Chevron Corporation CVX reported adjusted second-quarter earnings per share of $3.08, ahead of the Zacks Consensus Estimate of $2.95. The outperformance could be attributed to higher-than-expected bottom line results in the company’s key upstream segment. The unit’s profit of $4.9 billion came in well above our estimate of $2.9 billion as domestic production hit a new high.
However, the company’s bottom line fell from the year-ago adjusted profit of $5.82 due to weaker oil and natural gas realizations, plus a a dip in refined product sales margins.
The company generated revenues of $48.9 billion. The sales figure missed the Zacks Consensus Estimate of $51.4 billion and decreased 28.9% year over year.
Chevron Corporation Price, Consensus and EPS Surprise
Chevron Corporation price-consensus-eps-surprise-chart | Chevron Corporation Quote
Segment Performance
Upstream: Chevron’s production of crude oil and natural gas — at 2,959 MBOE/d (59% liquids) — rose 2.2% year over year. The latest volume statistics primarily reflect impressive output from the Permian basin — America's hottest and lowest-cost shale region.
The U.S. output increased 4% year over year to a record 1,219 MBOE/d, while the company’s international operations (accounting for 59% of the total) edged up 0.9% to 1,740 MBOE/d.
Despite volumes improving from last year, Chevron’s second-quarter 2023 upstream segment profit plunged 42.3% to $4.9 billion. This was mainly on account of a sharp drop in oil and natural gas prices.
At $56 per barrel, Chevron’s average realized liquids prices in the U.S. were $33 below the year-earlier levels while prices overseas slumped 33.3% to $68 per barrel. As far as natural gas is concerned, the commodity was down 80.2% and 18.7%, respectively in the U.S. and internationally.
Downstream: Chevron’s downstream segment recorded a profit of $1.5 billion, dropping from last year’s figure of $3.5 billion. The slip underlined lower product sales margins, higher operating expenses in the U.S. and lower foreign currency effects.
Cash Flows, Capital Expenditure
The company recorded $6.3 billion in cash flow from operations, compared to $13.8 billion a year ago. The decreasing cash flow could be attributed to weaker price realizations in the upstream business. Chevron’s free cash flow for the quarter was $2.5 billion.
Further, Chevron paid $2.8 billion in dividends and bought back $4.4 billion worth of its shares.
The Zacks Rank #3 (Hold) company spent around $3.8 billion in capital and exploratory expenditures during the quarter, compared to the year-ago period’s $3.2 billion.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Balance Sheet
As of Jun 30, the San Ramon, CA-based company had $9.3 billion in cash and cash equivalents and total debt of $21.5 billion with a debt-to-total capitalization of about 12%.
Important Energy Earnings So Far
Let’s take a look at some key energy reports of this season.
SLB SLB, the largest oilfield contractor, announced second-quarter 2023 earnings of 72 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate by a penny. SLB’s bottom line also significantly increased from the year-ago quarter’s earnings of 50 cents.
SLB’s strong quarterly earnings resulted from higher stimulation services and strong activities across all areas. As of Jun 30, 2023, the company had approximately $3.2 billion in cash and short-term investments. It had a long-term debt of $11.3 billion at the end of the second quarter.
Another oil service biggie Halliburton HAL reported second-quarter 2023 adjusted net income per share of 77 cents, surpassing the Zacks Consensus Estimate of 75 cents and well above the year-ago quarter profit of 49 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions.
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong second-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, HAL expects this recipe, and long-term oil and gas demand, to drive a strong and sustained upcycle.
Meanwhile, energy infrastructure provider Kinder Morgan KMI reported second-quarter adjusted earnings per share of 24 cents, a penny ahead of the Zacks Consensus Estimate. The bottom line was primarily aided by higher gathering and transport volumes. However, KMI’s second-quarter DCF was $1.1 billion, down from $1.2 billion a year ago.
As of Jun 30, 2023, Kinder Morgan reported $497 million in cash and cash equivalents. Its long-term debt amounted to $28.5 billion at the quarter-end. For 2023, KMI projects a net income of $2.5 billion and a dividend of $1.13 per share, suggesting an increase of 2% from the prior-year reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Schlumberger Limited (SLB) : Free Stock Analysis Report
Halliburton Company (HAL) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
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