What happened
Shares of Chevron (CVX 1.04%) jumped 23.4% over the first six months of the year, according to data provided by S&P Global Market Intelligence, as energy prices surged throughout the period.
While the per-barrel price of oil peaked in March, it continues to be elevated and remains around $100 per barrel today. It's notable, though, that beginning in June, Chevron stock has given back about 20% of its gains as fears of a recession loom.
Image source: Getty Images.
So what
While energy pricing was on the rise last year, it was exacerbated by Russia's invasion of Ukraine in February, and there is little excess capacity, as demand has remained high.
Because global governments have been hostile to the fossil fuels industry, vertically integrated oil and gas giants like Chevron have focused more on operating efficiently and cutting costs than on exploration and production.
Now we see the oil companies exhorted to produce more to help lower prices at the pump.
Chevron, however, says it's attempting to ameliorate the situation, and its first-quarter earnings report showed its U.S. oil and gas production was up 10% compared to the year-ago period. That led it to raise its guidance for the full year to a range of 700,000 to 750,000 barrels per day, an increase of more than 15% over 2021.
Now what
Rising prices, though, have helped Chevron's revenue soar, jumping 68% to $52.3 billion in the first quarter. Profits of $6.2 billion were up almost 3.5 times from the year-ago period.
Chevron also didn't have big exposure to Russian energy assets like some of its rivals, who were forced to take massive write-downs when they withdrew from the region. Chevron had no E&P exposure, though it was an investor in the government-owned Caspian Pipeline Consortium.
The fears of a recession, particularly in Europe, were heightened by the war in Ukraine and a recent explosion at a natural gas export facility in Louisiana, which is expected to cut supplies to the continent for months.
The entire energy industry is down by double-digit percentages for the past month as a result.
