U.S. energy giant Chevron Corp. CVX reported dismal first-quarter results as the oil market slump continues to deepen and refining margins weakened. The company reported loss per share of 39 cents, wider than the Zacks Consensus Estimate for a loss of 18 cents. Last year, Chevron earned $1.37 per share during the period.
Quarterly revenue fell 32% year over year to $23,553 million but was able to beat the Zacks Consensus Estimate of $23,547 million on stable production.
Chevron becomes the third integrated supermajor after BP plc BP and Exxon Mobil Corp. XOM in reporting first-quarter numbers. Royal Dutch Shell plc RDS.A is scheduled to report next week.
Upstream: At 2,666 thousand oil-equivalent barrels per day (MBOE/d), Chevron’s total production of crude oil and natural gas remained essentially unchanged from the year-earlier level. The U.S. output came in at 701 MBOE/d, while the company’s international operations (accounting for 74% of the total) produced 1,965 MBOE/d.
Contribution from project ramp-ups (in the U.S., Nigeria and other regions) and the effects of production entitlement in certain areas were offset by the Saudi Arabia-Kuwait Partitioned Zone shut-in and normal field declines.
However, stability on the production front were more than offset by the sharp downfall in oil prices, the net effect resulting in a huge loss for the upstream division – to the tune of $1,459 million.
Despite continued pricing pressure, 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. Major start-ups during the year include the Chuandongbei Project in China and the Gorgon natural gas project in Australia.
Amongst the major upcoming projects, Chevron’s Angola LNG plant is progressing well, with production set to begin shortly.
Downstream: Chevron’s downstream segment achieved earnings of $735 million, almost 50%lower than the profit of $1,423 million last year. The results were dragged down by lower margins on refined product sales.
Capital Expenditure & Balance Sheet
The second-largest U.S. oil company by market value after Exxon Mobil spent $6,469 million in capital expenditures during the quarter. Approximately 92% of the total outlays pertained to upstream projects.
As of Mar 31, 2016, the San Ramon, CA-based Zacks Rank #3 (Hold) company had $8,562 million in cash and total debt of $42,339 million, with a debt-to-total capitalization ratio of about 22.0%.
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