Chevron net falls 4.5% as margins, revenue decline
BY BEN LEFEBVRE
SAN RAMON -- Chevron’s first-quarter earnings dropped 4.5% as the energy producer suffered from a moderation in global oil prices.
The San Ramon, Calif.-based oil giant reported a profit of $6.18 billion, or $3.18 a share, down from $6.47 billion, or $3.27 a share, a year earlier, beating Wall Street expectations. Revenue declined 6.4% to $56.82 billion. Analysts polled by Thomson Reuters had most recently forecast earnings of $3.08 a share on revenue of $67.73 billion.
The company said the most-recent quarter included net charges of $439 million, compared with $504 million a year ago.
Chevron, ExxonMobil, ConocoPhillips and other oil and gas producers had turned their focus to oil production after newly deployed drilling technology--including hydraulic fracturing, or fracing--caused natural gas supplies last year to hit record highs and crashed prices. But as European and Chinese economies slowed down and U.S. oil production surged, Chevron said its global oil prices fell 7.5% on average.
Exxon on Thursday reported flat first-quarter earnings as low U.S. crude oil prices helped its refining segment increase profit margins and pick up the slack in oil profits. Chevron's refining arm posted $701 million in profits, down 13% year-over-year as its refinery in Richmond, Calif., continued to be down for repairs after an August 2012 fire and its refinery in Pascagoula, Miss., underwent planned maintenance.
"They missed out on the tremendous benefit Exxon depended on in the (refining) business," said Brian Youngberg, senior energy analyst at Edward Jones.
Chevron--the second-largest U.S. oil company by market value after Exxon--said daily oil production in the U.S. was flat year-over-year at 455,000 bopd but dropped 2.5% at its international wells to 1.3 MMbopd.
Meanwhile, its natural gas business improved. Chevron said it sold nearly 10.6 Bcfgd in the first quarter, up 3.2% from the year before. Prices in the U.S. rose 25% to an average of $3.11 per Mcf, the company said.
Natural gas prices got a boost as sales for home heating and power generation increased, sending prices in the U.S. to above $4 per million MMBTU in March. The natural gas business--which some energy companies had been fleeing because of low prices-- could now help pad the bottom lines of Chevron and others, said Phil Weiss, analyst at Argus Energy.
"The impact in the first quarter isn't even as much as we'll see in the second quarter," Mr. Weiss said.
Overall exploration-and-production earnings fell 4.1% to $5.92 billion. Total oil and natural gas production edged up 0.8% to 2.65 MMbopd as project ramp-ups in the U.S. and Nigeria were largely offset by normal field declines, Chevron said.
Operating margin fell to 18.1% from 19.9%.
Shares recently traded $1.47 higher at $119.98. The stock has climbed 10% so far this year through Thursday's close.