business segments. Refer to Note 11, beginning on page FS-35, for a discussion of the company’s “reportable segments.” This section should also be read in conjunction with the discussion in “Business Environment and Outlook” on pages FS-2 through FS-5.

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 offset 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.

The 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. The 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 production 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 offset by normal field declines. The decrease in production between 2012 and 2011 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 a ramp-up of projects in the Gulf of Mexico and Marcellus Shale and improved operational performance in the Gulf of Mexico. The 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 about 1.2 billion cubic feet per day in 2013, up approximately 4 percent from 2012 and down about 3 percent from 2011. Refer to the “Selected Operating Data” table on page FS-10 for a three-year comparative of production volumes in the United States.

International upstream earnings were $16.8 billion in 2013 compared with $18.5 billion in 2012. The decrease was mainly due to the absence of 2012 gains of approximately $1.4 billion on an asset exchange in Australia and $600 million on the sale of an equity interest in the Wheatstone

Project, lower crude oil prices of $500 million, and higher operating expense of $400 million. Partially offsetting these effects were lower income tax expenses of $430 million. Foreign currency effects increased earnings by $559 million in 2013, compared with a decrease of $275 million a year earlier.

International upstream earnings were $18.5 billion in 2012 compared with $18.3 billion in 2011. The increase was mainly due to the gain of approximately $1.4 billion on an asset exchange in Australia, higher natural gas