(Reuters) – Oil major Chevron Corp (CVX.N) beat market expectations on Friday as profit nudged higher in the first quarter, with earnings from refining compensating for slides in energy prices as well as oil and gas production.
Net profit climbed 5% to $6.57 billion or $3.46 per share. Results beat consensus by 4%, according to Refinitiv data. The company’s standout business was refining, where higher margins helped income surge more than five-fold to $1.8 billion.
Shares were down 0.5% in pre-market trading.
Chevron’s oil and gas production division, on the other hand, saw its net profit tumble 25% on big year-over-year declines in prices.
Brent crude, the global benchmark for oil, traded at an 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” for every dollar spent by the company, Chief Financial Officer Pierre Breber told Reuters.
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 the 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 that Chevron will 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 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 United States. The company is also starting up a new platform in the Gulf of Mexico.