Chevron (CVX) likely to report weak Q4 earnings on Jan 31

Chevron Corporation (NYSE: CVX) is set to release its fourth-quarter 2019 earnings results on Friday before the market opens. The bottom line will be hurt by higher costs and expenses as well as lower revenues while the top line will be impacted by lower refined products, crude oil, and natural gas prices, and lower crude oil volumes.

Revenue for the upstream segment is derived primarily from the production and sale of crude oil and natural gas as well as the sale of third-party production of natural gas.

Revenue for the downstream segment is derived from the refining and marketing of petroleum products such as gasoline, jet fuel, gas oils, lubricants, residual fuel oils and other products derived from crude oil.

For the fourth quarter, the company expects production growth to be primarily driven by shale and tight assets as well as the continued ramp-up of Hebron. The capital guidance is set at $18-20 billion for 2020 and $19-22 billion for 2021 through 2023. The company remained committed to capital discipline and delivering leading returns for its shareholders.

Chevron is expected to lower its debt balance by bringing in non-US cash into the US. The year-end cash balances are anticipated to be $3-4 billion lower than the end of the third quarter. The company still expects to have a free cash flow positive next year.

Read: FuelCell Energy Q4 earnings review

Analysts expect the company’s earnings to drop by 25.10% to $1.46 per share and revenue will decrease by 8.80% to $38.64 billion for the fourth quarter. The company has surprised investors by beating analysts’ expectations thrice in the past four quarters. The majority of the analysts recommended a “buy” rating with an average price target of $136.08.

For the third quarter, Chevron posted a 37% dip in earnings as lower crude oil and natural gas prices hurt the top line by 18%. The company experienced weaknesses in the upstream and downstream at both the US and international operations. The results offset a 3% increase in net oil-equivalent production.

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