Chevron’s Earnings Fell: Upstream Output Rose 9%

Chevron (CVX) posted its second-quarter results on August 2. Chevron’s earnings per share stood at $2.27 in Q2 2019 compared to $1.78 in Q2 2018. Chevron’s earnings adjusted for special items reached $1.77 per share in the second quarter. Further, Chevron’s Q2 revenues fell 8% YoY to $38.9 billion.

Chevron’s Earnings Fell: Upstream Output Rose 9%

Chevron’s earnings review

Chevron’s earnings rose 26% YoY to $4.3 billion in the second quarter. However, these earnings included special items like Anadarko merger termination fees, non-cash tax benefit, and foreign exchange effects. Adjusting for special items, Chevron’s earnings fell 1% YoY to $3.4 billion in the second quarter. The earnings fell year-over-year due to lower earnings from its Upstream and Downstream segments.

Chevron’s adjusted upstream earnings fell 2% YoY to $3.3 billion in the second quarter. The upstream earnings fell due to weaker realizations, partially offset by stronger volumes.

Chevron’s production grew due to higher volumes at its mega projects such as Wheatstone, Hebron, and Big Foot. Plus, hydrocarbon production at the Permian Basin grew almost 56% YoY. Chevron’s production rose 9% YoY to 3.08 million barrels of oil equivalent per day in the second quarter.

Chevron’s adjusted downstream earnings fell 7% YoY to $0.7 billion in the second quarter due to lower margins and volumes. Although Chevron’s domestic downstream refinery input was higher, its international input was lower. Domestic input was boosted by lower turnaround activity and the addition of the Pasadena refinery.

Chevron’s shareholder returns

Chevron paid $4.5 billion in dividends in the first half of 2019 compared to $4.3 billion in the first half of 2018. In the third quarter, Chevron will pay a dividend of $1.19 per share on September 10. The dividend was announced on July 31. Chevron’s third-quarter dividend payment shows 6% YoY growth.

Chevron also has an active share buyback program. The company aims to buy back $5 billion in shares every year. Robust cash flows backed by record upstream production has supported the company’s buyback program. In the second quarter, Chevron bought back $1 billion in shares.

In its second-quarter earnings release, Chevron’s chairman and CEO, Michael Wirth said, “Our strong financial and operational results reflect consistent execution, allowing us to pay our dividend, fund our attractive capital program, further strengthen our balance sheet and return surplus cash to our shareholders.”

Peers’ performance

Among Chevron’s peers, Total SA’s (TOT) earnings slumped and fell short of analysts’ estimate by 10%. Further, Suncor Energy’s (SU) EPS also missed its estimate by 11%. However, the company’s earnings rose in the quarter.

Similarly, Royal Dutch Shell’s (RDS.A) earnings fell to a two-year low. Shell’s adjusted EPS of $0.84 missed analysts’ estimate in the second quarter. However, BP’s (BP) earnings surpassed analysts’ estimate by about 7%.