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Chevron, the second-largest US oil company, swung back into profit and exceeded analysts’ expectations with earnings for the first quarter, buoyed by higher oil and gas prices.
Earnings per share were $1.41 for the quarter, compared to a loss of 39 cents for the equivalent period of 2016. The average of analysts’ forecasts was for earnings of 86 cents.

Net income of $2.7bn included a $600m gain from selling Chevron’s geo-thermal energy business in Indonesia, but even excluding that earnings were higher than analysts had forecast.

John Watson, Chevron’s chief executive, said in a statement: “We benefited from increasing crude oil prices and ongoing efficiencies being implemented across the company.”

“We continue to make good progress on reducing our spend,” he added. “Our operating expenses were reduced by about 14 per cent from first quarter 2016 and our capital spending declined over 30 per cent from a year ago.”

Chevron’s large net cash outflow, caused by spending more on investment than it has been making from operations, has been a concern for investors, but in the first quarter the company managed to cut that deficit sharply.

In the first quarter of 2017, cash from operations was $3.9bn and capital and exploration spending $4.4bn, compared to cash from operations of just $1.1bn and capital and exploration spending of $6.5bn in the equivalent period of last year.

The improvement in earnings was driven by a dramatic swing in the oil and gas production operations, which went from a loss of $1.5bn in the first three months of 2016 to a profit of $1.5bn in the equivalent period of 2017. Both the US and international operations moved from loss into profit for the quarter. Better selling prices for oil and gas were the principal reason.

Production rose only very slightly to 2.68m barrels of oil equivalent per day for the first quarter, up from 2.67m boe/d in the first three months of 2016.

However, Chevron said it was still on course to meet its target for the full year of 4-9 per cent growth in production, excluding the impact of asset sales.

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