Chevron missed second-quarter earnings expectations, hurt by lower refining margins, as the stock is already under pressure from delays in its pending acquisition of Hess Corp.
Chevron shares closed down 2.67% on Friday.
The oil giant said Friday it will move its headquarters from San Ramon, California, to Houston, where Chief Executive Mike Wirth will relocate by the end of 2024. All of the company’s jobs will move to Houston over the next five years. Wirth said the move was not related to any political dispute with California.
“Houston is the center of our industry,” Wirth told CNBC. “Our headquarters has been gradually growing in Texas and gradually declining in California. This is a continuation of a trend that has been going on for some time.”
Here is what Chevron Second-quarter results were reported compared to what Wall Street had expected, based on a poll of analysts conducted by LSEG:
Earnings per share: $2.55 adjusted vs. $2.93 expectedRevenue: $51.18 billion vs. $50.8 billion expected
Chevron’s net income fell 26% to $4.43 billion, or $2.43 a share, from $6.01 billion, or $3.20 a share, in the year-ago period. Adjusted for foreign currency effects of $243 million, Chevron reported earnings of $2.55 a share.
Revenue rose to $51.18 billion, compared to $48.9 billion last year.
The oil major's U.S. production unit reported a profit of $2.16 billion, up 31 percent from $1.64 billion in the year-ago period, thanks to higher sales volumes and oil prices.
International production profits fell by about 30% to $2.3 billion compared to $3.29 billion in the same period last year due to lower sales and natural gas prices in addition to negative foreign currency effects.
Overall, Chevron's global oil equivalent production rose 11% to 3.29 million barrels per day, driven by record production in the Permian Basin.
U.S. refining profit was $280 million, down 74% from $1.1 billion in the year-ago quarter due to lower margins. International refining profit fell 25% to $317 million, compared with $426 million in the year-ago quarter.
Hess deal postponed
Chevron's second-quarter results come after the oil major's acquisition of Hess I got hit hard this week.
Chevron and Hess revealed Wednesday that the arbitration panel will not hold a hearing until May 2025. Exxon Mobil It claims priority rights over Hess' lucrative oil assets in Guyana.
The decision in the case is scheduled to come three months after the hearing, meaning the Chevron-Hess deal won’t close until late next year if the companies succeed in arbitration. The companies had originally planned to close the deal this year.
The Chevron-Hess deal is also under review by the Federal Trade Commission. Wirth said the FTC’s review is likely to be completed in the third quarter.
Chevron's CEO said the company remained confident that the arbitration panel would rule in the company's favor, though he reiterated that if Exxon wins, the deal with Hess is unlikely to go through.
“This takes more work and time than we originally anticipated,” Wirth said.
Chevron shares closed down about 5% on Thursday, and Hess shares fell about 8%. Year-to-date, Chevron shares have underperformed the market, down 0.4%.
