Houston, October 27 - Chevron (CVX.N), one of the leading oil companies, reported a third-quarter profit that fell significantly short of Wall Street estimates, dampening market sentiment and causing its share price to plummet in pre-market trading. The company's earnings have witnessed a sharp decline from the record levels seen a year ago, primarily due to easing crude prices and increased refining and chemical costs.

Chevron's shares experienced a notable drop of 5.4%, falling to $146.40, during midday trading. The underwhelming financial results came as a result of what Chevron Chief Executive Pierre Breber referred to as "timing effects," which caused non-cash charges that will likely reverse in future quarters. These timing effects include unexpected maintenance costs and challenges related to oil inventories stored in cargoes on water, which were difficult for analysts to model accurately.

In the third quarter, Chevron's earnings amounted to $6.5 billion, down significantly from $11.2 billion reported in the same period last year. Adjusted profit stood at $3.05 per share, falling short of analysts' estimated figure of $3.75 per share, as reported by LSEG data. The warning issued by Chevron in the second quarter regarding the negative impact of maintenance activities on its oil and gas production and refining businesses seemed to have materialized, affecting the company's overall performance.

Furthermore, Chevron notified investors that its global production could suffer a potential 1% decline if the stoppage at its Tamar field in Israel persists throughout the fourth quarter. Breber expressed concern over the situation and refrained from speculating on the outcome. In addition, Chevron encountered setbacks in its Kazakhstan project, including escalating costs and a six-month delay in expanding oil and gas production at its Tengizchevroil operation.

Chevron's disappointing financial results aligned with the industry trend, as Exxon and TotalEnergies also reported lower third-quarter earnings, reflecting weaker profits in crude oil and refining. Exxon experienced a 54% decline in profit, while TotalEnergies witnessed a 35% decrease.

Despite these challenging circumstances, Chevron continues to pursue expansion opportunities. The company recently acquired U.S. rival Hess Corp (HES.N) in an all-stock deal worth $53 billion, aimed at expanding its shale and deepwater oil production and reserves. Chevron's acquisition spree also included the purchase of PDC Energy, a U.S. shale oil and gas producer, and a majority stake in ACES Delta, a U.S. hydrogen storage firm.

Capital expenditures during the quarter surged by more than 50% to $4.7 billion, driven partly by the acquisition of ACES Delta. Furthermore, the Tengizchevroil expansion project is expected to incur an additional cost of $1 billion.

Chevron's profit from pumping oil and gas experienced a significant decline of approximately 38%, with earnings amounting to $5.76 billion, compared to $9.3 billion during the same period last year. However, the company's overall volumes increased by 4% to 3.15 million barrels of oil and gas per day (boed) due to the acquisition of PDC Energy, which led to a 25% surge in less-lucrative natural gas production. In the previous year, Chevron's pumping activities amounted to 3.03 million boed.

Recent oil price rebounds have provided some relief, as tighter supplies pushed crude prices higher. Nevertheless, Chevron's cash flow from operations decreased to $9.7 billion, down from $15.3 billion recorded a year ago.

Chevron's refining business generated an operating profit of $1.68 billion in the third quarter, representing a decline from the $2.53 billion profit reported last year. Weaker results outside the United States offset gains made by its U.S. refining business, with overseas margins and inputs experiencing a considerable downturn.

Chevron's third-quarter financial performance highlights the challenges faced by major oil companies in a changing market landscape, where fluctuating oil prices and refining costs impact profitability. The company remains optimistic that non-recurring factors, coupled with its strategic acquisitions, will help rebound its financial performance in the coming quarters.

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