Earnings preview: Big oil drop likely to hurt Chevron Q4 results

Chevron Corp. (CVX) is scheduled to report its fourth-quarter earnings results on Friday before the market opens. Investors and markets could be on heels for the results from the oil producers as this would shed lights into the oil industry and crude oil prices as well as the industry’s future since the big oil drop.

Chevron and ExxonMobil (XOM) remained the giants in the energy industry and their results could set the tone for the industry this year. Among the rest, BP (BP), ConocoPhillips (COP), Royal Dutch Shell (RDS.A), Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO) would be reporting their results in the coming days.

Analysts expect Chevron to post earnings of $1.87 per share on revenue of $46.13 billion for the fourth quarter. In comparison, during the previous year quarter, the company reported a profit of $0.72 per share on revenue of $37.62 billion. Majority of the analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $138.54 per share in the next 52 weeks.

The results will be casting off some light into the oil industry and crude oil prices after the concerns of slowing global economic growth and oversupply. During early October and late December, this concerns sent crude oil prices down over 40%. Despite the recovery, the prices remain well below recent highs. After this, the quarterly reports could provide lights on the industry’s future.

Chevron is likely to be benefited by the production growth while the overall profits of the upstream segment would be hurt by the weakness in oil prices. The downstream segment is expected to feel the heat of weak refining margins. The negative impact from foreign currency could be higher from the prior year.

Related: ExxonMobil Q4 2018 earnings preview

The company is expected to record higher output from its top-tier assets in Permian as well as Wheatstone LNG plant in Australia during the fourth quarter.

In the third quarter, Chevron posted a 105% jump in earnings helped by the contractual settlement in the upstream segment, gain on the sale of its southern Africa assets, higher production, and crude oil prices. The negative impact from foreign currency was lower in this year’s third quarter versus last year. Revenue grew by 21.5% year-over-year.

Chevron achieved a record in net oil-equivalent production, which totaled 2.96 million barrels per day for the third quarter. This was helped by the ramp-up of Wheatstone in Australia and the Permian Basin in Texas and New Mexico, which drove a production increase of 9% over last year.

Shares of Chevron opened higher and is trading in the green territory on Wednesday. The stock has fallen over 10% in the past year while it has risen over 1% in the past three months.

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