New Investment, Oil Production Growth Strengthens Chevron’s 2024 Q1, Profit

Strong oil production growth from recent acquisitions has supported Chevron Corp. earnings which surpassed expectations for a second straight quarter.

Adjusted first-quarter profit of $2.93 a share was 3 cents higher than the average of analyst estimates in the Bloomberg Consensus.

Crude-oil production of almost 2 million barrels a day, MMbpd exceeded forecasts.

Chevron is facing questions from investors and analysts over whether its portfolio has enough long-term growth potential, especially if its $53 billion acquisition of Hess Corp. falls apart.

The deal hit a roadblock in March when Exxon Mobil Corp. disputed Chevron’s right to absorb Hess’ 30 per cent stake in a massive, Exxon-run oil project offshore Guyana.

Chevron outperformed rivals during and after the pandemic as investors admired its financial strength and large shareholder returns.

Last year, its buybacks amounted to almost $15 billion, or 5 per cent of outstanding shares. But with global oil demand hitting fresh records and electric vehicles sales stumbling, the industry is starting to target crude-production growth once again.

That’s why the Hess deal is so vital to Chevron and would provide a 30 per cent stake in what Chief Executive Officer. Mike Wirth. has been called “the industry’s most attractive, long-lived growth asset.”

It would also help narrow the valuation gap with Exxon, which operates Guyana’s Stabroek Block and owns 45 per cent.

While  still expecting to complete the Hess acquisition, he’s attempting to make the case to investors that Chevron has enough organic growth potential on its own. The company is targeting between 4 per cent and 7 per cent production growth this year without Hess, largely from the Permian Basin, a new offshore platform in the Gulf of Mexico, and the addition of PDC Energy, which Chevron acquired in August.