Chevron's profit nearly quadruples, vows more natural gas investment

© Reuters. FILE PHOTO: The Chevron logo is seen in Los Angeles, California, United States, April 12, 2016. REUTERS/Lucy Nicholson/File Photo

By Sabrina Valle

HOUSTON (Reuters) - Chevron Corp (NYSE:CVX) on Friday posted its highest quarterly profit in 10 years as oil and gas prices surged, and said on Friday it was looking to boost investment in natural gas on rising world demand.

Oil prices soared after Russia's invasion of Ukraine, bolstering profits for oil majors worldwide. The company has pledged to increase oil output, heeding the White House call for more fossil-fuel production as European nations and other try to wean themselves off Russian energy.

Chevron Chief Executive Mike Worth said the company was considering additional investments in renewable fuels and liquefied natural gas (LNG).

The United States is the world's largest LNG exporter, and the Biden administration has been scrambling to boost supply to Europe as Russia threatens the continent's supply after heavy sanctions imposed on Moscow.

"It is an area of high priority for us because of the market demand for it," Wirth said.

Wirth said Chevron was discussing new LNG investments in the U.S. Gulf and in expanding its LNG project in Israel. It is also in talks with a number of companies for potential partnerships in the renewable fuel industry.

"I don't want to leave the impression that we are off to the races to do anything tomorrow," Wirth said. "We really can take a long-term look."

The second-largest U.S. oil producer on Friday posted adjusted earnings of $6.5 billion or $3.36 per share, for the first quarter, up from $1.7 billion, or 90 cents per share, in the year-ago period.

Chevron's U.S. oil and gas production rose 10% from the year-ago period. In the first quarter, Chevron pumped a record 692,000 barrels of oil and gas per day (boed) in the Permian, the top U.S. unconventional basin, and boosted full-year guidance to a range of 700,000 to 750,000 boed.

"Chevron is doing its part to grow domestic supply," Wirth said.

The global benchmark Brent averaged $114 per barrel in the first quarter. Energy supplies have tightened around the globe as demand has rebounded to near pre-pandemic levels.

Chevron shares fell more than 2% at $158 in afternoon trading.

Revenue rose 70% to $54.4 billion in the first quarter, above the Refinitiv consensus of $47.9 billion.

GRAPHIC: Oil price spike https://fingfx.thomsonreuters.com/gfx/ce/akvezynlkpr/chart.png

SHAREHOLDER RETURNS

Revenues from higher oil prices will allow the company to increase returns to shareholders, expand Chevron's lower-carbon business and pay down debt, Chief Financial Officer Pierre Breber told Reuters, noting the company's priorities.

"First is the dividend. The second is investing in the business. Third is maintaining a balanced strong balance sheet. And then the fourth is returning excess cash to shareholders," he said.

Chevron earlier this year increased its dividend payments by 6% to $1.42 per share and boosted its buyback program to $10 billion annually; it bought back $1.3 billion in shares in the most recent quarter.

The company could raise buybacks further but Chevron is aiming at a level it can maintain when the oil industry goes through a downturn, Breber said.

KAZAKHSTAN

Chevron is still determining the second-quarter impact of storm damage to the Caspian Pipeline Consortium (CPC), the line to move crude from Kazakhstan to Russia's Black Sea coast, which is back in operation after several weeks. Chevron has a 15% stake in that line.

Disruptions at the CPC, which transports roughly 1% of the world's crude from Kazakhstan, contributed to a 8% reduction in Chevron's international oil and gas output in the quarter, according to the corporate presentation.

Barrels flowing through CPC are being sold at a discount to Brent of up to $10 per barrel due to security risks, Wirth said.

The consortium said Sunday it had fully restored the loading capacity of its Black Sea oil terminal after completing repairs.