Chevron reported second-quarter earnings that fell short of Wall Street expectations, primarily due to industry-wide challenges from lower refining margins and natural gas prices. The company’s shares dropped 1.5% in premarket trading following the announcement.
The company had previously warned that oil output would decline in this quarter and that refining would be affected by maintenance turnarounds at two California refineries. This trend of weak refining margins has also impacted other major oil companies like BP and Shell.
Chevron’s earnings for the quarter were $4.4 billion, or $2.43 per share, compared to $6 billion a year earlier. Adjusted earnings were $4.7 billion, or $2.55 per share, missing analysts’ expectations of $2.93 per share.
Peter McNally, global sector lead for energy at Third Bridge, noted that the disappointing results were largely due to the international upstream segment, which missed expectations by about 11%. Earnings from oil and gas production were down 9.4% from the previous year, and profits from gasoline and chemicals production plummeted approximately 60% to $597 million.
Despite the operational challenges and lower margins, CEO Mike Wirth expressed confidence in the company’s potential for long-term earnings and cash flow growth.