Chevron warns results will remain under pressure unless oil prices recover

Written by: Wajeeh Khan
May 1, 2020
  • Chevron posts £25.14 billion in revenue in Q1 versus £28.09 billion in the same quarter last year.
  • The U.S oil major slashes its 2020 capital expenditures by an additional £1.60 billion.
  • The oil company says it is taking all necessary measures to maintain its dividend.

Chevron Corp. (NYSE: CVX) released its quarterly financial results on Friday and warned that its performance is expected to keep under pressure unless oil prices recover. The company also slashed its 2020 capital expenditures further on Friday.

In the first quarter, Chevron generated £25.14 billion in revenue as compared to £28.09 billion in the same quarter last year. On the earnings front, the company made £1.54 per share in Q1 versus the year-ago figure of £1.11 per share.

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Chevron’s Q1 earnings also included non-recurring favourable items worth £527 million.

According to Refinitiv, analysts had forecast the company to print £23.45 billion in revenue in the recent quarter and make 54 pence of earnings per share.

Chevron’s production climbs to 3.24 million BPD

The 2nd largest oil company in the U.S also registered its quarterly production at 3.24 million BPD (barrels per day) that marked a 6% increase on an annualized basis. In Permian Basin, Chevron recorded a much broader 48% year over year increase in production.

Citing lower oil prices, however, Chevron anticipated a more pronounced financial impact in the next quarters. In Q1, the average price of natural gas liquids and crude oil per barrel was £29.50 that translates to a 23% decline versus the comparable quarter last year, as per Chevron. Natural gas, on the other hand, saw its sale price drop to 48 pence in the first quarter from £1.31.

The U.S oil major also highlighted on Friday that it will further reduce its 2020 capital spending to £11.17 billion that marks an additional £1.60 billion cut. Last month, Chevron had suspended its share repurchase programme and slashed its capital expenditures from £16 billion to £12.75 billion in an attempt to shore up its finances.

Chevron is committed to maintaining its dividend

Chevron’s announcement on Friday also accentuated that the company is taking all necessary measures to maintain its dividend amidst the financial crisis.  

The U.S oil company was reported roughly 2% down in premarket trading on Friday. At £73 per share, Chevron is currently around 25% down year to date in the stock market. Share prices have recovered roughly 70% in a little over a month after plunging to £43 per share in late March.

Chevron’s performance in 2019 was reported fairly upbeat with an annual gain of around 10%. At the time of writing, the oil major has a market cap of £137 billion and a price to earnings ratio of 59.56.