Big-Spending Chevron Copes With Cheaper Oil -- Earnings Preview

   By Daniel Gilbert 
 

Chevron Corp. (CVX) is scheduled to report third-quarter earnings Friday morning, and to hold a conference call at 11 a.m. EDT. Here's what you should know:

EARNINGS FORECAST: Net income of $2.55 a share is the consensus of analysts surveyed by Thomson Reuters, compared with $2.57 a share a year earlier.

REVENUE FORECAST: Revenue of $58.2 billion is forecast, compared with $56.6 billion a year earlier.

WHAT TO WATCH:

--OIL'S BITE: More than 65% of the company's production consists of oil and liquid fuels, making it more exposed to crude prices than peers with output more evenly balanced between oil and gas. Oil prices this year peaked in June and have fallen by about 25% since; Chevron's third-quarter results are likely to reflect some of that drop.

--HEY, BIG SPENDER: After spending a record $41.9 billion in 2013, Chevron said its capital spending would fall this year. The company spent $19.6 billion through the first half of 2014, putting it on target to meet its budget of $39.8 billion. But last year the company's spending accelerated in the second half. Friday's results will show whether Chevron has been able to keep its costs in check.

--MAJOR PROJECTS: This is crunch time for several of Chevron's biggest endeavors. The Jack/St. Malo project in the deep water of the Gulf of Mexico is set to start up this year. The company is also counting on production from another Gulf development, Big Foot, next year. And Gorgon, the Chevron-led liquefied natural-gas project in Australia, is also set to ship its first cargo in 2015.

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