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VANCOUVER (miningweekly.com) – Oil giant Chevron saw its NYSE-listed equity slip more than 6% on Friday after it reported disappointing fourth-quarter earnings.
The San Ramon, California-based energy company reported earnings of $3.1-billion, or $1.64 a share for the fourth quarter ended December 31, compared with just $415-million, or $0.22 a share in the comparable quarter of 2016.
The net profit included a $2.02-billion gain related to US tax reform and a noncash charge of $190-million related to a former mining asset. Excluding these items, the company earned adjusted profit of $0.72 a share, which was far below the $1.22 a share Wall Street analysts were expecting.
The top line, however, came in above expectations at $37.62-billion, compared with estimates for the period of $37.59-billion.
Chevron's upstream business, where the major produces oil and natural gas, rose some 469% year-on-year to $5.3-billion in the fourth quarter, from $930-million a year earlier, and were boosted by $3.3-billion related to the US tax reform.
Chevron also achieved a 258% rise in its downstream segment, which includes refining crude oil into fuels such as petrol, to $1.3-billion for the quarter, up from $357-million from 2016. The downstream business also benefitted from a $1.16-billion boost from tax reform. However, the international downstream operations earned $84-million in the fourth quarter – a 75% drop compared with $357-million a year earlier. The decrease in earnings was mainly attributable to lower margins on refined product sales.
For the full year, Chevron reported profits of $9.2-billion, compared with a loss of $497-million in 2016. This reflected the company's strongest financial performance since the oil price started its fall late in 2014.
Cash flow from operations was up 60% year-on year at $20.5-billion.
Worldwide net oil-equivalent production was 2.74-million barrels a day in the fourth quarter, compared with 2.67-million barrels a day in the fourth quarter of 2016.
"We achieved our objective of being cash flow positive through deliberate actions to reduce capital expenditures, lower our cost structure, start and ramp-up projects and conclude planned asset sales," chairperson and CEO Michael Wirth stated in a press release, adding that higher commodity prices had also helped.
On the back of an improved market outlook and strong cash flow, Chevron on Wednesday declared a $0.04 increase to its dividend from the prior quarter, lifting it to $1.12 a share.
Chevron's stock closed down 5.57% on Friday at $118.58 apiece, dragging the equity down 5.28% since the start of the year.