Chevron Earnings Hit by Lower Prices, Margins

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Chevron Corp. (NYSE: CVX) reported fourth-quarter and full-year 2013 results before markets opened Friday. For the quarter, the oil and gas supermajor posted diluted earnings per share (EPS) of $2.57 on revenues of $56.16 billion. In the same period a year ago, the company reported EPS of $3.27 on revenues of $60.55 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $2.57 and $63.14 billion in revenues.

For the full year, Chevron posted EPS of $11.09 on revenues of $228.85, compared with 2012 EPS of $12.57 and revenues of $241.91 billion. The consensus estimates called for EPS of $11.21 on revenues of $233.8 billion.

Global oil-equivalent production fell from 2.67 million barrels a day in the 2012 fourth quarter to 2.58 million barrels a day due to normal field declines and lower cost recovery volumes. U.S. profits fell from $1.36 billion a year ago to $803 million due to lower production and higher costs. The company’s average U.S. selling price per barrel dropped by $1.00 a barrel to $90, while the average cost of natural gas rose from $3.22 per thousand cubic feet a year ago to $3.35 in the quarter.

U.S. refining profits fell from $331 million a year ago to $265 million in the fourth quarter due to higher operating expenses and lower margins on product sales. Internationally, refining profits fell from $594 million to $125 million, which Chevron attributed to lower gains on asset sales, lower margins on refined products, nonperforming hedges and higher income taxes. Foreign currency translation effects totaled $96 million, virtually the same with the $97 million negative effect in the fourth quarter of 2012.

The company’s CEO said:

Global crude oil prices and refining margins were generally lower in 2013 than 2012. These conditions, as well as lower gains on asset sales and higher expenses, resulted in lower earnings. … We made significant progress on our LNG projects in Australia during the past year, with Gorgon almost 75 percent complete and Wheatstone successfully reaching important construction and LNG marketing milestones. We expect 2014 will be the peak year for spending on these two projects as we move them closer to first production.

The earnings announcement did not include guidance, but the consensus estimate for the first quarter calls for EPS of $2.88 on revenues of $60.09 billion. For the full year, EPS and revenues are estimated at $11.59 and $236.55 billion, respectively.

Chevron shares were down about 1.2% in premarket trading, at $115.68 in a 52-week range of $113.50 to $127.83. Thomson Reuters had a consensus analyst price target of around $132.35 before this report.

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