U.S. oil major Chevron reported its highest third-quarter earnings since the first quarter of 2013 due to improved market conditions, strong operational performance, and a lower cost structure.
Chevron saw a significant improvement in its quarterly performance as the company on Friday reported earnings of $6.1 billion for the third quarter of 2021, compared with a loss of $207 million in the third quarter of 2020 . The firm’s asset sale gains of $200 million and pension settlement costs of $81 million were included in the current quarter, while foreign currency effects increased earnings by $305 million.
Chevron listed adjusted earnings of $5.7 billion in the third quarter of 2021 compared to adjusted earnings of $340 million in the third quarter last year. Sales and other operating revenues in the third quarter of 2021 were $43 billion, compared to $24 billion in the year-ago period.
Mike Wirth , Chevron’s chairman and chief executive officer, commented: “Third-quarter earnings were the highest since first quarter 2013 largely due to improved market conditions, strong operational performance and a lower cost structure.”
Wirth added: “Our free cash flow during the quarter was the best ever reported by the company. We paid dividends of $2.6 billion, reduced debt by $5.6 billion, and repurchased $625 million of shares during the quarter.”
Chevron continued to exercise capital discipline and actively manage its portfolio to advance its higher return and lower carbon objectives, while year-to-date capital spending was down 22 per cent from a year ago. The firm’s worldwide net oil-equivalent production was 3.03 million barrels per day in the third quarter of 2021, an increase of 7 per cent from last year.
U.S. upstream operations earned $1.96 billion in the third quarter of 2021, compared with $116 million a year earlier. The improvement was primarily due to higher crude oil realizations and sales volumes, while gains on assets sales during the quarter also contributed to the improvement between periods.
The company’s average sales price per barrel of crude oil and natural gas liquids was $58 in the third quarter of 2021, up from $31 a year earlier. The average sales price of natural gas was $3.25 per thousand cubic feet in the third quarter of 2021, up from $0.89 in last year’s third quarter.
Chevron’s net oil-equivalent production of 1.13 million barrels per day in the third quarter of 2021 was up 145,000 barrels per day from a year earlier. The increase was due to an additional 224,000 barrels per day of production following the Noble Energy acquisition , partially offset by a 69,000 barrels per day decrease related to the Appalachian asset sale.
The company’s cash flow from operations in the first nine months of 2021 was $19.7 billion, compared with $8.3 billion in 2020. Excluding working capital effects, cash flow from operations in the first nine months of 2021 was $21.2 billion, compared with $8.4 billion in 2020.
Capital and exploratory expenditures in the first nine months of 2021 were $8.1 billion, compared with $10.3 billion in 2020 with expenditures for upstream representing 84 per cent of the company-wide total in 2021.