Chevron beats Wall Street profit estimates with record production

Adjusted earnings for qtr $1.77 per share vs $1.70 consensus Global production totaled record 3.4 million boed Capital expenditure declined 7.5% Targeting up to $3 billion in cost cuts by end of next year By Sheila Dang HOUSTON, Aug 1 (Reuters) - Chevron (CVX.N) beat analyst estimates for second-quarter profit on Friday as record oil and gas production and lower capital expenditure helped the U.S. oil producer boost earnings despite weaker crude prices. The No. 2 U.S. oil major triumphed last month in a legal challenge from Exxon Mobil (XOM.N) in order to close its $55 billion acquisition of Hess, with the crown jewel of the deal being Hess’ stake in a lucrative Guyana oilfield that is operated by Exxon. The landmark win helps Chevron secure a source of long-term growth and is expected to help fund dividends into the 2030s. The low cost of production in the Stabroek Block, offshore Guyana, will also help the company better weather lower crude prices, which declined 11% during the quarter as the OPEC+ group of producers ramped up production volumes. “We had strong execution, record production and exceptional cash generation,” said Chevron Chief Financial Officer Eimear Bonner in an interview. “The financial performance was really underpinned by the stellar operational performance from across the company.” Adjusted earnings for the quarter ended June 30 were $3.1 billion, or $1.77 per share, beating consensus analyst estimates of $1.70 per share, according to data compiled by LSEG. Global production totaled 3.4 million barrels of oil equivalent per day (boed), up from 3.3 million boed in the same period last year. Production from the Permian Basin, the top U.S. oilfield, reached 1 million boed during the quarter. Capital expenditure declined 7.5% from the same period last year, as the company spent less on its downstream operations. Chevron is also targeting up to $3 billion in cost cuts by the end of next year, including through layoffs. The company paid $2.9 billion in dividends and repurchased $2.6 billion worth of shares during the quarter. The Hess acquisition will allow Chevron to increase dividends and repurchases over the long-term, the company said when it announced the deal’s closing. But at least for this year, CFO Bonner said the company does not currently expect to change its guidance of between $10 billion and $20 billion in full-year share repurchases. “We’re still in the range and we’ve got a strong program, and we wouldn’t see a change unless we saw a sustained and significant shift in where the commodity prices are today,” she said. Earnings from oil and gas production, which make up the bulk of Chevron’s profit, were $2.7 billion, down from $4.5 billion in the year-ago quarter.