Chevron Shares Surge Following Strong Q3 Results
Beating Expectations
Oil giant Chevron Corp (NYSE:CVX) has reported impressive third-quarter results, sending its shares higher. The company’s revenues and other income reached $50.669 billion, surpassing the consensus of $48.986 billion. This significant increase can be attributed to the acquisition of PDC Energy and strong production in the Permian Basin.
Production on the Rise
Worldwide net oil-equivalent production rose 7% year over year to 3,364 MBOED, driven by the acquisition and robust production in the Permian Basin. Adjusted net earnings were $4.53 billion, with adjusted EPS being $2.51, beating the consensus of $2.43.
Segment Performance
U.S. Upstream reported earnings of $1.946 billion, down from $2.074 billion a year ago, due to lower realizations and higher depreciation, depletion, and amortization. International upstream earnings fell to $2.643 billion from $3.681 billion a year ago, primarily due to the lack of favorable tax effects from the prior year and absence of prior year favorable foreign currency effects.
Downstream Performance
U.S. downstream earnings declined to $146 million from $1.376 billion, attributed to reduced margins on refined product sales. On the other hand, international downstream earnings rose to $449 million from $307 million the prior year quarter, driven by higher margins on refined product sales.
Cash Flow and Shareholder Returns
Operating cash flow totaled $9.7 billion, flat year-over-year, as higher dividends from equity affiliates and favorable working capital impact were offset by weak earnings and a one-time payment for ceased operations. Chevron returned $7.7 billion of cash to shareholders during the quarter, including dividends of $2.9 billion and share repurchases of $4.7 billion.
Future Outlook
Mike Wirth, Chevron’s chairman and chief executive officer, highlighted the company’s progress in starting up key projects, including Anchor, Jack/St. Malo, and Tahiti fields. These projects, combined with additional project start-ups through 2025, are expected to grow U.S. Gulf of Mexico production to 300,000 barrels of net oil-equivalent per day by 2026. Furthermore, cost reduction efforts are underway, targeting $2-3 billion of structural cost reductions from 2024 by the end of 2026.
Investment Opportunities
Investors can gain exposure to CVX via EA Series Trust Strive U.S. Energy ETF (NYSE:DRLL) and Westwood Salient Enhanced Energy Income ETF (NASDAQ:WEEI). With the company’s strong Q3 results and promising future outlook, Chevron shares are up 2.07% at $151.90 premarket.
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