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HenryTo
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 Posted: Fri Apr 30, 2010 11:12 am Post subject: Chevron (CVX) |
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Morningstar on CVX's 1Q earnings:
| Quote: | | Chevron CVX reported a 147% rise in first-quarter earnings compared with the same period a year ago. Upstream earnings benefited from higher oil and natural gas price realizations and increased production volumes. Downstream segment earnings fell 74% as a result of lower refined product margins and reduced sales volumes. Higher earnings from the chemical segment somewhat offset the effects of the weak refining results. Production for the quarter was 2.78 million barrels of oil equivalent, an increase of 4.5% from the same period a year earlier. Gains came primarily from project startups and ramp-ups in the Gulf of Mexico, Nig eria, and Angola and the expansion of Tengiz in Kazakhstan. In the United States, oil volumes grew 15% while natural gas remained flat with the first quarter of 2009. Chevron previously indicated it would reduce investment in U.S. natural gas development, given the weak price environment. For the quarter, international oil and natural gas volumes grew 3% and 2%, respectively, from the same period a year earlier. Despite the year-over-year weakness in downstream earnings, Chevron registered a significant improvement from the fourth quarter, when the segment reported a loss. The company should make additional progress in the second quarter, given the recent strength in refining margins. And longer term, Chevron's downstream earnings should show some benefit from recently announced plans to restructure the operations. |
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Chevron (CVX) Replies |
HenryTo
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| Posted: Sun Apr 29, 2012 5:53 pm Post subject: |
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Morningstar on CVX's 1Q earnings.
| Quote: | | Chevron CVX posted an increase in first-quarter earnings, despite a drop in production, thanks to its oil-leveraged portfolio, which benefited from higher prices. First-quarter earnings rose to $6.5 billion from $6.2 billion a year earlier. Upstream earnings contributed the bulk of the improvement with earnings of $6.2 billion compared with $6.0 billion a year earlier. The increase was largely a result of higher crude oil prices as production slipped to 2.63 million barrels of oil equivalent per day, or 4.7% from 2.76 mmboe/d a year ago. U.S. production volumes of 651 mboe/d fell 6% from a year ago due to normal field declines and asset sales which offset the ramp-up of the Perdido project in the Gulf of Mexico. International volumes fell to 1.98 mmboe/d or about 4.2% from a year ago as maintenance downtime, notably at the Frade field in Brazil, and natural field decline offset project ramp-ups in Thailand. Production figures are largely in line with what Chevron previously reported in its interim update. However, production is tracking slightly below previous full-year guidance of 2.68 mmboe/d, probably because of higher oil prices and the shut-in of Frade. The quarterly results demonstrate why we still prefer Chevron relative to peers as it stands to benefit from higher international oil prices while maintaining limited exposure to weak U.S. natural gas prices. Chevron also remains focused on shareholder returns, offering a relatively attractive mix of repurchases and dividends. During the quarter, Chevron repurchased $1.25 billion in shares and will probably do so again in the second quarter. Additionally, it increased its dividend 11% this week, bringing its yield to 3.4%. The downstream segment posted earnings of $804 million compared with $622 million last year, thanks largely to asset sales in the international segment. Hurting results for the quarter was $504 million in corporate charges, above the upper end of management's latest guidance of $400 million. |
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HenryTo
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| Posted: Fri Jan 27, 2012 5:04 pm Post subject: |
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Morningstar on CVX's 4Q 2011 earnings.
| Quote: | | Chevron CVX posted a relatively weak quarter compared with the rest of 2011, as a loss for the downstream segment stood in sharp contrast to the robust profits seen earlier in the year. The decline in downstream earnings during the quarter also offset the benefit of higher oil prices on upstream earnings, resulting in earnings falling to $5.1 billion from $5.3 billion in the same period a year before. The downstream segment registered a loss of $61 million during the quarter, compared with gains of $742 million and $1.99 billion (including asset sales) in the fourth quarter of 2010 and third quarter of 2011, respectively. We think ultimately the weakness during the quarter will prove to be short-lived as conditions have already begun to improve. Chevron also suffered from lost volumes as a result of a turnaround during the quarter. However, considering that the chemical segment posted a gain, as indicated by Chevron's chemical partner ConocoPhillips' COP earnings report, the losses for the refining business were actually worse than the reported earnings would indicate. That being said, we think over the long term Chevron will benefit from asset divestitures during the year that reduced invested capital in the downstream segment and should lessen its impact on total company returns. The upstream segment benefited during the quarter from higher prices from a year earlier, but production volumes were lower. Earnings rose to $5.7 billion from $4.8 billion a year earlier. Fourth-quarter production fell to 2.64 million barrels of oil equivalent per day from 2.79 mmboe/d last year as maintenance downtime, natural field decline, and the negative effects of higher prices on entitlement volumes offset project additions. Full-year production averaged 2.67 mmboe/d compared with 2.79 mmboe/d in 2010, which was below management's midyear guidance of 2.73 mmboe/d. The guidance miss is disappointing, but does not affect the long-term outlook for Chevron, in our opinion. After several years of robust growth, the company had already warned of tepid production growth, about 1% per year, until 2014, when some of its larger projects currently under development come on line. At that point, production growth is expected to grow at 4%-5% per year. Also, Chevron was struck by some one-time events this year that negatively affected production. The company expects only marginal growth in 2012 with production guidance of 2.68 mmboe/d. We maintain a positive view on Chevron, given the firm's leverage to oil prices, deep project queue, and downstream restructuring. |
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HenryTo
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| Posted: Thu Jan 12, 2012 3:55 pm Post subject: |
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Morningstar on CVX's somewhat disappointing interim update.
