On August 2, 2024, Chevron Corp (CVX, Financial) released its 8-K filing for the second quarter of 2024. Chevron, an integrated energy company with global exploration, production, and refining operations, reported earnings of $4.4 billion ($2.43 per share - diluted) for Q2 2024, down from $6.0 billion ($3.20 per share - diluted) in Q2 2023. Adjusted earnings were $4.7 billion ($2.55 per share - diluted), compared to $5.8 billion ($3.08 per share - diluted) in the same period last year.
Company Overview
Chevron is the second-largest oil company in the United States, with production activities spanning North America, South America, Europe, Africa, Asia, and Australia. The company produces 3.1 million barrels of oil equivalent per day, including 7.7 million cubic feet of natural gas and 1.8 million barrels of liquids daily. Chevron's refineries, located in the US and Asia, have a total refining capacity of 1.8 million barrels of oil per day. As of year-end 2023, Chevron's proven reserves stood at 11.1 billion barrels of oil equivalent.
Performance and Challenges
Chevron's Q2 2024 earnings were impacted by lower margins on refined product sales, the absence of favorable tax items from the previous year, and negative foreign currency effects. Despite these challenges, the company achieved record Permian production and an 11% increase in worldwide production compared to the previous year. However, operational downtime in Australia and softer margins posed significant challenges.
Financial Achievements
Chevron returned $6 billion in cash to shareholders during the quarter, including $3 billion in dividends and $3 billion in share repurchases. Over the past two years, the company has returned more than $50 billion to shareholders. This consistent return of capital underscores Chevron's commitment to delivering value to its investors.
Key Financial Metrics
| Metric | 2Q 2024 | 1Q 2024 | 2Q 2023 |
|---|---|---|---|
| Total Earnings | $4.4 billion | $5.5 billion | $6.0 billion |
| Earnings Per Share - Diluted | $2.43 | $2.97 | $3.20 |
| Adjusted Earnings | $4.7 billion | $5.4 billion | $5.8 billion |
| Adjusted Earnings Per Share - Diluted | $2.55 | $2.93 | $3.08 |
| Cash Flow From Operations | $6.3 billion | $6.8 billion | $6.3 billion |
Income Statement Highlights
Chevron's upstream earnings were $4.5 billion, down from $4.9 billion in Q2 2023. Downstream earnings also saw a decline, with $597 million reported in Q2 2024 compared to $1.5 billion in the same period last year. The company's net oil-equivalent production increased to 3.3 million barrels per day, driven by the integration of PDC Energy and strong performance in the Permian and Denver-Julesburg Basins.
Balance Sheet and Cash Flow
Chevron's capital expenditures for Q2 2024 were $4.0 billion, up from $3.8 billion in Q2 2023. The company's free cash flow stood at $2.3 billion, down from $2.5 billion in the previous year. The debt ratio at the end of the period was 12.7%, slightly higher than the 12.0% reported in Q2 2023.
Commentary
"This quarter, we delivered strong production, enhanced our global exploration portfolio and extended our track record of consistent shareholder returns with over $50 billion of distributions in the last two years," said Mike Wirth, Chevron’s chairman and chief executive officer. "Despite recent operational downtime and softer margins, we remain poised to deliver significant long-term earnings and cash flow growth."
Analysis
Chevron's Q2 2024 performance reflects the challenges faced by the oil and gas industry, including fluctuating margins and operational disruptions. However, the company's ability to maintain strong production levels and return significant capital to shareholders highlights its resilience and strategic focus. The integration of PDC Energy and expansion of exploration acreage in Namibia, Brazil, Equatorial Guinea, and Angola position Chevron for future growth.
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Explore the complete 8-K earnings release (here) from Chevron Corp for further details.
