Chevron: Refining Margins Drive Profits
High oil prices are just one side of Chevron’s quarterly results. On the other hand, the company is earning extremely well from refining margins, which have risen sharply over the course of the year. In the US, data from the Energy Information Administration (EIA) showed that US oil production remains at a record level of 13.8 million barrels per day. However, and this is important for refineries, inventories of refined products have fallen by 1.5 million barrels to their lowest level in more than a month. Although the average US diesel price of USD 5.45 per gallon is low by European standards—equivalent to just USD 1.44 per litre— Last year, a gallon cost US drivers significantly less, at USD 3.65 to 3.70.
Investors who have turned to oil stocks as a hedge against rising energy costs can count themselves lucky. Chevron, in any case, impressed with its quarterly results. Revenue for the 147-year-old California-based oil giant rose 50% to USD 67.20 billion. Bottom line, the company earned USD 12.1 billion, or USD 6.11 per share. That is the highest quarterly profit in 6 years. In the upstream oil production business, profits tripled. In the downstream segment, that is, the processing of diesel and other products, net income increased nearly sevenfold to USD 4.9 billion.
It is important for investors that Chevron continues to focus on buying back its own shares. In Q2, the company repurchased approximately USD 3 billion in shares. In addition, the dividend for the current quarter was set at USD 1.78 per share. In total, Chevron returned more than USD 6.5 billion to shareholders. Last but not least, liabilities were reduced by USD 8.4 billion.
Chevron’s stock has gained more than a fifth since its June low. Those already invested should stay the course if they believe oil and diesel prices will remain high. New investors are waiting for a new entry opportunity following the rapid rally, which may arise during a correction.
Zefiro Methane Plugs the Holes Left Behind by Gas Companies
In the United States, it is possible to make money on both sides of the coin. And that is true in the oil business as well. So while Chevron benefits from strong demand, supply shortages, and high prices, other companies are looking to the sector’s past and seeing an opportunity for revenue, profits, and growth.
One such company is Zefiro Methane. The Canadians are tackling abandoned oil and gas wells with leaks from which climate-damaging gases like methane are still escaping today. This is particularly true in the eastern United States, along the Appalachian mountain range. These orphaned wells are a remnant of the country’s industrialization. Sometimes the damage is caused by simple leaks, material defects, or outright shoddy workmanship. The issue is especially significant in the US. It is estimated that there are between 2 and 4 million abandoned oil and gas wells there. The federal government in Washington and state governments have already responded by allocating more than USD 4.5 billion to enable the proper plugging of these leaks. The size of this emerging market is estimated at more than USD 400 billion. Zefiro Methane does not just profit from solving the problem itself. Since this work has been proven to prevent emissions, the company generates CO₂ credits that can then be sold at a profit to large corporations such as Chevron. In 2025, Zefiro had plugged more than 200 orphaned wells.
In addition, Zefiro is focusing on expansion with strong partners. A few weeks ago, for example, the company announced a collaboration with the prominent Well Done Foundation. This nonprofit organization is known for its work plugging abandoned oil and gas wells. Zefiro secured a contract directly from the NGO to plug 10 wells.
Zefiro Methane is currently valued at just under EUR 40 million on the stock market. Following the sharp rise in its share price in 2025 and at the start of this year, a prolonged correction ensued. Signs of a bottom are now emerging. Risk-conscious investors can use this as an opportunity to enter the market.
Shell: Refineries Drive Margins
Shell is one of the few European leaders in the oil industry. However, unlike Chevron, about one-fifth of its business is affected by the closure of the Strait of Hormuz. Nevertheless, the British-Dutch conglomerate recently delivered impressive quarterly results. Three areas in particular stand out as key factors. The pricing and trading environment remains extremely favorable for Shell as well. The company was able to realize higher crude oil and natural gas prices and delivered strong results in the Trading & Optimization segment. Refining margins remain the most important asset at present. The facilities in Rotterdam are operating at their absolute capacity. As a result, the company doubled its adjusted earnings in this segment. Like Chevron, management used the strong cash flows to further reduce debt. Net debt fell from USD 52.6 billion in Q1 to USD 41.8 billion. As a result, the debt-to-equity ratio, known as gearing, fell to 19%. This puts the company in an excellent position with regard to this metric as well. With a gearing ratio of 19%, the company is also performing very well relative to the rest of the industry in the capital-intensive, cyclical oil and gas sector.
The second quarter filled the coffers. Revenue increased 45% to USD 94.7 billion, and adjusted profit rose 128% to USD 9.8 billion, both significant increases. Free cash flow nearly tripled to USD 17.5 billion. Shell announced a new USD 3 billion share buyback program for the coming quarter. Over the past 12 months, 44% of operating cash flow was returned to shareholders, which is within management’s target range of 40–50%.
Shell should not only benefit from high prices in the second half of the year but also make further progress on cost savings. Shell’s stock has gained more than 10% since its June low. We continue to expect high oil prices. As long as central banks cannot print oil, the high price level is unlikely to fall anytime soon.
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