Second Quarter 2012 Compared with Second Quarter 2011
And Six Months 2012 Compared with Six Months 2011
Key Financial Results
Earnings by Business Segment
Three Months Ended Six Months Ended
June 30 June 30
2012 2011 2012 2011
(Millions of dollars)
Upstream
United States $ 1,318 $ 1,950 $ 2,847 $ 3,399
International 4,302 4,921 8,944 9,449
Total Upstream 5,620 6,871 11,791 12,848
Downstream
United States 802 564 1,261 1,006
International 1,079 480 1,424 660
Total Downstream 1,881 1,044 2,685 1,666
Total Segment Earnings 7,501 7,915 14,476 14,514
All Other (291 ) (183 ) (795 ) (571 )
Net Income Attributable to Chevron
Corporation(1)(2) $ 7,210 $ 7,732 $ 13,681$ 13,943
(1) Includes foreign currency effects $ 198 $ (81 ) $ (30 ) $ (245 )
(2) Also referred to as "earnings" in the
discussions that follow.
Net income attributable to Chevron Corporation for second quarter 2012 was $7.2
billion ($3.66 per share - diluted), compared with $7.7 billion ($3.85 per share
- diluted) in the corresponding 2011 period. Net income attributable to Chevron
Corporation for the first six months of 2012 was $13.7 billion ($6.93 per share
- diluted), versus $13.9 billion ($6.94 per share - diluted) in the first six
months of 2011.
Upstream earnings in second quarter 2012 were $5.6 billion, compared with $6.9
billion in the 2011 quarter. The decrease was mainly due to lower crude oil
realizations and crude oil volumes. Earnings for the first six months of 2012
were $11.8 billion, versus $12.8 billion a year earlier. The decrease between
the comparative periods was mainly due to lower crude oil volumes.
Downstream earnings were $1.9 billion in second quarter 2012, compared with $1.0
billion in the year-earlier period. The increase between the comparative periods
was primarily associated with gains on asset sales, improved refining margins
and favorable changes in effects on derivative instruments. Earnings for the
first six months of 2012 were $2.7 billion, versus $1.7 billion in the
corresponding 2011 period. The increase between comparative periods was mainly
due to gains on asset sales and favorable changes in effects on derivative
instruments.
Refer to pages 28 through 30 for additional discussion of results by business
segment and "All Other" activities for second quarter and first six months of
2012 versus the same period in 2011.
Business Environment and Outlook
Chevron is a global energy company with substantial business activities in the
following countries: Angola, Argentina, Australia, Azerbaijan, Bangladesh,
Brazil, Cambodia, Canada, Chad, China, Colombia, Democratic Republic of the
Congo, Denmark, Indonesia, Kazakhstan, Myanmar, the Netherlands, Nigeria,
Norway, the Partitioned Zone between Saudi Arabia and Kuwait, the Philippines,
Republic of the Congo, Singapore, South Africa, South Korea, Thailand, Trinidad
and Tobago, the United Kingdom, the United States, Venezuela, and Vietnam.
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Earnings of the company depend mostly on the profitability of its upstream and
downstream business segments. The single biggest factor that affects the results
of operations for the company is movement in the price of crude oil. In the
downstream business, crude oil is the largest cost component of refined
products. Seasonality is not a primary driver of changes in the company's
quarterly earnings during the year.
To sustain its long-term competitive position in the upstream business, the
company must develop and replenish an inventory of projects that offer
attractive financial returns for the investment required. Identifying promising
areas for exploration, acquiring the necessary rights to explore for and to
produce crude oil and natural gas, drilling successfully, and handling the many
technical and operational details in a safe and cost-effective manner are all
important factors in this effort. Projects often require long lead times and
large capital commitments.
The company's operations, especially upstream, can also be affected by changing
economic, regulatory and political environments in the various countries in
which it operates, including the United States. From time to time, certain
governments have sought to renegotiate contracts or impose additional costs on
the company. Governments may attempt to do so in the future. Civil unrest, acts
of violence or strained relations between a government and the company or other
governments may impact the company's operations or investments. Those
developments have at times significantly affected the company's operations and
results and are carefully considered by management when evaluating the level of
current and future activity in such countries.
The company also continually evaluates opportunities to dispose of assets that
are not expected to provide sufficient long-term value or to acquire assets or
operations complementary to its asset base to help augment the company's
financial performance and growth. Refer to the "Results of Operations" section,
beginning on page 28, for discussions of net gains on asset sales during 2012.
