Q4 2024 Earnings Summary
- Chevron expects significant free cash flow growth, aiming to add $10 billion of annual free cash flow by 2026, driven by major projects like the Future Growth Project (FGP) at Tengiz, which is performing at or above expectations. This includes stable operations and strong well deliverability at FGP, derisking future cash flows. , ,
- Strong production growth in the Permian Basin, achieving over 1 million barrels per day in December and 18% growth for the full year, while reducing capital investment. Chevron plans to maintain production above 1 million barrels per day for many years with a lower rate of capital investment, enhancing free cash flow and leveraging their royalty advantage.
- Targeting $2 billion to $3 billion in structural cost reductions by the end of 2026 across all segments through asset sales, operational efficiencies, and deployment of technologies like drones, AI, and robotics, which are expected to enhance efficiency and improve margins. ,
- Risk of Less Favorable Terms in Kazakhstan: The potential renegotiation of the Tengiz concession with the Kazakh government may result in less favorable terms for Chevron. Analysts expressed concern that contract extensions could be on better terms for the government, potentially impacting future cash flows from the project.
- Weakness in Downstream Segment: Chevron's downstream segment, including refining and chemicals, has been experiencing weak margins due to macroeconomic pressures. The company acknowledged challenges in mitigating margin pressures, which could negatively affect future earnings if the situation persists.
- Potential Slowdown in Permian Growth: As Chevron approaches its production target in the Permian Basin, growth is expected to moderate. A slowdown in production growth rates could lead to lower overall production growth for the company in future years.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue (Income Statement) | +7% (from $48,933M in Q4 2023 to $52,226M in Q4 2024) | Total Revenue increased by 7% YoY, likely reflecting a rebound in commodity pricing, sales volumes, and an improved revenue mix in Q4 2024 relative to prior challenges seen in Q4 2023. |
Operating Income (EBIT) | +74% (from ~$3,490M in Q4 2023 to $6,059M in Q4 2024) | Operating Income rose sharply by 74% YoY, indicating enhanced operational efficiency and margin expansion—factors such as better cost management and potentially improved upstream/downstream realizations may have helped reverse previous period pressures. |
Net Income | +43% (from $2,259M in Q4 2023 to $3,239M in Q4 2024) | Net Income improved by 43% YoY, driven by the operating gains which translated into higher profitability, even as tax and financing factors moderated overall performance compared to Q4 2023. |
Diluted EPS | +50% (from $1.22 in Q4 2023 to $1.84 in Q4 2024) | Diluted EPS surged nearly 50% YoY, reflecting the significant net income gains and improved earnings per share momentum relative to the previous quarter, thereby reinforcing shareholder value. |
International Revenue | –20% (from $30,659M in Q4 2023 to $24,632M in Q4 2024) | International Revenue fell by 20% YoY, suggesting that challenges such as lower commodity prices, unfavorable foreign currency effects, and higher operating costs in foreign markets outweighed domestic improvements noted in Q4 2024. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Production Growth | FY 2024 | Top end of 4%–7% | No current guidance | no current guidance |
Share Repurchases | Q4 2024 | $4B–$4.75B | No current guidance | no current guidance |
Asset Sale Proceeds | Q4 2024 | $8B before taxes | No current guidance | no current guidance |
Affiliate Dividends | Q4 2024 | $1B | No current guidance | no current guidance |
Downstream Maintenance | Q4 2024 | Higher planned maintenance | No current guidance | no current guidance |
Production Growth | FY 2025 | No prior guidance | Permian: 1M boepd; TCO: 1M boepd | no prior guidance |
TCO Free Cash Flow | FY 2025 | No prior guidance | $5B | no prior guidance |
Production Growth | FY 2026 | No prior guidance | 6% annually | no prior guidance |
TCO Free Cash Flow | FY 2026 | No prior guidance | $6B | no prior guidance |
Free Cash Flow Growth | FY 2026 | No prior guidance | $10B annual | no prior guidance |
Capital Expenditures | FY 2025 | $14B–$16B | $14B–$16B | no change |
Capital Expenditures | FY 2026 | $14B–$16B | $14B–$16B | no change |
Structural Cost Reductions | FY 2026 | $2B–$3B by end of 2026 | $2B–$3B by end of 2026 | no change |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Share Repurchases | Q4 2024 | $4,000 million – $4,750 million | $4,600 million | Met |
Capital Expenditures | FY 2024 (sum of Q1–Q4) | $14 billion – $16 billion | $16.41 billion (Q1: $4,089 million, Q2: $3,966 million, Q3: $4,055 million, Q4: $4,300 million) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Recurring emphasis on Kazakhstan’s Tengiz (FGP/TCO) for free cash flow growth, including new risks around government renegotiations and OPEC+ curtailments | Q3 2024 reiterated progress, no new government or OPEC+ risks. Q2 2024 flagged concession extension discussions and potential OPEC+ considerations. Q1 2024 mentioned project progress with no new risks. | TCO remains a major free cash flow driver, targeting $5B in 2025 and $6B in 2026. First oil from FGP in January 2025. Active negotiations with Kazakh government; no direct OPEC+ mention. | Continued focus on TCO’s cash flow with new emphasis on negotiation complexities. |
Consistent focus on Permian Basin production gains with evolving sentiment from aggressive growth targets to potential slowdown concerns | Q3 2024 nearing 1 million b/d, pivoting to free cash flow priorities. