Chevron fell short of analysts’ expectations amid weak returns from its overseas refineries as the oil giant moves closer to the US$53 billion purchase of storied rival Hess. 

Adjusted third-quarter earnings of US$3.05 a share lagged behind the Bloomberg Consensus estimate by 66 US cents. The result on Friday (Oct 27) followed this week’s announcement that Chevron plans to increase next year’s dividend by 8 per cent and boost annual share buybacks by 14 per cent to US$20 billion.  

Chevron’s overseas refineries underperformed expectations, delivering roughly half the profit analysts forecast.

The profit report is likely to be overshadowed the Hess megadeal that followed close on the heels of ExxonMobil’s US$60 billion agreement to purchase Pioneer Natural Resources. 

By one oil-industry metric, known as cost-per-flowing-barrel, Chevron is paying a much higher price for Hess, but doing so will secure the California-based driller a 30 per cent stake in Guyana’s Stabroek Block, one of the world’s largest crude discoveries in years. 

Chief executive officer Mike Wirth sought to ease investor concern about the high price for Hess by pledging to fatten dividends and buybacks. The combination will assuage concerns in some corners that Chevron was too reliant on just two regions – the US Permian Basin and Kazakhstan – to meet future production targets. BLOOMBERG

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