10-QPeriod: Q3 FY2019

CHEVRON CORP Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 7, 2019For Securities:CVX

Summary

Chevron Corporation's third quarter and year-to-date 2019 results reflect a notable decrease in revenues and net income compared to the same periods in 2018, largely attributable to lower crude oil and natural gas prices. The Upstream segment, which is the primary driver of earnings, experienced a decline in segment earnings due to reduced commodity realizations, despite increases in production volumes, particularly in the U.S. Permian Basin. The Downstream segment also saw a significant decrease in earnings, primarily due to lower refined product margins and the absence of asset sale gains recognized in the prior year. The company continues to manage costs and capital expenditures, with a focus on short-cycle projects, while also actively repurchasing shares and paying dividends. Management remains vigilant regarding market volatility and global economic conditions, which significantly influence operational performance and profitability.

Financial Highlights

46 data points
Beta

Revenue

$34.78B

42.8% Gross Margin

Net Income

$2.58B

7.4% Net Margin

EPS (Diluted)

$1.36

Total Assets

$256.54B

Cash & Equivalents

$11.70B

Free Cash Flow

$7.82B

Financial Statements
Beta
Revenue$34.78B
Cost of Revenue$19.88B
Gross Profit$14.90B
SG&A Expenses$954.00M
Operating Expenses$32.07B
Interest Expense$197.00M
Net Income$2.58B
EPS (Basic)$1.38
EPS (Diluted)$1.36
Shares Outstanding (Basic)1.88B
Shares Outstanding (Diluted)1.89B

Key Highlights

  • 1Net income attributable to Chevron Corporation decreased to $2.58 billion in Q3 2019 from $4.05 billion in Q3 2018, and $9.53 billion for the nine months ended September 30, 2019, from $11.09 billion in the prior year period, primarily due to lower oil and gas prices.
  • 2Upstream segment earnings declined to $2.70 billion in Q3 2019 from $3.38 billion in Q3 2018, and to $9.31 billion for the first nine months from $10.03 billion, driven by lower crude oil and natural gas realizations.
  • 3Downstream segment earnings dropped to $828 million in Q3 2019 from $1.37 billion in Q3 2018, and to $1.81 billion for the nine months from $2.94 billion, impacted by lower refined product margins and the absence of prior-year asset sale gains.
  • 4U.S. upstream production increased by 12% in Q3 2019 compared to the prior year, primarily due to shale and tight properties in the Permian Basin.
  • 5The company paid $6.7 billion in dividends to common stockholders during the first nine months of 2019.
  • 6Chevron repurchased $1.25 billion of its common stock in Q3 2019 as part of its ongoing share repurchase program.

Frequently Asked Questions

The primary driver of the decrease in net income was lower crude oil and natural gas prices, which negatively impacted the company's Upstream segment earnings. Additionally, the Downstream segment experienced lower margins and the absence of asset sale gains recorded in the prior year.

Chevron saw an increase in production volumes, particularly in its U.S. upstream operations, with a 12% rise in net oil-equivalent production in Q3 2019 compared to the prior year, largely attributed to growth in the Permian Basin. International upstream production saw a slight decrease.

Chevron continues to prioritize returning capital to shareholders. In the first nine months of 2019, the company paid $6.7 billion in dividends and repurchased $1.25 billion of its common stock in the third quarter. The company also has a substantial remaining authorization for future share repurchases.

Chevron is involved in ongoing litigation, most notably concerning environmental liabilities related to past operations in Ecuador. While the company believes these claims are without merit and is vigorously defending itself, the ultimate outcome remains uncertain and could potentially have a material impact. Other environmental and legal matters are also disclosed in the filing.