Asset dispositions and restructurings may also occur in future periods and could
result in significant gains or losses.
The company closely monitors developments in the financial and credit markets,
the level of worldwide economic activity, and the implications for the company
of movements in prices for crude oil and natural gas. Management takes these
developments into account in the conduct of daily operations and for business
planning.
Comments related to earnings trends for the company's major business areas are
as follows:
Upstream Earnings for the upstream segment are closely aligned with industry
price levels for crude oil and natural gas. Crude oil and natural gas prices are
subject to external factors over which the company has no control, including
product demand connected with global economic conditions, industry inventory
levels, production quotas imposed by the Organization of Petroleum Exporting
Countries (OPEC), weather-related damage and disruptions, competing fuel prices,
and regional supply interruptions or fears thereof that may be caused by
military conflicts, civil unrest or political uncertainty. Any of these factors
could also inhibit the company's production capacity in an affected region. The
company monitors developments closely in the countries in which it operates and
holds investments, and seeks to manage risks in operating its facilities and
businesses. The longer-term trend in earnings for the upstream segment is also a
function of other factors, including the company's ability to find or acquire
and efficiently produce crude oil and natural gas, changes in fiscal terms of
contracts and changes in tax laws and regulations.
The company continues to actively manage its schedule of work, contracting,
procurement and supply-chain activities to effectively manage costs. However,
price levels for capital and exploratory costs and operating expenses associated
with the production of crude oil and natural gas can be subject to external
factors beyond the company's control. External factors include not only the
general level of inflation, but also commodity prices and prices charged by the
industry's material and service providers, which can be affected by the
volatility of the industry's own supply-and-demand conditions for such materials
and services. Capital and exploratory expenditures and operating expenses can
also be affected by damage to production facilities caused by severe weather or
civil unrest.
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[[Image Removed: LOGO]]
The chart on the left shows the trend in benchmark prices for Brent crude oil,
West Texas Intermediate (WTI) crude oil, and U.S. Henry Hub natural gas. The
Brent price averaged $111 per barrel for the full-year 2011. During second
quarter 2012, Brent averaged $108 per barrel and ended July at about $106. The
WTI price averaged $95 per barrel for the full-year 2011. During second quarter
2012, WTI averaged $93 per barrel and ended July at about $88. The majority of
the company's equity crude production is priced based on the Brent benchmark.
WTI traded at a discount to Brent throughout 2011 and the first half of 2012 due
to high inventories in the U.S. Midcontinent market.
A differential in crude oil prices exists between high quality (high-gravity,
low-sulfur) crudes and those of lower quality (low-gravity, high-sulfur). The
amount of the differential in any period is associated with the supply of heavy
crude available versus the demand, which is a function of the capacity of
refineries that are able to process this lower quality feedstock into light
products (motor gasoline, jet fuel, aviation gasoline and diesel fuel). The
differential widened in second quarter 2012 primarily due to strong diesel and
gasoline prices and low petroleum product inventories.
Chevron produces or shares in the production of heavy crude oil in California,
Chad, Indonesia, the Partitioned Zone between Saudi Arabia and Kuwait, Venezuela
and in certain fields in Angola, China and the United Kingdom sector of the
North Sea. (See page 33 for the company's average U.S. and international crude
oil realizations.)
In contrast to price movements in the global market for crude oil, price changes
for natural gas in many regional markets are more closely aligned with
supply-and-demand conditions in those markets. In the United States, prices at
Henry Hub averaged $2.36 per thousand cubic feet (MCF) in the first half of
2012, compared with $4.30 during the first half of 2011. At the end of July
2012, the Henry Hub spot price was $3.21 per MCF. Fluctuations in the price for
natural gas in the United States are closely associated with customer demand
relative to the volumes produced in North America. The Henry Hub gas price
declined during first quarter 2012 due to high inventories resulting from a mild
winter and continued growth in U.S. gas production. The Henry Hub price has
strengthened since April as a result of falling inventory levels and improving
demand conditions.
Outside the United States, price changes for natural gas depend on a wide range
of supply, demand and regulatory circumstances. In some of these locations,
Chevron is investing in long-term projects to install infrastructure to produce
and liquefy natural gas for transport by tanker to other markets. International
natural gas realizations averaged $5.99 per MCF during the first half of 2012,
compared with $5.25 in the same period last year. (See page 33 for the company's
average natural gas realizations for the U.S. and international regions.)
