Chevron Corp.’s stock rose 1.5% early Friday after the oil giant said it returned a record sum to shareholders in 2023, offsetting a decline in profit for the fourth quarter and a revenue shortfall of about $3.7 billion.
The San Ramon, Calif.-based company
CVX,
said it returned $26.3 billion of cash to its shareholders last year between dividends of $11.3 billion and share buybacks of about $14.9 billion. It also announced an 8% increase in its quarterly dividend to $1.63 a share. The new dividend is payable March 11 to shareholders of record as of Feb. 16.
The returns overshadowed fourth-quarter earnings that were hit by impairment charges and a revenue miss.
Chevron has bee a “sector laggard” last year, coming off a premium valuation, Citi analyst Alastair Syme said in a note Friday.
“We struggle to see a basis for that premium to be restored,” he said, keeping an equivalent of hold rating on the stock.
While the growth outlook for some of Chevron’s more important projects is seen into this year and 2024, Chevron’s portfolio post the merger with Hess Corp.
HES,
“should offer advantaged resource depth/quality, and sustainable shareholder returns vs. peers,” Piper Sandler analyst Ryan Todd said in his note.
Chevron announced a deal to buy Hess in October, a few days after Exxon Mobil Corp.
XOM,
announced a deal to buy Pioneer Natural Resources Co.
PXD,
Chevron posted net income of $2.3 billion, or $1.22 a share, for the quarter, down from $6.4 billion, or $3.33 a share, in the year-earlier period.
The net figure includes $1.8 billion of U.S. upstream impairment charges and $1.9 billion of decommissioning obligations from previously sold assets in the U.S. Gulf of Mexico. The strong dollar shaved about $479 million off earnings.
Adjusted for those items per-share earnings came to $3.45, ahead of the $3.19 FactSet consensus.
Revenue fell to $47.180 billion from $56.473 billion a year ago, below the FactSet consensus of $50.926 billion.
For all of 2023, the company increased worldwide net oil-equivalent production to more than 3.1 million barrels of oil-equivalent a day, with U.S. production growing 14%.
“We also strengthened our portfolio with traditional and new energy acquisitions to help meet the growing demand for affordable, reliable, and ever-cleaner energy,” Chief Executive Mike Wirth said.
Chevron completed several deals in 2023, including PDC Energy, Inc. a majority stake in ACES Delta, LLC, besides the agreement to acquire Hess.
Upstream earnings, meaning earnings from activities such as exploration and development, came to $1.59 billion in the quarter, down from $5.76 billion a year ago.
Downstream earnings, or earnings from refining and distribution of finished products, fell to $1.15 billion from $1.68 billion a year ago.
Cash flow from operations rose to $12.4 billion from $9.7 billion.
The company said production at its Permian Basin assets grew about 10% in 2023 and is on track to achieve 1 million barrels of oil-equivalent a day by 2025.
The company is now expecting production go grow 4% to 7%, or by 3.24 million barrels of oil-equivalent a day to 3.33 million.
TD Cowen, which has a market perform rating on the stock, said the EPS beat came on “modestly better functional results.”
“The most in-focus number, 4Q Permian output, beat expectations. However, this is offset by the first half of 2024 guide down, guide to modest growth exit-to-exit, and type curves that failed to meet expectations,” analysts wrote in a note to clients.
The stock is down 12.5% in the last 12 months, while the S&P 500
SPX,
has gained 17.4%.
Claudia Assis in San Francisco contributed.
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