Published on 27 Jul 2022 on Zacks via Yahoo Finance
Will High Prices Boost Chevron's (CVX) Q2 Upstream Earnings?
It's earnings season again and oil supermajor Chevron CVX is gearing up to release its second-quarter results on Jul 29. This time around, the primary contributor to the company’s earnings — its upstream (or exploration and production) division — is likely to have benefited from the ongoing momentum in oil and natural gas prices. Chevron also has a downstream business, which refines crude oil into fuels like gasoline and diesel oil. Chevron has extensive upstream operations in all major hydrocarbon-producing regions of the world. The Zacks Rank #2 (Buy) company is primarily involved in the acquisition, development and exploitation of crude oil and natural gas properties.
A Look at Chevron’s Upstream Performance in Q1
Chevron’s production of crude oil and natural gas decreased 2% from the year-earlier level to 3,060 thousand oil-equivalent barrels per day/MBOE/d (57% liquids) but it was the sixth successive quarter where volumes topped 3 million barrels per day. The year-over-year decline reflects normal field declines, entitlement effects and the end of the Rokan concession in Indonesia, which were partly offset by strength in the Permian Basin,the absence of weather-related impacts and no production curtailments.The U.S. output was up 10.1% year over year to 1,184 MBOE/d, though the company’s international operations (accounting for 61% of the total) fell 8.3% to 1,876 MBOE/d.Despite being pulled down by the dip in volumes, Chevron’s upstream segment recorded a profit of $6.9 billion in the first quarter of 2022, rocketing from the $2.4 billion earned in the year-ago period and beating the Zacks Consensus Estimate of $6.5 billion.This was primarily on account of a significant improvement in commodity prices. At $77 per barrel, Chevron’s average realized liquids prices in the United States were 60.4% above the year-earlier levels, while prices overseas jumped 66.1%. On the natural gas front, its realizations soared 90.7% in the United States and 87.9% overseas.