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Chevron (CVX) Q4 Earnings Beat Thanks to Permian Strength

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Chevron Corporation (CVX - Free Report) reported adjusted fourth-quarter earnings per share of $1.49, above the Zacks Consensus Estimate of $1.47. The beat was driven by strong production from the Permian Basin.

However, the bottom line was below the year-earlier quarter's earnings of $2.06 per share due to lower oil and natural gas price realizations.

The company, which recently raised its quarterly dividend from $1.19 to $1.29, generated revenue of $36.4 billion. The sales figure missed the Zacks Consensus Estimate of $39.8 billion and was down 14.2% year over year.

Chevron announced that it added 494 million barrels of oil-equivalent in proved reserves in 2019, primarily from LNG projects in Australia and deepwater assets in the Gulf of Mexico.

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 remained essentially unchanged from the year-earlier level at 3,078 thousand oil-equivalent barrels per day/MBOE/d (61.5% liquids) – the fifth successive quarter where volumes exceeded 3 million barrels per day.

Contribution from the shale assets in the prolific Permian Basin were offset by normal field declines, turnarounds and the impact of asset dispositions. The fourth-quarter average production from the showpiece Permian Basin was 514 MBOE/d, up 36% year over year.  

The U.S. output rose 16.3% year over year to 998 MBOE/d but the company’s international operations (accounting for 68% of the total) fell 6.5% to 2,080 MBOE/d. For the full-year 2019, Chevron’s worldwide production averaged a record 3,058 MBOE/d, reflecting an increase of 4.4% from 2,930 MBOE/d a year ago.

Despite flat production volumes, Chevron’s upstream segment incurred a massive loss of $6.7 billion, compared with the year-ago profit of $3.3 billion. Apart from asset impairment charges, the nosedive to a loss could be blamed on significantly lower oil and gas realizations.

Downstream: Chevron’s downstream segment achieved earnings of $672 million, 21.8% lower than the profit of $859 million last year. The decline primarily underlined a fall in international refined products sales margins and planned turnaround activities.

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 $5.6 billion in cash flow from operations, down from $9.1 billion a year ago. The decrease in cash flow could be attributed to falling lower price realizations in the upstream business.

The company's cash flow for the full-year 2019 was $27.3 billion, down 10.8% from 2018.

In the fourth quarter, Chevron paid $2.3 billion in dividends and repurchased $1.1 billion worth of shares. For the full-year 2019, the company shelled out $9 billion in dividends, and bought back $4 billion of its shares.

The Zacks Rank #2 (Buy) company spent just over $6 billion in capital expenditures during the quarter, edging up from the year-ago period’s $5.8 billion. More than 83% of the total outlays pertained to upstream projects. In 2019, capital spending amounted to $21 billion.

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

Balance Sheet

As of Dec 31, the San Ramon, CA-based company had $5.7 billion in cash and cash equivalents and total debt of $27 billion, with a debt-to-total capitalization ratio of about 15.8%.

Earnings Roundup of Other Oil Supermajors

Among the major integrated players, ExxonMobil and Royal Dutch Shell (RDS.A - Free Report) missed profit expectations, while BP plc (BP - Free Report) will report on Tuesday.

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