Shares of Chevron fell in premarket trading on Friday after the oil giant reported fourth-quarter earnings that badly missed Wall Street’s expectations.
Chevron posted profits of $3.4 billion, or $1.64 per share, for the final quarter of 2017. However, the company included a $2 billion tax benefit.
Stripping out that benefit, Chevron earned 72 cents a share, according to Thomson Reuters. Analysts had expected earnings of $1.22 a share.
Chevron’s stock price was down almost $5 a share, or nearly 4 percent, at $120.80.
The San Ramon, California-based company slightly beat expectations for revenues, generating $37.62 billion in sales versus estimates for $37.59 billion.
Profits in Chevron’s upstream business, which focuses on producing oil and natural gas, rose to $5.3 billion in the fourth quarter from $930 million a year ago. However, the results were helped by a benefit from U.S. tax reform totaling $3.3 billion.
Chevron’s downstream segment, which includes refining crude oil into fuels like gasoline, earned $1.3 billion for the quarter, up from $357 million from 2016. Downstream also got a $1.16 billion boost from tax reform.
The downstream business saw headwinds internationally, with profits sliding more than 75 percent.
For the full year, Chevron posted profits of $9.2 billion, its strongest performance since the oil price crash of 2014, when its earnings were $19.2 billion.
Cash flow from operations — a key measure of financial health in the oil industry — rose 60 percent in 2017 to $20.5 billion.
“We achieved our objective of being cash flow positive through deliberate actions to reduce capital expenditures, lower our cost structure, start and ramp-up projects, and conclude planned asset sales,” Chevron Chairman and CEO Michael Wirth said in a statement.
On Wednesday, Chevron declared a quarterly dividend of $1.12 per share, up 4 cents from the previous quarter. The company on Friday said healthy cash flow made the higher shareholder payout possible.