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(Sharecast News) - Chevron reported a 43% drop in second-quarter earnings on Friday, as weaker crude prices and charges tied to its acquisition of Hess weighed on the bottom line, though adjusted results beat expectations on strong production and resilient operations.
Net income fell to $2.5bn, or $1.45 per diluted share, down from $4.4bn, or $2.43 per share, in the same period a year earlier.
The oil giant said the quarter included a $215m charge related to the fair value of Hess shares and pension curtailment costs, partly offset by gains from pipeline asset sales.
Excluding one-off items, adjusted earnings came in at $3.1bn, or $1.77 per share, ahead of the $1.70 consensus forecast.
Revenue rose to $44.8bn, surpassing analyst expectations.
Chevron said foreign currency effects reduced earnings by $348m.
Despite the headline earnings decline, chief executive officer Mike Wirth described the quarter as a demonstration of "continued strong execution, record production, and exceptional cash generation".
Production rose 3% year-on-year to 3.4 million barrels of oil equivalent per day, with US output up 8% to 1.69 million daily equivalent barrels.
The Permian Basin hit a milestone of one million barrels of oil equivalent per day.
Chevron said it returned $5.5bn to shareholders during the quarter, marking the 13th consecutive period of distributing over $5 billion through dividends and buybacks.
The company said it completed its $53bn acquisition of Hess Corporation in July, following a protracted arbitration dispute with ExxonMobil.
It said the deal added strategic assets in Guyana, the Bakken shale, and the Gulf of Mexico.
Chevron said it expected the transaction to contribute to earnings starting in the fourth quarter and anticipates $1bn in annual cost savings by the end of 2025.
Earnings from Chevron's upstream business fell 38% to $2.72bn due to lower energy prices, while refining profits rose 23% to $737m, supported by stronger margins.
The company said the integration of Hess and sustained high output levels would support its long-term growth plans, positioning it for improved free cash flow generation in the years ahead.
At 0645 EDT (1145 BST), shares in Chevron Corporation were up 0.51% in premarket trading in New York at $152.45.
Reporting by Josh White for Sharecast.com.