Chevron Stock Fell 6% on Its 4Q17 Earnings Miss



Chevron’s stock performance

Chevron (CVX) announced its 4Q17 results on February 2, 2018, and the stock opened weakly on the day. CVX opened at $123.90 per share, which was lower than its previous close of $125.60. This could have occurred because CVX’s 4Q17 earnings missed expectations. Chevron stock saw a high of $123.90 and a low of $117.60 during the day.

CVX closed at $118.60, which was ~5.6% lower than its previous day’s close. CVX’s peers Statoil (STO), Petrobras (PBR), and YPF (YPF) fell 4.7%, 4.5%, and 5.7%, respectively, on February 2. Royal Dutch Shell (RDS.A), BP (BP), and Total (TOT) fell 3.1%, 5.1%, and 3.3%, respectively, on February 2.

Crude oil prices fell 0.5% on February 2, and the broader market declined on the day. The SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF (SPY) fell 2.6% and 2.2%, respectively, on the day.

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Chevron’s 4Q17 update

In 4Q17, Chevron incurred capex (capital expenditure) of $5.4 billion, ~83% of which went toward its Upstream segment. Gorgon’s 4Q17 production stood at 393,000 barrels of oil equivalent per day (or boepd). The asset shipped 170 LNG cargos in 2017.

The Wheatstone project achieved 86,000 boepd in January 2018. The project’s Train 2 is expected to start up in 2Q18. Chevron foresees 4.0%–7.0% growth in 2018 in its net hydrocarbon production due to new fields startups and existing fields ramp-ups. This growth is partially offset by maturing fields declines.

In the company’s 4Q17 earnings press release, Chevron’s chairman and CEO, Michael Wirth, stated, “Earnings and cash flow grew significantly in 2017. We achieved our objective of being cash flow positive through deliberate actions to reduce capital expenditures, lower our cost structure, start and ramp-up projects, and conclude planned asset sales.”

Wirth noted, “We replaced more than 150 percent of the reserves we produced, and reached several significant upstream project milestones in 2017.”

Wirth added, “These included our first LNG shipments from Train 3 at Gorgon and Train 1 at Wheatstone in Australia. We also posted impressive production growth in the Permian Basin in the U.S.”


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