CHEVRON on Friday (Feb 2) beat analysts’ earnings estimates and increased dividends on higher oil and gas production, after a year of sharply lower profits on missteps and charges.

Shares in the pre-trading market rose a fraction after the company beat analysts’ consensus forecast by 24 cents with adjusted earnings of US$3.45 per share in the fourth quarter.

The second largest US oil producer reported a sharply lower, US$21.3 billion profit for 2023 as earnings from oil production and refining fuels tumbled.

The company has suffered from delayed expansion programmes and higher costs in its oil and gas production business. In refining, US margins fell sharply even as rivals reported better-than-expected results.

Despite the nearly 40 per cent fall in annual profit, Chevron said it would increase its dividend by 8 per cent in a sign of confidence. It returned a record US$26.3 billion last year to shareholders via dividends and buybacks.

“We returned more cash to shareholders and produced more oil and natural gas than any year in the company’s history,” CEO Mike Wirth said.

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Oil and gas production rose on shale gains and acquisitions. In the Permian basin, the top US shale field, volumes rose 10 per cent, helping lift output for the year to 3.12 million barrels of oil and gas per day.

But lower prices, foreign currency hits and one-time charges offset the volume gains. Fourth-quarter earnings fell 18 per cent from a year earlier to US$6.45 billion, excluding US$3.7 billion in charges to impair existing assets in California and to cover decommissioning costs in the US Gulf of Mexico.

Higher environmental costs and regulations are also being felt across the oil industry. Chevron’s big fourth-quarter writedowns mirrored those at Exxon Mobil and Shell . governments have imposed new methane emissions restrictions and higher taxes on energy companies after blockbuster earnings.

Chevron’s cash flow from operations was lower than a year earlier mainly due to lower commodity prices and lower margins on refined product sales. Its return on capital employed, a measure of how efficiently it invests, fell to 5.1 per cent in the fourth quarter from 14.2 per cent in the year-ago quarter.

Production delays and maintenance requirements at a major Kazakhstan oil expansion project and higher costs elsewhere prompted the company to acknowledge in December it was underperforming its potential. Kazakhstan output will fall by 50,000 barrels per day this year on maintenance.

Chevron has acquired oil production and reserves. It has offered to buy Hess for US$53 billion to get a foothold in Guyana’s lucrative offshore fields, and last year completed a deal for PDC Energy that boosted its US production.

Adjusted full-year earnings were US$24.69 billion, or US$13.13 per share, down from US$36.54 billion, or US$18.83 per share, in the prior year.

The acquisitions and higher investments in the US pushed full-year capital spending up 32 per cent to US$15.8 billion. That included about US$450 million it poured into PDC assets, which added 266,000 barrels per day of oil and gas production during the quarter. REUTERS