The promise of Big Oil inching higher hasn’t translated into major profits for Chevron Corporation (NYSE: CVX), one of the world’s biggest oil producers.
In a recent Q4 2017 filing the US-based oil producer confirmed that it had fallen short of expectations. Analysts had set an estimated adjusted earnings figure of $1.23 per share; but CVK reported adjusted earnings of 73 cents per share.
According to analysts, CVX has been misfiring at his production centers. The expectation was that CVX would ramp up production and boost sales of its petroleum products. But these numbers fell short. There was one production bright spot, though. CVX said that its oil and gas production rose 5%; this helped to push revenues higher by 19% and securing a dollar value of $37.62B.
Baseline earnings were reported higher by CVX. This was due in part because of the new tax laws. Many companies are seeing record adjusted profits and CVX was no worse, posting adjusted earnings of $3.11B, two thirds of which were directly attributable to the new tax laws.
CVX’s performance was in line with its other US competitor, Exxon. Exxon saw its revenue climb 18% to $66.52B although that figure still fell short of consensus estimate of $71.94. Net income for Exxon rose $8.38B, a huge rise from the $1.68B recorded in Q4 2016. Investors took the increase in a tempered way because like CVX, Exxon attributed $5.94B of this figure to a tax gain emanating from the new US tax policy. In the end it meant that adjusted profit for Exxon was 88 cents as opposed to the consensus estimate set for the fourth quarter of $1.03.
Like CVX that has seen problems with production, Exxon struggled to keep production levels high for much of the quarter. Production at Exxon fell 3% or about 4M barrels of oil per day. The weaker than expected production figure prompted one analyst from Edward Jones to remark that “This Company [Exxon] just cannot get production growth going. They talk about all these (new) projects, but they’re always in the future. People want to start seeing some results.”
That rather pointed remark is perhaps not enough to obscure the plans of management at Exxon. The company has said it expects to grow its US oil and gas business. Drilling rigs in the Permian Basin are expected to grow from the existing 26 to around 36.
Ultimately time will tell if the current uptick in oil prices will translate into top line and bottom line growth for companies like CVX and Exxon.