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Chevron (CVX) Misses on Q4 Earnings Even as Revenues Beat

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Chevron Corporation (CVX - Free Report) reported adjusted fourth-quarter earnings per share of $4.09, missing the Zacks Consensus Estimate of $4.16. The underperformance could be attributed to lower-than-expected bottom line results in both the company’s segments. CVX’s upstream segment profit of $5.5 billion came 19.8% below the consensus mark, while the downstream business missed the Zacks Consensus Estimate by 3.4%.

However, Chevron’s bottom line was significantly above the year-earlier quarter’s adjusted profit of $2.56 per share, backed by robust commodity prices and product margins.

The company generated revenue of $56.5 billion. The sales figure beat the Zacks Consensus Estimate of $52.3 billion and increased 17.3% year over year.

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation price-consensus-eps-surprise-chart | Chevron Corporation Quote

Shareholder Bonanza

Earlier this week, Chevron raised its quarterly dividend by more than 6% to $1.51 per share (or $6.04 per share annualized) and tripled its spending for stock repurchases to $75 billion.

Segment Performance

Upstream: Chevron’s production of crude oil and natural gas — at 3,011 MBOE/d (58% liquids) — fell 3.4% year over year.

The latest volume statistics reflect higher output from the Permian Basin, more than offset by the end of the Erawan concession in Thailand and lower volumes in the Gulf of Mexico.

The U.S. output was down 2% year over year to 1,192 MBOE/d, while the company’s international operations (accounting for 60% of the total) fell 4.3% to 1,819 MBOE/d.

Despite volumes declining from last year, Chevron’s upstream segment recorded a profit of $5.5 billion in the fourth quarter of 2022, improving 6.4% from the $5.2 billion earned in the year-ago period.

This was primarily on account of a gain in commodity prices. At $66 per barrel, Chevron’s average realized liquids prices in the U.S. were $3 above the year-earlier levels while prices overseas rose 5.4%. On the natural gas front, its realizations improved 3.3% and 31%.

Downstream: Chevron’s downstream segment recorded a profit of $1.8 billion, more than doubling from last year’s figure of $760 million. The improvement underlined higher product sales margins, strong jet fuel demand following the continued easing of pandemic restrictions, and contribution from Renewable Energy group acquisition.

Cash Flows, Capital Expenditure

The company recorded $12.5 billion in cash flow from operations, compared to $9.5 billion a year ago. The increasing cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was $8.7 billion.

Further, Chevron paid $2.7 billion in dividends and bought back $3.8 billion worth of its shares.

The Zacks Rank #3 (Hold) company spent around $4.1 billion in capital and exploratory expenditures during the quarter, compared to the year-ago period’s $2.8 billion.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Balance Sheet

As of Dec 31, the San Ramon, CA-based company had $17.7 billion in cash and cash equivalents and total debt of $23.3 billion with a debt-to-total capitalization of about 12.8%.

Important Energy Releases So Far

Let’s take a look at some key energy releases so far.

SLB (SLB - Free Report) , the largest oilfield contractor, announced fourth-quarter 2022 earnings of 71 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 69 cents. SLB recorded total revenues of $7.9 billion, outpacing the Zacks Consensus Estimate by 0.7%.

SLB’s strong quarterly earnings resulted from strong activities in land and offshore resources in North America and Latin America. The company’s board approved a quarterly cash dividend of 25 cents per share, indicating a 43% increase from the last paid dividend.

Downstream giant Valero Energy (VLO - Free Report) also reported strong fourth-quarter earnings. The bottom line of $8.45 per share came in well above the Zacks Consensus Estimate of $7.45. The outperformance reflects increased refinery throughput volumes and a higher refining margin. In particular, adjusted operating income in the Refining unit amounted to $4.4 billion, surging from $1.1 billion in the year-ago quarter.

At the end of 2022, VLO had cash and cash equivalents of $4.9 billion, while the company’s total debt and finance lease obligations amounted to $11.4 billion. Valero’s The fourth-quarter capital investment was $640 million. Of the total, $349 million was allotted for sustaining the business.

On the other hand, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported fourth-quarter 2022 adjusted earnings per share of 31 cents, in line with the Zacks Consensus Estimate. The bottom line was primarily aided by higher gathering and transport volumes, offset by lower contributions from KMI’s Product Pipelines offset the positives.

As of Dec 31, 2022, Kinder Morgan reported $745 million in cash and cash equivalents. The company’s long-term debt amounted to $28.3 billion. For 2023, KMI expects a dividend of $1.13 per share, suggesting an increase of 2% from the prior-year reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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