Chevron Q2 Earnings Beat Estimates as Production Hits Record

Globe and Mail

4 days ago

Chevron Corporation CVX reported adjusted second-quarter earnings per share of $1.77, beating the Zacks Consensus Estimate of $1.70. The outperformance stemmed from higher-than-expected production in the company's key upstream segment. The company's output of 3,396 thousand oil-equivalent barrels per day (MBOE/d) - a record - came in above the consensus mark of 3,326 MBOE/d. Healthy gain in natural gas realizations and stronger refined product sales margins also played their part.
However, the bottom line came well below the year-ago adjusted profit of $2.55 due to weaker oil price realizations.
The company generated revenue of $44.8 billion. The sales figure missed the Zacks Consensus Estimate of $47.1 billion and decreased 12.4% year over year.
In the earnings release, Chevron management said that the completion of the Hess acquisition gives it a stronger and more balanced portfolio. It also sets the stage for production and free cash flow growth to continue for many years. By adding Hess's top-tier assets in places like Guyana, the United States, and the Gulf of America, the company now has one of the most competitive and unique collections of resources in the industry.
Segment Performance
Upstream: Chevron's production of crude oil and natural gas — at 3,396 MBOE/d — rose 3.2% year over year. The latest volume statistics primarily reflect higher volumes from the Permian Basin, Gulf of America and Kazakhstan, partly offset by lower production in the Rockies and asset sales.
The U.S. output increased 7.8% year over year to an all-time high of 1,695 MBOE/d but the company's international operations (accounting for 50% of the total) edged down 1.1% to 1,701 MBOE/d.
Despite overall volumes improving from last year. Chevron's second-quarter 2025 upstream segment profit fell 39% to $2.7 billion. This was primarily due to lower liquids realizations, which constitute more than 60% of Chevron's total production. To some extent, this was offset by higher natural gas sales prices.
At $47.77 per barrel, Chevron's average realized liquids prices in the United States were more than 20% below the year-earlier levels, while prices overseas decreased 21.4% to $58.88 per barrel. As far as natural gas is concerned, the commodity more than doubled in the United States and improved 5% internationally.
Downstream: Chevron's downstream segment recorded a profit of $737 million, up 23.5% from last year's income of $597 million. The gain primarily underlined higher product sales margins.
Cash Flows, Capital Expenditure
The company recorded $8.6 billion in cash flow from operations compared to $6.3 billion in the year-ago period due to the absence of prior-year working capital outflows and higher cash distributions from Kazakhstan. Chevron's free cash flow for the quarter was $4.9 billion.
Further, Chevron paid $2.9 billion in dividends and bought back $2.7 billion worth of its shares.
The Zacks Rank #3 (Hold) company spent around $3.7 billion in capital and exploratory expenditures during the quarter compared to the year-ago period's $4 billion.
You can see the complete list of today's Zacks #1 Rank stocks here.
Balance Sheet
As of June 30, the only energy component of the Dow Jones Industrial Average had $4.1 billion in cash and cash equivalents and total debt of $29.5 billion with a debt-to-total capitalization of about 16.8%.
Important Energy Earnings
While we have discussed Chevron's second-quarter results in detail, let's take a look at some other key oil/energy reports of this season.
Oil service biggie Halliburton HAL reported second-quarter 2025 adjusted net income per share of 55 cents, the same as the Zacks Consensus Estimate but below the year-ago quarter's profit of 80 cents (adjusted). The numbers reflect softer activity in the North American region, partly offset by international growth. Meanwhile, revenues of $5.5 billion were 5.5% lower year over year but beat the Zacks Consensus Estimate by 1.1%.
Halliburton reported second-quarter capital expenditure of $354 million, higher than our projection of $338.2 million. As of June 30, 2025, the company had approximately $2 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. HAL bought back $250 million worth of its stock during the April-June period. The company generated $896 million of cash flow from operations in the second quarter, leading to a free cash flow of $582 million.
Refining major Valero Energy VLO reported second-quarter 2025 adjusted earnings of $2.28 per share, which beat the Zacks Consensus Estimate of $1.73. However, the bottom line declined from the year-ago quarter's level of $2.71. Valero's total quarterly revenues decreased from $34.5 billion in the prior-year quarter to $29.9 billion. The top line, however, beat the Zacks Consensus Estimate of $27.8 billion.
The better-than-expected quarterly results can be attributed to an increase in Valero's refining margins per barrel of throughput and lower total cost of sales. The positives were partially offset by a decline in refining throughput volumes and renewable diesel sales volumes.
Meanwhile, energy infrastructure provider Kinder Morgan KMI reported second-quarter 2025 adjusted earnings per share of 28 cents, which met the Zacks Consensus Estimate. The bottom line increased year over year from 25 cents. Kinder Morgan's quarterly revenues of $4 billion beat the Zacks Consensus Estimate of $3.9 billion. The better-than-expected quarterly earnings were primarily due to robust natural gas demand and higher contributions from its Natural Gas Pipelines and Terminals segments.
For 2025, Kinder Morgan reiterated its projected net income of $2.8 billion (up 8% from the 2024 level) and an Adjusted EPS of $1.27 (up 10%). The company expects dividends of $1.17 per share, up 2% from the prior-year figure. Kinder Morgan also anticipates a budgeted Adjusted EBITDA of $8.3 billion, up 4% from the previous year's level.
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Chevron Corporation (CVX): Free Stock Analysis Report
Halliburton Company (HAL): Free Stock Analysis Report
Valero Energy Corporation (VLO): Free Stock Analysis Report
Kinder Morgan, Inc. (KMI): Free Stock Analysis Report