Chevron's third-quarter profit slumps on lower commodity prices

Chevron Corp. earned $6.5 billion for third-quarter 2023, down from $11.2 billion in the same period last year, primarily due to lower upstream realizations and lower margins on international refined product sales.

Included in the current quarter were a one-time tax benefit of $560 million in Nigeria and pension settlement costs of $40 million. Foreign currency effects increased earnings by $285 million. Adjusted earnings of $5.7 billion in third-quarter 2023 compared with adjusted earnings of $10.8 billion in third-quarter 2022. Sales and other operating revenues in third-quarter 2023 were $51.9 billion, down from $63.5 billion in the year-ago period.

Capital expenditure in third-quarter 2023 was up over 50% from the year-ago period. This includes about $400 million of inorganic spend largely due to the acquisition of a majority stake in ACES Delta LLC, but excludes the acquisition of PDC Energy Inc. (OGJ Online, May 22, 2023).

Quarterly shareholder distributions were $6.2 billion, including dividends of $2.9 billion and share repurchases of $3.4 billion. Share repurchases were lower than the prior quarter due to restrictions related to the acquisition of PDC Energy.

The company’s board of directors declared a quarterly dividend of $1.51 per share, payable Dec. 11, 2023, to all holders of common stock as shown on the transfer records of the corporation at the close of business on Nov. 17, 2023.

Upstream

Chevron’s upstream earnings were $5.7 billion for third-quarter 2023, down from $9.3 billion recorded in the previous year’s third quarter, reflecting lower commodity prices (OGJ Online, Oct. 28, 2022). The company’s worldwide net oil-equivalent production was up 4% from the year-ago quarter primarily due to the acquisition of PDC Energy.

US net oil-equivalent production was up 20% from third-quarter 2022 and set a new quarterly record, primarily due to the acquisition of PDC Energy, which added 179,000 boe/d during the quarter, and net production increases in the Permian basin. US upstream earnings were lower than a year ago, primarily on lower realizations partially offset by earnings associated with PDC Energy.

International net oil-equivalent production was down 112,000 b/d from a year earlier primarily due to higher impacts from turnarounds, shutdowns and normal field declines. International upstream earnings were lower than a year ago primarily due to lower realizations and lower sales volumes, partially offset by a favorable one-time tax benefit of $560 million in Nigeria and foreign currency effects.

Downstream

The downstream segment of the company reported a profit of $1.68 billion, which marked a decrease from the $2.53 billion recorded a year ago. This decline was primarily attributed to significantly lower performance in international markets.

US downstream earnings were $1.37 billion during the quarter, compared with $1.29 billion a year ago primarily due to higher margins on refined product sales. Refinery crude oil inputs increased 23% from the year-ago period primarily due to the absence of 2022 turnaround activity at the Richmond, Cali., refinery. Refinery product sales were up 4% from the year-ago period, primarily due to higher demand for jet fuel.

International downstream earnings were $307 million, down sharply from $1.24 billion a year ago primarily due to lower margins on refined product sales and lower favorable foreign currency effects. Refinery crude oil inputs decreased 4% from the year-ago period as refinery runs decreased due to planned shutdowns. Refinery product sales were flat relative to the year-ago period due to higher jet fuel sales resulting from increased air travel offset by lower demand for gasoline.