Chevron Clears Low Bar (CVX, XOM)

Chevron Corporation (NYSE:CVX) reported EPS for the first quarter of 2009 of $0.92, down 64% from EPS of $2.48 for the same period a year ago, but better than consensus estimates of $0.81. Revenues followed the same pattern. For the 2009 first quarter, sales reached $35 billion, compared with analysts’ estimates of $21.14 billion and 2008 first quarter sales of $65 billion. That’s a drop of 46%. Ouch.

Low prices for crude oil and natural gas drove down revenues. Domestically the price for liquids fell $51/barrel to $36/barrel in the first quarter. Natural gas prices also fell 45% year-over-year. US earnings fell from $1.6 billion in the year-ago quarter to just $21 million this year. Internationally upstream earnings were off $2.3 billion from the year-ago quarter.

The report was not so bleak on downstream earnings, which rose as a result of lower crude prices which led to improved margins for refined products. US earnings hit $133 million in the downstream sector, up from $4 million a year ago. International downstream earnings more than doubled, from $248 million to $690 million. But the biggest impact on downstream earnings was a gain of $400 million on asset sales in Nigeria and Brazil.

Capital spending was up in the first quarter from $5.1 billion a year ago to $6.5 billion this year. Upstream projects accounted for 85% of the spending.

Chevron’s results mirrored the quarterly report from Exxon Mobil Corp. (NYSE:XOM), which saw its EPS fall 58% and its revenue fall 45% from a year ago.

In pre-market trading, Chevron is down less than half a point and Exxon is up by the same amount. Until the global economy starts humming again, prices for crude and natural gas will remain low, and that will hold down both earnings and revenues at the big integrated oil companies.

Paul Ausick
May 1, 2009