U.S.energy behemoth Chevron Corp. (CVX) released its second-quarter 2011 interim update, covering the first 2 months of the quarter. On the whole, the update is bullish, with earnings expected to be higher than the previous quarter.
The company expects results for the Exploration and Production arm to be buoyed by a rise in crude oil prices, partially offset by lower liftings. The San Ramon, California-based integrated major further added that second quarter refining and chemicals results would benefit from higher industry margins.
Additionally, Chevron expects net after-tax charges associated with corporate and other activities to come in between $250 million and $350 million.
Upstream
The company reported that oil and natural gas production averaged 2.685 million oil-equivalent barrels per day, 2.2% below the second quarter 2010 level, due to reduced volumes both in the U.S. and overseas. Production would also be down by nearly 3% from the first quarter 2011 level, as in-line domestic operations were not enough to make up for reduced international volumes.
In the first two months of the June quarter, Chevron’s total domestic oil equivalent production came in at 695,000 oil-equivalent barrels per day, about the same as 694,000 in the first-quarter of 2011. However, net international oil equivalent production was down by 76,000 barrels per day from the preceding quarter due to maintenance activity in Kazakhstan.
U.S.crude price realizations during April-May 2011 averaged $111.11 per barrel, up from $93.39 in the first quarter 2011, while international realizations were higher by $13.25 to $108.46 per barrel. Chevron’s domestic realized natural gas prices for this period averaged $4.32 per thousand cubic feet (Mcf), compared with $4.04 in the first quarter. Average international natural gas realizations were up 41 cents per Mcf to $5.44.
Downstream
Regarding downstream operations (chemical and refining), the second-largest U.S. oil company by market value after ExxonMobil Corp. (XOM) said that its U.S. and international refinery crude-input fell 14,000 and 15,000 barrels per day, respectively, from the previous quarter due to maintenance activities across multiple refineries. Second quarter refining margins increased $1.73 per barrel sequentially on the U.S. West Coast and $3.24 per barrel on the Gulf Coast.
Chevron plans to release its quarterly results on July 29, 2011, before the start of trading. The Zacks Consensus Estimate for Chevron’s second quarter is $3.49 per share, higher than the earnings of $2.58 in the year-ago period and $3.17 in the previous quarter (both excluding adjustments for foreign-currency effects).
Chevron shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating.
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