Chevron Corporation
CEO : Mr. Michael K. Wirth
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 18.9% YoY | 39.3% | 26.0% | 2023-01-27 |
Pierre Breber says,
Financial Performance
- Chevron reported Q4 2022 earnings of $6.4 billion or $3.33 per share.
- Adjusted earnings were $7.9 billion or $4.09 per share.
- The company delivered outstanding results on all four of its financial priorities.
- Chevron had over $37 billion of free cash flow in 2022, a record year.
Capital Allocation and Shareholder Returns
- Chevron invested within its organic budget despite cost inflation in 2022.
- Inorganic CapEx totaled $1.3 billion, nearly 80% for new energy investments.
- The company paid down debt in every quarter and ended the year with a 3% net debt ratio.
- Chevron returned record annual cash to shareholders through buybacks and ended the year with an annual repurchase rate of $15 billion.
- The Board of Directors authorized a new $75 billion share repurchase program.
Production and Reserves
- 2022 production was in line with guidance after adjusting for higher prices.
- Reserves replacement ratio was nearly 100%, with the largest net additions in the Permian, Israel, Canada, and the Gulf of Mexico.
- 2023 production is expected to be flat to up 3% at $80 Brent.
- The company remains confident in exceeding its long-term production guidance.
Earnings and Guidance
- Adjusted earnings were down nearly $3 billion compared with last quarter.
- 2023 earnings estimates from first quarter refinery turnarounds are mostly driven by El Segundo.
- Chevron expects higher natural gas costs for its California refineries.
- Full-year guidance for all other segment losses is lower this year due to higher expected interest income.
- The company estimated annual affiliate dividends between $5 billion and $6 billion.
- Earnings sensitivities were updated, and the company expects to maintain share buybacks at the top end of its guidance range during the first quarter.
Mike Wirth says,
Record Financial Performance and Production
- Chevron delivered record financial performance in 2022, beating the previous year’s Free cash flow by over $15 billion.
- The US production was the highest ever, with double-digit growth in the Permian.
- Return on capital employed over 20% shows that Chevron’s focus on capital efficiency is paying off.
New Energy Businesses
- Chevron successfully integrated REG’s people and assets into the company, combining the best of both companies’ technical and commercial capabilities.
- Chevron acquired rights to pore space for potential carbon capture and storage projects in Texas and Australia as part of building new energy businesses.
Other Highlights
- At TCO, project construction is largely complete, and the focus is on commissioning and start-up of the Wellhead Pressure Management Project by the end of this year, to begin transition of the field from high to low pressure.
- Chevron announced a significant new gas discovery offshore Egypt, which could build on its growing natural gas position in the Eastern Med.
- Affiliate CPChem reached FID for two world-scale ethylene and derivative projects in Texas and Qatar.
Chevron’s Approach in 2023
- Chevron’s approach will be clear and consistent, focused on capital, cost, and operational discipline, with the objective to safely deliver higher returns and lower carbon.
- Chevron recognizes the importance of affordable and reliable energy with a lower carbon intensity over time.
Q & A sessions,
Share Buyback Program
- Company has a track record of buying back shares below market volume weighted average
- Increased rate of repurchases last year and now at an all-time high
- No end date on the program, intended to maintain it through the commodity cycle
Production Outlook
- Flat to up 3% for 2023 at $80
- Revised plan with deeper targets, more single bench developments and rig moves in Permian
- Expect 100% or greater production over time, but may vary in short number of years
Project Updates
- WPMP trending toward a beginning start-up by the end of 2022
- Tamar expansion project online in early 2025
- Development options being worked on to expand Leviathan
- Exploration plans being developed for additional blocks in the Mediterranean
Share Buyback vs. Dividend
- Buybacks signal confidence in generating excess free cash flow
- Dividend growth represents confidence in growing free cash flow at mid-cycle prices
- Buybacks and dividends are not linked, with dividend load being an outcome of buybacks
Pipeline and Terminal Updates
- All three SPMs are operational, with no constraints on loading or throughput on the pipe
- Discounts have come in a little bit on CPC
- Overall flat price environment has muted impact on CCO
Demand Outlook
- Gasoline demand still slightly below pre-pandemic levels
- Diesel demand pretty flat versus pre-pandemic
- Jet recovering, but still below pre-pandemic levels
- China’s economy expected to recover and could increase demand for oil
No bad stock 