Chevron Corporation (NYSE:CVX)'s Q3 2023 earnings have taken a hit, with the company reporting a significant decrease in earnings per share from $5.78 in Q3 2022 to $3.48 in the same period this year, resulting in a 2% pre-market trade shares drop. The downturn is attributed to lower upstream realizations, reduced margins on refined product sales, international downstream weakness, and maintenance operations at the Richmond refinery.
Despite these challenges, Chevron managed to achieve a new U.S net oil-equivalent production record with a 20% increase due to the acquisition of PDC Energy (NASDAQ:PDCE) that added 179,000 oil-equivalent barrels per day. This achievement was supplemented by net production increases in the Permian Basin. However, international net oil-equivalent production decreased due to turnarounds, shutdowns, and normal field declines.
In terms of downstream performance, U.S. margins and fuel sales rose while international downstream earnings fell mainly due to lower margins on refined product sales. This comes as Chevron's Q3 2023 earnings plummeted to $3.05 per share from the previous year's $5.56, missing the projected $3.70 due to lower upstream realizations and shrinking margins on refined product sales.
The decline in earnings has also affected Chevron's upstream profits which saw a 38% YoY decrease to $5.8 billion. Sales fell by 18.3% YoY to $51.9 billion due to declining oil prices but exceeded the expected $51.4 billion.
In light of these results, Chevron declared a quarterly dividend of $1.51 per share, set for December 11 payment to shareholders on record by November 17. Analysts maintain a Moderate Buy consensus rating for the stock with seven Buys and Holds each, and an average price target of $189.71, suggesting a potential upside of 22.6%.
The disappointing earnings report was revealed following Chevron's announcement of a $53 billion all-stock acquisition of Hess Corporation (NYSE:HES), a move that is expected to impact the company's future performance.
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