SAN RAMON, Calif. _ Chevron on Friday reported first-quarter earnings that exceeded Wall Street's expectations as the oil and gas industry giant turned around from a loss a year ago and said business improved due to rising crude oil prices and continued cuts in its overall operational costs.
Before the stock market opened, Chevron said it earned $2.7 billion, or $1.41 a share, on $33.4 billion in revenue, compared to a loss of $725 million, or 39 cents a share, on $23.6 billion in sales in the first quarter of 2016. Analysts surveyed by Bloomberg had forecast Chevron to earn 87 cents a share on $36.12 billion in revenue.
Chief Executive John Watson said in a statement that increases in oil prices helped the company's results compared to a year ago. Oil is currently selling for around $50 a barrel after falling to below $30 a barrel at times in 2016. Watson added Chevron continued to "make good progress" on reducing its operating expenses, which it cut by 14 percent, to $5.53 billion, while capital expenses fell by 30 percent from a year ago.
Speaking on a conference call to discuss Chevron's results, Chief Financial Officer Pat Yarrington said Chevron was "seeing great efficiency" as it works to control capital expenses.
"We very well may be able to capture greater (business) activity, and volume for dollar spend (on expenses)," Yarrington said.
Yarrington said the company's results included a gain of $600 million from the sale of an "upstream" asset, which was the company's geothermal business in Indonesia. In the oil industry, the term upstream assets refers to exploration and production efforts to bring crude oil or natural gas to the surface from underground or undersea locations.
Chevron's international operations have been performing well of late, as the company said earnings from international upstream operations reached $1.4 billion after losing $609 million a year ago. The main factors for the turnaround were the sale of its Indonesian geothermal business and increases in volumes of natural gas and crude oil. U.S. upstream earnings also swung to a profit of $80 million after recording a loss of $850 million in the first quarter of 2016. The U.S. results were also helped by improvements in crude oil production and lower operating expenses.
The company said its worldwide net-equivalent oil production in the quarter rose to 2.7 million barrels a day from 2.6 million barrels a day a year ago. International oil production edged up by 2 percent from a year ago, to 2 million barrels a day, but production from U.S. sources fell 4 percent, to 672,000 barrels a day. However, Chevron saw production increases in key areas like the Gulf of Mexico and the Permian Basin in Texas.
Investors showed some mild support for Chevron, as the company's shares rose 0.8 percent to $106.31 Friday. For the year, Chevron shares have shed almost 10 percent of their value.
Chevron's results came out shortly after those of one of its main oil-industry rivals, Exxon Mobil. Exxon reported a profit of $4.01 billion, or 95 cents a share, on $63.3 billion in revenue for its first quarter
