Chevron exceeds expectations for quarterly profits on the back of higher oil production
Chevron Corp. beat Wall Street expectations for the third quarter profit on Friday. However, its earnings dropped from a previous year. Chevron Corp, which has had its proposed $53 billion takeover of Hess delayed by Exxon Mobil Ltd and CNOOC Ltd due to their challenge, reported a profit adjusted of $4.53 billion. This compares to $5.72 million a year earlier.
The shares rose by 2.6% ahead of normal trading hours.
The oil industry has seen profits fall this year as a result of lower crude prices and a weaker growth in fuel demand. Oil futures for the quarter ending Sept. 30, averaged 17% less than the previous quarter. Global fuel margins were also affected by slowing growth in demand and excess supply. BP and TotalEnergies, two of the largest European oil companies, also reported weaker results this week due to sharp declines year-over-year in refining margins and lower oil prices. Exxon Mobil posted a higher-than-expected profit due to increased oil production. However, profits fell 5% compared to a year earlier.
Chevron reported that it earned $2.51 in adjusted earnings per share during the third quarter, compared with analysts' estimates of only $2.42, according to LSEG. This was due to a 7% increase year-over-year in oil and natural gas volumes, and cost-cutting measures. The adjusted profit per share for the year before was $3.05.
Michael Wirth, CEO of the company, said in a press release that "we are also taking steps to optimise our portfolio and to reduce operating costs in order to deliver superior value over time to shareholders." The company will move its headquarters from California to Texas and open a new engineering center worth nearly $1 billion in India. The company announced that it has pending sales in Canada, Alaska and Congo which will generate approximately $8 billion. The company expects all three sales to be completed this quarter.
In both of its major divisions, operating profits fell compared to the previous year. The earnings from the pumping of oil and gas dropped 20% to $4.59 Billion, while profits from refining crude oil into gasoline and Diesel fell 65% to $595 Million. Earnings from chemicals were higher than a year earlier.
After two years with strong profits on motor fuels, the industry has not been able to adjust to the slowing growth of demand, excess supply from producers running their plants at high levels, and new refineries in Asia and Africa.
Chevron's results for the third quarter were hampered by outages in a California refinery, and production losses from wells that had to be shut down due to planned maintenance or bad weather.
(source: Reuters)
