U.S. energy giant
) reported strong second quarter results on higher
, partially offset by falling production.
Earnings per share came in at $2.98, well above the Zacks Consensus
Estimate of $2.68 and also improved from the year-ago profit of
$2.77 per share. The company's quarterly revenue increased 1% year
over year to $57,938 million and easily outperformed the Zacks
Consensus Estimate of $54,588 million.
Chevron Corporation - Earnings Surprise |
Chevron is the third of the integrated supermajors to come out
with better-than-expected second quarter results following Exxon
Mobil Corp. (
) and Royal Dutch Shell plc (
Chevron's total production of crude oil and natural gas decreased
by 1.4% from the year-earlier level to 2,545 thousand
oil-equivalent barrels per day (MBOE/d). Contribution from project
ramp-ups in the U.S., Nigeria, Brazil and Argentina were more than
negated by normal field declines, production entitlement effects in
certain regions and maintenance-induced downtime issues in
Though the U.S. output augmented 1.2% year over year, Chevron's
international operations (accounting for 74% of the total)
registered a 2.3% fall in volumes.
Losses on the production front were more than offset by higher oil
prices and gains on asset sales, the net effect resulting in a 6.4%
year-over-year rise in upstream earnings to $5,264 million.
However, despite the lower volumes for the quarter under
consideration, Chevron's production outlook remains one of the most
robust in its peer group, with a number of major initiatives
scheduled to come online during the next few years. Major start-ups
during the last few months include the liquefied natural gas (LNG)
project in Angola, deepwater Usan project and the Escravos
Gas-to-Liquids facility in Nigeria, Caesar/Tonga project in the
deepwater Gulf of Mexico, and the Chirag development in the Caspian
Amongst the major upcoming projects, Chevron's Gorgon and
Wheatstone natural gas initiatives in Australia are progressing
well, while the Jack/St. Malo and Big Foot initiatives in the
deepwater Gulf of Mexico remain on track for late 2014 and 2015
Chevron's downstream segment achieved earnings of $721 million,
lower than the profit of $766 million last year. The results were
dragged down by decreased earnings from the international business.
Ex-U.S. profits were hampered by lower refinery margins.
However, improved profitability from U.S. on the back of higher
refined product sales margins and better performance from the
50%-owned Chevron Phillips Chemical Company LLC, resurrected the
overall results to some extent.
Capital Expenditure, Balance Sheet & Share
The second-largest U.S. oil company by market value after Exxon
Mobil spent $10,185 million in capital expenditures during the
quarter. Approximately 92% of the total outlays pertained to
As of Jun 30, 2014, the San Ramon, CA-based company had $13,959
million in cash and total debt of $23,548 million, with a
debt-to-total capitalization ratio of about 13.3%. As part of the
stock repurchase program, Chevron repurchased $1,250 million worth
of shares in the second quarter.
Chevron currently carries 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. A better-ranked stock in the
integrated energy space would be Argentina's YPF S.A. (
), which hold a Zacks Rank #1 (Strong Buy).
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