Investment bank UBS has raised its third-quarter profit forecast for Chevron, saying stronger refining results should cushion a softer stretch in the company's oil-and-gas production business. The move comes as investors look ahead to Chevron's earnings report, due in late October.
UBS Securities now expects Chevron to earn $4.93 per share in the third quarter, up from its previous estimate of $4.15 and slightly above the Wall Street consensus of $4.86. The bank also penciled in $2.7 billion of share buybacks for the quarter.
Refining carries the load
The upgrade is mostly about downstream operations—the part of the business that turns crude oil into gasoline, diesel, and other fuels. UBS sees that unit's earnings rising to $4.9 billion from $4.6 billion in the second quarter, thanks to firmer refining margins both in the U.S. and overseas.
That strength is a key reason why Chevron's overall profit picture looks more resilient than a simple bet on crude prices. When refining contributes a bigger share of profits, an integrated oil major can appear steadier: margins at refineries often move differently from the prices producers get for crude. So even if the drilling side stumbles, the company's bottom line may not take a matching hit.
But the upstream side—the drilling and production business—is expected to cool. UBS forecasts upstream earnings will drop to $6.25 billion from $8.26 billion in the second quarter, as volumes ease and "timing effects" (when costs and revenues land in different periods) subtract about $500 million. The bank also trimmed its production estimate to 3.95 million barrels of oil equivalent per day, down from 4.07 million previously.
Additionally, UBS flagged a $100–200 million hit from weaker petrochemical margins, specifically in the ethylene chain. Ethylene is a building block for plastics and other products, and its margins have been under pressure in recent months.
What it means for investors
For investors, the key takeaway is that Chevron's third-quarter story looks less like a pure play on crude prices and more like an "integrated" quarter, where refining carries more of the load. That can be a positive signal for stability: when one part of the business struggles, another can help offset the drag.
However, the durability of refining margins is a question. Refining margins have been strong recently, helped by tight supply and steady demand for fuels. But they can be volatile, and some analysts have warned that margins could soften as new refining capacity comes online or if demand weakens.
UBS's forecast also highlights the importance of buybacks. With $2.7 billion expected to be returned to shareholders in the quarter, Chevron continues to reward investors even as its production growth slows. Buybacks can support the stock price by reducing the number of shares outstanding, but they also depend on the company generating enough cash flow.
Chevron's results will be reported in late October, and the market may spend as much time scrutinizing the strength of refining margins as it does the headline production number of 3.95 million barrels of oil equivalent per day. If refining margins prove durable, the company could beat expectations again; if they fade, the stock might face pressure.
This isn't the only oil major drawing attention. Shell's record refining margins have also signaled a blockbuster quarter for the sector, and RBC recently cut Equinor's forecasts after a production shortfall, showing how varied the picture can be across companies.
For everyday investors, the lesson is that integrated oil companies like Chevron offer a mix of businesses that can balance each other out. But that doesn't make them immune to swings in commodity prices or refining economics. As always, it's worth watching how the company's actual results compare with these forecasts when they land.
