Shares of Chevron fell in premarket trading after the company posted profits and revenues that fell short of analysts’ expectations, even as the oil major announced a $3 billion plan to buy back stock from shareholders.
Shares of the San Ramon, California-based company were down 2 percent ahead of the start of U.S. trading.
Chevron’s profit for the second quarter more than doubled from a year ago to $3.4 billion, driven by strength in its business producing oil and gas. However, earnings per share of $1.78 fell short of anticipations for $2.09.
Key metrics:
- Chevron earnings: $1.78 per share vs $2.09 per share, according to Thomson Reuters
- Chevron revenue: $42.24 billion vs $45.59 billion, according to Thomson Reuters
Earnings in the company’s downstream business — which focused on refining crude oil into fuels like gasoline — fell 30 percent from a year ago to $838 million. The headline drop was due to a decline in profits in Chevron’s international segment, where earnings fell by nearly $380 million from a year ago due to lower profit margins.
Chevron also reported $724 million in charges, higher than during the year-ago period, driven by interest expense.
Offsetting the miss on the top and bottom line, Chevron announced it will start returning cash to shareholders by buying back its stock.
“Our cash flow continues to improve with higher upstream margins and volumes, combined with disciplined spending,” Chevron’s Chairman and CEO Michael Wirth said in a statement. “This enables us to initiate share repurchases, which are expected to be $3 billion per year based on our current outlook.”
Cash flow from operations, a few measure of financial health for integrated oil companies, was up 38 percent at $11.9 billion.
Analysts have been focused on Chevron’s growing position in U.S. shale fields, particularly the Permian basin underlying Texas and New Mexico. On Thursday, British rival BP beat Chevron in its bid to purchase miner BHP Billiton‘s American shale assets. BP scooped up the acreage for $10.5 billion.
Despite steady improvement in Chevron’s earnings as oil prices rebound from an historic downturn, shares of the company were down about 1 percent this year through Thursday. Chevron is now underperforming its Big Oil peers in Europe and fellow American oil major Exxon Mobil, which also reported disappointing earnings on Friday.
This story is developing. Please check back for updates.
Be the first to comment