Many investors see the oil and gas business as a relatively simple way to invest. When energy companies are able to produce crude oil and natural gas at costs that are below the prices that the market is willing to pay, then they make money. That's exactly what Chevron (CVX 0.44%) has been able to do over the past couple of years, as soaring energy prices have helped the energy giant produce record profits.

Chevron just released its first-quarter financial report, and the California-based energy giant has been able to keep pulling in huge profits. Yet with the stock still within spitting distance of its all-time highs, some Chevron shareholders seem to question whether there's more upside. A closer look at the company's financials and prospects should help you decide for yourself whether Chevron stock is still worth buying at present levels.

The money just keeps pouring in

Chevron's first-quarter financial results showed that good times continued in the energy  markets. Interestingly, revenue was actually down nearly 7% year over year. However, the integrated oil and natural gas major was able to rein in its costs to an even greater extent. That produced net income of $6.57 billion, up from $6.26 billion in the year-ago quarter and working out to $3.46 per share.

A closer look, though, showed that it was Chevron's downstream refining operations that kept the company's bottom line moving higher. Higher margins on refined product sales helped U.S. downstream segment earnings to double year over year, even though sales remained relatively stable. The news was even better for Chevron's international refinery operations, where the company reversed a year-earlier loss with a $823 million segment profit. Rising sales of jet fuel stood out as the airline industry recovered from the pandemic globally.

By contrast, the upstream exploration and production business took a pretty sizable hit. Overall production levels were down about 3% year over year, mostly due to a 5% drop in natural gas production. Realizations were down sharply as well, with the realized price on oil and liquids in the U.S. falling from $77 per barrel a year ago to $59 in the just completed period. U.S. Natural gas prices were down an even sharper 37% to $2.58 per million cubic feet.

What's ahead for Chevron

Chevron spent 55% more on capital expenditures as it boosted its investment activity in the U.S. market, and increasing production appears to be high on the priority list even as crude oil prices have started to fall back from their highs at the beginning of Russian's invasion of Ukraine. CEO Michael  Wirth said that the recently reopened Venezuelan market might provide an avenue for a production boost, with hopes to increase output from the South American country by as much as 50%. An extra 50,000 barrels per day wouldn't be a huge mover for Chevron, but it would come with relatively little incremental effort.

More broadly, the reason why investors should be comfortable with Chevron is that the oil giant has worked hard to become more efficient. That's how the company has been able to generate record profits even with oil prices well below their all-time highs in the late 2000s. Rather than spending huge amounts of money even for small production increases, Chevron has instead focused on the best ways to get the most from its capital expenditure budget.

Solid value even if earnings decline

Few investors expect Chevron to match the nearly $19 per share in annual profit that it generated in 2022. However, even at the $14 to $15 per share that most of those following the oil and gas leader project for 2023 and 2024, Chevron trades at just 12 times forward earnings. That's a valuation that investors can feel comfortable with, particularly as more growth-oriented stocks rebound and start to command more premium valuation levels once again. For those seeking diversification, Chevron stock still looks like a solid choice even as energy markets stay volatile.