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Chevron Earnings Slide

FILE - A man walks past a tanker at a Chevron gas station in San Francisco, Oct. 23, 2023. (AP)
FILE - A man walks past a tanker at a Chevron gas station in San Francisco, Oct. 23, 2023. (AP)
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Chevron Earnings Slide

FILE - A man walks past a tanker at a Chevron gas station in San Francisco, Oct. 23, 2023. (AP)
FILE - A man walks past a tanker at a Chevron gas station in San Francisco, Oct. 23, 2023. (AP)

Chevron Corp on Friday posted sharply weaker second-quarter earnings and the oil major's CEO discounted the chance to close a $53 billion acquisition of Hess Corp before mid-2025, sending shares down 3%.
Shares were off 9% since Wednesday following company statements saying a Hess deal closing could well be pushed back by another year, if not blocked entirely.
Chevron is counting on the Hess acquisition to establish a foothold in Guyana, home to the largest oil discovery in nearly two decades. It also hopes the deal will mitigate risks associated with the company's performance-challenged oil projects in Australia and Kazakhstan, where operational issues again hit production, pushing maintenance work into the third quarter.
The company had warned oil output this quarter would slip along with refining margins, but investors were surprised at the magnitude of the declines.
Quarterly earnings fell 19% to $2.55 per share, well below a year ago and 38 cents below Wall Street's consensus estimate, Reuters reported.
"This quarter was a little light due to some operational and other discrete items that impacted results," CEO Michael Wirth told analysts.
The company's plan to enter Guyana's lucrative offshore oil fields was shaken by a challenge from Exxon Mobil. A slow arbitration process looks to drag the deal closing well into 2025.
Asked by analysts about the prospect of a compromise with Exxon, CEO Wirth said the idea would be "sensible" and that Chevron had pursued it, without success. "It doesn't appear that is how this is going to end up," he said.
Exxon claims its joint operating agreement with Hess and China's CNOOC Ltd gives it the right of first refusal to Hess' Guyana properties.
Chevron reported earnings fell sharply to $4.4 billion, or $2.43 per share, in the quarter, from $6 billion a year before.
It reported adjusted earnings of $4.7 billion, or $2.55 per share, down from $5.8 billion, or $3.08 per share, a year ago. In contrast, Exxon beat Wall Street estimates on strong oil production in US shale and Guyana's oil field.
Chevron's earnings from pumping oil and gas fell 9.4% on weakness outside the US Earnings from fuels and chemical operations tumbled about 60%. Refining suffered from weak margins that also hit rivals Exxon and Shell.
Oil refiners overall made less money selling gasoline in the second quarter, as demand softened after production had soared earlier this year. Companies had two years of stellar profits after ramping up production in the travel boom after COVID-19 shut-ins dissipated.
"Despite recent operational downtime and softer margins, we remain poised to deliver significant long-term earnings and cash flow growth," CEO Wirth said.
HESS DEAL DELAY
On Wednesday, Chevron said an arbitration panel that will evaluate Exxon's challenge to its Hess acquisition should have a decision between June and August 2025. Exxon's Chief Financial Officer Kathryn Mikells told Reuters she expects a hearing in late May and a decision on the dispute by September 2025.
Until earlier this week, Chevron expected to close the deal by the end of the year.
CALIFORNIA
Chevron said it would relocate its headquarters to Texas from California, continuing an exodus of oil companies from the state due to higher taxes, stricter climate regulations and depleting oil fields.
Chevron expects all corporate functions to migrate to Houston over the next five years. Positions in support of its California operations, which includes oil fields and two refineries, will remain in San Ramon.
Chevron CEO Wirth and Vice Chairman Mark Nelson will move to Houston before the end of 2024, the company said.
Chevron currently has roughly 7,000 employees in the Houston area and about 2,000 employees in San Ramon.

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Facing Market Pain, UK’s Reeves Says ‘Pragmatic’ China Ties Will Help Growth

British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)
British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)
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Facing Market Pain, UK’s Reeves Says ‘Pragmatic’ China Ties Will Help Growth

British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)
British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)

British finance minister Rachel Reeves, facing criticism for travelling to China during financial market turmoil at home, said on Saturday that "pragmatic and predictable" relations with Beijing would help boost economic growth and trade.

Under pressure from a sharp rise in British interest rates, Reeves defended her budget at the start of the two-day visit to China, where she is seeking to revive high-level economic and financial talks that have been frozen for nearly six years.

"The fiscal rules that I set out in my budget in October are non-negotiable, and growth is the number one mission of this government to make our country better off," Reeves told reporters at a Brompton bicycle shop in Beijing.

"That's why I'm in China to unlock tangible benefits for British businesses exporting and trading around the world to ensure that we have greater access to the second-largest economy in the world."

The rise in British government borrowing costs, due in part to a global bond selloff, prompted comparisons with the 2022 "mini-budget" crisis that forced then-Prime Minister Liz Truss out of Downing Street.

However, this week's market moves have been less sharp and there has so far been no evidence of the strain on institutional investors that forced the Bank of England into emergency bond purchases in 2022.

On trade, asked whether Britain would follow Washington and Brussels in imposing tariffs on Chinese electric vehicles, Reeves, who will be in Shanghai on Sunday, said: "We keep issues under review but we make decisions in our national interest."

British car manufacturers, "like Jaguar Land Rover, export substantially to Chinese markets, and we want to help them to grow."

After her bicycle shop visit, Reeves met Vice President Han Zheng, telling him it was "important to have open and frank dialogue in areas where we agree, but also in areas where we have different views."

'COMMON GROUND'

Her delegation, which includes Bank of England Governor Andrew Bailey, Standard Chartered Chairman Jose Vinals, and HSBC Chairman Mark Tucker, then met Chinese counterparts led by Vice Premier He Lifeng.

He urged British financial firms to expand renminbi services and promote deeper yuan internationalization, while inviting them to participate in green finance and the pension industry in China.

Reeves said she looked forward to China issuing its first overseas sovereign green bond in London this year.

Her visit follows a dialogue opened last year between Prime Minister Keir Starmer and President Xi Jinping, the first between the two countries' leaders since 2018.

Reeves told He that Russia's invasion of Ukraine, rising geopolitical tensions and climate change meant that they faced a much more challenging environment than when their predecessors last met.

"It is important to prevent economic leaps weakening our national security and economic resilience," she said, adding both she and He wanted to "find common ground" in this regard.

He said Beijing will work with London to ensure a fair, non-discriminatory business environment for each country's firms.

The approach adopted by Starmer's Labor government, elected in July, contrasts with that of the previous Conservative administration, which took a robust path to differences with China - particularly over human rights, Hong Kong and allegations of Chinese espionage.

Starmer has long described his desire to build a relationship with China that is "rooted in the UK's national interests" by boosting trade, a task that may become more difficult if US President-elect Donald Trump follows through on his threat to impose tariffs on all imports.

China is Britain's fourth-largest trading partner, accounting for goods and services trade worth almost 113 billion pounds ($138 billion).