| Quote: | | After market close on Wednesday, Chevron CVX released its interim update indicating fourth-quarter earnings would be significantly below third-quarter results as a result of weak downstream segment results. While Chevron suffered from company specific events during the quarter--such as the absence of asset sale gains that benefited third-quarter results and a large turnaround at its Richmond refinery--the report indicated that the strong downstream earnings reported by the majors throughout 2011 likely did not extend into the fourth quarter as global refining margins weakened. Specifically, Chevron cited a substantial decline in Gu lf Coast refining margins, which was likely due to a narrowing of heavy crude differentials. However, the weakness is unlikely to be contained to the Gulf Coast for the other major integrated firms. Poor refining margins during the quarter in Europe will likely negatively affect Royal Dutch Shell's RDS.A and Total's TOT earnings. ConocoPhillips COP likely will see lower quarterly downstream earnings given the narrowing of the WTI/Brent spread during the period, which was previously boosting margins at its Mid-Continent refiners. Though not overly exposed to one specific region given its wide geographic footprint, we expect ExxonMobil XOM will still see downstream earnings fall from third-quarter levels. Chevron expects upstream earnings to remain essentially flat with third-quarter levels as increased international production and higher U.S. liquids realizations offset lower international liquids realizations and U.S. natural gas realizations. However, it appears Chevron will fall short of its revised full-year production target of 2.73 mmboe/d. Though only based on data through November, full-year production is likely to be closer to 2.67 to 2.68 mmboe/d. The other majors should report similar changes in realizations with the fall in U.S. natural gas prices particularly hurting large domestic natural gas producers ConocoPhillips and ExxonMobil. Chevron also expects to report a foreign exchange loss for the fourth quarter, compared to a gain of $450 million in the third quarter. |
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HenryTo
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| Posted: Fri Oct 28, 2011 10:57 pm Post subject: |
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Morningstar on CVX's 3Q earnings:
| Quote: | | Chevron CVX reported a 108% increase in third-quarter earnings from a year ago thanks to higher oil prices, stronger refined product margins, and gains on asset sales. Upstream earnings increased 74% to $6.2 billion from $3.6 billion a year earlier despite a drop in production volumes. Like its peers, Chevron saw its production reduced (39 thousand barrels of oil equivalent per day) as a result of the effect of higher oil prices on production sharing contracts. Also taking a toll on production volumes was maintenance-related downtime due to damage of a third-party pipeline in Thailand, tropical storm related downtime and normal filed decline. As a result, total production volumes of 2.6 million barrels of oil equivalent per day were down 5.1% from a year earlier. With year-to-date production standing at 2.68 mmboe/d, we think it could be difficult for Chevron to realize its revised full-year guidance of 2.73 mmboe/d. We look forward to management comments regarding the viability of the target. However, the company has already reiterated its guidance of production growth of about 1% (assuming oil prices of $79 per barrel) through 2014 and total production of 3.3 mmboe/d in 2017, which we use in our model. As a result, a shortfall this year is unlikely to affect our fair value estimate. Also, despite the drop in production, Chevron's earnings per barrel of about $26 per barrel continued to far outpace its peers and demonstrate its leverage to international oil prices and high-quality portfolio. Downstream earnings reported a very strong quarter thanks to robust global refining margins, continued strong chemical performance, and asset sales. Earnings soared to $2.0 billion during the third quarter from $565 million a year earlier. The sale of the U.K. Pembroke refinery and other marketing assets contributed about $500 million to earnings. However, excluding the asset sales contribution, the downstream segment performed well on an operational level as profitability on a per barrel basis continued to improve. We think this demonstrates the effectiveness of Chevron's improvement plans and divestitures over the past year that should lead to higher sustained returns. While downstream performance will remain cyclical and currently strong refining margins may wane, we think Chevron is better positioned to weather a downturn than it was two years ago. The company repurchased $1.25 billion worth of its own shares during the third quarter. We expect a similar level for the fourth quarter will be announced on Friday's conference call. |
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HenryTo
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| Posted: Fri Jul 29, 2011 10:50 pm Post subject: |
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Morningstar on CVX's 2Q earnings:
