By: Reuters – Chevron (CVX.N) posted a third-quarter profit that missed Wall Street estimates by a wide margin, sending its share price down in pre-market trading.
Oil company earnings have slumped from record year-ago levels as crude prices eased and higher costs crimped refining and chemical profits. Results remain strong by historical standards but are well off year-ago levels.
The company earned $6.5 billion, down from $11.2 billion in the same period last year. Adjusted profit was $3.05 a share, compared to analysts’ expected $3.75 per share, according to LSEG data.
Exxon and TotalEnergies also posted lower third-quarter results on weaker crude oil and refining profits with Exxon’s profit down 54% and TotalEnergies’ off 35%.
The earnings miss came after Chevron had warned in the second quarter that maintenance in its oil and gas production and refining businesses would hurt results. It also suffered a setback in a Kazakhstan project with a delay of about six months in expanding oil and gas production at its Tengizchevroil operation.
Shares fell 2% to $151.25 in pre-market trading.
Chevron agreed to buy U.S. rival Hess Corp (HES.N) for $53 billion in an all-stock deal that expands its shale and deepwater oil production and reserves.
In addition to Hess, it acquired U.S. shale oil and gas producer PDC Energy and a majority stake in ACES Delta, a U.S. hydrogen storage firm.
“It is going to be a rough day for CVX shareholders,” wrote RBC analyst Biraj Borkhataria, who described the earnings shortfall as “disappointing,” but blamed it on non-recurring items.
Capital expenditures during the quarter rose more than 50% to $4.7 billion, in part due to the acquisition of ACES Delta. The total cost for the Tengizchevroil expansion project is expected to rise by $1 billion.
Profit from pumping oil and gas fell about 38% to $5.76 billion in the quarter from $9.3 billion a year ago.
Overall, volumes rose 4% to 3.15 million barrels of oil and gas per day (boed) on the PDC Energy deal, which increased the production of less-lucrative natural gas by 25%. Chevron pumped 3.03 million boed a year ago.
Oil prices recently rebounded from a mid-year slump as tighter supplies drove up crude prices. The company’s cash flow from operations fell to $9.7 billion from $15.3 billion a year ago.
Its refining business posted an operating profit of $1.68 billion, down from $2.53 billion a year ago on sharply lower results outside the United States. Gains by its U.S. refining business were offset by weakness overseas, where margins and inputs fell.
