uploads///Segments

How Chevron’s 3Q16 Segmental Earnings Trended

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Dec. 4 2020, Updated 10:53 a.m. ET

Chevron’s upstream segmental earnings

Chevron’s (CVX) earnings improved in 3Q16 compared to 3Q15. In fact, the upstream segment that reported losses in the past three quarters turned profitable in 3Q16. The segment reported a rise in earnings to $454.0 million in 3Q16 from a loss in 2Q16.

Upstream earnings were better due to a marginal increase in earnings in the international segment and a lower loss in the US segment. International operations benefited from a fall in taxes and operating costs and higher natural gas sales volumes. The US upstream segment also benefited from lower costs. This was partially offset by a fall in crude oil and natural gas prices in both the US and international regioins.

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Downstream segment fell but stayed positive

Chevron’s downstream segment saw its earnings fall 52.0% YoY (year-over-year) to $1.1 billion in 3Q16. The loss was due to the fall in refining margins in the US segment in 3Q16 over 3Q15. In 3Q16, CVX had lower earnings, about 50.0%, from its stake in Chevron Phillips Chemical.

CVX’s international downstream earnings were impacted YoY by the absence of derivative gains, foreign currency effects, and lower refined product margins in 3Q16. Refined product sales fell 2.0% YoY in 3Q16.

Segmental trends for Chevron’s peers

Chevron’s peers ExxonMobil (XOM), Total (TOT), and Suncor Energy (SU) have also seen their contributions from segmental earnings change. ExxonMobil’s upstream segment, which contributed 32.0% of its total earnings in 3Q15, fell to 23.0% in 3Q16. Total’s net adjusted operating earnings from its upstream segment fell 21.0% from 3Q15 to $0.88 billion in 3Q16.

However, Suncor’s (SU) Oil Sands segment, which had been posting operating losses until 2Q16, turned profitable in 3Q16.

If you’re looking for exposure to integrated energy sector stocks, you might consider the iShares Global Energy (IXC). IXC has a ~56.0% exposure to the industry.

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