Thursday, April 28, 2011

Chevron Corp. (NYSE: CVX): Q1 Earnings Preview 2011

Chevron Corp. (NYSE: CVX), the second biggest U.S. oil company by market capitalization, is scheduled to release its first quarter earnings before the opening bell on Friday, April 29, 2010. Analysts, on average, expect the company to report earnings of $3.04 per share on revenue of $66.62 billion. In the year ago period, the company reported earnings of $2.36 per share on revenue of $46.74 billion. 

Chevron Corporation operates as an integrated energy company worldwide. The company's Petroleum operations include the exploration, development, production, and marketing of crude oil and natural gas; refining, marketing, and transportation operations comprise refining crude oil into finished petroleum products; marketing crude oil and products derived from petroleum; and transporting crude oil, natural gas, and petroleum products by pipeline, marine vessel, motor equipment, and rail car. 

In preceding fourth quarter, the San Ramon, California-based company's net income was  $5.30 billion, or $2.64 per share, compared to $3.07 billion, or $1.53 per share, in the prior-year quarter. Revenue rose to $54.03 billion from last year's $48.68 billion. Analysts, on average, expected the company to report earnings of $2.40 per share on revenue of $55.97 billion.

The company has benefited from  higher oil prices and better refining margins. The demand for fossil fuels continued to rebound in recent months on an increase in global economic activity. Crude-oil prices have also broken through $100-a-barrel on jitters tied to supply disruptions in Libya and political strife in the Middle East. Oil prices have advanced 23 percent in New York this year.

Recently, the company said that it expects profit for the first quarter to be higher than the previous quarter, due to higher crude oil prices. Further, the company said that it expects its upstream earnings to increase sequentially in the first quarter, reflecting higher crude oil prices, offset in part by lower liftings. According to Chevron, Downstream earnings in the first quarter are expected to be slightly lower sequentially, largely due to reduced asset sales gains, largely offset by higher U.S. margins. U.S. net oil-equivalent production during the first two months of the first quarter dropped 12,000 barrels per day, compared to the average production for the fourth quarter, reflecting small declines across multiple assets. International net oil-equivalent production during February and March declined 26,000 barrels per day compared to the previous quarter as the increase in crude oil prices reduced the company's production under cost-recovery and variable-royalty provisions on certain international production contracts.

Average U.S. crude oil realizations for the first two months of the first quarter increased $8.67 per barrel or 10.90 percent from the prior quarter to $88.23 a barrel, and up $14.91 per barrel or 20.34 percent from the year-ago quarter. International liquids realizations also increased $12.24 per barrel or 15.48 percent from the previous quarter to $91.33 a barrel, and surged $21.28 per barrel or 30.38 percent from last year.

Last month, the company said that in the next few years it would focus on completing its major natural gas development projects in Australia, which is expected to deliver "Chevron's next wave of significant growth." The company plans to increase oil and natural-gas production by about 20 percent by 2017. The company said its Upstream business continues to advance its major capital projects and are on track to meet key project milestones. The company intends to increase output to 3.3 million barrels of crude per day in 2017 from 2.76 million barrels of crude per day in 2010. Pointing out that Asia Pacific has an important place in Chevron's growth story, the company said the center of growth will be Asia, and Chevron is the best positioned international oil company to supply that growing demand. The Downstream business is steadily progressing on its restructuring and asset rationalization plans. "We have made significant strides in the first year of our three-year plan," said Mike Wirth, executive vice president, Downstream and Chemicals.

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