Revenue rose well above expectations, as production got a boost from PDC Energy acquisition
Shares of Chevron Corp. dropped toward a five-month low on Friday, after the oil and gas giant reported second-quarter revenue that beat expectations but profit that missed, citing softer margins and recent operational downtime.
Separately, Chevron said it was moving headquarters to Houston, from San Ramon, in northern California.
Chevron Chairman and Chief Executive Mike Wirth with Vice Chairman Mark Nelson will move to Houston before the end of the year “to co-locate with other senior leaders and enable better collaboration and engagement with executives, employees, and business partners.”
The company said it had about 7,000 employees in Houston and about 2,000 in San Ramon.
Chevron’s quarterly earnings “are significantly below market expectations,” Citi analyst Alastair Syme said in a note.
They were “hit by a combination of unplanned and planned downtime and the way in which that impacted on the company’s ability to capture the [second quarter] macro environment,” Syme said. What’s more, guidance points to significant planned downtime in third quarter.
Chevron said production increased 11% from a year ago, primarily due to the acquisition of PDC Energy, which was completed on Aug. 7, 2023, and a big jump in the U.S. due to strong performances in the Permian and DJ basins.
The stock sank 2% Friday, putting it on track to end at its lowest close since March 6, when it ended at $148.33. It is down two straight sessions, off 7% over the period.
Chevron’s net income fell to $4.43 billion, or $2.43 a share, from $6.01 billion, or $3.20 a share, in the same period a year ago.
Excluding nonrecurring items, adjusted earnings per share of $2.55 were below the FactSet consensus of $2.93.
Total revenue grew 4.7% to $51.18 billion, well above the FactSet consensus of $48.68 billion.
Net oil-equivalent production rose 11.3% to 3,292 thousand barrels of oil-equivalent per day (MBOED), but that was below the FactSet consensus of 3,373 MBOED.
In the U.S., net oil-equivalent production jumped 29% to 1,572 MBOED, while international production slipped 1.1% to 1,720 MBOED.
In Chevron’s U.S. downstream, or refining and delivery business, refinery crude unit inputs were down 8.6% to 900 thousand barrels per day (MBD), mostly because of downtime at the El Segundo, Calif. refinery. Refined product sales increased by 2.5% to 1,327 MBD.
International refinery crude unit inputs were up 2.5% to 650 MBD and refined product sales increased 2.2% to 1,485 MBD.
Chevron said it returned $6 billion of cash to shareholders during the second quarter, including $3 billion through dividends and $3 billion through share repurchases.
The company declared a regular quarterly dividend of $1.63 a share. Shareholders of record on Aug. 19 will be paid the dividend on Sept. 10.
At Thursday’s closing price, the stock’s dividend yield was 4.27%, which is more than triple the implied yield on the S&P 500 index
SPX-1.84% of 1.36% and above the yield on the current 10-year Treasury yield BX:TMUBMUSD10Y of 3.98%.
Regarding its move, the oil giant said that there would be “minimal” immediate relocation impact to employees now based in San Ramon, but that it expects all corporate functions to migrate to Houston over the next five years.
Jobs that support California operations will remain in San Ramon. Chevron operates crude oil fields, technical facilities, and two refineries and supplies more than 1,800 retail stations in California.
The stock has tacked on 2.3% year to date through Thursday, while the Energy Select Sector SPDR ETF
XLE-2.58% has gained 8.2% and the S&P 500 has advanced 14.2%.