Chevron posts fourth-highest profit as refining margins hit record
Chevron Corp. beat analysts’ estimates as high oil prices and record US refining margins lifted earnings to the fourth highest in company history, the Houston-based company said in a statement Friday.
Adjusted third-quarter net income of $5.28 a share was 35 cents higher than the average analyst estimate. Chevron scaled back share repurchases to $2.5 billion, though they remained within the full-year guidance range.
Rival European supermajors also posted sharply higher profits this week, prompting Shell Plc to hike repurchases to match industry leader ExxonMobil Holdings Corp. BP Plc’s profit climbed to an 18-year high on the strength of hefty refining returns.
The bumper quarter for Big Oil was driven by surging fuel prices around the world and helped intensify affordability concerns among US voters heading into Tuesday’s crucial midterm elections. President Donald Trump, who repeatedly pledged to bring down fuel prices, is facing the potential loss of Republican control of both houses of Congress.
Refining was a key driver of Chevron’s outperformance, with profits of $4.93 billion, the highest on record for that unit 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.
For the second consecutive quarter, Chevron executives funneled windfall profits primarily into debt reduction, taking a more conservative approach than Shell and Repsol SA, which both increased buybacks more than 65%.
“We don’t react to upside or downside, we don’t move things around,” Chief Financial Officer Eimear Bonner said during an interview. “For now, we’re sticking with our longstanding financial priorities and we’re not making any changes.”
Aided by last year’s acquisition of Hess Corp., Chevron increased production year-on-year, allowing it to take advantage of the roughly 34% jump in international crude prices from a year earlier. The Hess deal gave Chevron a 30% stake in Guyana’s prolific Stabroek Block that’s operated by ExxonMobil Holdings Corp.
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. The company’s costs are less than $20 a barrel in the country, making it one of the most-profitable oil theaters in the world. Venezuela is “immediately accretive and free cash flow positive,” Bonner said. “We are not concerned with our ability to grow that production.”
Analysts are likely to quiz senior executives about the company’s “rapidly evolving upstream portfolio” later Friday, RBC Capital Markets analyst Biraj Borkhataria wrote in a note. Chevron 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.
