Chevron’s profit rises on higher oil prices and output

FAN Editor
FILE PHOTO - Dow Jones Industrial Average listed company Chevron (CVX)'s logo is seen in Los Angeles
FILE PHOTO – The logo of Dow Jones Industrial Average stock market index listed company Chevron (CVX) is seen in Los Angeles, California, United States, April 12, 2016. REUTERS/Lucy Nicholson/File Photo

February 1, 2019

By Jennifer Hiller

HOUSTON (Reuters) – U.S. oil and natural gas producer Chevron Corp on Friday reported quarterly earnings that topped analysts’ estimates on higher prices and production, sending shares higher in morning trading.

Results for the San Ramon, California, company reflected a 12.5-percent increase in oil and gas production as net output rose to 3.08 million bpd. Prices paid for its crude were $59 a barrel in the quarter, up from $57 a year earlier, the company said.

It was “a good beat overall,” said Muhammed Ghulam, an analyst at Raymond James. “Permian production growth remained strong, up 12 percent compared to the prior quarter and 84 percent year over year,” he said.

The Trump administration last month added new sanctions against imports from Venezuela, where Chevron is the last major U.S. oil company with production operations. Fourth-quarter results show net production by its affiliate rose slightly to 24,000 barrels per day, from 23,000 barrels per day a year earlier.

Chevron’s cash flow from operations rose nearly 51 percent to $30.6 billion, reflecting the higher output and expense reduction. Investors have been pushing oil companies to restrain spending and increase returns to shareholders.

Chief Executive Michael Wirth forecast oil-equivalent production this year to grow between 4 percent and 7 percent, excluding asset sales, compared with 2018.

Chevron reported a profit of $3.7 billion, or $1.95 per share, compared with $3.11 billion, or $1.64 a share a year earlier. Analysts’ mean forecast was $1.87 a share, according to Refinitiv.

Business unit results compared to the year-ago period were lower because of the impact of U.S. tax reform a year ago. Profit from oil and gas exploration was $3.29 billion compared with $5.29 billion a year earlier; refining profit fell to $256 million compared with $1.2 billion a year ago.

The company this week announced it would raise its dividend to $1.19 a share from $1.12 per share. It also agreed to pay $350 million to buy a refinery in Pasadena, Texas, from Brazilian state oil company Petrobras, confirming a Reuters report from Monday. The acquisition is intended to process oil flowing from its West Texas shale fields.

Shares were up 3.2 percent at $118.30, helping lift the Dow Jones Industrial Average.

Chevron officials are expected to discuss results on a conference call on Friday.

(Reporting by Jennifer Hiller; Editing by Chizu Nomiyama and Nick Zieminski)

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