Chevron reports 2Q earnings miss on weak refining margins
Chevron reported 2Q earnings on Friday that missed Wall Street estimates due to industry-wide pressure from lower refining margins and natural gas prices, sending its shares down 1.5% in premarket trading.
The company earlier had warned oil output this quarter would slip and refining would suffer from turnarounds at two refineries in California (U.S.). Refining margins have been weak globally, hurting other oil majors like bp and Shell.
Chevron said it would relocate the company's headquarters from San Ramon, California, where it was born 145 years ago as Pacific Coast Oil Co, to Houston, Texas. The company has been bitterly contesting state regulations on its oil producing and refining operations in the state.
Chevron reported earnings of $4.4 B, or $2.43 per share, in the quarter, compared with $6 B a year before. It reported adjusted earnings of $4.7 B, or $2.55 per share, compared to $2.93 expected by Wall Street analysts, according to LSEG data.
"Results were disappointing," said Peter McNally, global sector lead for energy at Third Bridge.
The shortfall can be attributed to the international upstream segment, which missed expectations by approximately 11%, he said.
Earnings from pumping oil and gas were down 9.4% from a year earlier. Profit from producing gasoline and chemicals was also down about 60% to $597 MM.
"Despite recent operational downtime and softer margins, we remain poised to deliver significant long-term earnings and cash flow growth," CEO Mike Wirth said.
Refining margins. Oil refiners made less money selling gasoline in 2Q after two years of stellar profits and after ramping up production for demand that never materialized.
Lower refining margins drove Shell's profits down 19% from the previous quarter to $6.3 B. Refining margins also limited bp’s forecast-beating $2.8-B profit and contributed to TotalEnergies’ 6% earnings drop.
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