The company's worldwide net oil-equivalent production in the first half of 2012
averaged 2.63 million barrels per day. About one-fifth of the company's net
oil-equivalent production in the first half of 2012 occurred in the OPEC-member
countries of Angola, Nigeria, Venezuela and the Partitioned Zone between Saudi
Arabia and Kuwait. OPEC quotas had no effect on the company's net crude oil
production for second quarter 2012 or 2011. At their latest meeting in June
2012, members of OPEC supported maintaining the collective production ceiling of
30 million barrels per day agreed upon in December 2011.
Production in any given year is subject to many factors and uncertainties,
including additional quotas that may be imposed by OPEC, price effects on
entitlement volumes, changes in fiscal terms or restrictions on the scope of
company operations, delays in project startups or ramp-ups, or fluctuations in
demand for natural gas in various markets, weather conditions that may shut in
production, civil unrest, changing geopolitics, delays in completion of
maintenance turnarounds, greater-than-expected declines in production from
mature fields, or other disruptions to operations. The outlook for future
production levels is also affected by the size and number of economic investment
opportunities and, for new large-scale projects, the time lag between initial
exploration and
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the beginning of production. Investments in upstream projects generally begin
well in advance of the start of the associated crude oil and natural gas
production. A significant majority of Chevron's upstream investment is made
outside the United States.
The production outlook for 2012 is subject to some specific uncertainties. These
include the resolution of the Frade shut-in in Brazil, the timing of start-up
and the ramp-up profile for LNG production in Angola, the continuing pace of
ramp-up in production for the Usan Field in Nigeria, and the duration of the
planned turnaround of the SGI/SGP facilities at the Tengiz Field in Kazakhstan.
On November 7, 2011, while drilling a development well in the deepwater Frade
Field about 75 miles offshore Brazil, an unanticipated pressure spike caused oil
to migrate from the well bore through a series of fissures to the sea floor,
emitting approximately 2,400 barrels of oil. Upon detection, the company
immediately took steps to stop the release. Chevron's emergency plan, approved
by the Brazilian environment and natural resources regulatory agency IBAMA, was
implemented according to the law and industry standards. The source of the seep
was substantially contained within four days and the well has been plugged and
abandoned. No evidence of any coastal or wildlife impacts related to this seep
has emerged. On March 14, 2012, the company identified a small, second seep in a
different part of the field. As a precautionary measure, the company and its
partners decided to temporarily suspend field production and received approval
from Brazil'sNational Petroleum Agency (ANP) to do so. The company also
installed special containment devices on the seafloor to capture the oil and
will install additional devices if needed. Chevron and its partners continue to
cooperate with the Brazilian authorities and are conducting studies to better
understand the geology in the area. On July 19, 2012, ANP issued its final
investigative report on the November 2011 incident. A Brazilian federal district
prosecutor has filed two civil lawsuits seeking $10.7 billion in damages for
each of the two seeps. The company is not aware of any basis for damages to be
awarded in any civil lawsuit. The federal prosecutor has also filed criminal
charges against 11 Chevron employees. With regard to criminal charges, the
company believes them to be without merit and intends to aggressively defend the
company and the named employees. Jurisdiction has been moved for all three
matters from Campos to a court in Rio de Janeiro. The company's ultimate
exposure related to regulatory fines and penalties is not currently
determinable, but could be significant to net income in any one period.
The company entered into a non-binding financing term sheet with Petroboscan, a
joint stock company owned 39.2 percent by Chevron, which operates the Boscan
Field in Venezuela. When finalized, the financing is expected to occur in stages
over a limited drawdown period and is intended to support a specific work
program to maintain and increase production to an agreed-upon level. The terms
are designed to support cash needs for on-going operations and new development,
as well as distributions to shareholders - including current outstanding
obligations. The loan will be repaid from future Petroboscan crude
sales. Definitive documents are under negotiation.
Refer to the "Results of Operations" section on pages 28 through 29 for
additional discussion of the company's upstream business.
Downstream Earnings for the downstream segment are closely tied to margins on
the refining, manufacturing and marketing of products that include gasoline,
diesel, jet fuel, lubricants, fuel oil, fuel and lubricant additives, and
petrochemicals. Industry margins are sometimes volatile and can be affected by
the global and regional supply-and-demand balance for refined products and
petrochemicals and by changes in the price of crude oil, other refinery and
petrochemical feedstocks, and natural gas. Industry margins can also be
influenced by inventory levels, geopolitical events, cost of materials and
services, refinery or chemical plant capacity utilization, maintenance programs,
and disruptions at refineries or chemical plants resulting from unplanned
outages due to severe weather, fires or other operational events.
