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U.S. energy giant Chevron Corp. (CVX - Analyst Report) reported weak fourth quarter results on falling production and refinery margins. It reflected in its share price on the NYSE, where it fell almost 4% in early trade.

Earnings per share (excluding adjustments for foreign-currency effects) came in at $2.47, below the Zacks Consensus Estimate of $2.58 and deteriorated considerably from the year-ago adjusted profit of $3.78 per share.

The integrated supermajor’s quarterly revenue decreased 7.3% year over year to $56,158.0 million and was way below the Zacks Consensus Estimate of $76,427.0 million.

Chevron is the third of the integrated supermajors to come out with fourth quarter results. Fellow biggies Exxon Mobil Corp. (XOM - Analyst Report) and Europe’s largest oil company Royal Dutch Shell plc (RDS.A - Analyst Report) both reported yesterday.

Segment Performance

Upstream: Chevron’s total production of crude oil and natural gas decreased by 3.5% from the year-earlier level to 2,576 thousand oil-equivalent barrels per day (MBOE/d). Contribution from project ramp-ups in the U.S. and Nigeria were more than negated by normal field declines and a decrease in cost recovery volumes.

The U.S. output dipped 3.6% year over year, while Chevron’s international operations (accounting for 75% of the total) registered a 3.4% fall in volumes.

Losses on the production front were accompanied by lower international natural gas prices and skyrocketing exploration expenses, the net effect resulting in a 29.3% year-over-year decline in upstream earnings to $4,852.0 million.

However, despite the lower volumes for the quarter under consideration, Chevron’s production outlook remains one of the most robust in its peer group, with a number of major initiatives scheduled to come online during the next few years. Major start-ups during the last few months include the liquefied natural gas (LNG) project in Angola, deepwater Usan project in Nigeria and the Caesar/Tonga project in the deepwater Gulf of Mexico.

Amongst the major upcoming projects, Chevron’s Gorgon and Wheatstone natural gas initiatives in Australia are progressing well, while the Jack/St. Malo and Big Foot initiatives in the deepwater Gulf of Mexico remain on track for late 2014 start-up.

Downstream: Chevron’s downstream segment achieved earnings of $390.0 million, 57.8% lower than the profit of $925.0 million last year. The results were negatively influenced by lower refined product sales margins, higher repair/maintenance expenses in its domestic business, unfavorable currency movements on derivatives, as well as increase in the income tax outgo abroad.

Capital Expenditure, Balance Sheet & Share Repurchases

The second-largest U.S. oil company by market value after Exxon Mobil spent $12,958.0 million in capital expenditures during the quarter. Approximately 88% of the total outlays pertained to upstream projects.

As of Dec 31, 2013, the San Ramon, Calif.-based company had $16,245.0 million in cash and total debt of $20,431.0 million, with a debt-to-total capitalization ratio of about 12.1%. As part of the stock repurchase program announced in 2010, Chevron repurchased $1,250.0 million worth of shares in the fourth quarter.

Zacks Rank

Chevron currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months. A better-ranked stock in the integrated oil and gas space would be French energy giant TOTAL S.A. (TOT - Analyst Report), which hold a Zacks Rank #2 (Buy).

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