Chevron beats quarterly profit expectations on higher production

CHEVRON beat Wall Street estimates for third-quarter profit on Friday (Nov 1), helped by higher oil and gas output, but its earnings fell from a year ago. The US company, whose proposed US$53-billion takeover of Hess has been delayed due to a challenge by rivals ExxonMobil and Cnooc, reported an adjusted profit of US$4.53 billion, compared to US$5.72 billion a year ago.

Shares rose 2.6 per cent before normal trading hours.

Oil industry profits have sagged this year due to softer crude prices and weaker fuel demand growth. Oil futures in the quarter ended Sep 30 averaged 17 per cent below the prior quarter, and global fuel margins have suffered from slowing demand growth and excess supplies.

European oil majors BP and TotalEnergies this week also posted weaker results on sharp year-over-year declines in refining margins, lower oil prices and gas-trading profits. ExxonMobil also posted higher than expected profit on raised oil production, but profit fell 5 per cent from a year ago.

Chevron said it earned US$2.51 per share for the quarter on an adjusted basis, compared to analysts’ estimates of US$2.42 according to LSEG data, helped by a 7 per cent year-over-year increase in oil and gas volumes and operating cost cuts. Year-ago adjusted profit was US$3.05 per share.

“We also are taking steps to optimise our portfolio and reduce operating costs to deliver superior long-term value to shareholders,” CEO Michael Wirth said in a statement. The company plans to move its headquarters to Texas from California, and to open a new, nearly US$1-billion engineering centre in India. It disclosed pending sales of oil properties in Canada, Alaska and Congo that will generate about US$8 billion. All three sales are expected to close this quarter, the company said.

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Operating profits were down compared to a year ago in both its major units. Earnings from pumping oil and gas fell 20 per cent to US$4.59 billion while profit from refining oil into petrol and diesel tumbled 65 per cent, to US$595 million. Chemical earnings were up compared to a year ago.

After two years of strong motor-fuels profits, the industry has been slow to adapt to slowing demand growth, excess supplies from producers running plants at high levels and new refineries coming online in Asia and Africa.

Chevron’s third-quarter results were hurt by outages at a California refinery and a loss of production from well shut-ins due to planned maintenance and bad weather. REUTERS