(FROM THE WALL STREET JOURNAL 5/2/15)
By Chelsey Dulaney and Daniel Gilbert
The slump in crude-oil prices weighed on Chevron Corp.'s
first-quarter earnings, though strength in the company's refining
segment helped put the results above analysts' estimates.
Chevron, the second-biggest U.S. oil company in market value
behind Exxon Mobil Corp., has been working to increase its
oil-and-gas output. In the latest quarter, its daily oil-equivalent
production rose to 2.68 million barrels from 2.59 million barrels a
year earlier.
On Thursday, Exxon also posted a drop in profit while exceeding
Wall Street expectations. Both energy companies have moved to trim
spending as the collapse in oil prices wiped billions of dollars
from their cash flow, and Chevron stopped buying back its
shares.
Chevron, which is based in San Ramon, Calif., said Friday it is
reducing costs and pacing new project approvals. In the latest
quarter, capital spending fell to $8.6 billion from $9.4 billion a
year earlier.
Chevron's shares fell 1.8% to $109.04 on Friday.
Finance chief Pat Yarrington said the company continues to press
its suppliers on costs, having already negotiated more than $900
million in savings this year. The company's bottom line is better
insulated against oil price slumps, relative to many other
producers, because Chevron also makes money from refining crude
into gasoline and diesel. Global oil prices are off more than 40%
from last summer's peak, and the lower-cost crude has helped the
company's refinery businesses improve profit margins. Brent crude,
the global benchmark, fell 28 cents to $66.50 a barrel on
Friday.
In the latest quarter, earnings from Chevron's refining,
marketing and chemical operations -- or downstream segment -- rose
to $1.42 billion from $710 million as feedstock costs fell. The
downstream results "were amongst the very best we've had in several
years, a perfect combination of margin strength and improved
refining reliability," Ms. Yarrington said on Friday.
Meanwhile, earnings from exploration and production -- or its
upstream segment -- fell to $1.56 billion from $4.31 billion.
In its U.S. upstream segment, the average sales price for oil
and natural-gas liquids was $43 a barrel, down from $91 a year
earlier.
In all, Chevron reported earnings of $2.57 billion, or $1.37 a
share, down from $4.51 billion, or $2.36 a share, a year earlier.
Currency fluctuations added $580 million to earnings, versus a
year-earlier hit of $79 million.
Revenue fell 35% to $34.56 billion.
Analysts polled by Thomson Reuters had forecast earnings of 79
cents a share and revenue of $24.37 billion.
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