Chevron Issues Warning For Q3 As Refining Earnings Drop
In advance of its full third-quarter results, Chevron Corporation (NYSE: CVX) has issued a warning to investors to not expect much in the way of profits for the upcoming quarter. The company cited a fire, a hurricane, and planned maintenance issues as reasons that its gas and oil output have been restricted and its fuel margins have been appreciably squeezed. Although third-quarter global gas and oil production is expected to show a slight rise, earnings will be considerably lower down the road. Globally, CVX produced 2.59 million barrels per day in the first two months of the third quarter, which was up slightly from 2.58 million in the second quarter. Output internationally began picking up as production projects recommenced.
Chevron is the second largest U.S. oil company with a market cap of $223 billion. Exxon Mobile Corporation (NYSE: XOM) eclipses it with a market cap of $374.53 billion. Love them or hate them, we’re all dependent upon their products in some way; if not as investors, then as consumers. Even with the advent of battery powered vehicles, the hard truth is that we will still be reliant on oil and gas for years to come.
Remarkably, U.S. energy output has been rising so much in recent years that the U.S. may have already surpassed Russia as the world’s largest producer of oil and gas combined. While the U.S. produced about 22 million barrels a day of oil and natural gas in July, Moscow is forecast to produce about 21.8 million barrels a day. U.S. reliance on imports of natural gas and crude oil has fallen appreciably over the past five years, narrowing America’s trade deficit significantly.
As for Chevron, shares fell as much as 1.2 percent in after-hours trading yesterday which widened into a significant dip during the regular session today on average volume. Investors seem to be staying put on their positions in company despite the dismal earnings forecast. Shares have rebounded slightly during the day and sit at a loss of .68 percent.
On a side note, analysts had been expecting earnings per share of $3.08 for the third quarter, up from $2.77 in the second quarter and $2.57 in the third quarter of 2012. The company will release third-quarter earnings on 1 November.
Disclosure: The author has no position in the stocks mentioned in this article, and does not intend to initiate any position in the next 48 hours.
