Chevron Thrives on Higher Prices, More Production

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Chevron Corp. (NYSE: CVX) reported third-quarter results before markets opened Friday morning. For the quarter, the oil & gas supermajor posted diluted earnings per share (EPS) of $2.11 on total revenues of $43.99 billion. In the same period a year ago, the company reported EPS of $1.03 on total revenues of $36.2 billion. Third-quarter results compare to the consensus estimates for EPS of $2.06 and $46.67 billion in revenues.

Net income for the quarter totaled $4.06 billion compared to net earnings of $1.95 billion in the year-ago quarter. Upstream earnings soared to $3.38 billion while downstream earnings fell by 24% to $1.37 billion. Higher realized prices and increased production boosted upstream earnings while downstream earnings were lower due to an 8% drop in sales of gasoline, diesel fuel, and jet fuel.

One-time items nicked profits by $580 million and currency exchange effects lopped off another $112 million.

The U.S. upstream segment posted earnings of $828 million compared with a net loss of $26 million in the year-ago quarter. International upstream posted a profit of $2.55 billion compared with a profit of $515 million last year.

Total net oil-equivalent production in the first quarter totaled 2.95 million barrels a day, up by 89,000 barrels a day compared with the year-ago quarter. Net oil-equivalent production in the United States totaled 831,000 barrels a day, up by 150,000 barrels year over year. Average U.S. price realizations per barrel of oil rose from $45.00 a year ago to $68.15.

Internationally, liquids prices rose from $56.68 a barrel a year ago to $68.73 a barrel and net oil-equivalent production rose by 41,000 barrels a day to 2.11 million barrels a day

U.S. natural gas realizations dipped from $1.86 per thousand cubic feet to $1.80 while international prices rose from $4.93 to $6.73 per thousand cubic feet.

CEO Michael Wirth said:

Third quarter earnings more than doubled from a year ago. Our strong financial results reflect higher production and crude oil prices coupled with a continued focus on efficiency and productivity. Quarterly cash flow from operations of $9.6 billion was the highest it has been in nearly five years. This allowed us to pay the dividend, fund our capital program, strengthen the balance sheet, and repurchase $750 million of the company’s common stock.

The earnings announcement did not include guidance, but consensus estimates for the fourth quarter of 2018 call for earnings per share of $2.34 on revenues of $48.44 billion. For the full year, earnings per share and revenues are estimated at $8.00 and $178.04 billion, respectively.

Like its fellow supermajor Exxon Mobil, Chevron benefited from higher oil prices and increased production. No secrets there.

Chevron’s shares traded up about 2.2% shortly before Friday’s opening bell at $113.78 in a 52-week range of $107.54 to $133.88. The consensus 12-month price target was $145.89 before this morning’s report.