Chevron’s Third Quarter 2024 Report: Earnings, Milestones, and Strategic Moves -

Last Updated on 27 December 2024 by Naijadazz

Chevron’s recent quarterly results reflect robust operational performance and strategic progress, albeit with some headwinds.

Chevron Corporation reported $4.5 billion in earnings ($2.48 per diluted share) for the third quarter of 2024, a notable decrease from the $6.5 billion reported in Q3 2023. Cash flow from operations remained solid at $9.7 billion, matching last year’s Q3 figure. Chevron also set a record for shareholder returns, distributing $7.7 billion in cash, including $4.7 billion in share repurchases and $2.9 billion in dividends.

Financial Summary and Performance

Chevron’s earnings dip year-over-year was largely due to lower margins on refined products and the absence of favorable tax adjustments seen in Q3 2023. The company’s adjusted earnings for Q3 2024 stood at $4.5 billion ($2.51 per diluted share), down from $5.7 billion ($3.05 per diluted share) in the same period last year. Despite the earnings reduction, Chevron continued to deliver value to shareholders, increasing dividends and initiating share repurchases.

Chevron’s upstream operations continued to thrive, with worldwide net oil-equivalent production up 7% from a year ago, supported by record production in the Permian Basin and boosted by the recent acquisition of PDC Energy, Inc. Notably, Chevron commenced production at key U.S. Gulf of Mexico sites, including the Anchor, Jack/St. Malo, and Tahiti fields, with these projects anticipated to elevate U.S. Gulf production to 300,000 barrels per day by 2026.

Strategic Divestments and Portfolio Optimization

As part of its plan to streamline operations and optimize its portfolio, Chevron announced a $6.5 billion sale of its Canadian assets, including interests in the Athabasca Oil Sands Project and Duvernay shale assets, which is expected to close by the end of 2024. This move is part of Chevron’s broader initiative to divest $10-15 billion in assets by 2028. Concurrently, the company has launched cost-cutting measures aimed at reducing structural expenses by $2-3 billion by 2026.

Key Financial and Business Highlights (Year-to-Date)

Return on Capital Employed (ROCE): Chevron posted a ROCE of 10.1% for Q3 2024, down from 14.5% in Q3 2023.
Capital Expenditures (Capex): Chevron’s capex for Q3 2024 was $4.1 billion, slightly lower than Q3 2023, reflecting a shift away from one-time acquisitions.
Free Cash Flow: Free cash flow for Q3 2024 stood at $5.6 billion, a 12% increase from Q3 2023, driven by favorable working capital and efficient cost management.
Debt Ratio: The company’s debt ratio rose to 14.2% as of Q3 2024, compared to 11.1% a year earlier, reflecting increased leverage due to recent acquisitions and capital investments.

Business Highlights and Project Milestones

Chevron’s Q3 2024 was marked by significant project startups and milestones:

U.S. Gulf of Mexico: Key projects like Anchor, Jack/St. Malo, and Tahiti fields commenced operations, positioning Chevron for continued growth in one of the U.S.’s most prolific oil-producing regions.
Kazakhstan: Chevron’s affiliate Tengizchevroil (TCO) completed the Wellhead Pressure Management Project and major turnarounds ahead of schedule.
International Growth: Chevron announced the opening of a new engineering and innovation center in India, aimed at bolstering technical and digital capabilities globally.
Sustainability Initiatives: In Australia, Chevron received a greenhouse gas assessment permit for a 8,467 km² area to evaluate potential CO₂ storage, a step towards more sustainable operations.

Segment Insights

Chevron’s upstream segment demonstrated resilience despite fluctuating market conditions. U.S. upstream earnings were slightly below last year’s figures due to lower prices and higher depreciation expenses, although increased sales volumes helped offset these factors. Internationally, Chevron’s upstream operations posted lower earnings due to the absence of favorable prior-year tax and currency effects.

The downstream segment saw contrasting fortunes in the U.S. and abroad. Domestic downstream earnings dropped substantially compared to Q3 2023 due to reduced product margins, while international downstream earnings improved, supported by stronger refined product sales.

Looking Ahead

Chevron’s CEO Mike Wirth emphasized the company’s commitment to long-term value creation and operational efficiency. “We delivered strong financial and operational results, started up key projects in the U.S. Gulf of Mexico, and returned record cash to shareholders this quarter,” Wirth stated. The company anticipates closing further asset sales in Canada, Congo, and Alaska by year’s end, in alignment with its ongoing portfolio optimization efforts.

Despite a challenging macroeconomic environment, Chevron continues to press forward with strategic asset sales, cost-saving initiatives, and advancements in sustainable energy projects, all of which are designed to fortify its position in the global energy market.

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