Chevron Earnings Fail to Impress Investors

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Chevron Corp. (NYSE: CVX) reported fourth-quarter and full-year 2017 results before markets opened Friday. For the quarter, the oil and gas supermajor posted a diluted earnings per share (EPS) of $1.64 on total revenues of $37.62 billion. In the same period a year ago, the company reported EPS of $0.22 on total revenues of $31.5 billion. Fourth-quarter results also compare to the consensus estimates for EPS of $1.22 and $37.59 billion in revenues.

For the full year, Chevron reported revenues of $141.72 billion and EPS of $4.85, compared with revenues of $114.47 billion and a net loss of $0.27 per share in 2016. Analysts were looking for EPS of $4.18 and revenues of $139.21 billion.

Chevron’s results include a fourth-quarter tax benefit of $2.02 billion and a noncash charge of $190 million on a former mining asset. Net income for the quarter totaled $3.11 billion, including $1.64 billion in a tax benefit.

The U.S. upstream segment posted earnings of $3.69 billion, compared with net earnings of $121 million in the year-ago quarter. International upstream posted a profit of $1.6 billion, compared with a profit of $809 million last year.

Net oil-equivalent production in the third quarter totaled 2.74 million barrels a day, up by about 7,000 barrels a day compared with the year-ago quarter. Net oil-equivalent production in the United States totaled 671,000 barrels a day, down by 11,000 barrels year over year. Average U.S. price realizations per barrel of oil rose from $40.00 a year ago to $50.00.

Natural gas realizations fell from $1.98 per thousand cubic feet to $1.86.

CEO Michael Wirth said:

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. Higher commodity prices helped as well. These improvements give us the confidence to increase the dividend by $0.04 per share, which puts us on track to make 2018 the 31st consecutive year with an increase in annual dividend payout.

The earnings announcement did not include guidance, but consensus estimates for the fourth quarter of 2017 call for earnings per share of $1.06 on revenues of $35.9 billion. For the full year, earnings per share and revenues are estimated at $4.08 and $134.7 billion, respectively.

Chevron’s shares traded down about 2.9% early Friday, at $121.94 in a 52-week range of $102.55 to $133.88. The consensus 12-month price target was $135.33 before this morning’s report.