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Chevron Corporation (CVX - Free Report) reported adjusted fourth-quarter earnings per share of $4.09, missing the Zacks Consensus Estimate of $4.16. The underperformance could be attributed to lower-than-expected bottom-line results in both the company’s segments. CVX’s upstream segment profit of $5.5 billion came 19.8% below the consensus mark, while the downstream business missed the Zacks Consensus Estimate by 3.4%.

However, Chevron’s bottom line was significantly above the year-earlier quarter’s adjusted profit of $2.56 per share, backed by robust commodity prices and product margins.

The company generated revenue of $56.5 billion. The sales figure beat the Zacks Consensus Estimate of $52.3 billion and increased 17.3% year over year.
 

Chevron Corporation Price, Consensus, and EPS Surprise

Chevron Corporation price-consensus-eps-surprise-chart | Chevron Corporation Quote
 

Shareholder Bonanza

Earlier this week, Chevron raised its quarterly dividend by more than 6% to $1.51 per share (or $6.04 per share annualized) and tripled its spending for stock repurchases to $75 billion.
 

Segment Performance

Upstream: Chevron’s production of crude oil and natural gas — at 3,011 MBOE/d (58% liquids) — fell 3.4% year over year.

The latest volume statistics reflect higher output from the Permian Basin, more than offset by the end of the Erawan concession in Thailand and lower volumes in the Gulf of Mexico.

The U.S. output was down 2% year over year to 1,192 MBOE/d, while the company’s international operations (accounting for 60% of the total) fell 4.3% to 1,819 MBOE/d.

Despite volumes declining from last year, Chevron’s upstream segment recorded a profit of $5.5 billion in the fourth quarter of 2022, improving 6.4% from the $5.2 billion earned in the year-ago period.

This was primarily on account of a gain in commodity prices. At $66 per barrel, Chevron’s average realized liquids prices in the U.S. were $3 above the year-earlier levels while prices overseas rose 5.4%. On the natural gas front, its realizations improved by 3.3% and 31%.

Downstream: Chevron’s downstream segment recorded a profit of $1.8 billion, more than doubling last year’s figure of $760 million. The improvement underlined higher product sales margins, strong jet fuel demand following the continued easing of pandemic restrictions, and contribution from the Renewable Energy Group acquisition.
 

Cash Flows, Capital Expenditure

The company recorded $12.5 billion in cash flow from operations, compared to $9.5 billion a year ago. The increasing cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was $8.7 billion.

Further, Chevron paid $2.7 billion in dividends and bought back $3.8 billion worth of its shares.

The Zacks Rank #3 (Hold) company spent around $4.1 billion in capital and exploratory expenditures during the quarter, compared to the year-ago period’s $2.8 billion.
 

Balance Sheet

As of Dec 31, the San Ramon, CA-based company had $17.7 billion in cash and cash equivalents and total debt of $23.3 billion with a debt-to-total capitalization of about 12.8%.

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