TCC takes a look at the earnings of Chevron

Published By: Myrna Salomon on January 28, 2017 07:28 pm EST

Chevron Corporation (NYSE:CVX) reported its financial results for the fourth quarter of the fiscal year 2016 (4QFY16) on Friday. The company’s investors were not happy with the results, sending the stock down 2.37% at $113.79 at the end of the day’s trading session.

Chevron reported revenue of $31.5 billion. While the revenue represented a 7.7% increase when compared to the same quarter last year, it managed to fall below the analysts’ estimate of $33.76 billion. In 2016, the company was able to start numerous projects including th3 $54 billion mammoth Gorgon project. Moreover, the company was also able to augment production from the Permian basin and achieve first gas at the Chuandongbei project in China.

John Watson, CEO of Chevron, also indicated that the company was able to increase its proved reserves by 900 million barrels of net oil equivalent last year. 95% of the company’s 2016 production constituted from the increased reserves.  The Future Growth Project at Tengizchevroil, Wheatstone Project in Australia and the Permian Basin in the United States contributed highly to the increase.

Chevron’s earnings for the quarter came at $415 million translating into earnings per share (EPS) of $0.22. The earnings came below the consensus expectation by $0.42. The company was able to improve upon its year-over-year (YoY) earnings when it reported a loss of $588 million or -$0.31 per share. The full year earnings results posted a much grimmer picture. The company’s earnings plunged from $4.6 billion in 2015 to a loss of $497 million in the latest year.

Mr. Watson attributed to the full year loss due to global economic downturn in the oil market. Prices despite showing some resilience still remain at low levels and far below for what companies require for a smooth running of the operations. Mr. Watson, however,  remains optimistic on the future and says that cost cutting techniques would enable them to improve upon earnings and cash flow balance in 2017. Cash flows came at $7 billion, declining by $4.3 billion from 2015.