Back to top

Analyst Blog

U.S. energy giant Chevron Corp. (CVX - Analyst Report) just about managed to beat third quarter earnings estimates on higher crude prices and a rise in output. Earnings per share (excluding adjustments for foreign-currency effects) came in at $2.71, a penny above the Zacks Consensus Estimate of $2.70.

However, Chevron’s performance deteriorated from the year-ago adjusted profit of $2.83 per share amid weak refining margins.

The integrated supermajor’s quarterly revenue moved up slightly (by 0.8%) year over year to $58,503.0 million. However, it was not enough to beat the Zacks Consensus Estimate of $59,346.0 million.

Exxon Mobil Corp. (XOM - Analyst Report) – the world's largest publicly traded oil company – reported higher-than-expected earnings yesterday, while European biggies Royal Dutch Shell plc (RDS.A - Analyst Report) and BP plc (BP - Analyst Report) came out with contrasting results. Shell missed estimates but BP beat earnings forecasts, apart from announcing a share repurchase program and a payout hike.

Segment Performance

Upstream: Chevron’s total production of crude oil and natural gas increased by 2.7% from the year-earlier level to 2,585 thousand oil-equivalent barrels per day (MBOE/d). Volume gains in U.S., project ramp-ups in Nigeria and Angola, together with a fall in maintenance-associated downtime at Kazakhstan’s Tengizchevroil joint venture were somewhat offset by normal field declines.

The U.S. output improved 2.8% year over year, while Chevron’s international operations (accounting for 75% of the total) delivered a 2.7% jump in volumes.

Notwithstanding gains on the production front and higher crude oil prices, upstream earnings declined marginally (by 0.9%) from the year-ago period – to $5,092.0 million – on the back of spiraling operating expenses.

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 last few months include the liquefied natural gas (LNG) project in Angola, deepwater Usan project in Nigeria and the Caesar/Tonga project in the deepwater Gulf of Mexico.

Amongst the major upcoming projects, Chevron’s Gorgon and Wheatstone natural gas initiatives in Australia are progressing well, while the Jack/St. Malo and Big Foot initiatives in the deepwater Gulf of Mexico remain on track for late 2014 start-up.

Downstream: Chevron’s downstream segment achieved earnings of $380.0 million, 44.8% lower than the profit of $689.0 million last year. The results were negatively influenced by lower refined product sales margins and higher repair/maintenance expenses in its domestic business. These factors were partially offset by better performance from the 50%-owned Chevron Phillips Chemical Company LLC.

Capital Expenditure, Balance Sheet & Share Repurchases

The second-largest U.S. oil company by market value after Exxon Mobil spent $10,585.0 million in capital expenditures during the quarter. Approximately 91% of the total outlays pertained to upstream projects.

As of Sep 30, 2013, the San Ramon, Calif.-based company had $17,014.0 million in cash and total debt of $18,581.0 million, with a debt-to-total capitalization ratio of about 11.4%. As part of the stock repurchase program announced in 2010, Chevron repurchased $1,250.0 million worth of shares in the third quarter.

Zacks Rank

Chevron currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%