Chevron edges lower after 4Q profit miss ends buyback-driven rally

January 27, 2023 8:35 AM EST

By Geoffrey Smith -- Chevron (NYSE: CVX) stock fell in premarket trading on Friday after profit at the U.S.'s second-largest oil and gas group fell slightly short of market expectations, taking a little of the shine off Wednesday's announcement of a massive multiyear $75 billion buyback program.

Chevron said adjusted earnings per share rose to $4.09, over 7% short of consensus forecasts of $4.42, even though revenue topped expectations at $56.47 billion.

The figures round off a record year for the oil and gas major, which posted its largest-ever annual profit of $35.5B as oil and gas prices surged in the wake of Russia's invasion of Ukraine. The company had $35.5B in free cash flow, after resisting the temptation to raise capital spending in search of higher production, despite paying down some $20B in net debt over the course of the year.

Chevron's output actually fell over the course of the year, as production overseas projects - notably its huge operation in Kazakhstan, were indirectly affected by the war and other issues. Its license for the Erawan project in Thailand also expired.

However, output in the U.S. rose around 4% to a new record of 1.2 million barrels of oil equivalent per day, accounting for 40% of its total output.

Chevron's growth is expected to slow this year, after it tapped most of the wells in the Permian shale basin in 2022 that it had previously drilled but not completed. Increased output from the Permian had, among other things, helped to offset production declines in the Gulf of Mexico in the fourth quarter.

Chevron's great rival, Exxon Mobil (NYSE: XOM), usually reports on the same day but it will instead report next Tuesday.

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