Refining earnings offset a drop in energy prices and oil and gas output to boost first-quarter profit for oil major Chevron Corp (CVX.N) on Friday.
Profit rose 5% to $6.57 billion or $3.46 per share. According to Zacks Investment Research, Wall Street expects a $3.38 per share flat profit.
Higher margins in oil refining drove profits to $1.8 billion.
But price declines in its oil and gas production division cut its net profit by 25%.
Brent crude, the global oil standard, averaged $82 per barrel in the first quarter, down 16% from a year earlier and 7% from the fourth quarter.
“Brent prices are high yet down significantly. “But you are still seeing mid-double-digit returns on capital employed,” Chief Financial Officer Pierre Breber told Reuters.
Breber said the second-largest U.S. oil company closed the quarter with $15.8 billion in cash, down 12% from a year earlier but $10 billion over its operating needs.
Big oil firms are stockpiling cash in case of a recession or a consolidation wave.
“The intent over time is that cash will be returned to shareholders in a steady way,” Breber said, adding that Chevron will only seek shareholder-beneficial partnerships.
“We are always looking,” he added when asked if Chevron was considering purchases. “And we have a very high bar because we don’t need to do a deal.”
U.S. projects drove capital spending up 55% to $3 billion.
Chevron has increased U.S. production while cutting it elsewhere. For example, a contract expiry in Thailand and selling South Texas shale properties reduced total output by 3% to 2.98 million barrels of oil and gas per day.
The largest U.S. shale basin, the Permian, increased output by 4%. The corporation has launched a Gulf of Mexico platform.
