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Chevron Misses EPS Estimates, Attributes To Tough Industry Environment

Chevron Corporation CVX released Q2 results before the open on Friday. EPS came in below Wall Street consensus expectations, sending shares lower.

Chevron reported GAAP EPS of $(0.78) and revenues of $29.292 billion. Analyst consensus had a revenue estimate of $29.8 billion. The company reported a loss of $1.5 billion compared to earnings of $571 million in the second quarter of 2015.

Included in the quarter were other non-cash charges totaling 42.8 billion and gains on asset sales of $420 million. Foreign currency effects bumped earnings up by $279 million, compared to a decrease of $251 million year-over-year.

Chevron reported upstream earnings of $(2.462) billion vs. $(2.219) billion year-over-year and downstream earnings of $1.278 billion vs. $2.956 billion year-over-year.

What Analysts Are Saying

Barclay's Paul Cheng saw upstream earnings to be -$7 million, compared to $637 million profit in the same quarter last year. Chang projected downstream earnings (including chemicals) at $857 million, lower than $1.349 billion a year ago. Production was expected to be at 2,533 mboe/d, down 2 percent year-over-year.

Management Comments

"The second quarter results reflected lower oil prices and our ongoing adjustment to a lower oil price world," said Chairman and CEO John Watson.

"In our upstream business, we recorded impairment and other charges on certain assets where revenue from expected oil and gas production is expected to be insufficient to recover costs. Our downstream business continued to perform well," stated Watson.

"In addition, we're bringing our major capital projects to completion," Watson stated. "We have restarted LNG production and cargo shipments at Gorgon and Angola LNG, and started up the third train at the Chuandongbei Project in China"

At time of writing, Chevron traded at $100.35 in Friday's pre-market session, down 1.4 percent.

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