Natural Gas Lifts Chevron Q1 Earnings Amid Oil Weakness

Chevron Corporation CVX reported adjusted first-quarter earnings per share of $2.18, beating the Zacks Consensus Estimate of $2.15. The outperformance stemmed from higher-than-expected U.S. natural gas production in the company’s key upstream segment. The unit’s domestic output of 2,859 million cubic feet per day (MMcf/d) came in above the consensus mark of 2,666 MMcf/d. A healthy gain in the commodity’s U.S. realizations also played its part.

However, the bottom line came well below the year-ago adjusted profit of $2.93 due to weaker oil price realizations and a dip in refined product sales margins. 

The company generated revenues of $47.6 billion. The sales figure missed the Zacks Consensus Estimate of $48.7 billion and decreased 2.3% year over year.

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation price-consensus-eps-surprise-chart | Chevron Corporation Quote

Segment Performance

Upstream: Chevron’s production of crude oil and natural gas — at 3,353 thousand oil-equivalent barrels per day (MBOE/d) (59% liquids) — edged up 0.2% year over year. The latest volume statistics primarily reflect higher output from the Permian basin, Kazakhstan and the Gulf of America, offset by asset sales in Canada and Republic of Congo. 

The U.S. output rose 4% year over year to 1,636 MBOE/d but the company’s international operations (accounting for 51% of the total) dropped 3.2% to 1,717 MBOE/d. 

With volumes essentially flat from last year and lower oil realizations, Chevron’s first-quarter 2025 upstream segment profit fell 28.3% to $3.8 billion. To some extent, this was offset by higher natural gas sales price. 

At $55.26 per barrel, Chevron’s average realized liquids prices in the U.S. were 3.7% below the year-earlier levels, while prices overseas decreased 6.7% to $67.69 per barrel. As far as natural gas is concerned, the commodity more than doubled in the U.S. though it declined 1.8% internationally.

Downstream: Chevron’s downstream segment recorded a profit of $325 million, plunging 58.5% from last year’s income of $783 million. The slip primarily underlined lower product sales margins.

(Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

Cash Flows, Capital Expenditure

The company recorded $5.2 billion in cash flow from operations, compared to $6.8 billion the year-ago period due to a drop in earnings and tax payments associated with divestment in Canada. Chevron’s free cash flow for the quarter was $1.3 billion. 

Further, Chevron paid $3 billion in dividends and bought back $3.9 billion worth of its shares.

The Zacks Rank #3 (Hold) company spent around $3.9 billion in capital and exploratory expenditures during the quarter, compared to the year-ago period’s $4.1 billion.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Balance Sheet

As of March 31, the only energy component of the Dow Jones Industrial Average had $4.6 billion in cash and cash equivalents and total debt of $29.7 billion with a debt-to-total capitalization of about 16.6%.

Important Energy Earnings

While we have discussed Chevron’s first-quarter results in detail, let’s take a look at some other key oil/energy reports of this season.

Oil service biggie Halliburton HAL reported first-quarter 2025 adjusted net income per share of 60 cents, the same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 76 cents (adjusted). The numbers reflect softer activity in the North American region, partly offset by international growth. Meanwhile, revenues of $5.4 billion were 6.7% lower year over year but beat the Zacks Consensus Estimate of $5.3 billion.

Halliburton reported first-quarter capital expenditure of $302 million, lower than our projection of $318.2 million. As of March 31, 2025, the company had approximately $1.8 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.8. HAL bought back $250 million worth of its stock during the January-March period. The company generated $377 million of cash flow from operations in the first quarter, leading to a free cash flow of $124 million.

Refining major Valero Energy VLO reported first-quarter 2025 adjusted loss of $1.90 per share, in contrast to the Zacks Consensus Estimate of earnings of 43 cents. The company reported earnings of $3.82 in the year-ago quarter. Total quarterly revenues decreased from $31,759 million in the prior-year quarter to $30,258 million. The top line, however, beat the Zacks Consensus Estimate of $28,450 million.

The weak quarterly earnings can primarily be attributed to its West Coast asset impairment, heavy maintenance activity across refining systems and a steep drop in refining margins, which together weighed on profitability.  

London-based supermajor BP plc BP reported first-quarter 2025 adjusted earnings of 53 cents per American Depositary Share on a replacement-cost basis, excluding non-operating items. The figure lagged the Zacks Consensus Estimate of 56 cents. The bottom line also declined from the year-ago reported figure of 97 cents.

The weak quarterly results can be primarily attributed to lower liquid price realizations and weaker refining margins. Lower contributions from the company's customers and products business also affected the results. Organic capital expenditure in the reported quarter totaled $3.4 billion. The company registered a total capital spending of $3.6 billion for the quarter. The first-quarter capital investment totaled $660 million, of which $582 million was allocated toward sustaining the business.

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