Chevron (NYSE:CVX) saw a 2% pre-market decline in its stock on Friday following the release of its Q3 earnings report, which fell short of Wall Street’s expectations. The energy giant reported a drop in revenues by 19% year-on-year (Y/Y), primarily attributed to lower upstream realizations and reduced margins on refined product sales.
The company’s Q3 net income tumbled to $6.5 billion, or $3.48 per share, down from $11.2 billion, or $5.78 per share, in the same quarter the previous year. The current quarter’s figures included a one-time tax benefit of $560 million in Nigeria and foreign currency effects that increased earnings by $285 million.
Furthermore, Chevron’s Q3 free cash flow decreased to $5 billion from $12.3 billion in the corresponding period in the previous year, signaling a challenging quarter for the energy giant.
However, the company did experience a 3.9% Y/Y increase in worldwide production, reaching 3.146 billion barrels of oil equivalent per day (boe/day). This growth was largely attributed to Chevron’s acquisition of PDC Energy.
In the United States, Chevron witnessed a substantial 20% Y/Y increase in net oil equivalent production, setting a new quarterly record. This surge was primarily driven by Chevron’s acquisition of PDC Energy, which contributed an additional 179,000 boe/day during the quarter, along with net production increases in the Permian Basin.
Chevron’s Q3 capital expenditures (capex) rose to $4.7 billion, up from $3 billion in the same period a year earlier. This increase in capex included approximately $400 million of inorganic spending, primarily associated with Chevron’s acquisition of a majority stake in ACES Delta.
The energy company’s upstream earnings for Q3 fell by 38% Y/Y to $5.76 billion. In the United States, upstream earnings experienced a 39% decline to $2.07 billion, while international upstream earnings dropped by 38% to $3.68 billion.
Q3 downstream earnings also saw a decline, falling by 33% Y/Y to $1.68 billion. In the United States, downstream earnings rose by 7% to $1.37 billion, but international downstream earnings fell dramatically, down 75% to $307 million.
Chevron’s Q3 performance reflects the ongoing challenges and volatility in the energy sector, as factors like lower margins on refined product sales and foreign currency effects impacted the company’s financial results. Despite these headwinds, Chevron continues to invest in expanding its production and acquiring new assets, emphasizing its commitment to long-term growth and stability.
Investors and industry analysts will closely monitor how Chevron adapts to the changing energy landscape and navigates the complexities of the global market in the coming quarters.