Chevron Stock Fell 2.4% Due to 4Q16 Earnings Miss



Stock performance

Chevron (CVX) announced its 4Q16 results on January 27, 2017. The stock received a weak opening on the day. Chevron opened at $113.5 per share—lower than its previous close of $116.6. Chevron saw a high of $114.7 and a low of $112.9 during the day. Eventually, Chevron closed at $113.8—around 2.4% lower than its close the previous day.

The fall in Chevron’s stock price is in line with crude oil prices. Crude oil prices fell 1.1% on the day. In line with oil prices, on January 27, 2017, Chevron’s peers Statoil (STO), PetroChina (PTR), and Eni’s (E) stock prices fell 1.0%, 2.3%, and 1.2%, respectively. However, natural gas prices rose 0.3% on the day. For exposure to global stocks, you can consider the Vanguard FTSE All-World ex-US ETF (VEU).

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Chevron’s 4Q16 update

In 4Q16, Chevron incurred a capex (capital expenditure) of $5.3 billion. It’s important to note that ~85% of the capex went towards its upstream segment. During the quarter, Chevron stabilized the LNG (liquefied natural gas) production from its Gorgon Train 1 as well as Train 2. The company shipped 39 cargos to date. Chevron expects its first LNG cargo from Train 3 in 2Q17. Also, Chevron’s Wheatstone project plans to deliver the first LNG cargo by mid-2017.

For 2017, Chevron expects 4%–9% growth in net production because of new fields’ start-ups and existing fields’ ramps-ups partially offset by maturing fields’ declines.

In the 4Q16 earnings press release, Chevron’s chairman and CEO, John Watson stated, “We were able to reach noteworthy milestones in 2016 on major capital projects. We achieved first gas and cargo shipments at our Gorgon Project in Australia, first gas at our Chuandongbei Project in China, and increased production from our Permian Basin shale and tight oil properties. In addition, we announced the final investment decision on the Future Growth and Wellhead Pressure Management Project at the company’s 50 percent-owned affiliate, Tengizchevroil, in Kazakhstan.”


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