Other factors affecting profitability for downstream operations include the
reliability and efficiency of the company's refining, marketing and
petrochemical assets, the effectiveness of the crude oil and product supply
functions, and the volatility of tanker-charter rates for the company's shipping
operations, which are driven by the industry's demand for crude oil and product
tankers. Other factors beyond the company's control include the general level of
inflation and energy costs to operate the company's refining, marketing and
petrochemical assets.
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The company's most significant marketing areas are the West Coast of North
America, the U.S. Gulf Coast, Asia and southern Africa. Chevron operates or has
significant ownership interests in refineries in each of these areas. The
company has further progressed its ongoing effort to concentrate downstream
resources and capital on strategic assets. In March 2012, the company completed
the sale of its fuels and finished lubricants businesses in Spain. Also in first
quarter 2012, the company signed an agreement to sell its Perth Amboy, New
Jersey, refinery, which has been operated as a products terminal in recent
years. The sale is expected to close later this year. In April 2012, the company
completed the sale of several of its fuels marketing and aviation businesses in
the Caribbean and expects to complete the remaining announced sales of certain
fuels marketing and aviation businesses in the Caribbean during 2012, pending
regulatory approvals.
On July 26, 2012, Caltex Australia Ltd. (CAL), the company's 50 percent-owned
affiliate, announced that it plans to convert its Kurnell Refinery to an import
terminal in 2014. As a result of this decision, Chevron expects to recognize
impairment and related charges in the third quarter 2012 which are not expected
to be material to its consolidated results of operations.
Refer to the "Results of Operations" section on pages 29 through 30 for
additional discussion of the company's downstream operations.
All Other consists of mining operations, power generation businesses, worldwide
cash management and debt financing activities, corporate administrative
functions, insurance operations, real estate activities, energy services,
alternative fuels and technology companies.
Operating Developments
Noteworthy operating developments for the upstream business in recent months
included the following:
• Australia - Signed nonbinding Heads of Agreement with Tohoku Electric for
LNG offtake, and additional binding agreements with Tokyo Electric for LNG
offtake and an equity interest, for the Wheatstone Project. To date, more
than 80 percent of Chevron's equity LNG from Wheatstone is covered under
long-term agreements with customers in Asia.
• Australia - Announced a natural gas discovery, Pontus-1, in the Carnarvon
Basin in 47.3 percent-owned Block WA-37-L.
• Angola-Republic of the Congo Joint Development Area - Reached final investment decision on the cross-border development of the deepwater
Lianzi Field.
• Bangladesh - Reached final investment decision on the Bibiyana Expansion
Project.
• United Kingdom - Initiated front-end engineering and design (FEED) for the
deepwater Rosebank project west of the Shetland Islands.
• Kurdistan Region of Iraq - Acquired an 80 percent interest and
operatorship in the Rovi and Sarta blocks.
• Suriname - Acquired a 50 percent interest in two offshore exploration
blocks.
• Ukraine - Bid successfully for a 50 percent interest and operatorship in a
shale gas block.
• United States - Bid successfully for additional shelf and deepwater exploration acreage in the Gulf of Mexico.
In the downstream business, the company completed the sale of several of its
fuels marketing and aviation businesses in the Caribbean, and the company's 50
percent-owned GS Caltex affiliate in South Korea completed the sale of its power
operations. In addition, the company's 50 percent-owned Chevron Phillips
Chemical Company LLC announced the execution of FEED contracts for an ethylene
cracker at its Cedar Bayou facility in Baytown, Texas and two polyethylene
facilities near its Sweeny facility in Old Ocean, Texas.
The company purchased $1.25 billion of its common stock in second quarter 2012
under its share repurchase program.
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Results of Operations
Business Segments The following section presents the results of operations for
the company's business segments - Upstream and Downstream - as well as for "All
Other." (Refer to Note 4, beginning on page 9, for a discussion of the company's
"reportable segments," as defined under the accounting standards for segment
reporting.)
Upstream
Three Months Ended Six Months Ended
June 30 June 30
2012 2011 2012 2011
(Millions of dollars)
U.S. Upstream Earnings $ 1,318 $ 1,950 $ 2,847 $ 3,399
U.S. upstream earnings of $1.32 billion in second quarter 2012 decreased $632
million from the same period last year. The decrease was due to lower crude oil
and natural gas realizations of about $160 million and $120 million,
respectively, decreased net oil-equivalent production of about $140 million and
the absence of gains on assets sales of about $110 million.
