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Chevron second quarter results missed expectations Friday with donstream dissappointing. Upstream revenue continued higher with oil prices. $CVX announced stock buybacks. Oil and gas production rose strongly in Australia and the Texas Permian.


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

$1.78 Missed $2.10 EPS and $42.24 billion missed $45.59 billion forecast in revenue 

Earnings

EPS of $1.78 on revenue of $42.24 billion missed Thomson Reuters estimates of $45.59 billion and expected $2.10 EPS.

Chevron Corporation NYSE: CVX

Market Reaction > Lunch $125.31 USD +1.36 (1.10%)

Highlights

Upstream

  • Upstream earnings soared 286% to $3.3 billion

Downstream

  • Downstream earnings fell 30% to $838 million, largely due to lower margins on refined product sales from its international refining operations.
  • Production edged up about 2% to 2.83 million boe per day.

Cap Ex

Capital and exploratory spending grew 6% to $4.82 billion. Cash flow from operations in the first six months of 2018 climbed 36% to $11.9 billion.

Buybacks

"Our cash flow continues to improve with higher upstream margins and volumes, combined with disciplined spending," Chairman and CEO Michael Wirth said in a statement. "This enables us to initiate share repurchases, which are expected to be $3 billion per year based on our current outlook."

CVX Earnings Q2 18Source: AlphaStreet

 

Chevron Q1 Earnings Preview

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.

The Zacks Consensus Estimate for the total output of oil and gas is pegged at 2,860 thousand oil-equivalent barrels per day (MBOE/d), around 3% higher than the prior-year quarter. Driven by production and pricing gains, the Zacks Consensus Estimate for its upstream segment’s profit is pegged at $2,909 million, reflecting massive growth from second-quarter 2017’s figure of $853 million.

However, Chevron’s downstream segment is anticipated to limit overall earnings. Even in the last reported quarter, the segment’s income declined 21.4% year over year. The downstream unit is likely to bear the brunt of lower refinery input per day and reduced refined products sales margins in the second quarter as well.

Previous Earnings: 

Sources: TradersCommunity, XOM, CVX, COP, Zacks

Chevron Q1 Earnings Recap

Earnings

Chevron earned $3,64 billion or  $1.90 per share, ahead of the $1.48 forecast by Thomson Reuters. Chevron's upstream profits doubled from a year ago. Downstream profits were down 21% . Revenue rose about 13 percent to $37.76 billion from a year ago. 

Chevron Corp NYSE: $CVX 

  • Reaction · April 27, 10:15 AM EDT 125.72 ▲ 1.49 (1.20%)

"Oil and gas production is increasing, most notably in our Gorgon and Wheatstone LNG Projects in Australia, and our shale developments in the Permian Basin where production grew 65 percent from a year ago," Chairman and CEO Michael Wirth said in a statement.

Upstream

Domestic

  • Upstream business doubled from a year ago.
  • Upstream volumes are expected to continue to increase in future quarters
  • Average sales price per barrel of crude oil and natural gas liquids was $56 in first quarter 2018, up from $45 a year earlier.
  • Average sales price of natural gas was $2.02 per thousand cubic feet in first quarter 2018, compared with $2.39 in last year’s first quarter.
  • Net oil-equivalent production of 733,000 barrels per day in first quarter 2018 was up 61,000 barrels per day from a year earlier.
  • Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico, and base business in the Gulf of Mexico, were partially offset by the impact of asset sales of 39,000 barrels per day and normal field declines.
  • The net liquids component of oil-equivalent production in first quarter 2018 increased 13 percent to 567,000 barrels per day, while net natural gas production decreased 1 percent to 993 million cubic feet per day.

International

  • International upstream operations earned $2.70 billion in first quarter 2018, compared with $1.44 billion a year ago.
  • The increase in earnings was mainly due to higher crude oil and natural gas realizations, higher natural gas sales volumes and lower tax items, partially offset by the absence of a gain of approximately $600 million from the 2017 sale of the Indonesia geothermal business and higher depreciation expenses associated with higher production.
  • Foreign currency effects had a favorable impact on earnings of $394 million between periods.
  • The average sales price for crude oil and natural gas liquids in first quarter 2018 was $61 per barrel, up from $49 a year earlier.
  • The average sales price of natural gas was $5.85 per thousand cubic feet in the quarter, compared with $4.36 in last year’s first quarter.
  • Net oil-equivalent production of 2.12 million barrels per day in first quarter 2018 was up 115,000 barrels per day from a year earlier
  • Production increases from major capital projects, primarily Gorgon and Wheatstone in Australia, were partially offset by production entitlement effects in several locations, normal field declines and the impact of asset sales of 22,000 barrels per day.
  • The net liquids component of oil-equivalent production decreased 1 percent to 1.19 million barrels per day in the 2018 first quarter, while net natural gas production increased 17 percent to 5.60 billion cubic feet per day.

Downstream

Domestic

  • Downstream profits dropped 21% from a year ago 
  • Weakness in its refining and marketing business to lower profit margins on sales of refined products.
  • U.S. downstream operations earned $442 million in first quarter 2018, compared with earnings of $469 million a year earlier.
  • The decrease was primarily due to lower margins on refined product sales and higher expenses from planned turnaround activity at the El Segundo, California refinery.
  • These were partially offset by lower tax expense, and higher equity earnings from the 50 percent-owned Chevron Phillips Chemical Company LLC.
  • Refinery crude oil input in first quarter 2018 increased 2 percent to 930,000 barrels per day from the year-ago period.
  • Refined product sales of 1.19 million barrels per day increased 3 percent from first quarter 2017, primarily due to increased jet fuel sales. Branded gasoline sales of 501,000 barrels per day decreased 2 percent from the 2017 period.

International

  • International downstream operations earned $286 million in first quarter 2018, compared with $457 million a year earlier.
  • The decrease in earnings was largely due to lower margins on refined product sales, partially offset by lower operating expenses.
  • Foreign currency effects had a favorable impact on earnings of $57 million between periods.
  • Refinery crude oil input of 712,000 barrels per day in first quarter 2018 decreased 41,000 barrels per day from the year-ago period mainly due to sale of the company’s Canadian refining asset in third quarter 2017.
  • Total refined product sales of 1.44 million barrels per day in first quarter 2018 were down 1 percent from the year-ago period, primarily due to lower diesel sales, partially offset by higher jet fuel sales.

Cashflow

Chevron's cash flow from operations was $5 billion, up more than $1 billion from a year ago.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first three months of 2018 and 2017 were $4.4 billion. The amounts included $1.3 billion in 2018 and $939 million in 2017 for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 88 percent of the companywide total in the first three months of 2018.

Source: Chevron

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