Strong production growth and the oil price boom lifted Chevron’s (CVX) profit in the second quarter. Earnings, however, missed analysts’ forecast and the stock fell sharply after the announcement. The company also announced plans to repurchase $3 billion of its shares every year.
Second-quarter earnings surged to $3.4 billion or $1.78 per share from $1.5 billion or $0.77 per share in the year-ago quarter. The results missed the estimates of Wall Street analysts, who have been particularly upbeat about the company’s increasing presence in shale fields like the Permian Basin.
The San Ramon, California-based energy services giant reported sales of $40 billion during the three-month period, up 21% compared to the same period last year. Total revenues climbed 22% to $42.2 billion.
The company also announced plans to repurchase $3 billion of its shares every year
Worldwide net oil-equivalent production was 2.83 million barrels per day during the quarter, a 1.8% increase from the same period last year helped by higher oil realizations. Output in the US advanced 5.4% year-over-year, while overseas production remained broadly flat. Benefitting from the production growth and high oil prices, profit of the upstream segment increased sharply, while the downstream segment witnessed a 30% fall.
“Our cash flow continues to improve with higher upstream margins and volumes, combined with disciplined spending. This enables us to initiate share repurchases, which are expected to be $3 billion per year based on our current outlook,” said Chevron CEO Michael Wirth.
Earlier today, Exxon Mobil (XOM), the market leader in oilfield technology, reported below-consensus results for the second quarter, triggering a stock sell-off. Both Exxon and Chevron have been underperforming for quite some time despite the oil boom and the favorable prices.
Chevron’s shares increased about 15% in the past 12 months. The stock gained 1% in the pre-market trading Friday but dropped sharply after the earnings announcement.