Chevron annual profit doubles to record $36.5 billion, but misses estimates

Chevron on Friday posted a record $36.5 billion profit for 2022 that was more than double year-earlier earnings but fell shy of Wall Street estimates, undercut by asset writedowns and a retreat in oil and gas prices.

The second largest U.S. oil producer’s adjusted net profit for 2022 beat by about $10 billion its previous record set in 2011. But $1.1 billion in writedowns in its international oil and gas operations in the fourth quarter left earnings short of forecasts for an adjusted net profit of $37.2 billion.

Chevron’s numbers kick off what promises to be nosebleed-level earnings for global energy suppliers. High prices from strong demand and shortages since Russia’s invasion of Ukraine position Western energy firms to show a combined $200 billion profit for the year, according to analysts.

Industry earnings already have put energy stocks at the top of market returns as companies lift their payouts to shareholders. The latest figures could stir fresh calls for windfall taxes.

The White House on Wednesday protested against Chevron’s decision to triple the budget to buy back its own stock from future earnings – now at $75 billion over an undisclosed period. Biden’s administration say companies should invest more in ways to lower prices for consumers.

Investors reacted by boosting Chevron shares by almost 5% on Thursday, to $187.79, up 44% in the last 52 weeks.

Free cash flow surge

Chevron last year paid $26 billion in dividends and buybacks to shareholders and invested $15.7 billion. Chevron says it is raising capital expenditure to $17 billion in 2023, two-thirds of it in the United States, where output is up 4%.

For 2022, Chevron’s free cash flow, a closely watched measure of operating efficiency, was up by $15 billion from the previous year.

A more than 20% return on capital employed, or how much the company makes for every dollar invested in the business, “shows that our focus on capital efficiency is delivering results,” said Chief Executive Michael Wirth in a statement.

In the final quarter, Chevron posted adjusted earnings of $7.9 billion, or $4.09 per share, up 61% from a year ago.

The earnings surge over the full year came despite weaker overall production, led by a 7% decline in international output due to the end of concessions in Thailand and Indonesia.

Chevron has been moving new investments and focusing production in the United States instead. U.S. production rose to a record last year led by a 16% increase in Permian, the country’s main shale basin.

Its refining business was even stronger, and almost tripled results from the previous year as international business bounced back on stronger margins. Refined product sales were up 7% led by higher renewable fuel sales and jet fuel demand.

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