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Chevron's quarterly profit falls on lower oil prices and weak refining margins

Key Points
  • Chevron earnings: $1.39 per share, vs $1.30 EPS expected.
  • Profits fall from a year ago, weighed down by lower oil prices and weak profit margins in its refining and chemicals business.
  • Chevron struck a $33 billion deal this month to buy Anadarko Petroleum, but now faces a rival bid from Occidental.
Mike Wirth, CEO, Chevron
Mary Catherine Wellons | CNBC

Chevron on Friday reported first-quarter earnings that beat analysts' expectations, even as profits fell from a year earlier, weighed down by lower oil prices and weak profit margins in its refining and chemicals business.

Shares of the oil giant fell about two-thirds of a percent on Friday.

Chevron earned $2.65 billion in the first quarter of the year, down 27% from a year earlier. The company earned $1.39 per-share in the quarter, compared with $1.30 per share predicted in a Refinitiv survey of analysts.

The results were bolstered by a 7% jump in oil and natural gas production, with oil equivalent output exceeding 3 million barrels per day for the second quarter in a row. Chevron pinned the increase on rising volumes from its Permian Basin fields in Texas and New Mexico, as well as its Wheatstone project in Australia.

Chevron's oil and gas production surged nearly sixfold to 884,000 barrels of oil equivalent per day. Production was also up 35,000 barrels of oil equivalent internationally. The higher production was offset by lower oil prices from a year ago.

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Chevron reports EPS beat, revenue miss for Q1

Earnings in Chevron's U.S. upstream business jumped by $100 million to $748 million, while international profits for producing oil and gas fell 12% to $2.38 billion.

However, like its big oil rival Exxon Mobil, the company's profits took a hit from lower profit margins in the downstream business, which focuses on refining oil into products like gasoline and diesel.

Exxon Mobil on Friday reported first-quarter profits that were nearly 50% lower than a year ago.

Downstream profits tumbled about 65% to $252 million from a year ago. In addition to weak margins, weather-related impacts on California refineries and the sale of the Cape Town refinery in South Africa led to lower activity.

Chevron also saw its expenses surge 64% to $726 million, driven by higher corporate charges and interest expenses, as well as foreign currency impacts.

The company's revenue was $35.19 billion, down 5% from a year ago and falling short of $38.43 billion forecast by analysts in a Refinitiv survey.

Chevron's performance in the Permian Basin and production forecasts for the Texas-New Mexico oil region has been in focus. The company announced plans last month to double its output from the top U.S. shale oil basin by 2023.

The oil and gas giant struck a $33 billion deal earlier this month to buy Anadarko Petroleum, a diversified driller with a large stake in the Permian. Occidental Petroleum launched a rival offer for Anadarko this week, potentially setting up a rare bidding war in the oil patch.

The Anadarko deal underpins Chevron's decision to increase its share buyback program from $4 billion to $5 billion per year.

On Wednesday, Chevron announced a quarterly dividend of $1.19 per share, unchanged from last quarter, when the company raised the shareholder payout by 7 cents.

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Key Points
  • Exxon Mobil earnings: 55 cents a share, vs 70 cents EPS expected
  • The energy giant's oil and gas production from the Permian Basin will be in focus as Exxon ramps up output from the top U.S. shale field.
  • Exxon's refining margins have come under pressure from a heavy slate of refinery maintenance in recent quarters.