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Chevron Tops Q1 Revenue Forecasts, Pledges to Protect Dividend, Amid Biggest Crude Slump on Record

Chevron said deeper cost cuts are 'consistent with our longstanding financial priorities: to protect the dividend; to prioritize capital that drives long-term value; and to maintain a strong balance sheet."

Chevron Corp.  (CVX) - Get Chevron Corporation Report posted stronger-than-expected first quarter revenues Friday, and pledged to protect its dividend, amid the biggest three-month decline in history for global crude prices.

Chevron said diluted earnings for the three months ending in March came in at $1.93 per share, a 38.8% increase from the same period last year that included some one-time items that pushed it well ahead of the Street consensus forecast of 68 per share. Group revenues, the company said, fell 14.8% to $30 billion, but again topped analysts estimates of a $29.4 billion tally.

Chevron also said it would make a further $2 billion in cuts to its capital spending plans, while reducing operating costs by another $1 billion, as it attempts to protect the group's dividend and maintain a strong balance sheet. Chevron announced a quarterly dividend of $1.29 per share earlier this week.

“First quarter earnings were up from a year ago,” said CEO Michael Wirth “driven by downstream margins and increased Permian production. However, commodity prices fell significantly in March and the weakness continued into the second quarter, primarily due to reduced demand resulting from the COVID-19 pandemic.” 

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“Chevron is responding to these unprecedented challenges by making changes to what we control, and with a commitment to protect the long-term health and value of the company,” Wirth added. “Our company entered this crisis well positioned with a strong balance sheet, flexible capital program and low breakeven price. These advantages will be important as we respond to challenging market conditions.”

Chevron shares were marked 0.9% lower in early trading following the earnings release to change hands at $91.08 each, a move that would extend the stock's year-to-date decline to around 24%.

Chevron told investors in late March that it would halt its share buyback program and lower 2020 spending plans by $4 billion as warned of a material' coronavirus impact on its 2020 earnings. 

WTI crude prices, the U.S. benchmark, plunged 66% over the first quarter, the biggest decline on record, as demand evaporated amid the coronavirus pandemic and domestic production rates hummed along at all-time highs. Brent crude, meanwhile, fell more than 54% over the month of March alone despite speculation of OPEC output cuts.