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Chevron (CVX) Q3 Earnings Top, Sets Free Cash Flow Record

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Chevron Corporation (CVX - Free Report) reported adjusted third-quarter earnings per share of $2.96, beating the Zacks Consensus Estimate of $2.21. Meanwhile, the company reported a profit of just 18 cents per share in the year-ago period.

Chevron follows peers ExxonMobil (XOM - Free Report) and Royal Dutch Shell in coming up with third-quarter earnings. Meanwhile, BP plc (BP - Free Report) will reveal quarterly numbers early next week. Chevron’s impressive earnings reflects higher commodity prices and production, plus increase in refined products sales.

The company generated revenues of $44.7 billion. The sales figure beat the Zacks Consensus Estimate of $42.5 billion and increased 82.3% year over year.

 

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation price-consensus-eps-surprise-chart | Chevron Corporation Quote

 

Segment Performance

Upstream: Chevron’s production of crude oil and natural gas increased 7.1% from the year-earlier level to 3,034 thousand oil-equivalent barrels per day/MBOE/d (58% liquids) and it was the fourth successive quarter where volumes topped 3 million barrels per day. The year-over-year rise reflects contribution from the Noble Energy acquisition and lower production curtailments.

The U.S. output was up 14.8% year over year to 1,127 MBOE/d and the company’s international operations (accounting for 63% of the total) was up 3% to 1,907 MBOE/d.

Apart from higher production, Chevron also experienced a significant improvement in commodity prices. At $58 per barrel, Chevron’s average realized liquids prices in the U.S. were 87.1% above the year-earlier levels while prices overseas rose 74.4%. On the natural gas front, its realizations soared 265.2% and 61.4%.

The dual catalyst of increase in volumes and realizations meant that Chevron’s upstream segment recorded a profit of $5.1 billion in the third quarter of 2021, rocketing from the $235 million earned in the year-ago period when the energy sector was just coming out of the devastated by the pandemic-induced demand destruction and price plunge.

Downstream: Chevron’s downstream segment recorded a profit of $1.3 billion, a massive improvement from last year’s income of $292 million. The jump primarily underlined higher product sales, improved earnings from its Chevron Phillips Chemical Company joint venture and stronger domestic margins.

 

Cash Flows, Capital Expenditure

The company recorded $8.6 billion in cash flow from operations, more than doubling from $3.5 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was a record $6.7 billion.

In the third quarter, Chevron paid $2.6 billion in dividends and bought back $625 million worth of its shares.

The Zacks Rank #1 (Strong Buy) company spent $2.8 billion in capital and exploratory expenditures during the quarter, compared to the year-ago period’s $2.6 billion. Some 84% of the total outlays pertained to upstream projects.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Balance Sheet

As of Sep 30, the San Ramon, CA-based company had $6 billion in cash and cash equivalents and total debt of $37.3 billion with a debt-to-total capitalization of about 21.6%.


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