Chevron Corporation (NYSE: CVX) — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; compared with Q1 2023. Interim financial statements are unaudited. Amounts below are in U.S. dollars.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Sales and other operating revenues | $46.6 billion | $48.8 billion | Down 4.6% |
| Net income attributable to Chevron | $5.5 billion | $6.6 billion | Down 16.3% |
| Diluted earnings per share | $2.97 | $3.46 | Down 14.2% |
| Cash from operating activities | $6.8 billion | $7.2 billion | Down $0.4 billion |
| Capital expenditures | $4.1 billion | $3.0 billion | Up $1.1 billion |
| Free cash flow (operating cash flow less capital expenditures) | $2.7 billion | $4.2 billion | Down $1.4 billion |
- Net income before tax was $7.9 billion, versus $9.5 billion; income tax expense was $2.4 billion, versus $2.9 billion. The effective tax rate was 30%, compared with 31%.
- At March 31, cash and cash equivalents were $6.3 billion; marketable securities were nil. Current assets were $40.5 billion and current liabilities $32.9 billion; the reported current ratio was 1.2.
- Total debt and finance lease liabilities were $21.8 billion, up from $20.8 billion at year-end 2023. Net debt ratio was 8.8%, compared with 7.3%. Chevron reported $8.1 billion in committed 364-day credit facilities and no facility borrowings.
- Cash returned to shareholders included $3.0 billion in common dividends and $3.0 billion in share repurchases. The quarterly dividend paid was $1.63 per share, up from $1.51 a year earlier.
Material changes and operating performance
- Upstream earnings increased to $5.2 billion from $5.2 billion (reported as $5.161 billion in Q1 2023). Higher U.S. volumes, including production from PDC Energy and growth in the Permian and DJ basins, were partly offset by lower international natural gas realizations and lower international production.
- Worldwide net oil-equivalent production rose 12% to 3.35 million barrels per day, primarily reflecting the PDC acquisition and U.S. production growth.
- Downstream earnings fell to $783 million from $1.8 billion, mainly due to lower refined-product margins. U.S. results also reflected higher operating expenses and a planned Pascagoula refinery shutdown.
- Management attributed lower consolidated pretax income chiefly to lower downstream margins and natural gas realizations, partly offset by higher U.S. upstream sales volumes. Operating and SG&A expenses and depreciation, depletion and amortization increased year over year.
Outlook, management commentary and risks
- The filing provides no specific consolidated earnings or production guidance. Chevron expects Q2 2024 share repurchases of $2.5–$3.0 billion; repurchases are subject to market conditions and restrictions related to the pending Hess transaction.
- Chevron continues to anticipate obtaining required Hess stockholder and regulatory approvals by mid-2024, but completion timing is uncertain. A Stabroek Block right-of-first-refusal arbitration could delay or prevent the approximately $53 billion all-stock acquisition. Hess scheduled a stockholder meeting for May 28, 2024; arbitration proceedings were expected to continue into 2024.
- Management cited commodity prices, natural gas realizations, refining margins, geopolitical developments, supply-chain and cost pressures, regulation, and the pace of the energy transition as factors that could affect results. Chevron said U.S. inflation was easing overall, but labor and certain offshore equipment costs remained pressured.
- Tengizchevroil’s Wellhead Pressure Management Project started up in April 2024; start-up of its Future Growth Project was expected in the first half of 2025. Chevron also reported a final investment decision to expand Tamar gas capacity in Israel.
- Chevron faces climate-related lawsuits and 39 Louisiana coastal erosion cases; it said it cannot estimate a possible liability range and that outcomes could adversely affect results or financial condition. Environmental obligations, tax examinations, guarantees, indemnities and long-term purchase commitments also remain contingencies.
- The filing notes uncertainty from conflicts and sanctions affecting operations, including in Israel and the region around Russia. It states that current Russia-related financial impacts were not material, while future impacts remain uncertain.
Important facts for investors to verify
- Progress, approvals and arbitration outcomes for the Hess acquisition, including any impact on anticipated timing or transaction benefits.
- Whether upstream volume growth can offset lower gas realizations, and whether downstream margins recover from Q1 levels.
- Cash generation relative to elevated capital spending, dividends and planned share repurchases; monitor debt and liquidity as these uses continue.
- Developments in climate, Louisiana coastal, environmental and tax proceedings, for which the filing does not provide a clear estimate of potential exposure in key cases.
- Execution and timing of major projects, including TCO developments, and the operational or financial effects of geopolitical and regulatory changes.