Chevron Corp. CVX 1.60% swung to a profit for the first time in a year as the global energy industry starts to recover from the destruction of oil and gas demand wrought by the pandemic.
The second-largest U.S. oil company behind Exxon Mobil Corp. XOM 1.43% reported $1.4 billion in first-quarter profit, results that were boosted by sharply improved oil prices as countries around the world soften coronavirus restrictions.
Chevron’s net income was down about 62% from the same quarter last year, but a substantial increase from a $665 million loss in the previous quarter.
“Earnings strengthened primarily due to higher oil prices as the economy recovers,” Chevron Chief Executive Mike Wirth said in a statement.
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Chevron’s profits were lower than expected by analysts, who predicted about $1.8 billion in net income, according to S&P Global Market Intelligence. Chevron’s refining and chemical units reported $5 million in profits, down from $1.1 billion a year ago, which Mr. Wirth attributed to the continuing impact of the pandemic and the February winter storm in Texas, which shut down much of the petrochemical complex along the Gulf of Mexico.
Chevron’s results were also weighed down by $978 million in expenses related to employee benefit and pension payments.
The results indicate Chevron is turning a corner, following one of its most challenging years ever. The San Ramon, Calif.-based company reported $5.5 billion in losses in 2020. On Wednesday, it increased its quarterly dividend by 4%, one of several major oil companies to return more cash to investors this quarter as the industry recovers.
Chevron Chief Financial Officer Pierre Breber said that demand for gasoline and diesel was nearly back to pre-pandemic levels, and that jet fuel is the last remaining overhang, with strong signs that domestic air travel in the U.S. is picking up.
“As we look forward, the next couple of quarters look very good,” Mr. Breber said in an interview. “We feel good about our ability to generate cash.”
U.S. oil prices neared a six-week high of about $65 a barrel Thursday and are up nearly 80% over the past six months.
“Momentum across the energy complex remains quite strong,” analysts at Ritterbusch & Associates said in a note to investors.
Despite the improving conditions, Chevron has pledged to keep capital expenditures austere. Mr. Wirth said capital spending decreased 43% from last year during the quarter, citing its corporate restructuring last year that saw as much as 15% of its workforce laid off.
Chevron in the Pandemic
Write to Christopher M. Matthews at [email protected]
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