Earnings for the first six months of 2012 were approximately $2.85 billion, down
about $552 million from the corresponding period in 2011. Decreased net
oil-equivalent production and the absence of gains on assets sales reduced
earnings by approximately $280 million and $110 million, respectively.
The company's average realization per barrel of crude oil and natural gas
liquids in second quarter 2012 was $97, down from $104 a year earlier. For the
six-month periods, average realizations were about $100 and $96 for 2012 and
2011, respectively. The average natural gas realization in second quarter 2012
was $2.17 per thousand cubic feet, compared with $4.35 in the year-ago period.
The average six-month realizations were $2.33 in 2012 and $4.20 in 2011.
Net oil-equivalent production of 659,000 barrels per day in second quarter 2012
was down 35,000 barrels per day, or about 5 percent, from a year earlier. The
decrease in production was associated with normal field declines and an absence
of volumes associated with Cook Inlet, Alaska, assets sold in 2011. Partially
offsetting this decrease was ramp-up at the Perdido and Caesar/ Tonga projects
in the Gulf of Mexico.
First-half 2012 production was 655,000 barrels per day, down 39,000 from the
corresponding 2011 period. The decrease was associated with normal field
declines and an absence of volumes associated with Cook Inlet, Alaska, assets
sold in 2011. Partially offsetting this decrease was production from the ramp-up
at the Perdido and Caesar/ Tonga projects in the Gulf of Mexico, as well as
volumes from the Marcellus Shale.
The net liquids component of oil-equivalent production was 461,000 barrels per
day and 459,000 barrels per day for second quarter and six months of 2012,
respectively. Those volumes were 4 percent lower than the corresponding 2011
periods. Net natural gas production of 1.19 billion cubic feet per day in second
quarter 2012 and 1.18 billion cubic feet per day in the first half of 2012
decreased 9 percent and 8 percent from the comparative 2011 periods.
Three Months Ended Six Months Ended
June 30 June 30
2012 2011 2012 2011
(Millions of dollars)
International Upstream Earnings* $ 4,302 $ 4,921 $ 8,944 $ 9,449
* Includes foreign currency effects $ 219 $ 26 $ 11 $ (90 )
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International upstream earnings of $4.3 billion in second quarter 2012 decreased
$619 million from the corresponding period in 2011. The decline between quarters
was primarily due to lower realizations for crude oil of about $460 million,
lower crude oil volumes of about $430 million, as well as higher exploration
expense of about $90 million, partially offset by higher realizations for
natural gas of about $160 million. Foreign currency effects increased earnings
by $219 million in the 2012 quarter, compared with an increase of $26 million a
year earlier.
Earnings for the first six months of 2012 were $8.94 billion, down $505 million
from the same period in 2011. This decrease in earnings was mainly due to lower
crude oil volumes of about $630 million, higher tax items of about $320 million,
higher exploration expense of about $250 million and higher operating expenses
of about $190 million. Higher prices for crude oil and natural gas partly offset
the decreases, increasing earnings by about $780 million. Foreign currency
effects increased earnings by $11 million in the first six months of 2012,
compared with a decrease of $90 million a year earlier.
The average realization per barrel of crude oil and natural gas liquids in
second quarter 2012 and six-month period were $99 and $105, respectively,
compared with $107 and $101 in the corresponding 2011 periods. The average
natural gas realization per thousand cubic feet in second quarter 2012 was
$6.10, compared with $5.49 in the corresponding 2011 period. Between the
six-month periods, the average natural gas realization increased to $5.99 from
$5.25.
International net oil-equivalent production of 1.97 million barrels per day in
second quarter 2012 decreased 35,000 barrels per day from a year ago. Production
increases from project ramp-ups in Thailand and Nigeria were more than offset by
normal field declines, the shut-in of the Frade Field in Brazil and
maintenance-related downtime.
International net oil-equivalent production of 1.97 million barrels per day for
the six months of 2012 decreased 60,000 barrels per day from a year ago.
Production increases from project ramp-ups in Thailand and Nigeria were more
than offset by normal field declines, the shut-in of the Frade Field in Brazil
and maintenance-related downtime.
The net liquids component of oil-equivalent production was 1.32 million barrels
per day in second quarter 2012 and 1.33 million barrels per day in the six-month
period, decreases of 5 and 6 percent for the respective periods. Net natural gas
production totaled 3.89 billion cubic feet per day in second quarter 2012 and
3.87 billion cubic feet per day in the first six months, increases of 6 percent
and 3 percent, from the respective 2011 periods.
