Chevron Earnings Dip on Lower US Production

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When Chevron Corp. (NYSE: CVX) reported third-quarter 2017 results before markets opened Friday, the oil and gas supermajor posted a diluted earnings per share (EPS) of $1.03 on total revenues of $33.89 billion. In the same period a year ago, the company reported EPS of $0.68 on total revenues of $29.16 billion. Third-quarter results also compare to the consensus estimates for EPS of $0.98 and $34.06 billion in revenues.

Net income for the quarter totaled $1.95 billion, compared with $1.28 billion in the third quarter of 2016. The U.S. upstream segment posted a net loss of $26 million, compared with a net loss of $212 million in the year-ago quarter. International upstream posted a profit of $515 million, down from $666 million last year.

The drop in international earnings was attributed to higher depreciation expense on Bangladeshi operations and an asset write-off. Foreign exchange effects nicked $249 million from results. The improvement in U.S. earnings was attributed to higher prices for crude oil.

Net oil-equivalent production in the third quarter totaled 2.72 million barrels a day, up by about 200,000 barrels a day compared with the year-ago quarter. Net oil-equivalent production in the United States totaled 525,000 barrels a day, up by 6,000 barrels year over year. Average U.S. price realizations per barrel of oil rose from $40.10 a year ago to $45.00.

U.S. natural gas production dipped from 1.098 million cubic feet a year ago to 988 million this year. Natural gas realizations fell from $1.89 per thousand cubic feet to $1.80.

Measured in barrels of oil equivalent, total U.S. production fell by 17,000 barrels a day year over year, entirely due to a drop in natural gas production and prices.

CEO John Watson said:

We continue to see improvement in the underlying pattern of earnings and cash flow. Cash flow is at a positive inflection point, with oil and gas production increasing and capital spending falling. We’re completing projects that have been under construction and ramping up production, notably at our Gorgon LNG Project in Australia. And our shale and tight rock drilling activity in the Permian Basin is exceeding expectations.

The earnings announcement did not include guidance, but consensus estimates for the fourth quarter of 2017 call for earnings per share of $1.06 on revenues of $35.9 billion. For the full year, earnings and revenues are estimated at $4.08 per share and $134.7 billion, respectively.

Chevron’s shares traded down about 3.4% Friday morning at $114.46, in a 52-week range of $100.95 to $120.89. The consensus 12-month price target was $122.57 before this morning’s report.