Chevron’s segments in 1Q16
Chevron (CVX) reported a loss in 1Q16 due to its upstream segment, which reported a steep plunge in its earnings to -$1.5 billion. The upstream segment, which accounted for 61% of overall earnings in 1Q15, turned into a loss-making segment in 1Q16. This was due to the steep fall in oil and natural gas prices, which were partly offset by higher volumes and lower operating and exploration costs. The average price of Brent crude oil fell from $54 per barrel in 1Q15 to $34 per barrel in 1Q16.
Downstream segment falls, but stays positive
Chevron’s downstream segment saw its earnings fall by 48% to $0.74 billion in 1Q16 as compared to 1Q15. This was due to the decline in refining margins coupled with higher operating expenses in the US downstream operations in 1Q16. Plus, in 1Q16, CVX had lower earnings from its stake, around 50%, in Chevron Phillips Chemical Company.
CVX’s international downstream operations also saw lower refined product margins in 1Q16. However, crude oil input volumes rose in the company’s international operations due to lower turnaround, but this was partly offset by the divestment of Caltex Australia.
Chevron’s competitors’ segmental trends
Chevron’s competitors have also seen their segmental dynamics change. Total’s (TOT) upstream segment, which accounted for 48% of overall adjusted earnings in 1Q15, contributed 26% in 1Q16. Suncor Energy (SU) and BP (BP) reported losses in their upstream segments in 1Q16.
Also, ExxonMobil’s (XOM) upstream segment, which accounted for 58% of overall earnings in 1Q15, turned into a loss-making segment in 1Q16. The PowerShares Dynamic Large Cap Value Portfolio (PWV) has ~11% exposure to energy sector stocks, including Chevron.