Chevron is capitalizing on the rise in oil prices this year. Chevron stock (NYSE:CVX) soared 2.6% this morning, racing to an all-time high price within minutes of the market opening, as investors praised the oil company’s latest quarterly results.
Chevron blew third-quarter results out of the water, easily outperforming Wall Street expectations and building up massive profits and cash flows. In fact, it was Chevron’s second-most lucrative quarter in history.
What Happened to Chevron Stock?
Chevron’s third-quarter net income increased 83.6% year on year to $11.2 billion, attributable mostly to a strong performance from its upstream sector. Chevron invested aggressively and increased Permian Basin output by 12% yearly to capitalize on strong oil prices.
Chevron’s upstream profits skyrocketed due to increased production and significant increases in its average realized prices for crude oil and natural gas liquids. In the United States, for example, Chevron sold crude oil and natural gas for average prices of $76 per barrel and $7.05 per thousand cubic feet in Q3, up from $58 per barrel and $3.25 per thousand cubic feet in the previous quarter.
Meanwhile, strong refining margins bolstered Chevron’s (NYSE:CVX) downstream profitability throughout the quarter. However, the firm might have achieved significantly greater results if not for scheduled turnarounds that impacted refinery operations in the United States.
So, What Now?
Chevron is operating at full capacity. Its cash flow from operations set a record $15.3 billion in the third quarter, accounting for about 40% of the company’s total cash flow from operations in the nine months that ended September 30. The oil company judiciously utilized the funds to reduce debt, invest in growth, and reward shareholders.
So, although Chevron’s overall debt declined by about 25% between December 31, 2021, and September 30, 2022, its cash and cash equivalents balance increased by approximately 170%. Chevron repurchased $3.75 billion in shares and paid $2.7 billion in dividends in the third quarter, which was 6% higher than the previous quarter due to a dividend increase earlier this year.
Chevron’s (NYSE:CVX) brisk cash flows have boosted investors’ prospects for another significant dividend increase next year, which is just one of the reasons they’re betting on this 3.3%-yielding oil company today.
Featured Image- Megapixl @ Heaslet