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Chevron reported better than expected third quarter earnings Friday along with fellow oil major ExxonMobil. Capital spending was down 48% and operating expenses down 12%. Noble Energy acquisition completed in October 2020. Revenue continues to be hammered by the coronavirus economic collapse.

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Chevron Inc. (NYSE: $CVX) Reported Earnings Before Open Friday

$0.11 Missed ($0.27) EPS AND $24.45B Missed $25.8 Billion Revenue Forecast

Earnings

Chevron Corp. (NYSE: CVX) reported third quarter results on Friday.  On an adjusted basis, Chevron earned 11 cents per share, far better than the 27 cent per share loss expected by analysts polled by Refinitiv. Chevron’s revenue came in at $24.45 billion, which missed the consensus estimate of $25.8 billion.

During the second quarter, the oil giant lost $1.59 per share on an adjusted basis, while revenue came in at $13.49 billion. In the third quarter a year earlier, the company earned $1.36 per share on $36.12 billion in revenue.

  • Capital spending down 48 percent; operating expenses down 12 percent
  • Noble Energy acquisition completed in October 2020

Included in the current quarter was a charge of $130 million attributable to a tax item related to an international upstream end-of-contract settlement and a non-cash provision of $90 million for remediation of a former mining asset. Foreign currency effects decreased earnings by $188 million. 

Last quarter part of the company’s loss came from noncash net charges of $5.2 billion, including a $1.8 billion write-down primarily associated with a downward revision in commodity price outlook, as well as a $2.6 billion impairment change related to Chevron’s Venezuela investment. The company also reported $780 million in expenses related to job cuts.

Chevron Corporation NYSE: CVX

Market Reaction Pre-market 68.92 ▲ 0.06 (+0.087%)

Highlights  

  • During the third quarter, net oil-equivalent production declined 7% year over year to 2.83 million barrels per day as the company scaled back its operations in response to low commodity prices and lower demand.
  • U.S. upstream operations earned $116 million during the quarter, an 84% year-over-year decline.
  • The average sale price per barrel of crude oil and natural gas liquids was $31 during the third quarter, down from $47 a year earlier.
  • Chevron said its cash flow from operations in the first nine months of 2020 reached $8.3 billion, down from $21.7 billion a year earlier.

CVX Earnings Q3 20

Outlook

CEO Michael Wirth said, “We remain focused on what we can control – safe operations, capital discipline and cost management. Our actions are guided by our long-standing financial priorities: to protect the dividend, invest for long term value and maintain a strong balance sheet.”

Noble Energy Aquistion

Earlier in July, Chevron announced plans to buy independent oil and gas producer Noble Energy, in a move that Wirth said would be a “good deal” for shareholders in both companies. Including debt, the total value of the deal was $13 billion.

The acquisition would enhance Chevron’s portfolio in the oil-rich Permian Basin, as well as in Colorado’s DJ Basin. Noble Energy also has assets in Israel and West Africa, which will further enhance Chevron’s international footprint. It will also lead to around $300 million in annual cost savings, Chevron said.

The deal was the industry’s largest since oil prices plummeted in March and April, hit by a price war between Saudi Arabia and Russia, as well as an unprecedented plunge in demand due to the pandemic

 

About Chevron

What Analysts Will Be Watching

Chevron Corp. is a U.S.-based integrated oil and gas company with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. It has large exposure to the Permian and to LNG with the  Wheatstone Chevron LNG Facility production starting in Western Australia

The Permian Basin remains a key source of capital flexibility, and it is a key issue behind many analysts preference for Chevron versus some of the other majors. Chevron’s liquids-rich upstream segment is likely to benefit from higher crude price realizations. This segment is expected to record higher production volumes on the back of major capital projects including Gorgon, and core developments in the Gulf of Mexico and Permian Basin.

Sources: TradersCommunity, AlphaStreet, XOM, CVX

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