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Chevron Revitalizing with Improving Financials, Outperforms SPY

PART:
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Part 11
Chevron Revitalizing with Improving Financials, Outperforms SPY PART 11 OF 13

A Look at Chevron’s Segmental Earnings

Chevron’s segmental earnings: Upstream rise

Chevron’s Upstream segment registered a loss in 2Q16 and saw its earnings rise to $853 million in 2Q17. Its Upstream earnings grew due to an increase in its international earnings, and the loss in its domestic earnings was minimized.

The company’s international operations benefited from higher crude oil and natural gas volumes, lower operating costs, and reduced tax expenses. Also, the US Upstream segment benefited from lower operating costs. These earnings were also backed by a rise in crude oil and natural gas realizations in both zones—US and international.

A Look at Chevron’s Segmental Earnings

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Downstream earnings fall

Chevron’s Downstream segment’s earnings fell 6% YoY to ~$1.2 billion in 2Q17. This was due to a drop in International Downstream earnings and partially offset by a rise in its Domestic Downstream earnings.

CVX’s International Downstream earnings fell due to lower volumes and led by maintenance and turnaround activities. The maintenance activity at the Star Petroleum Refining Company in Thailand and a planned turnaround at the Cape Town, South Africa, refinery hit the overall international throughput. However, Chevron saw a rise in refining margins in both zones.

Peers’ segmental trends

ExxonMobil’s (XOM) Upstream segment’s earnings rose from $294.0 million in 2Q16 to ~$1.2 billion in 2Q17. Royal Dutch Shell’s (RDS.A) Upstream segment’s earnings plunged to ~-$1.3 billion in 2Q16 and turned to a profit of $339.0 million in 2Q17 on an adjusted basis. 

BP’s (BP) Upstream segment, which reported adjusted earnings of $29 million in 2Q16, rose to $710 million in 2Q17.

In the next part, we’ll review Chevron’s burgeoning Upstream portfolio.

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