Chevron reported earnings for the first quarter that beat Wall Street expectations, with adjusted earnings per share of $2.93 compared to the expected $2.87. However, the company’s profit fell from the year-ago period, with net income declining 16% to $5.5 billion. This was attributed to lower sales margins at its refineries and lower natural gas prices impacting international production. Chevron’s revenue of $48.72 billion also fell short of analysts’ expectations.
While oil prices have increased this year, with a 16% gain, and gasoline futures up 31%, Chevron’s profits were still affected by challenges faced by its refineries and international gas business. Natural gas prices have dropped by 37% due to an oversupply, further impacting the company’s earnings. The refining business in the U.S. saw a significant decline in earnings, with a more than 50% drop, while international refining profits fell by almost 60%.
Chevron’s U.S. oil and gas business, however, saw a 16% increase in earnings to about $2 billion, attributed to higher sales volumes. The company produced 1.57 million barrels of oil and gas daily in the U.S. for the quarter, a significant increase from the previous year. Production gains were driven by strong output in the Permian and the Denver-Julesburg basins. International oil and gas earnings fell by 6% due to production declines in Nigeria and maintenance issues.
The company remains confident in its pending acquisition of Hess Corp., despite a challenge from Exxon Mobil in arbitration court. Chevron expects the shareholder vote and the Federal Trade Commission’s request for information on the deal to be resolved in the second quarter. Capital expenditures rose significantly to $4.1 billion, a 37% increase from the previous year, with higher spending on oil and gas production. Chevron also paid out dividends and repurchased shares in the quarter.
Despite the challenges faced in the energy industry, Chevron remains committed to its operations and investments. The company’s total worldwide production increased by 12% to 3.35 million barrels per day, its highest first-quarter output on record. While profits may have declined in certain segments, Chevron is focused on driving growth and efficiency in its operations. The company’s return on capital was lower compared to the previous year, but it continues to prioritize shareholder returns and investment in its assets.
