Chevron Earnings Stymied by Refining


Chevron Corp. (NYSE: CVX) reported second-quarter 2013 results before markets opened this morning. The oil and gas supermajor posted diluted earnings per share (EPS) of $2.77 on revenues of $55 billion. In the same period a year ago, the company reported EPS of $3.66 on revenues of $60 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $2.96 and $56.01 billion in revenues.

As with rival Exxon Mobil Corp. (NYSE: XOM), which also missed second-quarter estimates, Chevron's downstream (refining and marketing) operations get most of the blame. Downstream earnings fell from $1.88 billion in the second quarter of 2012 to just $766 million this year. Upstream (exploration and production) earnings fell from $5.62 billion to $4.95 billion as well.

Total worldwide production on a barrel of oil equivalent basis declined by 40,000 barrels a day, compared with second quarter 2012 production. The company said that increased production in new projects in the United States and Angola were "more than offset by normal field declines." The average price Chevron received per barrel fell from $97 last year to $92. Upstream earnings in the U.S. totaled $1.08 billion, which means that the company's non-U.S. operations lost about $250 million.

Throughput at U.S. refineries fell by 114,000 barrels a day to 814,000 barrels a day and remained flat at around 872,000 barrels a day at international refineries. The declines were attributed to the fire at the Richmond, Calif., refinery in August 2012 and a major asset sale in South Korea.

The company's CEO said:

Our second quarter earnings were down from the very strong level of a year ago. The decrease was largely due to softer market conditions for crude oil and refined products. Earnings were also reduced as a result of repair and maintenance activities in our U.S. refineries.

The earnings announcement did not include guidance, but the consensus estimate for the third quarter calls for EPS of $3.11 on revenues of $57.1 billion. For the full year, EPS and revenues are estimated at $12.33 and $232.53 billion, respectively.

Chevron's shares are down 1.1% in premarket trading, at $126.44 in a 52-week range of $100.66 to $127.83. Thomson Reuters had a consensus analyst price target of around $132.10 before today's report.

Filed under: Commodities & Metals Tagged: CVX, XOM