According to the news report by CNBC, Chevron Corp. released its fourth quarter profits which beat Wall Street expectations, after the company’s fossil fuel production reached an all-time high. The company’s executives also gave a solid guidance for 2019.
Chevron’s shares jumped by 3% to $118.37 per share on Friday after the news broke.
According to company reports, Chevron’s oil and natural gas production jumped up by 12% to reach 3.1 million barrels per day of oil equivalent for the fourth quarter. This production was pushed up by fresh outputs of liquefied natural gas from its Australian project in Wheatstone, as well as increasing supplies from its US share fields in the Permian Basin.
For the 2018, Chevron also reported that production was at record levels at 2.93 million barrels a day of oil equivalent. And, based on its assumption that Brent crude oil prices are at $60 per barrel, the company is expecting its production to go up by 4% to 7% in 2019.
The Chief Executive Officer of Chevron Mike Wirth stated that they were expecting these positive production trends to go on from the first quarter right through to the rest of the year.
In January, Chevron had announced that it was planning to spend $20 billion on further development as well as exploration this year. The company also said that this budget was going to be used for short-cycle projects, a large number of which were expected to start generating revenues in the next two years.
For the fourth quarter, Chevron’s profit shot up by almost 20% to $3.73 billion, which is $1.95 a share. The market consensus estimate of Chevron’s profits were at $1.87 a share. This was achieved largely due to lower charges in the final quarter of 2018, thanks to the impact of taxes. The same time a year ago, the company had to pay charges of $3.46 billion, however, this year, Chevron paid only $419 million.
The oil giant, based out of San Ramon, California, stated that it generated revenues of $42.35 billion, vis-à-vis the $46.13 estimate by Wall Street. However, thanks to the fact that the company incurred lower costs in the quarter, the drop revenues in the company’s core business was compensated.
Tax impacts hurt the company’s upstream business of oil and gas production, with profits falling by almost 38% to $3.29 billion as compared to a year ago.
Earnings also dropped by one-third to $859 million in the company’s downstream businesses of oil refining and the sale of fuels such as gasoline. But profits from international operations in the refining segment rose more than 7 times to $603 million due to increased margins as well as forex factors. These profits once again offset the impact of taxes on Chevron’s downstream businesses in the US.
Chevron’s cash flow went up by 50% to $30.6 billion in 2018. The company increased its quarterly dividend from $1.12 a share in Q3 to $1.19 a share for the fourth quarter. In addition to increasing its quarterly dividend payout, the company on Friday also announced that its board had approved a share buyback program of $25 billion.
The CFO Pat Yarrington said on Friday that the dividend increase reflected the company confidence that its cash flow would continue to grow.
Earlier this week on Wednesday, before its earnings report was released, Chevron announced that it was acquiring Brazilian Petrobras’ Pasadena Refining System for a sum of $350 million. With this deal, the company will have control of a refinery in the Houston area of Texas, and will give Chevron the ability to process the increasing output it is getting from its fields in the Permian Basin.