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A month has gone by since the last earnings report for Chevron (CVX). Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Chevron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Chevron Q2 Loss Wider Than Expected
Chevron reported adjusted second-quarter loss per share of $1.59. The Zacks Consensus Estimate was of a loss of 93 cents, while the company earned $1.77 per share in the year-ago period. The underperformance reflects sharply lower oil and natural gas price realizations, plus decline in refined products margins.
The company generated revenue of $13.5 billion. The sales figure missed the Zacks Consensus Estimate of $20.5 billion and was down 65.3% year over year.
Chevron also wrote down the value of its assets by $1.8 billion due to weaker commodity price expectations. Further, the company incurred $780 million in severance costs.
Meanwhile, Chevron said that it would keep paying shareholders a quarterly dividend of $1.29 despite the difficult operating environment.
Segment Performance
Upstream: Chevron’s production of crude oil and natural gas decreased 3.1% from the year-earlier level to 2,988 thousand oil-equivalent barrels per day/MBOE/d (61% liquids) – the first time in seven quarters quarter where volumes fell below 3 million barrels per day. The decline reflects output curtailment in reaction to the coronavirus-induced commodity price collapse, and the impact of asset dispositions. This was partly offset by improved production in a number of properties.
The U.S. output rose 10.4% year over year to 991 MBOE/d while the company’s international operations (accounting for 67% of the total) was down 8.6% to 1,997 MBOE/d. At $19 per barrel, the Chevron’s average realized liquids prices in the U.S. were 63.5% below the year-earlier levels while prices overseas were down 66.1%.
The dual pressure of slumping oil and gas realizations and lower production meant that, Chevron’s upstream segment incurred a loss of $6.1 billion against profit of $3.5 billion in the year-ago period.
Downstream: Chevron’s downstream segment incurred a loss of $1 billion, compared to earnings of $729 million last year. The deterioration primarily underlined a fall in refined products sales margins and severance payments.