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Chevron Corp. Second Quarter 2022 Results

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Chevron Corp. reported its second quarter 2022 results.

Chevron reported earnings of $11.6 billion ($5.95 per share - diluted) for second quarter 2022, compared with $3.1 billion ($1.60 per share - diluted) in second quarter 2021. Included in the current quarter were charges associated with an early contract termination of $600 million, pension settlement costs of $11 million, and a gain on asset sales of $200 million. Foreign currency effects increased earnings by $668 million. Adjusted earnings of $11.4 billion ($5.82 per share - diluted) in second quarter 2022 compares to adjusted earnings of $3.3 billion ($1.71 per share - diluted) in second quarter 2021.

CEO Mike Wirth said: "Second quarter financial performance improved as we delivered a return on capital employed of 26 percent. The company also strengthened its balance sheet, lowering its debt ratio to under 15 percent, and increased the top end of its annual share repurchase guidance range to $15 billion.

"We more than doubled investment compared to last year to grow both traditional and new energy business lines," Wirth added. "With Permian production more than 15 percent higher than a year ago and now as one of the leading renewable fuel producers in the United States, Chevron is increasing energy supplies to help meet the challenges facing global markets," Wirth concluded.

This investment includes total capital and exploratory and acquisition-related expenditures as Chevron closed its acquisition of Renewable Energy Group, Inc. and completed the formation of a renewable fuels joint venture with Bunge North America, Inc. Also during the second quarter, the company sanctioned the Ballymore project in the deepwater U.S. Gulf of Mexico, which is expected to require a gross investment of approximately $1.6 billion. The field is planned to be produced through an existing facility with allocated capacity of 75,000 barrels of crude oil per day.

The company also advanced its carbon capture and storage (CCS) business this quarter by launching a CCS project aimed at reducing the carbon intensity of its upstream operations in California and forming an expanded joint venture to develop the Bayou Bend CCS hub in Texas, with the goal of it becoming one of the first offshore CCS projects in the United States.

Further, leveraging the company's growing U.S. natural gas production and its global liquefied natural gas (LNG) value chain, Chevron signed agreements to export 4 million tonnes per year of LNG out of the U.S. Gulf Coast, commencing in 2026.

Upstream

Worldwide net oil-equivalent production was 2.90 million barrels per day in second quarter 2022. International production decreased 13 percent primarily due to the end of concessions in Thailand and Indonesia, while U.S. production increased 3 percent compared to the same period a year ago mainly in the Permian Basin.

U.S. upstream operations earned $3.37 billion in second quarter 2022, compared with $1.45 billion a year earlier. The improvement was primarily due to higher realizations, partially offset by higher operating expenses largely due to an early contract termination.

The company's average sales price per barrel of crude oil and natural gas liquids was $89 in second quarter 2022, up from $54 a year earlier. The average sales price of natural gas was $6.22 per thousand cubic feet in second quarter 2022, up from $2.16 in last year's second quarter.

Net oil-equivalent production of 1.17 million barrels per day in second quarter 2022 was up 36,000 barrels per day from a year earlier. The increase was primarily due to net production increases in the Permian Basin. The net liquids component of oil-equivalent production in second quarter 2022 increased 4 percent to 888,000 barrels per day, and net natural gas production increased 2 percent to 1.71 billion cubic feet per day, compared to last year's second quarter.

International upstream operations earned $5.19 billion in second quarter 2022, compared with $1.73 billion a year ago. The increase in earnings was primarily due to higher realizations and asset sale gains, partially offset by lower sales volumes. Foreign currency effects had a favorable impact on earnings of $525 million between periods.

The average sales price for crude oil and natural gas liquids in second quarter 2022 was $102 per barrel, up from $62 a year earlier. The average sales price of natural gas was $9.23 per thousand cubic feet in the second quarter, up from $4.92 in last year's second quarter.

Net oil-equivalent production of 1.72 million barrels per day in second quarter 2022 was down 266,000 barrels per day from second quarter 2021. The decrease was primarily due to the absence of production following expiration of the Erawan concession in Thailand and Rokan concession in Indonesia, and unfavorable entitlement effects due to higher prices. The net liquids component of oil-equivalent production decreased 19 percent to 799,000 barrels per day in second quarter 2022, while net natural gas production decreased 7 percent to 5.55 billion cubic feet per day compared to last year's second quarter.

Downstream

U.S. downstream operations reported earnings of $2.44 billion in second quarter 2022, compared with earnings of $776 million a year earlier. The increase was mainly due to higher margins on refined product sales, partially offset by lower earnings from the 50 percent-owned Chevron Phillips Chemical Company and higher operating expenses.

Refinery crude oil input in second quarter 2022 decreased 8 percent to 881,000 barrels per day from the year-ago period, primarily due to planned turnarounds.

Refined product sales of 1.21 million barrels per day were up 4 percent from the year-ago period, mainly due to higher jet fuel demand as travel restrictions associated with the pandemic continue to ease.

International downstream operations reported earnings of $1.08 billion in second quarter 2022, compared with $63 million a year earlier. The increase was mainly due to higher margins on refined product sales and a $144 million favorable swing in foreign currency impacts between periods.

Refinery crude oil input of 634,000 barrels per day in second quarter 2022 increased 9 percent from the year-ago period as refinery runs increased due to higher demand.

Refined product sales of 1.34 million barrels per day in second quarter 2022 increased 4 percent from the year-ago period, mainly due to higher demand for jet fuel as restrictions from the pandemic continue to ease.

Other

All Other consists of worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.

Net charges in second quarter 2022 were $459 million, compared to $935 million a year earlier. The decrease in net charges between periods was mainly due to lower employee benefit costs, pension expenses and interest expense, partially offset by an unfavorable swing in foreign currency effects.

Cash Flow

Cash flow from operations in the first six months of 2022 was $21.8 billion, compared with $11.2 billion in 2021. Excluding working capital effects, cash flow from operations in the first six months of 2022 was $22.2 billion, compared with $12.2 billion in 2021.

Expenditures

Capital and exploratory expenditures, including equity affiliates (Total C&E) in the first six months of 2022 were $6.7 billion, compared with $5.3 billion in 2021. The amounts included $1.5 billion in 2022 and $1.5 billion in 2021 for the company's share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream represented 79 percent of the company-wide total in 2022. Total C&E for 2022 includes $700 million of inorganic spend largely associated with the formation of the Bunge joint venture. The acquisition of Renewable Energy Group, Inc. is not included in the company's Total C&E.