uploads///Segments

Has Chevron’s Earnings Mix Changed?

By

Dec. 4 2020, Updated 10:52 a.m. ET

Change in earnings mix

A rise in oil prices altered Chevron’s (CVX) segmental dynamics in the third quarter. Chevron’s overall adjusted earnings rose from $1.6 billion in the third quarter of 2017 to $4.7 billion in the third quarter of 2018. However, its earnings mix changed radically.

Chevron’s Upstream segment, which contributed 54% to its overall adjusted earnings in the third quarter of 2017, contributed 93% in the third quarter of 2018. With the steep rise in its Upstream earnings, contributions from its Downstream segment declined. Chevron’s Downstream segment’s contribution fell from 70% in the third quarter of 2017 to 22% in the third quarter of 2018. Other expenses negatively impacted its earnings by 15% in the quarter compared to 24% in the third quarter of 2017.

It’s evident that the rise in oil prices led to an increase in Chevron’s Upstream earnings, which altered the company’s earnings mix.

Article continues below advertisement

Chevron’s third-quarter earnings details

Chevron’s adjusted Upstream earnings rose from $0.9 billion in the third quarter of 2017 to $4.4 billion in the third quarter of 2018. Its Upstream earnings rose due to higher hydrocarbon production coupled with better oil prices. In the United States, Chevron’s average crude oil realizations rose from $45 per barrel in the third quarter of 2017 to $68 per barrel in the third quarter of 2018. Chevron’s Upstream production also grew.

However, Chevron’s adjusted Downstream earnings fell 8% YoY to $1.0 billion in the third quarter, mainly due to lower international revenues, which were impacted by lower margins on the sale of refined products. However, the company’s domestic Downstream earnings rose due to higher equity earnings from Chevron Phillips Chemical Company. Chevron owns a 50% stake in the company.

In the next article, we’ll see how Chevron’s segmental capex trended in the third quarter.

Advertisement

Latest Chevron Corp News and Updates

    Market Realist Logo

    © Copyright 2022 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.