Stocks of Chevron Climb After the Company Beats Profit, Revenue, and Production Expectations

Shares of Chevron Corp. surged early Friday, reaching close to a three-month high, after the oil major posted third-quarter results that outperformed analysts' expectations on earnings and production. Alongside strong performance, Chevron announced record-high shareholder returns.

‍

To drive efficiency, Chevron has initiated cost-cutting measures, targeting reductions of $2 billion to $3 billion by the close of 2026. Additionally, the company plans to sell assets in Alaska, Canada, and Congo, with these transactions expected to finalize in the current quarter. This move aligns with Chevron’s strategy to divest $10 billion to $15 billion in assets by 2028.

‍

Chevron’s stock rose by 2.2% in premarket trading, positioning it to open near its highest closing price since August 1.

‍

For the quarter ending September 30, Chevron reported net income of $4.49 billion, equating to $2.48 per share, a decline from $6.53 billion, or $3.48 per share, in the same period last year. This drop in earnings is attributed to narrower profit margins on refined product sales, lower realizations, and the absence of favorable tax items that had boosted last year’s results. However, when excluding nonrecurring items, Chevron’s adjusted earnings per share reached $2.51, outperforming the FactSet consensus of $2.42.

‍

Chevron’s revenue for the quarter decreased by 6.3%, landing at $50.67 billion, yet this still surpassed analysts' estimates of $48.86 billion. The company also achieved a significant increase in global oil-equivalent production, which rose 6.9% to 3,364 thousand barrels of oil-equivalent per day (MBOED), exceeding the FactSet consensus of 3,271 MBOED.

‍

In the U.S., Chevron’s production jumped 14.1% to a new quarterly record of 1,605 MBOED. This was primarily driven by record output fro the Permian Basin and the August 2023 acquisition of PDC Energy Inc. Internationally, Chevron’s production grew by 1.2%, reaching 1,759 MBOED.

‍

On the shareholder front, Chevron returned a record $7.7 billion in cash during the third quarter, consisting of $4.7 billion through stock repurchases and $2.9 billion in dividends. This marked an increase from the previous quarter, when $6 billion was returned to shareholders, including $3 billion through buybacks.

‍

Chevron also declared a regular quarterly dividend of $1.63 per share. Shareholders recorded as of November 18 will receive this dividend on December 10. Based on Thursday’s closing price, Chevron’s annual dividend yield is estimated at 4.38%, a figure that outpaces Exxon Mobil’s dividend yield of 3.25% and the broader S&P 500’s implied yield of 1.30%.

‍

Year-to-date, Chevron’s stock is down by 0.2%, contrasting with the Energy Select Sector SPDR ETF’s (XLE) 5.7% gain and the S&P 500’s 19.6% increase over the same period.

‍