How Chevron Earnings Crushed Estimates

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Chevron Corp. (NYSE: CVX) reported first-quarter 2017 results before markets opened Friday. The oil and gas supermajor posted diluted earnings per share (EPS) of $1.41 on total revenues of $33.42 billion. Operating revenues totaled $31.52 billion in the quarter, up from $23.07 billion in the year-ago quarter. In the same period a year ago, the company reported a net loss per share of $0.39 on revenues of $23.55 billion. First-quarter results also compare to the consensus estimates for EPS of $0.86 and $32.76 billion in revenues.

Net income for the quarter totaled $2.68 billion, compared with a loss of $725 million in the first quarter of 2016. U.S. earnings rose to $80 million from a loss of $850 million a year ago, and international earnings rose from a loss of $1.46 billion to a profit of $1.52 billion.

The increase in international earnings was attributed to higher crude oil realizations, a gain of approximately $600 million from the sale of Chevron’s Indonesia geothermal business, higher natural gas sale volumes and lower operating expenses, partially offset by higher depreciation expense and higher tax items.

Net oil-equivalent production in the first quarter totaled 2.68 million barrels a day, up by 11,000 barrels a day compared with the year-ago quarter. Net oil-equivalent production in the United States totaled 672,000 barrels a day, down 29,000 year over year, however the average realized price per liquids barrel rose from $26 last year to $54 in the first quarter of this year. Natural gas realizations rose from $1.32 per thousand cubic feet to $2.39.

CEO John Watson said:

First quarter earnings and cash flow improved significantly from a year ago. We benefitted from increasing crude oil prices and ongoing efficiencies being implemented across the company. … Our operating expenses were reduced by about 14 percent from first quarter 2016 and our capital spending declined over 30 percent from a year ago. We started up several new projects and have all three trains at Gorgon online. We also progressed our asset sales program. The combination of these actions contributed to a cash positive first quarter. Overall net oil-equivalent production in the first quarter increased 3 percent compared to the 2016 full year and we are on track to meet the 4-9 percent growth goal for 2017 before the effect of asset sales

The earnings announcement did not include guidance, but consensus estimates for the second quarter of 2017 call for earnings per share of $1.02 on revenues of $33.4 billion. For the full year, earnings per share and revenues are estimated at $4.39 and $140.83 billion, respectively.

Chevron’s shares traded up 1.3% early Friday, at $106.86 in a 52-week range of $97.53 to $119.00. The consensus 12-month price target was $126.32 before this report.