Analysis

Chevron Q1 Profits Fall Even as Production Soars

A brief analysis of Chevron’s performance in the first quarter of 2024.

Global energy giant Chevron (CVX 0.27%) unveiled its first-quarter financials on Friday, April 26, revealing a mixed bag of results. The quarter saw adjusted EPS at $2.93, inching past the consensus forecast of $2.92 by analysts. Chevron’s Q1 revenue of $48.7 billion missed the anticipated $50.7 billion and was down 4.1% year over year, presenting challenges in revenue growth amid volatile oil prices. This quarter mirrors the complexities of managing profitability in the ever-dynamic energy sector.

Earnings at a glance

Metrics Q1 2024 Analyst Estimates Q1 2023 Change (YOY)
Total earnings $5.5 billion N/A $6.6 billion -16.3%
Adjusted EPS $2.93 $2.92 $3.55 -17.5%
Revenue $48.7 billion $50.7 billion $50.8 billion -4.1%
Net income $5.5 billion N/A $6.57 billion -16%
Net oil production 1.57 million bpd N/A 1.17 million bpd +35%

Analyst sources: FactSet and CNBC. Note: Total earnings take into account foreign currency effects and added $85 million to the total. YOY = Year over year. bpd = Barrels per day.

Understanding Chevron

Chevron stands as a leading global energy corporation, engaged in every aspect of the oil, gas, and geothermal energy industries. The company’s operations span from exploration and production to refining, marketing, and transportation. A significant focus in recent times has been on expanding its production capabilities while simultaneously moving toward lower carbon energy sources. Strategic investments in renewable energy and efficiency in traditional operations are key to its future growth.

Recent business adjustments, including acquiring PDC Energy in 2023 and a shift toward renewable energy, showcase Chevron’s agility in adapting to the evolving energy market. These strategic moves are instrumental for the company, given the global emphasis on sustainability and the transition to cleaner energy sources.

Quarterly highlights

Chevron’s first-quarter performance reflects a nuanced landscape of achievements and challenges:

  • The company surpassed EPS estimates, albeit slightly, which indicates prudent financial and operational management, even amid shifting market prices for oil and gas.
  • Revenue fell short of expectations, underscoring the difficulties faced in boosting sales in a competitive and volatile market. Global economic conditions and oil price fluctuation play a critical role in the company’s financial health.
  • A year-over-year decline in profits by approximately 16% and a 17.5% downshift in Adjusted EPS spotlight the ongoing pressures in the energy sector. These figures point to the challenges Chevron encounters in maintaining its profitability amid varying market conditions.
  • A 35% year-over-year increase in daily oil production showcases Chevron’s efforts to manage the price changes and keep revenue growing regardless. The increase was primarily due to the acquisition of PDC and higher production in the Permian and DJ
    Basins.
  • Chevron’s commitment to rewarding its shareholders remains unshaken. It set aside $3 billion for the quarterly dividend ($1.63 per share) and $3 billion for share repurchases.

Looking ahead

As Chevron navigates through 2024, management expressed optimism, albeit cautiously, about its ability to sustain production increases and navigate the challenges of the global energy transition. The focus on renewable energy and strategic acquisitions, like the $53 billion offer to buy Hess (HES 0.37%), are expected to fortify Chevron’s position in the energy market.

Investors should keep an eye on Chevron’s ongoing adjustments to its business strategy, particularly its investments in renewable energy and efforts to lower carbon emissions. These initiatives, along with how the company manages the volatility in oil prices and regulatory landscapes, will be crucial in determining its long-term success.

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.

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