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Chevron’s Earnings Fall on Rising Costs

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Chevron’s Earnings Fall on Rising Costs

Shares of Chevron Corporation (NYSE:CVX) traded to the downside on Friday morning following the company’s third quarter report. The company announced that its net income fell 6 percent in the third quarter as weak refining results offset higher oil and gas production. Chevron generated net income of $4.95 billion for the quarter compared with the $5.25 billion in the third quarter of last year. On the top line the company took in revenues of $56.6 billion versus 55.66 billion in the same quarter last year.

On a per share basis, the country’s second largest oil company gave shareholders $2.57 per share in earnings. These results came in below analyst forecasts, analysts had expected Chevron to report earnings per share of $2.71 per share on $58.41 billion in revenue, according to a consensus estimates.

Oil prices and production rose, helping to increase revenue, however, higher operating and exploration expenses offset those gains. Refining profit fell by 45 percent in the quarter as input costs such as crude oil stayed elevated while prices for fuel products such as gasoline fell.

At the time of this writing shares of the company were down by just over half a percent, or $0.70 per share, to $119.26. Many analyst and traders alike expect energy prices to remain volatile as production throughout the globe is set to change drastically. Higher production out of North America may cause action throughout the middle east and add to the swings. Shares of the company remain vulnerable to these swings as returns are highly correlated with energy over the short term. The risk averse investor may consider hedging this volatility though one of many energy derivatives products on the market if they are concerned in the short term.

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