| Quote: | | Chevron CVX reported a 43% increase in second-quarter earnings from a year ago, thanks to higher oil prices and stronger refined product margins. However, production slipped to 2.69 million barrels of oil equivalent per day from 2.75 mmboe/d a year earlier as project startups in Canada and the United States were unable to offset the loss of 40 mboe/d related to the effect of higher prices on cost recovery and variable-royalty contract terms. As a result, Chevron lowered its full-year production guidance to 2.73 mmboe/d assuming oil prices of $111 per barrel or 2.76 mmboe/d at $79 per barrel from its original guidance of 2.79 mmboe/d at $79 per barrel. A third-party pipeline incident in Thailand and slower-than-anticipated project ramp-up also contributed to the revision. While we plan to incorporate the new guidance into our model, we do not anticipate a revision to our fair value estimate. We already have modeled a period of tepid production growth for Chevron until a series of large projects come on line beginning in 2014. Also, despite the drop in production, we were rather impressed by Chevron's numbers, as earnings per barrel well outpaced peers during the quarter. We think this speaks to the quality of Chevron's existing portfolio and exposure to oil relative to other integrateds. Improved downstream results also contributed to the year-over-year increase in earnings. Downstream earnings rose modestly to $1.044 billion from $975 million a year earlier as an improvement in the U.S. segment was partially offset by a decline in international earnings. The U.S. segment benefited from higher ma rgins on refined products as well as increased earnings from its chemical operations. International earnings fell as a result of foreign currency effects. More importantly, Chevron continued its divestment of downstream assets by completing the sale of its fuel marketing business in Central America. The company will complete the sale of its U.K. refinery in August, despite a fire at the facility earlier this year. As a result, Chevron's investment in downstream, already the lowest among the major integrateds, should continue to fall, likely setting it up for improved future returns on capital. The company repurchased $1 billion worth of its own shares in the second quarter, and we expect the same amount for the third quarter. |
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HenryTo
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| Posted: Tue Jul 12, 2011 1:14 pm Post subject: |
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Morningstar on CVX's second-quarter interim update:
| Quote: | | Late Monday, Chevron CVX released its second-quarter interim update, which indicated earnings would be higher than in the first quarter. Upstream earnings are expected to increase thanks to higher oil prices, despite a decline in production volumes from the first quarter. The lower production volumes are largely a result of maintenance activity in Kazakhstan. Downstream earnings are expected to rise from the first quarter as a result of higher worldwide refining margins. Given the rise in commodity price benchmarks throughout the quarter, the increase in earnings comes as little surprise and is in line with our expectations. We would expect Chevron's integrated peers ExxonMobil XOM, Shell RDS.A, BP BP, ConocoPhillips COP, and Total TOT to benefit as well from the same factors and report a similar improvement in second-quarter earnings, barring any company-specific factors that could affect results. |
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HenryTo
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| Posted: Thu May 05, 2011 1:31 am Post subject: |
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Morningstar on CVX's 1Q earnings:
| Quote: | | Chevron CVX reported a 36% increase in first-quarter earnings from a year ago to $6.2 billion, thanks to higher oil prices, which offset lower production volumes. Production for the quarter was 2.76 million barrels of oil equivalent per day compared with 2.78 mmboe/d last year. U.S. production volumes fell about 5.4% to 694 mboe/d, while international volumes rose almost 1% to 2,066 mboe/d. However, thanks to the higher oil prices, upstream earnings increased to $5.98 billion from $4.72 billion a year earlier. The fall in production is not surprising, given that Chevron disclosed the lower volumes in its interim release earlier this month. Additionally, after several years of strong production growth, we anticipate only modest gains in the next few years until the startup of several large projects. The decline in production was largely attributable to the effect of higher prices on international volumes from production-sharing contracts. Production was also affected by maintenance and weather-related downtime in the both the United States and internationally. As a result, we continue to have a positive long-term outlook for the company despite the short-term fluctuation in production growth. During the quarter, Chevron continued to make significant progress on restructuring its downstream operations by selling a refinery in the United Kingdom and disposing of additional international marketing operations. We continue to see these divestitures as positive moves that better position Chevron to deliver higher returns. Like its peers, Chevron reported a significant improvement for its downstream segment. U.S. downstream first-quarter earnings rose to $442 million from $82 million a year earlier thanks to improved refining margins and higher chemical earnings. International downstream earnings increased to $180 million from $114 million as the negative effects from derivative contracts and foreign currency partially offset improved refining margins. We expect similarly strong downstream results in the second quarter as benchmark margins remain strong. |
