 1992 was $654 million, down 30 percent from the $941 million earned during the first half of 1991. Earnings per share decreased to $1.91 from $2.68. Special items increased earnings $48 million in the first half of 1992 and $96 million in the first half of 1991.
 Total revenues were $10.6 billion for the 1992 second quarter compared with $9.7 billion in last year's second quarter. Total revenues for the first six months were $20.3 billion, down slightly from $20.5 billion in last year's first half.
 Commenting on second quarter results, Chairman and CEO Ken Derr said, "After adjusting for special items in all periods, our second quarter earnings increased substantially from last year's second quarter as well as from the first quarter of this year. The improvement was primarily due to a strengthening of prices for both crude oil and U.S. refined products coupled with reduced operating expenses. These factors resulted in significant improvement in our U.S. petroleum operations. Also, U.S. natural gas prices have recovered somewhat from the abysmal levels of this year's first quarter and, while still low, exceeded those of last year's second quarter." Derr also noted that the company's worldwide production and sales volumes were higher than in last year's second quarter.
 Derr continued, "We are making good progress in our reorganizations and cost-reduction efforts toward achieving our objective of a 50 cent per barrel reduction in operating costs. We are already seeing some benefits. However, our earnings are currently being impacted by the one-time costs associated with these programs.
 "In the second quarter we recorded employee severance and relocation provisions totaling $92 million after tax. Of this amount, a net $36 million was related to the enhanced early retirement program we announced at the beginning of this year," Derr said. "In addition, our business units recorded provisions totaling $56 million after tax for the estimated employee severance and relocation costs associated with their own work force reduction programs and for redeploying employees. As programs are completed and implemented, we may need to make additional provisions, but we believe the majority of the work force reduction costs are behind us."
 Largely as a result of expanding the early retirement program, Derr said the estimated cost increased from the $102 million after-tax provision recorded at year-end 1991. "We had about 4,400 employees accept this voluntary program. Although the actual payments for the terminations will be made from the company's pension plan, accounting rules require recognition in our income statement of the effect of the plan enhancements.
 "We are having to make difficult and painful decisions. However, I am confident we will emerge a much more competitive and profitable company as a result of the dramatic changes we are making in the way we conduct our businesses," concluded Derr.
 The $92 million of provisions for the work force reduction were partly offset by favorable prior year income tax and other adjustments and asset sale gains, resulting in a net special charge of $39 million in the second quarter.
 Also included in net income for the quarter were $64 million of foreign exchange gains, compared with losses of $16 million for the same period last year. First half foreign exchange gains were $47 million compared with losses of $25 million in the first six- months of 1991. The 1992 gains primarily resulted from fluctuations in United Kingdom and Nigerian currencies. United States Petroleum
 U.S. exploration and production earnings were $123 million for the quarter, up significantly from $70 million reported for the 1991 second quarter. Special charges reduced 1992 second quarter results by $25 million, whereas the 1991 quarter included property sale gains of $5 million. The 1992 special items consisted mainly of employee severance and relocation provisions, partially offset by a favorable prior year adjustment.
 Excluding special items, earnings improved on higher crude oil and natural gas prices. Average crude oil prices were $17.17 per barrel, up from $16.80 in the 1991 second quarter; natural gas prices increased about 11 percent to an average of $1.47 per thousand cubic feet. Net liquids production was about level between periods as new production nearly offset property sales and normal field declines. Net natural gas production increased 4 percent. Earnings also benefited from a decline in operating expenses, which were over $1 per barrel lower than in last year's quarter, due to cost reduction efforts. The company continues to dispose of high-cost, marginal producing properties.
 U.S. refining and marketing operations earned $95 million in the quarter, compared with a loss of $16 million in the year earlier period. The 1992 quarter benefited $28 million from special items, primarily favorable prior year income tax and other adjustments. The 1991 quarter included a charge of $23 million for environmental provisions.
 Sales margins, although improved, remained low as product prices did not keep pace with crude oil cost increases because of competitive pressures. Conditions improved on the West Coast, but deteriorated in the company's southeastern markets. Improved refinery operations also contributed to the earnings increase. Total product sales volumes were essentially flat when compared to the 1991 second quarter. International Petroleum
 International exploration and production earnings were $172 million, down from $213 million earned in the 1991 second quarter, which included $80 million of gains from asset sales and favorable prior year income tax adjustments. The 1992 quarter results were reduced $4 million as employee severance and relocation provisions and a prior year adjustment more than offset a $13 million gain from the sale of a producing field.
 Excluding special items, earnings benefited from $60 million of foreign exchange gains, compared with $11 million of gains in the 1991 quarter. Net liquids production increased 3 percent, primarily in Africa, and net natural gas production was up 9 percent, mainly in Canada.
 International refining and marketing earned $54 million, down from $66 million earned in last year's second quarter. The 1992 quarter benefited $5 million from special items, primarily a favorable prior year income tax adjustment.
 Although sales volumes increased 12 percent, refined product prices did not fully recover crude oil cost increases, resulting in lower sales margins. The increased sales volumes resulted from product trading activities and higher Caltex volumes. Earnings benefited from foreign exchange gains of $23 million, mostly in the United Kingdom, compared with exchange losses of $22 million included in the 1991 second quarter results. Chemicals
 Chemicals earned $7 million, down from $36 million in the 1991 second quarter. Continued weak demand and industry overcapacity forced product prices lower, particularly in the company's olefins operations. Also, planned maintenance shutdowns contributed to the lower earnings. Coal and Other Minerals
 Coal and other minerals earnings fell to $2 million from $11 million earned in last year's quarter due to lower sales volumes and operational problems that resulted in increased expenses. Corporate and Other
 Corporate and other charges were $103 million compared with a positive $4 million in last year's second quarter when $58 million of favorable prior year income tax adjustments were recognized. The 1992 period included net special charges of $44 million, comprised mainly of a $43 million increase to the reserve for the enhanced early retirement program, partially offset by a related $7 million of pension settlement gains recognized for employees who terminated employment during the quarter. The company expects to record additional accounting gains during the remainder of the year resulting from the effect on the pension plan of employees leaving under the program. This program is considered to be a corporate charge and not properly allocable to the company's business segments. Capital and Exploratory Expenditures
 Worldwide capital and exploratory expenditures, including the company's share of affiliates' expenditures, were $992 million in the quarter, down 13 percent from the $1.143 billion spent in the 1991 second quarter. Total expenditures for the first six months of 1992 were $2.072 billion, about even with the $2.044 billion spent in last year's first half.
 -0- 7/27/92
 /CONTACT: Sherri Zippay of Chevron Corp., 415-894-4581/
 (CHV) CO: Chevron ST: California IN: OIL SU: ERN


RM -- SF004 -- 3508 07/27/92 12:05 EDT
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Date:Jul 27, 1992
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