Chevron saw its stock price jump as it reported first-quarter earnings that easily topped expectations, fueled by rising oil and natural gas production and higher commodity prices.
Shares of Chevron were up more than half a percent shortly after the U.S. stock market opening, backing off stronger gains before the bell.
Chevron’s profits have steadily improved as the oil market works through a glut of crude. Oil prices have recently risen to their highest levels since the end of 2014 as supply and demand balance out.
Overall profits at the San Ramon, California-based company were $3.64 billion, up nearly 36 percent from a year ago. The company reported earnings of $1.90 per share, compared with $1.48 forecast by Thomson Reuters.
In the first quarter, Chevron’s profits from its upstream business, which produces oil and gas, doubled from a year ago. That offset a 21-percent drop in earnings in its downstream segment, which includes refining crude oil into fuels like gasoline.
“Oil and gas production is increasing, most notably in our Gorgon and Wheatstone LNG Projects in Australia, and our shale developments in the Permian Basin where production grew 65 percent from a year ago,” Chairman and CEO Michael Wirth said in a statement.
“Upstream volumes are expected to continue to increase in future quarters,” Wirth added.
Revenue rose about 13 percent to $37.76 billion from a year ago.
Chevron attributed the weakness in its refining and marketing business to lower profit margins on sales of refined products.
Chevron’s cash flow from operations, a key measure of financial health in the sector, was $5 billion, up more than $1 billion from a year ago.
Shares of Chevron are up nearly 18 percent over the last year, recovering from a sharp drop following the oil giant’s last quarterly earnings report, which badly missed Wall Street’s expectations.
During that quarter, earnings took a hit from weaker profit margins in Chevron’s downstream sector, which refines crude oil into fuels like gasoline.