عربي English Türkçe اردو فارسى
Logo
Latest News
Business

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)
TT
TT

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.

Most Viewed

 
 
Business

Global Stocks Plunge, Bond Prices Rally as US Data Spooks

A sign for ‘Jobs’ is displayed outside a business in Los Angeles, California, USA, 02 August 2024. EPA/ALLISON DINNER
A sign for ‘Jobs’ is displayed outside a business in Los Angeles, California, USA, 02 August 2024. EPA/ALLISON DINNER
TT
TT

Global Stocks Plunge, Bond Prices Rally as US Data Spooks

A sign for ‘Jobs’ is displayed outside a business in Los Angeles, California, USA, 02 August 2024. EPA/ALLISON DINNER
A sign for ‘Jobs’ is displayed outside a business in Los Angeles, California, USA, 02 August 2024. EPA/ALLISON DINNER

Surprisingly weak US employment data on Friday stoked fears of a recession ahead, prompting investors to dump stocks and turn to safe-haven bonds, Reuters reported.

Treasury prices surged, sending yields to multi-month lows.
Oil price benchmarks fell by more than $3 per barrel at their session lows. The US dollar index dropped over 1% to its weakest since March.

Richly valued technology firms bore much of the pain, and an index of European bank stocks headed for its largest weekly decline in 17 months on soft earnings.

The VIX stock market volatility measure, dubbed Wall Street's fear gauge, surged over 40%.

Friday's US jobs report showed job growth slowed more than expected in July and unemployment increased to 4.3%, pointing to possible weakness in the labor market and greater vulnerability to recession.

Markets were already rattled by downbeat earnings updates from Amazon and Intel and Thursday's softer-than-expected US factory activity survey in addition to the monthly US non-farm payrolls report, which showed job growth slumped to 114,000 new hires in July from 179,000 in June.

The data raised expectations of multiple rate cuts by the Federal Reserve this year, which just this week opted to keep rates unchanged, Reuters reported.
"The jobs data are signaling substantial further progress that the Federal Reserve made a policy error by not reducing the fed funds rate this week," said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.

"It’s very possible the Fed alters its inter-meeting communications on the balance of risks to remove all doubt about a September rate cut."

With thin summer trading likely exaggerating moves, a slump that began in Asia with a 5.8% drop for Japan's Nikkei, its biggest daily fall since March 2020 during the COVID-19 crisis, rippled through Europe and headed for Wall Street.

MSCI's gauge of stocks across the globe fell 16.09 points, or 2.00%, to 787.31.

The Nasdaq Composite lost 417.98 points, or 2.43%, to 16,776.16. The index has fallen more than 10% from its July closing high, confirming it is in a correction after concerns grew about expensive valuations in a weakening economy.

The Dow Jones Industrial Average fell 610.71 points, or 1.51%, to 39,737.26, the S&P 500 lost 100.12 points.

Europe's STOXX 600 fell close to 3%, with financials and technology the worst hit.
Emerging market stocks fell 24.30 points, or 2.23%, to 1,063.50.
MSCI's broadest index of Asia-Pacific shares outside Japan closed 2.48% lower 2.48%, at 553.72, while Japan's Nikkei fell 2,216.63 points, or 5.81%, to 35,909.70.
The Fed has kept benchmark borrowing costs at a 23-year high of 5.25%-5.50% for a year, and some analysts believe the world's most influential central bank may have kept monetary policy tight for too long, risking a recession.
Money markets on Friday rushed to price a 70% chance of the Fed, which was already widely expected to cut rates from September, implementing a jumbo 50 basis points cut next month to insure against a downturn.
The "employment report flashes a warning signal that this economy does have the ability to turn rather quickly," said Charlie Ripley, Senior Investment Strategist for Allianz Investment Management in Minneapolis.
"Ultimately, today’s employment data should embolden the committee to cut policy by more than 25 basis points at the next meeting."

RUSH AWAY FROM TECH, TO SAFE HAVENS
Shares in US chipmaker Intel tumbled to a more than 11-year low and finished down over 26%, after suspending its dividend and announcing hefty job cuts alongside underwhelming earnings forecasts.

Artificial intelligence chipmaker Nvidia, one of the biggest contributors to the tech rally, dropped 1.8%
Up more than 700% since January 2023, Nvidia has left many asset managers with an outsized exposure to the fortunes of this single stock.
Safe-haven buying went full throttle, with government debt, gold and currencies traditionally all rallying. They are assets viewed as likely to hold value during market chaos.

The yield on benchmark US 10-year notes fell 18 basis points to 3.798%.
The 2-year note yield, which typically moves in step with interest rate expectations, fell 28.5 basis points to 3.8798%.
In foreign exchange markets, the yen added nearly 2%, extending a rapid bounceback after the Bank of Japan raised interest rates to levels unseen in 15 years.
In commodities, spot gold lost 0.37% to $2,436.31 an ounce and US gold futures settled 0.4% lower to $2,4769.8.
Oil prices took a hit on the growth worries, with global benchmark Brent futures settled down $2.71, or 3.41%, to $76.81 a barrel. US West Texas Intermediate crude futures finished down $2.79, or 3.66%, at $73.52.