Chevron misses Q4 earnings estimates but reports record full-year profit

Yahoo Finance’s Ines Ferre joins the Live show to discuss fourth-quarter earnings for Chevron.

Video transcript

JULIE HYMAN: Chevron missed earnings estimates in its latest quarter as gains were partially offset by write-offs and impairment charges, as well as a foreign exchange impact of $74 million, compared to last year. But the full year picture provides a bright spot for the energy company as it reaches records, fueling its $75 billion buyback plan. Ines Ferre here with more details on all of this. Ines.

INES FERRE: That's right, Julie. Well, Chevron highlighted record earnings for 2022, record cash flow in 2022, also increasing investments and growing US production. We'll get to that in just a second because the company also highlighting that. But looking at the earnings, fourth quarter earnings came in at $4.09. That came in about $0.18 light of expectations. But also, the company disclosed a $1.1 billion writedown on international assets. So expect that to also be a topic during the earnings call at 11:00 AM Eastern time.

But looking at the results for 2022, that record profit of 36.5 billion, cash flow from operations, 49.6 billion, that's compared to 29 billion back in 2021. And return on capital employed more than 20%. So some significant results here is what we're seeing from Chevron. All of this on the backdrop of their recent announcement of buying $75 billion in buyback-- in its buyback program, authorizing that. That's three times the previously authorized program.

And of course, also, the criticism from the White House because the White House has been criticizing oil companies, saying, you guys need to be producing more in order to bring down the price of oil in order to alleviate Americans. So what is Chevron doing as far as production is concerned? Well, it will be increasing output from the Permian Basin by 10% this year. That's lower than the 16% hike output in the Permian Basin last year.

But nevertheless, the CFO, Pierre Breber, in an interview saying, look, we are doing it all. We had record oil and gas production last year. And overall CapEx budget is up 30% in 2023 relative to 2022. And 2/3 of that CapEx is in the US. So really, Chevron is basically responding to both the shareholders. We are giving back cash to the shareholders. And at the same time, also responding to the criticism from the White House.

BRIAN SOZZI: It seems like with that buyback, Ines, Chevron has really set the stage for further gains in its stock price.

INES FERRE: Yeah, I mean, look, the stock is coming off all-time highs. So how much more is there to gain? But the analysts that we've spoken to are saying that maybe it won't repeat the 53% upside that you saw in 2022, but certainly, there is more to gain. Also, do want to point out natural gas. Keep an eye out for this because in January, Chevron announced a significant discovery of natural gas off the coast of Egypt. And now it already produces natural gas off the coast of Israel. So this will be important because as Europe looks for more supply of natural gas, Chevron could step in there. So another reason for investors to buy in.

BRIAN SOZZI: Ines Ferre, thanks so much.