By Sabrina Valle
HOUSTON, April 28 (Reuters) - Oil major Chevron Corp beat market expectations on Friday as profit nudged
higher in the first-quarter, with earnings from refining
compensating for a slide in energy prices and in oil and gas
production.
Net profit climbed 5% to $6.57 billion or $3.46 per share.
That compares with a Wall Street consensus for flat profit at
$3.38 per share, according to figures compiled by Zacks
Investment Research.
The company's standout business was oil refining, where
higher margins helped income surge more than five-fold to $1.8
billion.
But its oil and gas production division saw its net profit
tumble 25% on a big year-over-year declines in prices.
Brent crude, the global benchmark for oil, traded at a
average of $82 per barrel during the first three months of the
year, down 16% from a year earlier and a drop of 7% from the
fourth-quarter.
"Brent prices are high, yet down quite a bit. But you are
still seeing mid double digit returns," Chief Financial Officer
Pierre Breber told Reuters, referring to returns on capital
employed (ROCE).
The second-largest U.S. oil firm ended the quarter with
$15.8 billion in cash, down 12% from a year ago, but some $10
billion above what it needs run the business, Breber said.
Big oil companies are holding more cash in event of an
economic slowdown and to be ready if there is a new wave of
consolidations.
"The intent over time is that cash will be returned to
shareholders in a steady way," Breber said, adding Chevron would
only pursue deals that benefit shareholders.
"We are always looking," he said when asked if Chevron was
discussing acquisitions. "And we have a very high bar because we
don't need to do a deal."
Capital spending jumped 55% from a year ago to $3 billion,
primarily driven by investments in U.S. projects.
Chevron has been increasing production in the United States
while decreasing it elsewhere. Total output fell 3% from a year
ago to 2.98 million barrels of oil and gas per day on a contract
expiration in Thailand and on the sale of South Texas shale
properties.
The decrease was partially offset by a 4% production growth
in the Permian, the largest shale basin in the U.S. The company
is also started up a new platform in the Gulf of Mexico.
(Reporting by Sabrina Valle; Editing by Edwina Gibbs)
