U.S. energy behemoth
) released its third-quarter 2013 interim update covering the
first two months of the September quarter. Chevron expects
foreign exchange translation effect of negative $250-$350 million
during the quarter. Moreover, Chevron believes its third quarter
2013 earnings to go down as compared to the previous quarter.
In the upstream activities, the update is slightly bullish with
oil production expected to be above the year-ago period and the
previous quarter. The price realization for crude oil is expected
to increase from second-quarter 2013, both in the U.S. and
However, in the downstream sector, the outlook is negative as the
company expects the sector's operating result to be substantially
lower than the last quarter. Additionally, the refining margin is
expected to decrease in the U.S. West Coast.
The company's oil and natural gas production averaged 2.589
million oil-equivalent barrels per day, up 2.9% from the
third-quarter 2012 level. The hike was owing to increased
domestic and international production. While production increased
marginally by 0.3% sequentially.
In the first two months of the September quarter, Chevron's total
domestic production was 651,000 barrels of oil equivalent per day
(BOE/D) as compared to 659,000 BOE/D in the previous quarter. The
decrease was owing to shutdown activities in the Gulf of
Net international oil equivalent production - at 1,938,000
BOE/D - was 15,000 barrels per day more than the second quarter
of 2013. The increase was due to comparatively lower maintenance
work and shutdown activities worldwide.
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The U.S. crude price realizations during Jul-Aug 2013 averaged
$96.73 per barrel, up from $92.25 in second-quarter 2013, while
international realizations increased by $10.91 to $104.62 per
barrel. Chevron's domestic realized natural gas prices for this
period averaged $3.30 per thousand cubic feet (Mcf), compared
with $3.78 in the second quarter of 2013. Moreover, average
international natural gas realizations were down 12 cents per Mcf
Regarding downstream operations, the second-largest U.S. oil
company by market value after
Exxon Mobil Corp.
), said that its domestic refinery crude-input rose 4,000 barrels
per day as compared to the previous quarter. The results were
aided by the restart of a refinery crude unit in Richmond and
California. This was however partially offset by El Segundo,
Calif. based refineries' planned shutdown activities.
Refinery crude input volumes outside the U.S. were also up (by
21,000 barrels per day) during the same period due to the
completion of maintenance work by the first half of
The third-quarter refining margins decreased by $3.97 per barrel
sequentially in the U.S. West Coast, however, it increased by
$2.07 per barrel in the Gulf Coast.
Third Quarter Estimate
Chevron plans to release its quarterly results on Nov 1, 2013,
before the opening bell. The Zacks Consensus Estimate for
Chevron's third quarter is $3.10 per share.
Chevron currently retains a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can look at better performing energy firms like
Stone Energy Corp.
) that offer value. Both the stocks sport a Zacks Rank #1 (Strong