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Chevron (CVX) Q1 Earnings Beat on Strong U.S. Production

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Chevron Corporation (CVX - Free Report) reported adjusted first-quarter earnings per share of $2.93, ahead of the Zacks Consensus Estimate of $2.84. The outperformance could be attributed to higher-than-expected U.S. production in the company’s key upstream segment. The unit’s domestic output of 1,573 thousand oil-equivalent barrels per day (MBOE/d) came in above the consensus mark of 1,544 MBOE/d.

However, the company’s bottom line fell from the year-ago adjusted profit of $3.55 due to weaker oil and natural gas realizations in the United States, plus a dip in refined product sales margins.

The company generated revenues of $48.7 billion. The sales figure missed the Zacks Consensus Estimate of $49.9 billion and decreased 4.1% year over year.


Chevron Corporation Price and EPS Surprise

Chevron Corporation Price and EPS Surprise

Chevron Corporation price-eps-surprise | Chevron Corporation Quote


Segment Performance

Upstream: Chevron’s production of crude oil and natural gas — at 3,346 MBOE/d (59% liquids) — rose 12.3% year over year. The latest volume statistics primarily reflect contribution from the PDC Energy acquisition and impressive output from the Permian basin — America's hottest and lowest-cost shale region. 

The U.S. output surged 34.8% year over year to 1,573 MBOE/d but the company’s international operations (accounting for 53% of the total) edged down 2.2% to 1,773 MBOE/d. 

With volumes improving from last year, Chevron’s first-quarter 2024 upstream segment profit rose 1.5% to $5.2 billion. This was partly offset by a decline in U.S. oil and natural gas prices. 

At $57.37 per barrel, Chevron’s average realized liquids prices in the U.S. were 2.9% below the year-earlier levels though prices overseas increased 5.3% to $72.52 per barrel. As far as natural gas is concerned, the commodity was down 51.9% and 19.4%, respectively in the United States and internationally.

Downstream: Chevron’s downstream segment recorded a profit of $783 million, plunging from last year’s figure of $1.8 billion. The slip underlined lower product sales margins and higher operating expenses in the United States.

Cash Flows, Capital Expenditure

The company recorded $6.8 billion in cash flow from operations compared to $7.2 billion a year ago. The decrease in cash flow could be attributed to weaker price realizations in the upstream business. Chevron’s free cash flow for the quarter was $2.7 billion. 

Further, Chevron paid $3 billion in dividends and bought back $3 billion worth of its shares.

The Zacks Rank #3 (Hold) company spent around $4.1 billion in capital and exploratory expenditures during the quarter, compared to the year-ago period’s $3 billion.

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

Balance Sheet

As of Mar 31, the San Ramon, CA-based company had $6.3 billion in cash and cash equivalents and total debt of $21.8 billion with a debt-to-total capitalization of about 12%.

Important Energy Earnings So Far

While we have discussed Chevron first-quarter result in detail, let’s take a look at some other key energy reports of this season.

Oil service biggie Halliburton (HAL - Free Report) reported first-quarter 2024 adjusted net income per share of 76 cents, surpassing the Zacks Consensus Estimate of 74 cents and improving from the year-ago quarter profit of 72 cents (adjusted). The outperformance reflects strength in the international markets, partly offset by weak performance in the North American region.

Halliburton reported first-quarter capital expenditure of $330 million, lower than our projection of $338.7 million. As of Mar 31, 2024, the company had approximately $1.9 billion in cash/cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 44.1. HAL also bought back $250 million worth its stock during the January-March period. The company generated $487 million of cash flow from operations in the first quarter, leading to free cash flow of $206 million.

Independent oil refiner and marketer Valero Energy (VLO - Free Report) reported first-quarter 2024 adjusted earnings of $3.82 per share, which beat the Zacks Consensus Estimate of $3.18, driven by a decline in total cost of sales. Adjusted operating income in the Refining segment totaled $1.7 billion, down from $4.1 billion in the year-ago quarter. The figure also missed our estimate of $1.6 billion.

Valero’s total cost of sales declined to $29.8 billion from the year-ago figure of $32.1 billion. The figure is also below our estimate of $30.4 billion, primarily due to lower material costs and operating expenses. The first-quarter capital investment totaled $661 million, of which $563 million was allotted for sustaining the business.

Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported first-quarter adjusted earnings per share of 33 cents, a penny above the Zacks Consensus Estimate. The bottom line was favourably affected by increased financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Moreover, KMI’s first-quarter DCF was $1.42 billion, up from $1.40 billion a year ago.

As of Mar 31, 2024, Kinder Morgan reported $119 million in cash and cash equivalents. Its long-term debt amounted to $30.1 billion at the quarter-end. For full-year 2024, KMI anticipates a DCF of $5 billion ($2.26 per share) and an adjusted EBITDA of $8.16 billion, each indicating 8% growth from the previous year’s reported figures.

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