CVX
Chevron's (NYSE: CVX) Q1 earnings report painted a mixed picture. The company surpassed Wall Street's earnings expectations despite a decline in profits due to weaker refining margins and lower natural gas prices.
The oil giant reported a net income of $5.5 billion, or $2.97 per share, marking a 16% decrease from the previous year. However, adjusted earnings of $2.93 per share exceeded analyst predictions by a narrow margin.
The company's performance was notably impacted by declining sales margins in its refining operations and a significant drop in international natural gas prices, which fell by 35% this year, contributing to reduced profits. Chevron's refining business saw a steep downturn, with U.S. operations earning $453 million, more than halving from last year, and international refining profits tumbling nearly 60% to $330 million.
| Category | Q1 Results | Previous Year Comparison | Expectations |
|---|---|---|---|
| Earnings Per Share (Adjusted) | $2.93 | - | $2.87 |
| Revenue | $48.72 billion | - | $50.66 billion |
| Net Income | $5.5 billion | Down 16% from previous year | - |
| Refining Earnings (U.S.) | $453 million | More than 50% decline | - |
| Refining Earnings (International) | $330 million | Nearly 60% decline | - |
| Oil and Gas Earnings (U.S.) | $2 billion | 16% increase | - |
| Oil and Gas Earnings (International) | $3.2 billion | 6% decline | - |
| Total Oil and Gas Production (U.S.) | 1.57 million bpd | 35% increase | - |
| Total Oil and Gas Production (International) | 1.77 million bpd | Decline of 39,000 barrels | - |
| Total Worldwide Production | 3.35 million bpd | 12% increase | - |
| Capital Expenditures | $4.1 billion | 37% increase from $3 billion | - |
| Dividends and Share Repurchases | $6 billion | - | - |
| Return on Capital | 12.4% | Lower than 14.6% from previous year | - |
Despite these setbacks, Chevron demonstrated strength in its oil and gas production, particularly in the U.S., where it recorded a notable 16% increase in earnings to about $2 billion. This was supported by a robust 35% surge in daily production volumes, driven by solid outputs in the Permian and Denver-Julesburg basins.
Internationally, the scenario was less favorable. Chevron faced a 6% decline in earnings from its overseas oil and gas operations, as production dipped slightly due to maintenance activities in Nigeria and natural field declines. However, worldwide production grew by 12% to reach a record high for the first quarter of 3.35 million barrels per day.
Amid these operational challenges and successes, Chevron remains committed to its shareholder returns, maintaining a $3 billion dividend payout and repurchasing nearly $3 billion in shares during the quarter. The company also increased its capital expenditures to $4.1 billion, up 37% from the previous year, reflecting its ongoing investment in production enhancement and asset acquisitions.
As Chevron looks forward, it remains optimistic about its pending acquisition of Hess Corp., expecting to finalize the shareholder vote and necessary regulatory reviews in the coming months despite facing competition from Exxon over assets in Guyana.
