10-QPeriod: Q1 FY2017

CHEVRON CORP Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:CVX

Summary

Chevron Corporation reported a significant turnaround in its financial performance for the first quarter of 2017 compared to the same period in 2016. The company swung from a net loss of $725 million in Q1 2016 to a net income of $2.68 billion in Q1 2017. This dramatic improvement was primarily driven by a substantial recovery in upstream segment earnings, which benefited from higher crude oil and natural gas prices, coupled with gains from asset sales and reduced operating expenses. The downstream segment also showed improved profitability, contributing to the overall positive results. Total revenues and other income saw a considerable increase, reflecting the more favorable commodity price environment. While capital expenditures were reduced compared to the prior year, operating cash flows significantly strengthened, indicating improved operational efficiency and market conditions. Investors can view this quarter as a sign of recovery and increased profitability for Chevron, largely influenced by the rebound in energy prices.

Financial Highlights

46 data points
Beta

Revenue

$33.42B

Net Income

$2.68B

8.0% Net Margin

EPS (Diluted)

$1.41

Total Assets

$259.11B

Cash & Equivalents

$6.98B

Free Cash Flow

$3.78B

Financial Statements
Beta
Revenue$33.42B
SG&A Expenses$810.00M
Operating Expenses$30.29B
Interest Expense$51.00M
Net Income$2.68B
EPS (Basic)$1.43
EPS (Diluted)$1.41
Shares Outstanding (Basic)1.88B
Shares Outstanding (Diluted)1.90B

Key Highlights

  • 1Net income attributable to Chevron Corporation surged to $2.68 billion ($1.41 per diluted share) in Q1 2017, a significant improvement from a net loss of $725 million ($0.39 per diluted share) in Q1 2016.
  • 2Total revenues and other income increased by over 42% to $33.42 billion in Q1 2017, up from $23.55 billion in Q1 2016, driven by higher commodity prices.
  • 3Upstream segment earnings dramatically improved, swinging from a loss of $1.46 billion in Q1 2016 to a profit of $1.52 billion in Q1 2017, primarily due to higher crude oil and natural gas prices and asset sale gains.
  • 4Downstream segment earnings also increased to $926 million in Q1 2017 from $735 million in Q1 2016, attributed to the absence of an asset impairment charge and lower operating expenses.
  • 5Net cash provided by operating activities increased substantially to $3.88 billion in Q1 2017 from $1.14 billion in Q1 2016, reflecting improved operational performance and commodity prices.
  • 6Capital expenditures were reduced to $3.32 billion in Q1 2017, down from $5.57 billion in Q1 2016, indicating a focus on capital discipline.
  • 7The company declared a quarterly dividend of $1.08 per common share in April 2017, consistent with the previous year's dividend payment.

Frequently Asked Questions

The primary driver for the significant improvement in profitability was the recovery in upstream segment earnings. This was largely due to higher crude oil and natural gas prices, increased gains from asset sales, and lower operating expenses. The improved commodity price environment benefited both the upstream and downstream segments.

Chevron experienced a substantial increase in cash flow from operations, generating $3.88 billion in Q1 2017 compared to $1.14 billion in Q1 2016. This improvement reflects higher commodity prices and better operational performance. The company also reduced its capital expenditures, further strengthening its cash position.

Chevron continues to evaluate opportunities for asset disposals that may not provide sufficient long-term value. The company had a target of $5-10 billion in pre-tax proceeds from asset sales for 2016-2017 and has already realized $2.1 billion in the first three months of 2017. Capital expenditures were significantly reduced in Q1 2017 compared to the prior year, indicating a disciplined approach to investment in the current market environment.

Chevron is involved in several significant legal matters, most notably the ongoing litigation related to environmental damage claims in Ecuador, which has resulted in substantial judgments against the company. The company is also assessing the impact of an adverse decision from the Federal Court of Australia regarding intercompany loans for tax purposes. While management believes it has provided for probable and reasonably estimable environmental obligations, the ultimate outcome of these contingencies remains uncertain and could materially affect future results of operations.