Shares of Chevron Corp. increased as the oil and gas giant reported quarterly profits exceeding expectations and revenues beating forecasts despite a decline in oil prices. Chevron’s net income increased to $6.57 billion, or $3.46 per share, from $6.26 billion, or $3.22 per share, in the same period last year. After excluding nonrecurring items, the company reported its adjusted earnings per share of $3.55 surpassed FactSet’s consensus of $3.40.
Chevron’s revenue rose from $45.90 billion a year ago to $46.03 billion, beating the FactSet consensus of $44.68 billion. This increase in revenue has been attributed to the company’s upstream revenue growth, which rose from $15.53 billion last year to $18.5 billion this year, outpacing the FactSet estimate of $17.24 billion.
However, the company’s downstream revenue declined from $30.15 billion in 2020 to $27.29 billion, with the FactSet consensus at $32.21 billion. The company’s U.S. upstream division also reported an earnings increase from $1.58 billion to $2.05 billion, while international upstream operations saw a rise in earnings from $4.78 billion to $4.9 billion. Conversely, Chevron’s U.S. downstream earnings fell from $1.07 billion to $935 million, alongside a decline in international downstream operations from $1.15 billion to $958 million.
Chevron attributed its successful fourth-quarter performance to “disciplined capital spending,” which totaled $3.9 billion for the quarter, a 12% fall compared to the same period in the previous year. For the whole of 2021, Chevron’s capital spending amounted to $16.6 billion, a 6% decrease from the previous year.
Mike Wirth, Chevron’s chairman and CEO, expressed satisfaction with the company’s Q4 and full-year 2021 results, stating they “demonstrate the strength of our portfolio and the resilience of our business as we navigate the energy transition.” He added that the company grew cash flow, increased distributions to shareholders, concluded strategic and transformative transactions, and achieved a 75% reduction in Scope 1 and 2 emissions intensity as it targets the zero-emissions future.
Moreover, Wirth highlighted the company’s commitment to capital discipline and a focus on returns while it continues to invest in high-value projects. Additionally, Chevron aims to reduce its net debt and maintain a strong credit rating while returning cash to shareholders. The CEO also revealed that the company experienced a 15% growth in dividends during 2021, which he described as “a testament to the confidence we have in our ability to grow shareholder value over time.”
In response to concerns about the global economic recovery and its impact on oil demand, Wirth stated that Chevron remains “well positioned” to capitalize on commodity price increases but also prepare for market downturns. While financial turmoil and inflation have caused uncertainty in the industry, the company has demonstrated an ability to grow cash flow, maintain profitability, and strengthen its balance sheet during difficult times.
Furthermore, Chevron has various measures in place to safeguard the environment and minimize the impact of its operations on climate change. Wirth emphasized that the company is “committed to a culture of safety, inclusion, and sustainability.” As part of its pledge to reduce greenhouse gas emissions, Chevron aims to achieve carbon neutrality for its operations by 2050, and has committed to reducing methane emissions and lowering the carbon intensity of its products.
Beyond reducing emissions, Chevron is diversifying its portfolio, including investing in renewable energy such as solar, wind, and biofuels. The company has also allocated $10 billion to energy transition initiatives, with $3 billion to be invested annually in low-carbon technologies by 2028.
To meet global demand for renewable energy sources, Chevron is partnering with leading start-ups and venture capital firms to develop sustainable solutions, as well as investing in research and development. The company is also collaborating with various stakeholders, including governments and non-governmental organizations, to support the transition to a low-carbon economy.
In conclusion, Chevron’s impressive fourth-quarter and full-year 2021 results showcased the resilience and flexibility of its portfolio and strategic outlook. As the company navigates the energy transition, it will continue to focus on reducing emissions, investing in renewable energy, and delivering increased value to shareholders.
