Chevron (CVX) Shares Leap After Q1 Earnings, Sales Beat
Zacks Investment Research | Apr 28, 2017 01:57AM ET
Shares of Chevron Corp. (NYSE:CVX) rose more than 1% in early trading Friday, after the U.S. energy giant reported strong first-quarter results amid the recovery in commodity prices, improving domestic refining margins and the success of its cost savings initiatives. The company reported earnings per share of $1.41, sharply higher than the Zacks Consensus Estimate of 85 cents and turning around from the year-ago loss of 39 cents.
Quarterly revenue of $33,421 million surpassed the Zacks Consensus Estimate of $32,008.7 million and were up 42% year over year.
Chevron becomes the second integrated supermajor after ExxonMobil Corp. (NYSE:XOM) in reporting first quarter numbers. European biggies – BP plc (NYSE:BP) and Royal Dutch Shell (LON:RDSa) plc RDS.A – are scheduled to report over the next week.
Segment Performance
Upstream: Chevron’s total production of crude oil and natural gas remained essentially unchanged from the year-earlier level at 2,676 thousand oil-equivalent barrels per day (MBOE/d). The U.S. output decreased 4% year over year to 672 MBOE/d, while the company’s international operations (accounting for 75% of the total) was up 2% to 2,004 MBOE/d.
Contribution from volume increases from showpiece projects and base business were offset by normal field declines, the effect of asset sales and production entitlement effects in different regions.
Despite flat production volumes, Chevron’s upstream segment had a massive turnaround – from a loss of $1,459 million in the year-earlier quarter to a profit of $1,517 million. This was mainly on account of a leaner cost structure and higher realizations.
Meanwhile, Chevron’s production outlook remains one of the most robust in its peer group, with a number of major initiatives scheduled to come online during the next few years. A major start-up during the quarter was the Mafumeira Sul project, offshore Angola.
Downstream: Chevron’s downstream segment achieved earnings of $926 million, 26% more than the profit of $735 million last year. The results were driven by higher margins on refined product sales in the U.S.
Cash Flows
Importantly, Chevron delivered a good cash flow performance this quarter – an important gauge for the oil and gas industry – with $3,879 million in cash flow from operations, up from $1,141 million a year ago.
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Costs & Expenses
Exploration costs fell from $370 million in the first quarter of 2016 to $144 million. The second-largest U.S. oil company by market value after ExxonMobil spent $4,392 million in capital expenditures during the quarter, a considerable decline from the $6,469 million incurred a year ago. More than 90% of the total outlays pertained to upstream projects.
Balance Sheet
As of Mar 31, 2017, the San Ramon, CA-based Zacks Rank #3 (Hold) company had $6,983 million in cash and total debt of $45,256 million, with a debt-to-total capitalization ratio of about 23.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Share Performance:
Chevron shares have mirrored the performance of the Zacks categorized Oil & Gas - International Integrated industry over the past 3 months, with both falling more than 4%. Over the last 12 months, Chevron stock has risen 3%.
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