Chevron Corp. (CVX), an integrated energy company, is scheduled to report first-quarter results after the market closes on Thursday. The economic crisis has led to a decline in demand for oil, consequently sending the oil prices down, and the demand is expected to remain more or less the same for the whole of 2009. These factors are likely to weigh on the company's report card, and Chevron is anticipated to report lower earnings for the first quarter.
The San Ramon, California-based company has petroleum and chemical operations and is also involved in the production and marketing of coal and molybdenum, development and operation of commercial power projects and cash management and debt financing. The company is also engaged in corporate administrative, insurance, and real estate activities.
When Chevron reports earnings later in the day, on average, 11 analysts polled by Thomson Reuters expect the company to earn $0.94 per share for the quarter, sharply lower than the $2.48 per share reported for the year-ago period. Analysts' estimates typically exclude special items. Revenue is estimated to be $23.11 billion.
In January, the second largest U.S. oil company reported a marginal profit in its fourth quarter, despite a 26% revenue drop, helped by a gain from an upstream asset swap as well as higher earnings from its downstream operations. Net income for the fourth quarter was $4.90 billion or $2.44 per share, compared to $4.88 billion or $2.32 per share for the year-ago quarter. Total revenue and other income declined to $45.20 billion from $61.41 billion a year ago.
On March 11, Credit Suisse lowered its 2009 earnings per share estimates for the company to $5.50 from $5.66 and maintained its $68 target price as well as Neutral rating. The brokerage noted that Chevron is likely to outperform most other Big Oils in 2009, if it can achieve its 4% upstream volume growth expectation. The stock will find it harder to outperform a stabilizing equity market due to the already stretched relative valuation, the firm felt.
During the quarter, Chevron said two of its subsidiaries completed the sale and transfer of their fuels marketing business in Brazil to a subsidiary of Ultrapar Participações S.A.
Ultrapar acquired a network of about 2,000 service stations operating under the Texaco brand, an equity interest in associated terminal operations, and Chevron's commercial and industrial fuels business. Other terms of the agreement were not disclosed.
Chevron Africa Holdings Ltd., another unit of Chevron, last month completed the sale of Chevron Nigeria Holdings Ltd to Corlay Global S.A. The financial details related to the transaction were not disclosed. Chevron also noted that its upstream operations in Nigeria are not affected by the sale.
Apart from the drop in oil prices as well as the decline in demand, Chevron is also grappling with environmental issues in Ecuador related to the toxic waste left by Texaco, which it bought in 2000. As much as $27 billion is at stake for Chevron in this issue and a decision is expected next year.
Among peers, ConocoPhillips (COP) is expected to announce first-quarter results on April 23. Analysts expect the company to report earnings of $0.52 per share on revenues of $26.34 billion.
CVX is currently trading at $69.24, up $0.76 or 1.11%, on 11.24 million shares.
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