Chevron’s third-quarter profit slumps, shares fall 5% on earnings miss

HOUSTON (Reuters) – Chevron (NYSE:) posted a third-quarter profit that missed Wall Street estimates by a wide margin, sending its share price down in pre-market trading.

Oil company earnings have slumped from record year-ago levels as crude prices eased and higher costs crimped refining and chemical profits. Results remain strong by historical standards but are well off year-ago levels.

The company earned $6.5 billion, down from $11.2 billion in the same period last year. Adjusted profit was $3.05 a share, compared to analysts’ expected $3.75 per share, according to LSEG data.

The earnings miss came after Chevron had warned in the second quarter that maintenance in its oil and gas production and refining businesses would hurt results. It also suffered a setback in a Kazakhstan project with a delay of about six months in expanding oil and gas production at its Tengizchevroil operation.

Shares fell 5.4% to $146.40 in early trading.

Exxon (NYSE:) and TotalEnergies (EPA:) also posted lower third-quarter results on weaker and refining profits with Exxon’s profit down 54% and TotalEnergies’ off 35%.

Chevron agreed to buy U.S. rival Hess Corp (NYSE:) for $53 billion in an all-stock deal that expands its shale and deepwater oil production and reserves.

In addition to Hess, it acquired U.s. shale oil and gas producer PDC Energy (NASDAQ:) and a majority stake in ACES Delta, a U.S. hydrogen storage firm.

“It is going to be a rough day for CVX shareholders,” wrote RBC analyst Biraj Borkhataria, who described the earnings shortfall as “disappointing,” but blamed it on non-recurring items.

Capital expenditures during the quarter rose more than 50% to $4.7 billion, in part on the acquisition of ACES Delta. Total cost for the Tengizchevroil expansion project is expected to rise by $1 billion.

Profit from pumping oil and gas fell about 38% to $5.76 billion in the quarter from $9.3 billion a year ago.

Overall, volumes rose 4% to 3.15 million barrels of oil and gas per day (boed) on the PDC Energy deal, which increased the production of less-lucrative by 25%. Chevron pumped 3.03 million boed a year ago.

Oil prices recently rebounded from a mid-year slump as tighter supplies drove up crude prices. The company’s cash flow from operations fell to $9.7 billion from $15.3 billion a year ago.

Its refining business posted an operating profit of $1.68 billion, down from $2.53 billion a year ago on sharply lower results outside the United States. Gains by its U.S. refining business were offset by weakness overseas, where margins and inputs fell.