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HenryTo
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| Posted: Tue Nov 09, 2010 11:17 am Post subject: |
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Chevron moves into unconventional (shale) gas in a major way. Following courtesy of Morningstar:
| Quote: | | Chevron CVX announced Tuesday it will acquire Atlas Energy ATLS for $3.2 billion in cash or $38.25 per share and assume $1.1 billion in debt, joining peers ExxonMobil XOM and Royal Dutch Shell RDS.A in making significant entries into North American unconventional resource plays in the past year. Chevron had previously limited exposure to unconventional natural gas in the United States compared with its peers and had even reduced investment in natural gas production in the past year as prices remained low. With the acquisition, Chevron adds Atlas' assets in the Appalachian basin consisting of 486,000 net acres in the Marcellus Shale and 623,000 net acres of Utica Shale. Atlas' Marcellus acreage in southwestern Pennsylvania borders positions held by fellow independent Range Resources RRC. Combined with other recent entries into the play by larger firms, the acquisition by Chevron probably confirms the potential of the Marcellus Shale, particularly in southwestern Pennsylvania, which has key advantages that could make the region more attractive over the next five years. The deal also includes a 49% interest in Laurel Mountain Midstream, a midstream joint venture that owns more than 1,000 miles of natural gas gathering lines serving the Marcellus. Other Atlas assets include Antrim producing proper ties in Michigan and 100,000 net acres of Collingwood/Utica Shale. Atlas' total resource base consists of an estimated 9 trillion cubic feet of natural gas including 850 billion cubic feet of proved natural gas reserves plus about 80 million cubic feet of production per day. The pre-existing Atlas joint venture in the Marcellus Shale with Reliance Industries will remain intact, with Chevron assuming Atlas' role of operator with a 60% participation interest. The original agreement will stand, with Reliance continuing to fund 75% of the operators' drilling costs up to $1.4 billion. In addition to the cash consideration, Atlas shareholders will receive a pro rata distribution of 41 million units of Atlas Pipeline Holdings AHD after some restructuring, including selling the 49% interest in Laurel Mountain Midstream to Atlas and purchasing from Atlas interests in certain investment partnerships and 175 b illion cubic feet of proved natural gas reserves. Chevron plans to comment on the acquisition further when it presents at an energy conference Thursday. |
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HenryTo
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| Posted: Fri Oct 29, 2010 11:10 am Post subject: |
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Morningstar on CVX's 3Q earnings:
| Quote: | | Chevron CVX reported a 1.6% decrease in third-quarter earnings compared with the year-ago period. Despite increased total production volumes of 1.3% and higher oil and natural gas price realizations, earnings suffered from foreign currency effects and the absence of gains realized in the third quarter of 2009. International upstream earnings for the quarter incurred the bulk of these negative effects, falling 8% from the same period a year ago. Foreign currency effects decreased earnings for the segment by $245 million, while the quarter a year ago benefited by $400 million from asset sales related to the Gorgon project in Australia. While quarterly earnings for the segment fell, production volumes continued to increase. Gains in Brazil and Thailand led to international oil and natural gas volume growth of 3.3% and 7.9%, respectively. U.S. upstream third-quarter earnings increased 6.4%. Higher price realizations helped to offset the negative impact of decreased production volumes and higher operating expenses, partially related to the Gulf of Mexico drilling moratorium. Third-quarter U.S. volumes fell 7.1% from the period a year ago as a result of normal field decline and downtime related to maintenance. Natural gas volumes registered a decline of 11.6% while oil volumes fell 5.3%. As expected, downstream earnings dipped from the second quarter as benchmark margins in certain areas weakened. However, earnings remained well above levels of the past year, including a 116% improvement from the third quarter of 2009. The improvement in international downstream earnings was hampered by negative forei gn currency effects of $118 million. Chevron indicated its downstream segment benefited from higher earnings from its chemical operations, though it does not break out these results. We would expect downstream earnings could fall only slightly from third-quarter levels in the fourth quarter, since refining margins appear to be holding up well early on. Also, refining benchmark margins for the West Coast and Asia, two key areas for Chevron, actually improved during the third quarter. Continued strength in those regions should benefit the company. During the quarter, Chevron joined its peers by announcing plans to repurchase shares in the fourth quarter at a rate of $500 million-$1 billion per quarter. |
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