Chevron beats Wall Street profit estimates with record output
Chevron beat analyst estimates for second-quarter profit on Friday as record oil and gas production and lower capital expenditure helped to offset the impact of lower crude prices.
The number two US oil major last month headed off a legal challenge from the biggest US producer Exxon Mobil enabling it to close its $55 billion acquisition of Hess. The deal includes a stake in the Stabroek Block oilfield, offshore Guyana, that Exxon operates, and should provide Chevron with a source of long-term growth to help to fund dividends into the 2030s and make Chevron's earnings more resilient to oil price volatility.
International crude prices declined by 11 per cent during the quarter as OPEC+, the Organisation of the Petroleum Exporting Countries and allied producers, increased output.
Exxon Mobil also beat Wall Street estimates for second-quarter profit on Friday.
"We had strong execution, record production and exceptional cash generation," said Chevron Chief Financial Officer Eimear Bonner in an interview.
"The financial performance was really underpinned by the stellar operational performance from across the company."
Adjusted earnings for the quarter ended June 30 were $3.1 billion, or $1.77 per share, beating consensus analyst estimates of $1.70 per share, according to data compiled by LSEG.
Global production totaled 3.4 million barrels of oil equivalent per day, up from 3.3 million boed in the same period last year. Production from the Permian Basin, the biggest US oilfield, reached one million boed during the quarter.
Third-quarter production is expected to be lower by 60,000 boed due to maintenance.
"Following the clouds of uncertainty being lifted around the Hess deal, Chevron has hit the ground running with a strong set of results and beat versus market expectations," said Biraj Borkhataria, an analyst with RBC Capital Markets, in a research note.
Capital expenditure declined 7.5 per cent from the same period last year, as the company spent less on its downstream operations.
Chevron raised its free cash flow guidance for 2026 to $12.5 billion.
The company paid $2.9 billion in dividends and repurchased $2.6 billion worth of shares during the quarter.
Although Chevron has said the Hess acquisition will allow it to increase dividends and repurchases over the long term, at least for this year, CFO Bonner said it did not expect to change its guidance of between $10 billion and $20 billion in full-year share repurchases.
"We're still in the range and we've got a strong program, and we wouldn't see a change unless we saw a sustained and significant shift in where the commodity prices are today," she said.
Earnings from oil and gas production, which make up the bulk of Chevron's profit, were $2.7 billion, down from $4.5 billion in the year-ago quarter.
(Reporting by Sheila Dang in Houston and Arunima Kumar in Bengaluru; Editing by Marguerita Choy, Muralikumar Anantharaman and Barbara Lewis)
