Chevron, the US oil and gas group, has reported earnings for the first quarter that were down 27 per cent, hit by a squeeze on margins at its refining and chemicals operations, but above analysts’ expectations.
The company also reiterated that it had entered “a definitive agreement” to buy Anadarko Petroleum in a $50bn deal, despite Occidental Petroleum having this week announced a rival offer at a higher value. Anadarko’s board has said it will “carefully review Occidental’s proposal”.
Chevron’s earnings per share for the first quarter were $1.39, well above the average of analysts’ expectations, which was $1.30.
The company was hit by some of the same problems that affected its US rival ExxonMobil in the quarter, but the impact was less severe.
Profits from the downstream refining and chemicals operations dropped 65 per cent to $252m as margins fell sharply. A surge in production of petrochemicals, following heavy investment in recent years, has put downward pressure on prices, and margins on fuels have also been squeezed.
Profits in the upstream oil and gas production operations fell 7 per cent to $3.12bn, as the effect of weaker prices was offset by a 7 per cent increase in production volumes, led by growth at the Wheatstone liquefied natural gas project in Australia and in the Permian Basin of Texas and New Mexico. Worldwide production in the quarter was 3.04m barrels of oil equivalent per day.
Chevron is seeking to add to its growth potential in the Permian region with the Anadarko deal.
Mike Wirth, Chevron’s chief executive, said in a statement accompanying the earnings: “The combination of Anadarko’s high-quality assets and people with Chevron’s portfolio strengthens our leading position in the Permian, builds greater deepwater Gulf of Mexico capabilities and will grow our LNG business. We believe this transaction will unlock significant value for shareholders.”
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