Downstream
Three Months Ended Six Months Ended
June 30 June 30
2012 2011 2012 2011
(Millions of dollars)
U.S. Downstream Earnings $ 802 $ 564 $ 1,261 $ 1,006
U.S. downstream earned $802 million in second quarter 2012, compared with
earnings of $564 million a year earlier. Earnings for the first six months of
2012 were $1.3 billion, compared with $1.0 billion in the same period of 2011.
Earnings in both comparative periods mainly benefited from improved margins on
refined product sales of $240 million and $220 million, respectively.
Refinery crude-input of 928,000 barrels per day in second quarter 2012 and
926,000 barrels per day for the six month period both increased about 6 percent
from the corresponding 2011 periods.
Refined product sales of 1.27 million barrels per day in the 2012 quarter were
essentially flat with a year ago. Total refined product sales of 1.25 million
barrels per day for the six months of 2012 declined 2 percent, mainly due to
lower residual fuel oil sales. Branded gasoline sales of 521,000 and 513,000
barrels per day for second quarter and six months in 2012 increased 2 percent
and 1 percent, respectively.
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Three Months Ended Six Months Ended
June 30 June 30
2012 2011 2012 2011
(Millions of dollars) International Downstream Earnings* $ 1,079$ 480$ 1,424$ 660
* Includes foreign currency effects $ (22 ) $ (94 ) $ (33 ) $ (132 )
International downstream operations earned $1.1 billion in second quarter 2012,
compared with $480 million a year earlier. Current quarter earnings benefited
from gains on asset sales of approximately $200 million, primarily reflecting
the sale of GS Caltex's power operations in South Korea. Improved refined
product margins of $110 million and a favorable change in effects on derivative
instruments of $110 million also contributed to higher earnings in the 2012
quarter. Foreign currency effects decreased earnings by $22 million in the 2012
quarter, compared with a decrease of $94 million a year earlier.
Earnings for the first six months of 2012 were $1.4 billion, compared with $660
million in the corresponding 2011 period. Earnings benefited from gains on asset
sales of approximately $400 million, primarily reflecting the sale of the
company's fuels and finished lubricants businesses in Spain and the sale of GS
Caltex's power operations in South Korea. A favorable change in effects on
derivative instruments of $260 million was partly offset by lower refined
product margins of $150 million. Foreign currency effects decreased earnings by
$33 million in 2012, compared with a decrease of $132 million a year earlier.
Refinery crude-input of 870,000 barrels per day in second quarter 2012 decreased
147,000 barrels per day from second quarter 2011. For the six months of 2012,
crude oil inputs were 825,000 barrels per day, down 199,000 barrels per day from
the year-ago period. The decrease for both comparative periods was attributable
mainly to the third quarter 2011 sale of the Pembroke Refinery in the United
Kingdom.
Total refined product sales of 1.57 million barrels per day for the quarterly
period and 1.55 million barrels per day for the first six months of 2012 both
declined 14 percent, primarily related to the third quarter 2011 sale of the
company's refining and marketing assets in the United Kingdom and Ireland.
Excluding the impact of 2011 asset sales, sales volumes were down 2 percent
between both comparative periods.
All Other
Three Months Ended Six Months Ended
June 30 June 30
2012 2011 2012 2011
(Millions of dollars)
Net Charges* $ (291 ) $ (183 ) $ (795 ) $ (571 )
* Includes foreign currency effects $ 1 $ (13 ) $ (8 ) $ (23 )
All Other consists of mining operations, power generation businesses, worldwide
cash management and debt financing activities, corporate administrative
functions, insurance operations, real estate activities, energy services,
alternative fuels, and technology companies.
Net charges in second quarter 2012 were $291 million, compared with $183 million
in the year-ago period. The change between periods was mainly due to higher
corporate tax items and other corporate charges, partially offset by a gain on
the sale of a mining investment. Foreign currency effects decreased net charges
by $1 million, compared with an increase of $13 million last year. For the six
months of 2012, net charges were $795 million, compared with $571 million a year
earlier. The increase between six month periods was mainly due to higher U.S.
environmental reserve additions, higher corporate tax items and other corporate
charges, partly offset by lower employee compensation and benefits. Foreign
currency effects increased net charges by $8 million for the six months of 2012,
compared with a $23 million reduction in net charges last year.
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