Analyst estimates for the third quarter fell short of Chevron's results as high oil prices and record US refining margins lifted earnings. Its refining unit posted the highest profit on record, while the company scaled back share repurchases.
Chevron surpassed analysts' estimates as high oil prices combined with record US refining margins to push earnings to the fourth highest in company history. Adjusted third-quarter net income came to $5.28 a share, 35 cents above the average analyst estimate, the Houston-based company said in a statement Friday.
Refining drives the beat
Refining was a key driver of the outperformance. The unit earned $4.93 billion, the highest on record for that business and four times more than a year earlier. The conflicts in Iran and Ukraine have knocked out as much as 10% of global refining capacity.
Production also helped. Aided by last year's acquisition of Hess Corp., Chevron increased production year-on-year, allowing it to take advantage of a roughly 34% jump in international crude oil prices from a year earlier.
Chevron holds back on buybacks
Chevron scaled back share repurchases to $2.5 billion, which remained within its full-year guidance range. For the second consecutive quarter, executives put windfall profits primarily into debt reduction. Shell and Repsol SA, by contrast, both increased buybacks by more than 65%.
Chief Financial Officer Eimear Bonner said in an interview: "we’re sticking with our longstanding financial priorities and we’re not making any changes."
Venezuela and new projects extend growth
Chevron is on track to produce 300,000 barrels a day from Venezuela by the end of this year, up 20% from a year ago. Its costs in the country are less than $20 a barrel.
The company also recently signed a deal with Venezuela to produce 600,000 barrels a day by the early 2030s, is renegotiating its Tengiz oil license in Kazakhstan, and is in talks to take over the West Qurna-2 oil field in Iraq. The goal is to extend production growth into the next decade as output flatlines in the Permian Basin and elsewhere.
Source: Rigzone (Bloomberg)
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