Surge in oil prices have helped oil companies book record profits in the current quarter. However, investors did not seem happy with the results posted by the company. Shares fell on Friday after the company’s Q4 earnings missed estimates on losses linked to its refining business and compensation costs, whiles its production dropped slightly short of the mark.
The company was able to maintain better margins in the third quarter due to rise in the oil prices and strong refinery margins. Earnings per share (excluding adjustments for foreign-currency effects) came in at $3.69, Quarterly revenue of $64,432 million was 29.6% higher from the prior-year quarter result of $49,718 million and was 14.7% above our projection.
With tensions in the Middle East rising crude oil prices could remain at current price levels. This could turn beneficial for the company. The company has provided an dampener on its future estimates. Chevron released an interim 4Q update where it stated “Lower margins and refinery input volumes, and the absence of an asset sale gain are expected to reduce downstream earnings significantly compared to third quarter results.”
Commenting on the results CEO John Watson stated that “with record earnings and cash flow. This reflects our exceptionally strong upstream portfolio, as well as higher 2011 crude prices. Full-year earnings also benefited from improved downstream sales margins. Our financial strength enabled us to both invest in our development projects and to acquire several new resource opportunities. At the same time, we raised the annual dividend twice and increased outlays for our common stock repurchase program. Beyond our strong financial performance, we also had an outstanding year in terms of oil and gas reserves replacement.”
We maintain a buy on the counter for as top line looks good in the long run