Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chevron tops profit estimates, joins share buyback stampede

Stock MarketsJul 30, 2021 01:06PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Chevron gas station sign is seen in Del Mar, California, April 25, 2013. REUTERS/Mike Blake/File Photo

By Shariq Khan

(Reuters) -Chevron Corp on Friday reported its highest profit in six quarters and joined an oil industry stampede to reward investors with share buybacks, as rebounding crude oil prices carried earnings and cash flow to pre-pandemic levels. Oil and gas are trading near multi-year highs as fuel consumption has thrown off pandemic losses and natural gas has soared on weather demand. OPEC's decision to carry production curbs into next year has kept oil above $70 per barrel.

The company cut its annual capital spending forecast to about $13 billion, now below what it had spent last year. It had earlier budgeted $14 billion to $16 billion a year in annual capital spending through 2025.

Chevron (NYSE:CVX) last year cut expenses to allow profits to flow at above $50 a barrel. Lower costs and higher prices generated the highest cash flow in two years, enabling it to pare debt and resume share repurchases, officials said. Share buybacks will resume this quarter at an annual rate of between $2 billion and $3 billion, said Chief Executive Michael Wirth, about half the annual rate it had planned.

The company and its rivals halted purchases early last year as the pandemic cut oil demand. Chevron now joins Royal Dutch Shell (LON:RDSa), TotalEnergies and Equinor in resuming buybacks.

"We've always said we would begin buybacks when we were confident that we could sustain it, and our breakeven is $50 per barrel and we are now well above it," Chief Financial Officer Pierre Breber told Reuters.

"We're trying to win back investors... demand for our products has fully recovered, demand for our stock is recovering."

The second-largest U.S. producer's oil and gas production unit earned $3.18 billion in the quarter compared with a loss of $6.09 billion a year ago.

Total production rose 5% to 3.13 million barrels of oil equivalent per day (boepd), while Chevron sold its U.S. oil for $54 a barrel last quarter, compared with $19 a year earlier.

Chevron expects output from the Permian basin to be almost same as last year's, but said it will add drilling rigs in the second half. Its production rate from the top U.S. shale basin is expected to be 600,000 boepd by 2021 end.

"It's still a fundamentally oversupplied world and that's why we're being cautious... We're not going to be driven by an output target or a production target," Jay Johnson, Chevron's upstream executive vice president told analysts.

Meanwhile, top U.S. oil producer Exxon Mobil (NYSE:XOM) said it expects more spending on key projects, including Guyana and Permian, in the second half of this year.

Anish Kapadia, director of energy at London-based Palissy Advisors, said Chevron's Permian additions "still seem measured" and the two U.S. producers seemed to be focusing on cashflow over production.

Crude oil prices this year through June were up 57%, while hard-hit refining and chemicals improved with better plant utilization rates and margins.

The United States accounted for most of a $839 million profit at Chevron's refining operations in the quarter as Asia units suffered from weak margins.

CFO Breber said cost-cuts are largely over and it has achieved targeted savings from its 2020 takeover of Noble Energy (NASDAQ:NBL). It is aiming to raise up to $2 billion from asset sales this year. Its adjusted profit of $1.71 per share beat Wall Street estimates of $1.59, according to Refinitiv IBES data.

The company's shares were down 0.9% at $101.65 in afternoon trade after opening higher amid a broader drop in energy stocks.

Chevron tops profit estimates, joins share buyback stampede
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email