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Chevron (CVX) Q3 Earnings Beat on Oil Rally, Record Output

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Shares of Chevron Corporation (CVX - Free Report) are up more than 5% in early trade after the company reported strong third-quarter results, boosted by rising crude oil prices and record production. This was partly offset by drop in profits in its downstream business, which refines crude oil into fuels like gasoline and diesel oil.

The U.S. energy major reported earnings per share of $2.11, ahead of the Zacks Consensus Estimate of $2.06 and improving significantly from the year-ago profit of $1.03. Quarterly revenue of $44 billion beat the Zacks Consensus Estimate of $42.8 billion and was up 21.5% year over year.

Chevron Corporation Price, Consensus and EPS Surprise


Chevron Corporation Price, Consensus and EPS Surprise | Chevron Corporation Quote

Segment Performance

Upstream: Chevron’s total production of crude oil and natural gas increased 8.8% compared with last year’s corresponding period to 2,956 thousand oil-equivalent barrels per day (MBOE/d) – the highest quarterly volumes in the company’s history. The U.S. output rose 22% year over year to 831 MBOE/d while the company’s international operations (accounting for 72% of the total) increased 4.4% to 2,125 MBOE/d.

Apart from the shale assets in the prolific Permian Basin, the record output could be attributed to contribution from its Wheatstone LNG development in Australia.

The rise in production was supported by higher oil realizations, the result being a massive jump in Chevron’s upstream segment profit – from a paltry $489 million in the year-earlier quarter to $3.4 billion.

Downstream: Chevron’s downstream segment achieved earnings of $1.4 billion, 24.3% lower than the profit of $1.8 billion last year. The decline primarily underlined a fall in refined products sales margins in its international operations and lower gain on asset sales.

Cash Flows, Buybacks

Importantly, Chevron delivered a good cash flow performance this quarter – an important gauge for the oil and gas industry – with $9.6 billion in cash flow from operations, up from $5.5 million a year ago. The significant cash flow enabled the company to repurchase $750 million of its own shares, apart from paying the dividend and taking care of capital expenditure.

Capital Expenditures

The Zacks Rank #3 (Hold) company spent $5.1 billion in capital expenditures during the quarter, up from the year-ago period’s $4.5 billion. Roughly 89% 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 Sep 30, 2018, the San Ramon, CA-based company had $9.7 billion in cash and total debt of $36.1 billion, with a debt-to-total capitalization ratio of about 19%.

Earnings Roundup of Other Oil Supermajors

Among the major integrated players, BP plc (BP - Free Report) and ExxonMobil (XOM - Free Report) beat expectations but Royal Dutch Shell plc (RDS.A - Free Report) fell short of forecasts.

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