Chevron beat revenue estimates, but profits fell due to lower refining margins and lower natural gas prices

Chevron Earnings on Friday beat expectations but fell from a year earlier as refineries and international natural gas operations faced headwinds.

Compared to the same period last year, the oil giant’s net profit fell 16% to $5.5 billion, or $2.97 per share. Excluding one-time items, Chevron reported earnings of $2.93 per share, beating Wall Street expectations.

Chevron attributed the profit decline to lower margins on refinery sales and lower natural gas prices, which reduced profits from international production.

Oil prices are up more than 15% this year, with gasoline futures up 31%, but those gains will do little to boost profits as the rest of the energy industry struggles.

Natural gas prices have fallen 35% this year due to oversupply. According to the US Energy Information Administration, gasoline retail and distribution margins, or the difference between the retail price and the refining price, were also lower in February and March.

Here’s how Chevron’s first-quarter report compared to Wall Street expectations, according to a survey of analysts by the London Stock Exchange Group (LSEG):

• Earnings per share: Adjusted $2.93, $2.87 expected
• Revenue: $48.72 billion, vs. $50.66 billion expected

Profits at Chevron’s US refining operations more than halved to $453 million. Profits in the international refining business took an even bigger hit, falling nearly 60% to $330 million.

Due to the increase in sales, the US oil and gas business recorded a profit of nearly US$2 billion, a 16% increase over the same period last year. Chevron produced 1.57 million barrels of oil and natural gas per day in the U.S. this quarter, a 35% increase from the same period last year, or 406,000 barrels per day.

Oil attributed the increase in production to strong production in the major Permian and Denver-Julesburg basins.

International oil and gas revenue fell 6% to $3.2 billion due to lower maintenance and field output in Nigeria, down 39,000 barrels per day to 1.77 million barrels. Still, total global production rose 12% to 3.35 million barrels, the highest first-quarter output on record.

Capital expenditure rose to US$4.1 billion, a 37% increase from US$3.0 billion in the same period last year. Oil and gas production and PDC Energy’s aging assets have increased costs since the acquisition of PDC Energy was completed last August.

Chevron still paid out a $3 billion dividend in the quarter and repurchased nearly $3 billion in stock, though its return on capital of 12.4% was down from 14.6% in the first quarter last year.