Chevron (CVX) Tops Q3 Estimates as Refining Profit Jumps
Chevron earned $5.28 a share on an adjusted basis, beating the $4.89 expected, as refining profit rose more than fourfold. The stock was up 1.8% early Friday.
Chevron (CVX) reported third-quarter revenue of $67.8 billion, up 36% year on year. Adjusted earnings of $5.28 a share beat the $4.89 LSEG consensus, as CNBC and Reuters reported. The shares rose 1.8% to $235.64 as of 9:31 a.m. ET on Friday, after the results came out before the open.
That puts the stock above its previous closing high of $233.21, set on 23 October.
What stood out
Refining carried the quarter. Downstream earnings, from turning crude into fuels and selling them, rose to $4.9 billion from $1.1 billion a year earlier, the release showed, and Reuters reported that US downstream earnings alone climbed to $3.6 billion from $638 million. Chevron’s US refineries ran a record 1.09 million barrels a day of crude, at nearly 98% of capacity, the company said.
The oil-and-gas side cooled. Upstream earnings fell to $5.7 billion from $8.2 billion in the second quarter, and production slipped to 3.98 million barrels of oil equivalent a day. Chevron blamed lower output on smaller entitlements at higher prices and on the conflict in the Middle East.
The quarter was strong against last year but softer than the last one. GAAP profit was $9.9 billion, or $5.06 a share, against $3.5 billion a year earlier, and adjusted earnings per share fell from $6.06 in the second quarter. “We’re reinvesting to bring more energy to a supply-constrained market,” Chairman and Chief Executive Mike Wirth said in the release.
The outlook
Debt came first. Chevron bought back $2.5 billion of stock and cut total debt by $3.5 billion in the quarter, the release showed. The board kept the quarterly dividend at $1.78 a share.
Venezuela is the growth story it pointed to. Chevron’s joint ventures there plan to invest $7 billion over the next five years, with the potential to more than double production, the release said.
Our take
This was a clean beat, and almost all of it came from refining, where Chevron is earning roughly four times what it did a year ago. Next quarter we’d watch whether refining margins hold, how fast Venezuela adds barrels, and whether debt reduction gives way to bigger buybacks. Our Chevron preview set out what we were watching, and Exxon Mobil (XOM) also reported on Friday morning (see our preview).
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Mostly Markets is for information and education only and isn't investment advice. Theo Park is a pen name. Prices are from Nasdaq and CNBC as of the time stated.
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Earnings previewChevron (CVX) Reports Earnings Tomorrow: What to Watch
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Earnings previewExxon Mobil (XOM) Reports Earnings Tomorrow: What to Watch
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