Chevron earnings nearly quadruple, Wall Street depressed | Investment News

HOUSTON (Reuters) – Chevron Corp’s first-quarter profit jumped from the same period a year ago to its highest level in 10 years, benefiting from soaring oil and gas prices in the aftermath of the Russian invasion of Ukraine.

The second-largest U.S. oil producer on Friday reported adjusted earnings of $6.5 billion, or $3.36 per share, compared with $1.7 billion, or 90 cents per share, in the same quarter last year. .

Still, the result was below Wall Street analysts’ top-performing SmartEstimate figure of $3.47 according to Refinitiv, but was above Refinitiv’s average estimate of $3.27 per share.

Jefferies called the performance “the most disappointing set of numbers” so far in the first quarter.

Wall Street analysts noted higher-than-expected corporate charges, inflationary costs and weakness in the international refining division due to price volatility.

Shares of Chevron fell 1.6% to $159.54 in premarket trading.

The world’s largest energy companies have been under pressure to increase production as oil and gas prices rose sharply after Moscow decided to invade Ukraine and after the United States and its allies imposed heavy sanctions in Moscow.

The company’s oil and gas production in the United States increased by 10% over the previous year. In the first quarter, Chevron pumped a record 692,000 barrels of oil and gas per day (boed) from the Permian, the United States’ first unconventional basin, and raised its full-year forecast to a range. from 700,000 to 750,000 boed.

“Chevron is doing its part to increase domestic supply,” Chevron chief executive Mike Wirth said in an earnings statement.

The global benchmark Brent averaged $114 a barrel in the first quarter. Energy supplies have tightened around the world, with demand rebounding to near pre-pandemic levels.

Chevron’s revenue rose 70% to $54.4 billion in the first quarter, above the Refinitiv consensus of $47.9 billion.

Chart: Soaring Oil Prices –

Revenue from higher oil prices could be used to return cash to shareholders, expand Chevron’s low-carbon business and pay down debt, chief financial officer Pierre Breber told Reuters.

“The first is the dividend. The second is investing in the business. The third is maintaining a strong and balanced balance sheet. And the fourth is returning excess cash to shareholders,” he said. .

Chevron earlier this year increased its dividend payouts by 6% to $1.42 per share and increased its buyback program to $10 billion per year; it repurchased $1.3 billion worth of stock in the last quarter.

The company could increase buybacks further, but Chevron is aiming for a level it can maintain when the oil industry experiences a downturn, Breber said.

Chevron plans to increase investments and acquisitions this year by more than 50% from 2021, which could include deals in low-carbon businesses like natural gas and renewable fuels.

RBC said earlier this month that Chevron may be interested in purchasing a liquefied natural gas (LNG) facility on the US Gulf Coast as it expands its natural gas business. The company declined to comment on the speculation.

Chevron is still determining the second-quarter impact of storm damage to the Caspian Pipeline Consortium (CPC), the line to deliver crude from Kazakhstan to Russia’s Black Sea coast, which is operational again after several weeks. Chevron has a 15% stake in this line.

Disruptions at CPC, which transports about 1% of the world’s crude from Kazakhstan, contributed to an 8% reduction in Chevron’s international oil and gas production in the quarter, according to the company’s presentation.

The consortium said on Sunday it had fully restored cargo capacity at its Black Sea oil terminal after completing repairs.

(Reporting by Sabrina Valle; Editing by Richard Pullin)

Copyright 2022 Thomson Reuters.

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Felix J. Dixon