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U.S. energy giant Chevron Corp. (CVX - Free Report) reported strong third quarter results, buoyed by the success of its cost savings initiatives. The company reported earnings per share of 68 cents, higher than the Zacks Consensus Estimate of 39 cents.
However, the bottom line compared unfavorably with the year-ago adjusted profit of $1.09 amid the continued plunge in commodity prices and lower refining margins.
Quarterly revenue of $30,140 million beat the Zacks Consensus Estimate of $30,057.1 million but were down 12% year over year.
Chevron becomes the second integrated supermajor after Exxon Mobil Corp. (XOM - Free Report) in reporting third quarter numbers. European behemoths BP plc (BP - Free Report) and Royal Dutch Shell plc are scheduled to report next week.
Segment Performance
Upstream: Chevron’s total production of crude oil and natural gas edged down 1% from the year-earlier level to 2,513 thousand oil-equivalent barrels per day (MBOE/d). The U.S. output decreased 4% year over year to 698 MBOE/d, while the company’s international operations (accounting for 72% of the total) remained essentially flat at 1,815 MBOE/d.
Contribution from volume increases from showpiece projects, shale assets and base business were more than offset by normal field declines, the effect of asset sales, production entitlement effects in different regions, maintenance downtime and disruptions in its Nigerian operations.
The decline on the production front were accompanied by lower oil and gas prices. But these were more than offset by a leaner cost structure, the net effect resulting in a huge jump in upstream segment earnings – from $59 million in the year-earlier quarter to $454 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.
Downstream: Chevron’s downstream segment achieved earnings of $1,065 million, 52% lower than the profit of $2,211 million last year. The results were dragged down by lower margins on refined product sales.
Exploration costs fell from $315 million in the third quarter of 2015 to $258 million. The second-largest U.S. oil company by market value after Exxon Mobil spent $5,175 million in capital expenditures during the quarter, a considerable decline from the $7,965 million incurred a year ago. Approximately 90% of the total outlays pertained to upstream projects.
Balance Sheet
As of Sep 30, 2016, the San Ramon, CA-based Zacks Rank #2 (Buy) company had $7,351 million in cash and total debt of $45,585 million, with a debt-to-total capitalization ratio of about 23.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dividend Hiked: Earlier this week, the company announced a 1% increase in its quarterly dividend to $1.08 per share, or $4.32 per share annualized. The dividend is payable on Dec 12 to shareholders of record on Nov 18, 2016.
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Chevron (CVX) Q3 Earnings Beat as Cost Cut Offsets Low Price
U.S. energy giant Chevron Corp. (CVX - Free Report) reported strong third quarter results, buoyed by the success of its cost savings initiatives. The company reported earnings per share of 68 cents, higher than the Zacks Consensus Estimate of 39 cents.
However, the bottom line compared unfavorably with the year-ago adjusted profit of $1.09 amid the continued plunge in commodity prices and lower refining margins.
Quarterly revenue of $30,140 million beat the Zacks Consensus Estimate of $30,057.1 million but were down 12% year over year.
Chevron becomes the second integrated supermajor after Exxon Mobil Corp. (XOM - Free Report) in reporting third quarter numbers. European behemoths BP plc (BP - Free Report) and Royal Dutch Shell plc are scheduled to report next week.
Segment Performance
Upstream: Chevron’s total production of crude oil and natural gas edged down 1% from the year-earlier level to 2,513 thousand oil-equivalent barrels per day (MBOE/d). The U.S. output decreased 4% year over year to 698 MBOE/d, while the company’s international operations (accounting for 72% of the total) remained essentially flat at 1,815 MBOE/d.
Contribution from volume increases from showpiece projects, shale assets and base business were more than offset by normal field declines, the effect of asset sales, production entitlement effects in different regions, maintenance downtime and disruptions in its Nigerian operations.
The decline on the production front were accompanied by lower oil and gas prices. But these were more than offset by a leaner cost structure, the net effect resulting in a huge jump in upstream segment earnings – from $59 million in the year-earlier quarter to $454 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.
Downstream: Chevron’s downstream segment achieved earnings of $1,065 million, 52% lower than the profit of $2,211 million last year. The results were dragged down by lower margins on refined product sales.
CHEVRON CORP Price, Consensus and EPS Surprise
CHEVRON CORP Price, Consensus and EPS Surprise | CHEVRON CORP Quote
Costs & Expenses
Exploration costs fell from $315 million in the third quarter of 2015 to $258 million. The second-largest U.S. oil company by market value after Exxon Mobil spent $5,175 million in capital expenditures during the quarter, a considerable decline from the $7,965 million incurred a year ago. Approximately 90% of the total outlays pertained to upstream projects.
Balance Sheet
As of Sep 30, 2016, the San Ramon, CA-based Zacks Rank #2 (Buy) company had $7,351 million in cash and total debt of $45,585 million, with a debt-to-total capitalization ratio of about 23.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dividend Hiked: Earlier this week, the company announced a 1% increase in its quarterly dividend to $1.08 per share, or $4.32 per share annualized. The dividend is payable on Dec 12 to shareholders of record on Nov 18, 2016.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>