Chevron (NYSE:CVX), one of the world’s leading integrated energy companies, saw its shares rise 1% on Friday, following the release of mixed fourth-quarter earnings. Revenue missed Wall Street expectations by 8.6%, while earnings per share of $3.45 beat by 8%.
Revenue of $47.18 billion missed estimates for $51.62 billion, reflecting lower oil prices. Oilfield service companies have been particularly impacted. Last week, state-owned Saudi Aramco announced it would reduce its planned maximum sustainable oil production capacity to 12 million barrels a day.
However, Chevron’s management struck a positive note as it revealed a record volume of $26.3 billion in cash returned to shareholders in 2023, and an 8% increase in quarterly dividends to $1.63 per share.
Nevertheless, these rosy figures highlight the worrying backdrop for oil prices. North American oil production continues to rise, countering a decrease in OPEC+ supply. The International Energy Agency believes that global oil supply will rise by 1.5 million barrels per day to a record 103.5 million barrels per day this year, led by American production. Chevron’s strong financials further support the expansion of drilling over the coming years.
Together, that suggests Chevron’s 34% rise in U.S. oil production in Q4 was not an outlier. Oil bulls beware: $100-barrel-oil days are likely gone for now.
On the date of publication, Thomas Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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