Chevron Corp CVX-N on Friday beat analysts’ earnings estimates and increased dividends on higher oil and gas production, after a year of sharply lower profits on missteps and charges.
Shares were up 2 per cent in morning trading after the company beat analysts’ consensus forecast by 24 cents with adjusted earnings of $3.45 per share in the fourth quarter and disclosed higher production targets for 2024.
The second largest U.S. oil producer reported a sharply lower, $21.3-billion profit for 2023 as earnings from oil production and refining fuels tumbled.
The company has delayed expansion programs its oil and gas production business as work took longer and cost more than expected. In refining, U.S. margins fell sharply even as rivals reported better-than-expected results.
Even though full-year profits sank 40 per cent, Chevron said it would increase its dividend by 8 per cent in a sign of confidence. It returned a record $26.3-billion last year to shareholders via dividends and buybacks.
“We returned more cash to shareholders and produced more oil and natural gas than any year in the company’s history,” CEO Mike Wirth said.
Oil and gas production rose to 3.12 million barrels of oil and gas per day in 2023 on shale gains and acquisitions. In the Permian basin, the top U.S. shale field, Chevron projected a 10 per cent increase in output this year to about 860,000 bpd.
It also predicted a 4 per cent to 7 per cent increase in its global output, to 3.25 million bpd of oil and gas or more.
But lower prices, foreign currency hits and one-time charges offset the volume gains. Fourth-quarter earnings fell 18 per cent from a year earlier to $6.45-billion, excluding $3.7-billion in charges to impair existing assets in California and to cover decommissioning costs in the U.S. Gulf of Mexico.
Higher environmental costs and regulations are also being felt across the oil industry. Chevron’s big fourth-quarter writedowns mirrored those at Exxon Mobil XOM-N and Shell SHEL-N. Governments have imposed new methane emissions restrictions and higher taxes on energy companies after blockbuster earnings.
Chevron’s cash flow from operations was lower than a year earlier mainly due to lower commodity prices and lower margins on refined product sales. Its return on capital employed, a measure of how efficiently it invests, fell to 5.1 per cent in the fourth quarter from 14.2 per cent in the year-ago quarter.
Production delays and maintenance requirements at a major Kazakhstan oil expansion project and higher costs elsewhere prompted the company to acknowledge in December it was underperforming its potential. Kazakhstan output will fall by 50,000 barrels per day this year on maintenance.
Chevron has acquired oil production and reserves. It has offered to buy Hess Corp for $53-billion to get a foothold in Guyana’s lucrative offshore fields, and last year completed a deal for PDC Energy that boosted its U.S. production.
Adjusted full-year earnings were $24.69-billion, or $13.13 per share, down from $36.54-billion, or $18.83 per share, in the prior year.
The acquisitions and higher investments in the U.S. pushed full-year capital spending up 32 per cent to $15.8-billion. That included about $450-million it poured into PDC assets, which added 266,000 barrels per day of oil and gas production during the quarter.