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Dow-30 Earnings: Chevron Corp. – First Quarter 2012
Chevron (CVX – Free Chevron Stock Report), the world's fourth-largest oil company based on proven reserves and a Dow-30 component, has delivered share earnings of $3.27 in the first quarter, compared with the year-earlier tally of $3.09 and our estimate of $3.00. Revenues reached a total of $6.17 billion, versus $5.98 billion in the 2011 March period. The stock was relatively flat in morning trading.
In the Upstream (Exploration & Production) segment, sales and operating income came in higher than in the prior-year term, buoyed by increased oil prices. Chevron's operations are oil-weighted, and the company's average sales price per barrel of crude oil and natural gas liquids in the U.S. was $102, versus $89 in the comparable quarter of 2011. The average quarterly price per barrel of oil in the international segment was $110, up from $95 last year. As a result, even though worldwide net oil equivalent production was down 4.7%, to 2.63 million barrels per day, global Upstream income rose 3.2%, to $6.17 billion. The drop-off in worldwide production was attributable to normal field declines, maintenance-related downtime, and asset dispositions, more than offsetting project ramp-ups in Thailand and the United States.
In the Downstream (Refining & Marketing) business, unit income also registered a gain in the latest quarter, rising to $804 million, from $622 million in the previous year. Refinery crude oil input sales outweighed a decline in fuel oil and gasoline sales. Proceeds from the disposition of various R&M assets compensated for the drop-off in production due to the loss of those assets.
The healthy cash flow generated, predominantly from higher earnings, enabled Chevron to reward its shareholders with a substantial increase to the quarterly dividend, up 11.1% to $0.90 a share. This is the third increase in just over a year.
Chevron's sales and earnings should continue to grow over the next few years, as new production stemming from key development projects comes into service. Customer interest is building for the company's liquefied natural gas (LNG) projects in Australia. Too, we look for production to ramp-up in the deepwater Usan field off the Nigerian coast and at Chevron's Caesar/Tonga deepwater field in the Gulf of Mexico.
Elsewhere, the negative impact of a pollution lawsuit in Ecuador will probably keep the stock price in check over the coming months. Long term, however, Chevron's sales and earnings should benefit from increasing oil prices as the global economy gradually improves, as well as the accretive effect of new production volumes coming on-line. We look for 2012 and 2013 share net of $14.40 and $15.30, respectively.
About The Company:Chevron has daily gross crude oil and natural gas liquid production of about 1,850 million barrels. Natural gas production averages around 5,100 billion cubic feet. Net proved reserves at 12/11 were 7.173 billion barrels of oil. The company operates a multitude of well sites all over the globe, as well as owning/leasing about 4,100 gas stations, mostly in the United States.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.