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Chevron (CVX) Incurs Wider-Than-Expected Q2 Loss, Sales Miss

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Chevron Corporation (CVX - Free Report) shares slumped more than 4% in early trading as the integrated energy behemoth reported adjusted second-quarter loss per share of $1.59. The Zacks Consensus Estimate was of a loss of 93 cents, while the company earned $1.77 per share in the year-ago period. The underperformance reflects sharply lower oil and natural gas price realizations, plus decline in refined products margins.

The company generated revenue of $13.5 billion. The sales figure missed the Zacks Consensus Estimate of $20.5 billion and was down 65.3% year over year.

Chevron, which recently reached an agreement to acquire Noble Energy (NBL - Free Report) in an all-stock deal worth $5 billion, also wrote down the value of its assets by $1.8 billion due to weaker commodity price expectations. Further, the company incurred $780 million in severance costs.

Meanwhile, Chevron said that it would keep paying shareholders a quarterly dividend of $1.29 despite the difficult operating environment. This earnings season has already seen Italian oil major Eni SpA (E - Free Report) trim its dividend payments. 

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation price-consensus-eps-surprise-chart | Chevron Corporation Quote

Segment Performance

Upstream: Chevron’s production of crude oil and natural gas decreased 3.1% from the year-earlier level to 2,988 thousand oil-equivalent barrels per day/MBOE/d (61% liquids) – the first time in seven quarters quarter where volumes fell below 3 million barrels per day. The decline reflects output curtailment in reaction to the coronavirus-induced commodity price collapse, and the impact of asset dispositions. This was partly offset by improved production in a number of properties. 
The U.S. output rose 10.4% year over year to 991 MBOE/d while the company’s international operations (accounting for 67% of the total) was down 8.6% to 1,997 MBOE/d. At $19 per barrel, the Chevron’s average realized liquids prices in the U.S. were 63.5% below the year-earlier levels while prices overseas were down 66.1%.

The dual pressure of slumping oil and gas realizations and lower production meant that, Chevron’s upstream segment incurred a loss of $6.1 billion against profit of $3.5 billion in the year-ago period.

Downstream: Chevron’s downstream segment incurred a loss of $1 billion, compared to earnings of $729 million last year. The deterioration primarily underlined a fall in refined products sales margins and severance payments.

Cash Flows, Capital Expenditure

America's No. 2 energy producer behind ExxonMobil (XOM - Free Report) recorded a meager $100 million in cash flow from operations, down from $8.7 billion a year ago. The plunge in cash flow could be attributed to falling lower price realizations in the upstream business.

In the second quarter, Chevron paid $2.4 billion in dividends.

The Zacks Rank #1 (Strong Buy) company spent $3.3 billion in capital and exploratory expenditures during the quarter, down from the year-ago period’s $5.3 billion. More than 75% of the total outlays pertained to upstream projects.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Balance Sheet

As of Jun 30, the San Ramon, CA-based company had $6.9 billion in cash and cash equivalents and total debt of $34.1 billion, with a debt-to-total capitalization ratio of about 20.2%.

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