Chevron Corporation (NYSE:CVX) Q4 Result Fails To Meet Investors’ Expectations
At a time when oil price is either stable or growing, Chevron Corporation (NYSE:CVX) delivered below than expected results for the fourth quarter. While upstream business gained, its downstream unit let down due to weak margins and increased tax items. In any case, investors pressed the panic button in selling the stock in pre-market trading on Friday.
Chevron’s earnings from downstream operations in the United States were only breakeven compared to $496 million in the year-ago quarter. The company blamed it on lower margins on refined product sales apart from higher tax items. The oil firm pointed out that refinery crude oil input dropped 21 percent in the fourth quarter citing planned turnaround activity at its Richmond, California, refinery.
The company’s refined product sales dropped 8 percent in the fourth quarter to 1.14 million barrels a day. However, branded gasoline sales witnessed 2 percent growth on a year-over-year basis.
As far as global downstream operations, Chevron’s earnings dropped to $357 million from $515 million in the previous year period. Refinery crude oil input witnessed 18,000 barrels a day increase in the latest fourth quarter period. Total refined product sales grew 1 percent.
As far as upstream is concerned, its US division recorded earnings of $121 million in the fourth quarter compared to a loss of $1.95 billion. Its International division’s earnings jumped to $809 million from $593 million. The increase in earnings are attributed to higher price realization and increased natural gas sales volume besides lower operating costs. The average selling price for crude oil and natural gas liquids improved from $39 to $44 in its international division. As far as the United States division, it improved from $35 to $40 in the comparable period.
Chevron’s chairman and CEO, John Watson, commented: “We responded aggressively to those conditions, cutting capital and operating expenses by $14 billion. We are well positioned to improve earnings and be cash flow balanced in 2017 through continued tight spending and cost control and additional revenue from expected production growth. That confidence enabled us to increase the 2016 annual dividend payout for the 29th consecutive year.”
At time of writing this, the stock dropped 2.82 percent in the pre-market trading.