Chevron’s Fourth-Quarter Performance Falls Short of Market Expectations

Chevron Corporation (NYSE: CVX) reported fourth-quarter 2024 earnings of $3.2 billion, translating to $1.84 per diluted share. This result marks an improvement from the $2.3 billion, or $1.22 per share, recorded in the same period in 2023.

However, these figures include significant charges, such as $715 million for severance and $400 million for impairments. Adjusted earnings, which exclude these items, stood at $3.6 billion or $2.06 per share, reflecting a decrease from $6.5 billion, or $3.45 per share, in the fourth quarter of the previous year.

Chevron’s Fourth-Quarter Performance Falls Short of Market Expectations

Chevron’s total revenues and other income for the quarter reached $52.2 billion, up from $47.2 billion in the fourth quarter of 2023. The company’s upstream segment reported earnings of $4.3 billion, driven by record oil-equivalent production levels, particularly in the Permian Basin. Meanwhile, the downstream segment faced challenges, posting a loss of $248 million due to lower margins on refined product sales and higher operating expenses.

The company’s cash flow from operations totaled $8.7 billion, a decline from $12.4 billion recorded in the same quarter last year. This decrease is attributed to lower earnings and higher payments related to asset retirement obligations. Despite these challenges, Chevron continued its robust capital investment strategy, with capital expenditures amounting to $4.3 billion for the quarter.

Chevron’s fourth-quarter performance fell short of market expectations. Analysts had anticipated an earnings per share (EPS) of $2.34 and revenue of $48.03 billion. The reported EPS of $1.84, even when adjusted to $2.06, was below the expected figure. However, Chevron’s revenues exceeded expectations, coming in at $52.2 billion.

The company’s upstream operations performed well, with a notable increase in U.S. oil-equivalent production. However, the downstream segment’s losses, driven by lower margins and higher expenses, significantly impacted overall earnings.

Chevron’s adjusted earnings also reflected a decline from the previous year, indicating that while the company managed to navigate through some operational hurdles, it faced significant headwinds in terms of profitability. The foreign currency effects were favorable, contributing $722 million to earnings, yet this was not enough to offset the broader challenges faced during the quarter.

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Chevron Aims to Reduce $2-$3 Billion by End of 2026

Chevron has set its sights on strategic growth and cost management. The company announced a target of $2-3 billion in structural cost reductions by the end of 2026, aiming to enhance its financial flexibility and operational efficiency. This commitment to cost discipline is expected to support Chevron’s goal of achieving significant free cash flow growth in the coming years.

Chevron’s capital investment strategy remains focused on upstream growth, with key projects in the Gulf of America and Kazakhstan playing a pivotal role. The company has recently closed asset sales in Canada, the Republic of Congo, and Alaska, which are expected to streamline operations and focus resources on high-return projects. Additionally, Chevron is progressing with the acquisition of Hess Corporation, which is anticipated to bolster its upstream portfolio.

The company also announced a 5 percent increase in its quarterly dividend to $1.71 per share, reinforcing its commitment to returning value to shareholders.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.