Chevron reported fourth-quarter earnings below Wall Street estimates on Friday as weak margins dragged its refining business into a loss for the first time since 2020. CEO Mike Wirth told Reuters that the post-pandemic surge in fuel margins had run its course, and the downtrend is set to continue this year. The second-largest U.S. oil producer, which on Friday became one of the first companies to heed U.S. President Donald Trump’s executive order renaming the Gulf of Mexico the “Gulf of America,” posted adjusted earnings per share of $2.06, falling short of Wall Street’s $2.11 estimate. This caused Chevron shares to drop over 4% to a three-week low of $148.68.
Profit on fuel sales declined across the industry last year as post-pandemic demand faded and economic activity slowed in the United States and China, the two largest oil consumers. Chevron’s downstream business reported a loss of $248 million in the fourth quarter of 2024, compared to a profit of $1.15 billion in the same period a year ago. Profit from the company’s oil and gas exploration and production unit increased to $4.3 billion from $1.59 billion a year ago, but the U.S. business missed consensus estimates, according to RBC analysts.
Refining margins softened in both U.S. and international markets, with weak jet fuel demand exacerbating issues for Chevron’s domestic business. U.S. fuel sales dropped by 3% year-over-year. Wirth mentioned that the trend of softening margins seen in 2024 is expected to continue into 2025. Weak refining margins and lower oil prices during the fourth quarter also impacted Exxon Mobil’s earnings, although the top U.S. oil producer surpassed analyst estimates, causing Exxon shares to decline by 1.6%.
Chevron is currently engaged in a contentious arbitration battle with Exxon over its proposed $53-billion takeover of Hess, which holds a 30% stake in Exxon’s Guyana holdings. Previous attempts to settle the dispute have failed, and Chevron is now focused on the arbitration process. While refining faced challenges, Chevron’s oil production remained relatively stable in the fourth quarter at 3.35 million barrels of oil equivalent per day (boepd), compared to 3.39 million boepd a year ago. Production from the Permian Basin of Texas and New Mexico grew by 14% year-over-year to a record 992,000 boepd, bringing the company close to its goal of reaching 1 million boepd in the top U.S. oilfield this year.
Chevron anticipates global output to increase by 6% to 8% this year and by 3% to 6% in 2026, assuming Brent crude oil prices around $70 a barrel. The company raised its quarterly dividend by 5% to $1.71 per share and confirmed plans to generate $10 billion in free cash flow over the next two years. Chevron also committed to continuing its share buyback program, aiming to repurchase $10 billion to $20 billion of its shares annually, depending on market conditions.
