Chevron Stock Torched by $10.4 Billion in Q4 Charges

Energy

Published: January 31, 2020 9:55 am

Chevron Corp. (NYSE: CVX) reported fourth-quarter results before markets opened Friday. For the quarter, the oil and gas supermajor posted a diluted loss per share of $3.51 on total revenues of $36.35 billion. In the same period a year ago, the company reported earnings per share (EPS) of $2.11 on total revenues of $42.1 billion. Fourth-quarter results also compare to the consensus estimates for EPS of $1.95 and $42.35 billion in revenues.

For the full year, Chevron reported EPS of $1.54 on revenues of $139.87 billion, compared with 2018 EPS of $7.74 on revenues of $158.9 billion. Analysts had estimated EPS of $6.27 and revenues of $149.95 billion.

In the latest quarter, Chevron took impairment charges and write-downs of $10.4 billion and recognized the sale of $1.2 billion in North Sea assets. For the year, profits were hammered by net charges of $8.7 billion.

Even adjusted for these items, Chevron’s profits would have been lower than a year ago for both the quarter and the year. To bolster investor enthusiasm, the company raised its quarterly dividend by $0.10 a share, but that was having little impact on investor sentiment Friday morning.

The net loss for the quarter totaled $6.6 billion, compared to net earnings of $3.73 billion in the year-ago quarter. The net loss in upstream operations totaled $7.47 billion, due primarily to impairment charges of $8.2 billion. In the fourth quarter of 2018, Chevron posted a profit of $964 million in its upstream division.

U.S. capital expenditures totaled $2.89 billion in the quarter and $10.43 billion for 2019, while international capex saw a quarterly total of $2.75 billion, along with annual spending of $9.63 billion. Worldwide capital spending totaled $20.99 billion for the year, roughly flat compared with 2018.

Net oil-equivalent production in the first quarter totaled 3.08 million barrels a day, essentially unchanged compared with the year-ago quarter. Net oil-equivalent production in the United States totaled 998,000 barrels a day, up by 140,000 barrels year over year. Average U.S. price realizations per barrel of oil dropped from $62.20 a year ago to $55.91.

Internationally, liquids prices fell from $59.11 a barrel a year ago to $56.52 a barrel and net oil-equivalent production fell by 145,000 barrels a day to 2.08 million barrels a day

CEO Michael Wirth focused on what good news he could find:

Cash flow from operations remained strong in 2019, allowing the company to deliver on all our financial priorities. We paid $9 billion in dividends, repurchased $4 billion of shares, funded our capital program and successfully captured several inorganic investment opportunities, all while reducing debt by more than $7 billion. … For the first time in the company’s history, annual production exceeded 3 million barrels per day of oil equivalent.

The earnings announcement did not include guidance, but consensus estimates for the first quarter of 2020 call for EPS of $1.66 on revenues of $38.09 billion. For the full year, EPS and revenues are estimated at $6.81 and $153.42 billion, respectively.

Chevron’s shares traded down about 2.5% shortly after the opening bell, at $108.65 in a 52-week range of $108.54 to $127.34. The low was posted this morning. The consensus 12-month price target was $135.83 before this morning’s report. Chevron’s dividend yield is around 4.31%.

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