Chevron earnings fall more than expected in second quarter

Chevron announced a fall in second-quarter earnings on Friday, to $4.4bn, down from $6bn in the same period last year.

Adjusted earnings came in at $4.7bn.

The outcome fell short of Wall Street expectations, with earnings per share coming in at $2.43 per share, well below the $2.88 per share predicted by analysts surveyed by Zacks Investment Research

Despite the drop in earnings, Chevron's global oil-equivalent production increased by 11% compared to the prior year, bolstered by the acquisition of PDC Energy and robust output from the Permian and Denver-Julesburg Basins.

The company also expanded its exploration footprint by securing new agreements in Namibia, Brazil, Equatorial Guinea, and Angola.

Chevron said its second-quarter financial performance was impacted by a number of factors, including lower margins on refined product sales, negative foreign currency effects, and the absence of favourable tax items from the prior year.

Capital spending rose due to increased investments in upstream projects, particularly following the PDC acquisition.

Cash flow from operations remained steady year-on-year, and Chevron returned $6bn to shareholders through dividends and share repurchases.

It marked the ninth consecutive quarter where shareholder returns exceeded $5 billion.

The company announced a quarterly dividend of $1.63 per share, payable on 10 September.

In terms of segment performance, US upstream operations saw an increase in earnings due to higher production volumes and realisations, while international upstream earnings declined, primarily due to lower natural gas prices and unfavourable currency impacts.

In the downstream sector, earnings decreased both domestically and internationally, largely due to lower margins on refined product sales and increased operating expenses.

“This quarter, we delivered strong production, enhanced our global exploration portfolio and extended our track record of consistent shareholder returns with over $50bn of distributions in the last two years,” said chairman and chief executive officer Mike Wirth.

“Despite recent operational downtime and softer margins, we remain poised to deliver significant long-term earnings and cash flow growth.”

At 0651 EDT (1151 BST), shares in Chevron Corporation were down 2.33% in premarket trading in New York, at $149.06.

They had closed down 4.89% on Thursday, ahead of the results, at $152.62.

Reporting by Josh White for Sharecast.com.