Chevron Corporation (NYSE:CVX) announced its third-quarter earnings, reporting adjusted earnings per share of $3.05. However, this figure missed the Zacks Consensus Estimate of $3.68 and represented a decrease from the $5.56 per share earned in the same quarter the previous year. The underperformance was primarily attributed to weaker results in the company’s downstream segments, with CVX’s downstream earnings falling short of the Zacks Consensus Estimate by 12.3%.
On the revenue front, Chevron generated $54.1 billion, slightly surpassing the Zacks Consensus Estimate of $54 billion. Nonetheless, overall revenues showed an 18.9% year-over-year decline due to reduced production levels and lower oil prices.
Segment Performance
Upstream: Chevron’s upstream segment, responsible for crude oil and natural gas production, reported production of 3,146 thousand barrels of oil equivalent per day (MBOE/d), marking a 3.9% year-over-year increase. This growth was primarily driven by impressive output from the Permian Basin, known as America’s hottest and most cost-effective shale region. The company’s worldwide net oil-equivalent production also benefited from the acquisition of PDC Energy, Inc. In the United States, production increased by 19.6% year over year to reach a record 1,407 MBOE/d, while international operations, accounting for 55% of total production, declined by 6.1% to 1,739 MBOE/d. Despite volume improvements, Chevron’s third-quarter 2023 Upstream segment profit decreased by 38.2% to $5.7 billion, primarily due to a significant drop in oil and natural gas prices. Chevron’s average realized liquid prices in the United States were $62 per barrel, down $14 from the previous year, and internationally, they declined by 14.6% to $76 per barrel. Natural gas prices saw substantial declines of 80.3% in the United States and 32.8% in international markets.
Downstream: The downstream segment reported a profit of $1.7 billion, which was lower than the figure from the same period in the previous year, standing at $2.5 billion. This decline was attributed to reduced margins on refined product sales and unfavorable foreign currency effects.
Cash Flows and Capital Expenditure
Chevron’s cash flow from operations for the quarter was $9.7 billion, a decrease from $15.3 billion reported in the same quarter the previous year. The company’s free cash flow for the period amounted to $5 billion. Chevron distributed $2.9 billion in dividends and repurchased shares worth $3.4 billion, with share buybacks affected by restrictions related to the acquisition of PDC Energy. The company’s capital and exploratory expenditures for the quarter reached around $4.7 billion, up from $3 billion in the same quarter the previous year.
Balance Sheet
As of September 30, 2023, Chevron had $5.8 billion in cash and cash equivalents, along with a total debt of $20.6 billion, resulting in a debt-to-total capitalization ratio of approximately 11.1%.
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