Chevron Corp reported its second-highest quarterly profit in history, exceeding analysts’ expectations, thanks to rising global demand for its oil and gas and increased output from its U.S. oilfields.

The increase comes as oil companies report record profits as prices near record highs and supplies are tight due to output cuts during the COVID-19 pandemic, as well as market disruption from the Ukraine war.

Chevron reported a third-quarter net profit of $11.2 billion, or $5.78 per share, nearly doubling the $6.1 billion reported in the same period last year and exceeding Wall Street’s $4.86 estimate.

According to Chief Financial Officer Pierre Breber, the results will support increased project spending and oil and gas production next year.

Due to contract expirations in Asia, production was roughly flat last quarter.

US oil executives have been reluctant to brag about this year’s earnings gains, which have surpassed the once-roaring tech sector, preferring to focus on investment commitments. However, as inflation rises, soaring profits are fueling criticism in the United States and Europe.

The company’s cash flow from operations reached a new high of $15.3 billion, far exceeding the previous quarter. Chevron’s return on capital employed jumped to 25%, a measure of how much it earns for every dollar invested in the business.

“We delivered another quarter of strong financial performance,” Chevron Chief Executive Michael Wirth said in a prepared statement, noting its oil and gas production in the top U.S. shale field reached “another quarterly record.”

The Permian basin in the United States produced 700,000 barrels of oil equivalent per day (boed), up 12% from the previous year and exceeding the 692,000 boed produced in the second quarter. However, global production in the first nine months of the year is down by about 100,000 boed from the same period last year.

Chevron reaffirmed its goal of pumping 1 million barrels per day (bpd) in the top U.S. shale oil field by 2025, as well as achieving a 3% annual growth rate compounded between 2023 and 2026 for its overall output.

Chevron will increase project spending by 20% next year, to up to $17 billion, according to CFO Breber. Breber estimates that spending will be less than $15 billion this year, excluding acquisitions.

Chevron has pledged to reinvest profits in shareholder dividends, fossil fuel and clean energy projects, and debt reduction.

“Our fourth priority, after we have met the first three, is to do share buybacks” at $15 billion a year, Breber said.

Its oil and gas division reported an 81% increase in operating profit to $9.3 billion, while its oil refining division nearly doubled to $2.5 billion.

Nonetheless, refining profit fell from the previous quarter, keeping overall earnings below the company’s all-time high of $11.6 billion. According to the company, refineries processed about 13% fewer barrels per day than the previous year, owing primarily to planned maintenance.

However, refined product sales of 1.25 million barrels per day were up 5% year on year, owing primarily to higher renewable fuel sales as a result of the company’s acquisition of biodiesel supplier Renewable Energy Group.

(Adapted from Latestly.com)