Chevron missed second-quarter earnings expectations, with the decline because of lower refining margins and the stock already under pressure because of delays in its pending acquisition of Hess Corporation.
Chevron shares closed 2.67% lower on Friday.
The oil company also announced Friday that it’s moving its headquarters from San Ramon, California, to Houston. CEO Mike Wirth is anticipated to maneuver by the tip of 2024. All corporate functions will probably be moved to Houston over the following five years. Wirth said the move had nothing to do with political disputes with California.
“Houston is the epicenter of our industry,” Wirth told CNBC’s “Squawk Box.” “Our headquarters has gradually grown in Texas and gradually shrunk in California. This is a continuation of a trend that has been emerging for some time.”
Here is what Chevron reports for the second quarter in comparison with Wall Street expectations based on an analyst survey conducted by LSEG:
- Earnings per share: USD 2.55 adjusted versus USD 2.93 expected
- Revenue: $51.18 billion in comparison with expected $50.8 billion
Chevron’s net income fell 26% to $4.43 billion, or $2.43 per share, from $6.01 billion, or $3.20 per share, in the identical period last yr. Adjusted for $243 million in foreign currency effects, Chevron posted earnings of $2.55 per share.
Sales rose from $48.9 billion within the previous yr to $51.18 billion.
The oil company’s US production segment reported a profit of $2.16 billion, a rise of 31 percent over the identical period last yr ($1.64 billion). This is because of higher sales volumes and oil prices.
Profit from international production decreased by roughly 30% to $2.3 billion in comparison with $3.29 billion in the identical period last yr, because of lower sales and natural gas prices in addition to negative currency effects.
Overall, Chevron’s global oil equivalent production rose 11% to three.29 million barrels per day, because of record production within the Permian Basin.
The U.S. refining business posted profit of $280 million, down 74 percent from $1.1 billion in the identical quarter last yr because of lower margins. International refining profit fell 25 percent to $317 million, in comparison with $426 million in the identical quarter last yr.
Hess deal delayed
Chevron’s second quarter results come after the pending acquisition of Hess suffered a severe blow this week.
Chevron and Hess announced Wednesday that an arbitration panel won’t hold a hearing until May 2025. Exxon Mobil’s Claims to a right of first refusal on Hess’s lucrative oil reserves in Guyana.
A choice within the case would come three months after the hearing, meaning the Chevron-Hess deal couldn’t close until next yr in the event that they prevail in arbitration. The firms had originally planned to shut the transaction this yr.
The Chevron-Hess deal can be currently under review by the Federal Trade Commission. Wirth said the FTC’s review will likely be accomplished within the third quarter.
The CEO said Chevron stays confident the arbitration panel will rule in the corporate’s favor, but he reiterated that the Hess transaction is unlikely to shut if Exxon wins.
“This requires a little more work and a little more time than we initially expected,” said Wirth.
Chevron shares closed nearly 5 percent lower on Thursday and Hess shares lost nearly 8 percent. Since the start of the yr, Chevron shares have underperformed the market, falling 0.4 percent.
