01—Abstract
Summary
Summary of the 8-K filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Chevron reported unaudited first quarter 2024 earnings of $5.5 billiona ($2.97 per diluted share), down from $6.6 billion ($3.46 per diluted share) in the year-ago quarter.
Adjusted earnings, which exclude special items and foreign currency effects, were $5.4 billionb ($2.93 per diluted share) versus $6.7 billion ($3.55) in 1Q 2023. The decline was driven primarily by weaker refining and marketing margins and lower natural gas realizations, partly offset by higher U.S. upstream volumes following the acquisition of PDC Energy. Downstream earnings fell to $783 million from $1.8 billion, while upstream earnings were roughly flat at $5.2 billion.
Production rose 12 percent year over year to 3,346 MBOED, with U.S. output up 35 percent on the PDC acquisition and strong Permian and DJ Basin execution. Return on capital employed was 12.4 percent versus 14.6 percent a year earlier. Cash flow from operations fell to $6.8 billionc from $7.2 billion, and free cash flow was $2.7 billion versus $4.2 billion.
Chevron returned $6.0 billiond to shareholders, including $3.0 billion in dividends and nearly $3.0 billion in buybacks, and the board declared a quarterly dividend of $1.63 per share. Leverage rose, with the net debt ratio at 8.8 percent compared with 4.4 percent a year earlier, as total debt increased to $21.8 billion and cash fell to $6.3 billion. Investors should weigh the earnings decline and tighter cash generation against the operational gains from the PDC acquisition and Tengizchevroil's Wellhead Pressure Management Project.
Capital expenditures of $4.1 billion were higher, and the company also reported milestones in Kazakhstan, Israel's Tamar field, and Uruguay. The 8-K contains only the earnings release and is furnished, not filed, under Item 2.02.
02—Key points
Key Highlights
- Reported 1Q 2024 earnings of $5.5 billion ($2.97/diluted share), down about 16% from $6.6 billion in 1Q 2023; adjusted earnings were $5.4 billion ($2.93/share).
- Upstream earnings held steady at $5.2 billion, with U.S. upstream up to $2.1 billion on higher volumes from legacy PDC assets, while International upstream fell to $3.2 billion on lower natural gas realizations.
- Downstream earnings fell sharply to $783 million from $1.8 billion, driven by lower refined product margins and planned refinery shutdowns, including Pascagoula.
- Worldwide production rose 12% year over year to 3,346 MBOED, with U.S. net production up 35% largely from the PDC Energy acquisition.
- Returned $6.0 billion to shareholders ($3.0 billion dividends, nearly $3.0 billion buybacks) and declared a quarterly dividend of $1.63 per share, payable June 10, 2024.
- Cash flow from operations fell to $6.8 billion from $7.2 billion, and free cash flow dropped to $2.7 billion from $4.2 billion; capex rose to $4.1 billion from $3.0 billion.
- Net debt ratio increased to 8.8% from 4.4% a year earlier as total debt rose to $21.8 billion and cash declined, while ROCE was 12.4% versus 14.6%.
03—Questions
Frequently Asked Questions
Why did Chevron's first quarter 2024 earnings decline compared with a year earlier?
Earnings fell to $5.5 billion from $6.6 billion mainly because of lower margins on refined product sales in the downstream segment and lower natural gas realizations, particularly internationally. Higher U.S. upstream sales volumes from the PDC acquisition partly offset these declines.
How did Chevron's cash returns and dividend change?
Chevron returned $6.0 billion to shareholders in the quarter, including $3.0 billion in dividends and nearly $3.0 billion in share repurchases. The board declared a quarterly dividend of $1.63 per share, payable June 10, 2024, to holders of record on May 17, 2024, and management noted the dividend per share increased 8% from the prior quarter.
Is Chevron's balance sheet weaker than a year ago?
Leverage increased. The net debt ratio rose to 8.8% from 4.4% a year earlier, and the debt ratio rose to 12.0% from 12.7%... as total debt grew to $21.8 billion from about $20.8 billion at year-end 2023, while cash and equivalents fell to $6.3 billion from $8.2 billion. Free cash flow of $2.7 billion did not fully cover the quarter's shareholder distributions.
What drove production growth, and what project milestones were reached?
Worldwide production rose 12% year over year, primarily from the PDC Energy acquisition and strong Permian and DJ Basin performance, plus higher output at the Tengizchevroil affiliate in Kazakhstan. Chevron started up the Wellhead Pressure Management Project at Tengizchevroil and reached a final investment decision to expand midstream capacity at the Tamar gas field in Israel to 1.6 billion cubic feet per day.
Are these results final, and is this filing subject to SEC review requirements?
The figures are unaudited and preliminary, as indicated in the release and balance sheet attachments. Under Item 2.02, the information is furnished rather than filed under Section 18 of the Exchange Act, so it is not subject to the liability of that section and is not incorporated by reference into Securities Act filings unless specifically stated.
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