What happened

Shares of Chevron Corporation (CVX 0.94%) were in rally mode Friday, rising as much as 5% in early morning trading following the oil giant's strong third-quarter results. Given the oil company's giant size, the move higher added a jaw-dropping $10 billion to its market cap.

So what

Chevron reported $4 billion, or $2.11 per share, of earnings for the third quarter, which beat the consensus estimate by $0.03 per share. Fueling the oil giant's expectation-beating results was a 9% surge in production, which hit a quarterly record of 2.96 million barrels of oil equivalent per day thanks to the ramp-up of its Wheatstone project in Australia and strong drilling results out of the Permian Basin.

An oil pump with the sun setting in the background.

Image source: Getty Images.

Meanwhile, Chevron's cash flow was even stronger at $9.6 billion, which was its highest level in five years. That provided the company with enough money to fully fund its capital investment program, pay its dividend, strengthen its balance sheet, and repurchase $750 million of its stock. While its cash flow will ebb and flow with oil prices, Chevron aims to grow it in the coming years by investing in high-margin projects that will expand its earnings per barrel.

Now what

Chevron's investments in places like the Permian paid big dividends during the third quarter thanks to higher oil prices. The oil giant believes that its continued focus on that high-margin region will enable it to expand cash flow further even if oil prices take a breather. That will provide the oil giant with even more cash to continue growing its dividend and buying back stock, which should give it the fuel to create more value for investors.