Chevron Profits Fall, Despite High Downstream Refinery Gains – ValueWalk Premium

Chevron Profits Fall, Despite High Downstream Refinery Gains

chevron corporation

Chevron Corporation (NYSE:CVX), the second largest American oil company, posted a 7 percent dip in quarterly profit in its earnings release today, amid widespread weakening of oil prices on a year-over-year basis. During the second-quarter, its income fell to $7.2 billion. Nonetheless, the otherwise bearish situation was salvaged by remarkable refining margins (downstream).

While Chevron Corporation (NYSE:CVX)'s earnings are not all that dependent on natural gas prices, they were affected by the sapless nature of the natural gas price during the second quarter. Notwithstanding, Exxon Mobil- its bigger rival- took a bigger blow during the quarter as it has a more profound inclination towards natural gas.

Despite the many pitfalls, Chevron Corporation (NYSE:CVX)'s earnings topped Wall Street analysts' forecasts. Brian Youngberg, an analyst with Edward Jones, shared a notably positive insight on the matter. On a personal level, Youngberg believed that the quarter was outstanding. “The downstream was the main reason for the beat,” he says.

According to Thomson Reuters, analysts’ general outlook came in at $3.24 per share. However, actual reports now show that Chevron was underestimated, as it has managed to post earnings of $3.66 per share. Although this was lower than last year’s $3.85, it still managed to beat estimates, and as such, plants a seed of hope.

In an interesting twist, Chevron’s upstream business recorded an 18 percent drop, as profits dipped to $5.6 billion, while its downstream refining business- which was the real game changer- posted a profit of $1.88 billion, representing an 80 percent leap.

In general, U.S refinery operations performed exceptionally well. Profits swelled notably, presenting a 42 percent gain. The global picture was also equally appealing, as collective profits from diverse markets around the globe more than doubled to come in at $1.1 billion.  Apparently, the strong global performance is traceable to a major asset sale in South Korea.

On the other end of the table, Exxon (which arguably happens to be Chevron’s biggest competitor) failed to meet expectations. Its oil and gas output was not impressive and its chemical unit exhibited weak margins.

The cumulative oil and gas production this quarter came in at 2.62 million barrels per day, down from a slightly higher 2.89 million barrels per day in last year’s second quarter.

As if to mark the tough conditions facing the oil industry, Chevron commented on the reasonable rise in bench mark margins earlier this month. At the time of giving its insight, Chevron noted that the margins on the Gulf Coast had risen to $24.89, an additional $4 plus of the initial price.

In today’s early trading, Chevron’s share price closely revolved around $108.50.


Saved Articles