Oil giant Chevron (CVX) posted mixed first-quarter financial results as its profits declined due to lower margins at its refineries.
Chevron reported earnings per share (EPS) of $2.93 U.S. versus $2.87 U.S. that was expected amongst analysts. The oil major’s profit was down 16% from a year ago.
Revenue in the quarter came in at $48.72 billion U.S. compared to $50.66 billion U.S. that was forecast on Wall Street.
The San Ramon, California-based company attributed the declining profits to lower sales margins at its refineries and lower natural gas prices due to excess global supply.
Natural gas prices have declined 37% this year due to a supply glut caused by warm winter weather around the world.
At the same time, retail margins for gasoline, which is the difference between the retail and refining prices, has also fallen in recent months.
Chevron’s refining business in the U.S. saw earnings plummet by more than 50% to $453 million U.S. during Q1. Profits in international refining fell nearly 60% to $330 million U.S.
Chevron said it produced 1.57 million barrels of oil and gas daily in the U.S. during Q1, an increase of 35% from a year ago.
The oil major attributed the production gains to strong output in the Permian Basin of Texas.
Looking forward, Chevron said in its earnings release that it is confident its acquisition of Hess Corp. (HES) will close this year as expected.
Chevron said that the shareholder vote and the Federal Trade Commissions (FTC) request for information on the deal should conclude in the current second quarter.
The company added that it paid $3 billion U.S. in dividends and repurchased nearly $3 billion U.S. of its own stock during Q1 of this year, although its return on capital of 12.4% was lower than the 14.6% recorded a year earlier.
Chevron’s stock is flat over the past 12 months (down 0.42%) and trading at $165.28 U.S. per share.
