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Chevron (CVX) Q3 Earnings Beat Thanks to Production Gains

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Chevron Corporation (CVX - Free Report) reported adjusted third-quarter earnings per share of $1.59, above the Zacks Consensus Estimate of $1.47. The beat was driven by strong production, which increased almost 3% from the third quarter of 2018.

However, the bottom line was below the year-earlier quarter's earnings of $2.11 per share due to lower oil and natural gas price realizations, together with weak refined products sales margins in the U.S.

Quarterly revenue of $36.1 billion missed the Zacks Consensus Estimate of $39.1 billion and was down 17.9% year over year.

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 total production of crude oil and natural gas increased 2.6% compared with last year’s corresponding period to 3,033 thousand oil-equivalent barrels per day/MBOE/d (60% liquids) – the fourth successive quarter where volumes exceeded 3 million barrels per day. The U.S. output rose 12.4% year over year to 934 MBOE/d but the company’s international operations (accounting for 69% of the total) fell 1.2% to 2,099 MBOE/d.

Apart from the shale assets in the prolific Permian Basin, the strong output could be attributed to contribution from its Wheatstone LNG development in Australia, partially offset by normal field declines and the impact of asset dispositions.

However, the rise in production was more than offset by lower oil and gas realizations, the result being a 20% fall in Chevron’s upstream segment profit – from $3.4 billion in the year-earlier quarter to $2.7 billion.

Downstream: Chevron’s downstream segment achieved earnings of $828 million, 39.7% lower than the profit of $1.4 billion last year. The decline primarily underlined a fall in domestic refined products sales margins, absence of gains from asset sales and higher operating expenses in the United States.

Cash Flows, Capital Expenditure

America's No. 2 energy producer behind ExxonMobil (XOM - Free Report) delivered a soft cash flow performance this quarter – an important gauge for the oil and gas industry – with $7.9 billion in cash flow from operations, down from $9.6 billion a year ago. The decrease in cash flow could be attributed to falling price realizations in the upstream business.

In the third quarter, Chevron paid $2.2 billion in dividends and repurchased $1.8 billion worth of shares.

The Zacks Rank #3 (Hold) company spent nearly $5 billion in capital expenditures during the quarter, edging down from the year-ago period’s $5.1 billion. Roughly 86% 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, the San Ramon, CA-based company had $11.7 billion in cash and cash equivalents and total debt of $32.9 billion, with a debt-to-total capitalization ratio of about 17.4%.

Earnings Roundup of Other Oil Supermajors

Similar to Chevron, BP plc (BP - Free Report) , ExxonMobil and Royal Dutch Shell (RDS.A - Free Report) all beat profit expectations but fell short of year-ago earnings.

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