Chevron Corp. hit record oil and gas production in the Permian Basin during the second quarter — and blew past some analysts’ expectations — according to preliminary results the U.S. supermajor released prior to its July 28 earnings report.

Chevron’s Permian Basin production of 772,000 boe/d set a new quarterly record—11% higher than the same quarter a year ago, the company disclosed in a surprise filing on July 23.

The company’s Permian oil and gas output increased by about 55,000 boe/d quarter-over-quarter, crushing some predictions. TD Cowen’s second-quarter forecast Chevron production growth was around 12,000 boe/d, the firm wrote in a July 24 report.

Early 2023 well performance from Chevron’s operated assets in the Permian indicate the company is on track to meet its full-year guidance. Full-year Permian production is forecast at about 770,000 boe/d, up from about 707,000 boe/d in 2022, Chevron CEO Mike Wirth said on the company’s first-quarter earnings call.

Between 2023 and 2027, Chevron expects to add 650,000 boe/d of incremental production; about 450,000 boe/d of that total will come from the Permian Basin.

The company’s drilling inventory and royalty position in the Permian “is expected to deliver strong cash flow through 2040,” Chevron said.

Chevron is also adding meaningful scale outside of the prolific Permian, the top oil-producing region in the Lower 48. The supermajor is adding complementary assets in the Denver-Julesburg (D-J) through its $6.3 billion acquisition of PDC Energy Inc.

The PDC deal—which also includes PDC’s smaller position in the Permian’s Delaware basin—is expected to close in August.

Chevron’s net oil and gas production was approximately 2.96 MMboe/d during the second quarter, down slightly from 2.98 MMboe/d during the first quarter.

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Earnings snapshot

The company reported adjusted earnings of $3.08 per share for the second quarter—beating earnings expectations by analysts at TD Cowen, Tudor, Pickering, Holt & Co. (TPH & Co) and Jeffries.

Chevron’s earnings beat was driven largely by its upstream segment, which brought in earnings of $4.94 billion during the second quarter—surpassing TPH & Co.'s estimate of $4.5 billion for the quarter.

The company’s quarterly shareholder distributions of $7.2 billion also set a new record. Quarterly distributions included $2.8 billion of dividends and $4.4 billion in share buybacks.

Chevron has repurchased nearly 50 million of its outstanding shares so far this year, including 27 shares repurchased during the second quarter.

Chevron, as well as fellow U.S. supermajor Exxon Mobil Corp., are both slated to report second-quarter earnings on July 28.

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