Chevron expects Q4 profits to be down significantly

Slowing down.

Shares of Chevron were in the red on Thursday after management warned that its Q4 profit would be significantly lower than that posted in Q3 due to lower than expected production and a break even quarter in its refining operation.

The company expects upstream earnings from oil and gas production to be similar to the $6.2 billion posted in Q3, without accounting for foreign exchange impacts. That said, the company notes that Q3 earnings includes FX gains of about $450 million while it anticipates a loss in Q4.

International oil-equivalent production rose to 1.98 million bpd in the first two months of the quarter from 1.94 million in Q3 but was offset by a decrease in U.S. production, which fell to 660,000 bpd from 662,000 in Q3. Overall, production of 2.64 million bpd so far this quarter is an improvement from the 2.6 million seen in Q3 but is short of the company’s full year forecast of 2.73 million bpd.

Looking at refining, management said its Gulf Coast margins fell “substantially” while downstream margins were also weaker outside of the U.S. Domestically; U.S. refinery input fell by roughly 180,000 bpd to 717,000 bpd due to maintenance at a California facility. Last, total net charges in Q4 are expected to be “notably higher” than its guidance range of $250-350 million. Detailed Q4 results are expected on January 27.

Chevron (CVX : NYSE : US$104.99), Net Change: -2.78, % Change: -2.58%, Volume: 10,717,831

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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