Chevron Q2 profits more than triple to nearly $12 billion
Chevron Corp. posted a second-quarter profit of $11.7 billion, up from $3.1 billion in the same period of 2021, with the company’s upstream businesses growing earnings about 170% year over year and downstream operating benefiting from higher refining margins. Total revenues at the California-based company climbed 83% to $68.8 billion while operating income rose to $16.0 billion from $4.4 billion.
Second-quarter production was down 7% year over year, with contract expirations in Indonesia and Thailand outweighing growth in the Permian Basin and other shale operations. In the Permian basin, Chevron averaged net production of 696,000 boe/d, a year-over-year increase of more than 20% and up slightly from first-quarter 2022.
On a conference call with analysts and investors, executive vice president Jay Johnson said the company is on track to spend $1 billion more in the Permian than it did in 2021 and plans to grow its annual investment there to $4 billion annually by 2024 from about $3 billion this year. Chevron added two rigs in the region in July, growing its operations there to 10. Johnson also pointed out that the company’s rigs today can produce roughly double what they did in 2018.
Chevron’s earnings from its US upstream division rose to nearly $3.4 billion from $3.2 billion in the first quarter (and $1.4 billion in second-quarter 2021) but that number would have been higher bar a $600-million charge related to the early termination of a long-term LNG terminal contract with Cheniere Energy Inc.
Higher refining margins and volumes drove a threefold increase in profits (to more $2.4 billion) from the company’s US downstream business and brought the international downstream segment back into the black after it incurred a $155 million loss in the first quarter.
Speaking to Chevron’s overall capital spending plans, chief financial officer Pierre Breber said the company is likely to come in below its $15 billion target for the year even though it will increase spending from the first half’s $5.1 billion. That number will be higher in 2023, he added, and more in line with the target of $15-17 billion annually through 2026 that the Chevron team outlined earlier this year. Breber also noted that the winding down of Chevron’s investment in a Kazakhstan project will free up about $1 billion to deploy elsewhere.
Also noted in Chevron’s earnings and on the executives’ conference call:
- Echoing the observations of a number of his energy industry peers, Breber said he is not seeing signs on persistent demand destruction in recent weeks as talk of a pending or already-here recession has intensified. He noted that there was “a demand response to higher prices” in June but that activity has recovered lately and that it looks to be “a little more resilient than in past recessions.”
- Chevron team has lifted the upper bound of its share repurchase plan to $15 billion from $10 billion and Breber said the company expects to be buying back stock at that annual pace this quarter. Chevron spent $3.8 billion on repurchases in the first 6 months of this year.
Shares of Chevron (Ticker: CVX) increased on earnings news and in afternoon trading were up more than 8% to about $163, growing the company’s market capitalization past $320 billion. Year to date, shares have risen about 35%.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
