Oil-Price Sag Hits Chevron

   (FROM THE WALL STREET JOURNAL 5/2/15) 
   By Chelsey Dulaney and Daniel Gilbert 

The slump in crude-oil prices weighed on Chevron Corp.'s first-quarter earnings, though strength in the company's refining segment helped put the results above analysts' estimates.

Chevron, the second-biggest U.S. oil company in market value behind Exxon Mobil Corp., has been working to increase its oil-and-gas output. In the latest quarter, its daily oil-equivalent production rose to 2.68 million barrels from 2.59 million barrels a year earlier.

On Thursday, Exxon also posted a drop in profit while exceeding Wall Street expectations. Both energy companies have moved to trim spending as the collapse in oil prices wiped billions of dollars from their cash flow, and Chevron stopped buying back its shares.

Chevron, which is based in San Ramon, Calif., said Friday it is reducing costs and pacing new project approvals. In the latest quarter, capital spending fell to $8.6 billion from $9.4 billion a year earlier.

Chevron's shares fell 1.8% to $109.04 on Friday.

Finance chief Pat Yarrington said the company continues to press its suppliers on costs, having already negotiated more than $900 million in savings this year. The company's bottom line is better insulated against oil price slumps, relative to many other producers, because Chevron also makes money from refining crude into gasoline and diesel. Global oil prices are off more than 40% from last summer's peak, and the lower-cost crude has helped the company's refinery businesses improve profit margins. Brent crude, the global benchmark, fell 28 cents to $66.50 a barrel on Friday.

In the latest quarter, earnings from Chevron's refining, marketing and chemical operations -- or downstream segment -- rose to $1.42 billion from $710 million as feedstock costs fell. The downstream results "were amongst the very best we've had in several years, a perfect combination of margin strength and improved refining reliability," Ms. Yarrington said on Friday.

Meanwhile, earnings from exploration and production -- or its upstream segment -- fell to $1.56 billion from $4.31 billion.

In its U.S. upstream segment, the average sales price for oil and natural-gas liquids was $43 a barrel, down from $91 a year earlier.

In all, Chevron reported earnings of $2.57 billion, or $1.37 a share, down from $4.51 billion, or $2.36 a share, a year earlier. Currency fluctuations added $580 million to earnings, versus a year-earlier hit of $79 million.

Revenue fell 35% to $34.56 billion.

Analysts polled by Thomson Reuters had forecast earnings of 79 cents a share and revenue of $24.37 billion.

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