Chevron becomes Juggernaut with cash Motley fool

Chevron (Cvx -0.36%) She recently postponed her financial results in the second quarter. While the revenues of the oil giant were lower compared to previous periods, its cash flow increased. Strong cash flow allows the oil giant to return a significant amount of money to shareholders.

With the greater growth of cash flows in 2026 and further, Chevron stands out as an anterior oil supply that now buys and holds for the coming years.

Drilling to earnings in the second quarter of Chevron

Chevron reported a second quarter of a $ 3.1 billion. This fell from $ 3.8 billion in the first quarter and $ 4.8 billion in the previous period due to lower oil prices.

However, although Chevron’s earnings fell, his cash flow increased from the operations. Chevron generated $ 8.6 billion in the second quarter, from last quarter by $ 5.2 billion and $ 6.3 billion in the previous period. That its year -on -year total number of USD 13.8 billion, from $ 13.1 billion to the first six months of last year.

The primary factor that supported the improvement of cash flows was the high division of cash from its investment in TCO. This year, the joint venture in Kazakhstan began to produce oil from its project of future growth (FGP) at the beginning of this year. It is the deepest supergiant oil field in the world and a large existing tank with one trapt. This project helped support 34% increase in production from TCO last quarter.

Chevron also gained 22% increase in production from recently completed Gulf projects, which President Donald Trump renamed to the Executive Regulation in America. Meanwhile, his production in a permical basin reached a milestone of 1 million Barl in the quarter of the BARL equivalent of oil (BOE) per day, which has been a 14% increase in the last year.

These catalysts allowed Chevron to set a quarterly production record to 3.4 million Boe per day.

Returning to unexpected shareholders

Chevron’s strong cash flow, along with a decline in capital expenditure after completing its FGP in Kazakhstan, allowed the company to generate $ 4.9 billion in quarter. In the second quarter, this increased from $ 4.2 billion and $ 4.8 billion in the season. That the B3wer Chevron’s 2025 a total of $ 9.1 billion, out of $ 8.7 billion to the first half of last year.

The oil company returned more than 100% of its free cash flow in the second quarter. It paid $ 2.9 billion in dividends and repaste $ 2.6 billion ($ 5.5 billion in total cash benefits).

Chevron bridged a small gap with his firm balance sheet. IT and a quarter with a net debt ratio of 14.8%. This is one of the lowest levels in the oil patch and significantly below 20% -25% of the target range.

Comes even bigger Gusher Cash Flow

Chevron expects his already robust free cash flow to cross next year. The company assumes that FGP TCO will constantly increase up to full production (260,000 barrels a day). It also increases the output from recently completed Gulf projects. In addition, he expects Permian Basin to really hit his step as she hit 1 million boe a day.

These and other catalysts control the opinion of the company that next year will create an additional cash flow of $ 10 billion from the existing portfolio, which means that oil oppresses $ 70 per barl (currently at 60 years).

In addition, Chevron Finully closed his acquisition of needles Up Last month. The company expects to capture cost savings of $ 1 billion by the end of this year. Add this to the expected free cash flow from the growing Hess and Chevron operation that this agreement increases its free cash flow by another $ 2.5 billion next year to $ 12.5 billion.

Due to the strength of Chevron’s balance sheet, the oil giant is likely to return the growing unexpected unexpected shareholders. The company will undoubtedly continue to increase its dividend (it has increased its payment for 38 stays and has expanded it in the last decade). Chevron is also likely to raise the rate of its reparchase shares, which is at a high level of $ 10 billion to $ 20 billion.

In a well -oiled cash machine

Chevron becomes Juggernaut with cash flows. Recently completed organic growth projects stimulated a robust cash flow in the second quarter, which should continue next year. In addition, the company has recently concluded its megadeal for Hess, which will provide additional support in 2026 and at the same time extend the view of the growth of free cash flows within the 30th of the 20th century.

In the future, these drivers will return much more cash to investors in the future, making it a very coming oil supply that you can buy and hold in the next few years.