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Chevron Back In Black, But Misses Q2 Profit Estimate

As expected, Chevron Corporation (NYSE:CVX) returned to a net profit in the second quarter, driven by lower expenses and higher production, but the earnings per share of US$0.77 fell short of the analyst consensus estimate of US$0.86.

The consensus estimate was for US$1.06 per-share earnings three months ago, but has been lowered since then, as the oil price weakness and pessimism swept over the oil market.

Still, Chevron raised sales and other operating revenues in Q2 2017 to US$33 billion, from US$28 billion in same period last year. Production also increased, with worldwide net oil-equivalent production at 2.78 million barrels per day in Q2 2017, compared with 2.53 million bpd a year ago. Production growth was mostly due to output from major capital projects, base business, and shale and tight properties, as well as to lower maintenance-related downtime, Chevron said.

In the U.S. upstream, net oil-equivalent production of 701,000 bpd in the second quarter of 2017 was 19,000 bpd higher than the same period last year, due to production increases in the Permian, base business, and the Jack/St. Malo major capital project. Chevron’s U.S. upstream operations booked a loss of US$102 million, compared with a loss of US$1.11 billion a year earlier. The substantially decreased loss reflected lower impairment charges, higher crude oil and natural gas realizations, higher gains on asset sales, and lower operating expenses.

In the downstream segment, U.S. operations lifted earnings to US$634 million from US$537 million a year earlier, mostly thanks to higher margins on refined product sales and lower operating expenses.

Chevron’s cash flow from operations in the first six months of 2017 was US$8.9 billion, surging from US$3.7 billion in the corresponding 2016 period. Capital and exploratory expenditures in the first half of 2017 dropped to US$8.9 billion, from US$12.0 billion in H1 2016.

Related: Oil Rises, But Saudis Face Daunting Dilemma

“Second quarter results improved substantially from a year ago and year-to-date net cash flow is positive,” Chevron’s Chairman and CEO John Watson said in the press release.

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“Operating expenses were down 10 percent and capital spending was down 25 percent in the first six months of the year versus 2016,” Watson noted.

By Tsvetana Paraskova for Oilprice.com

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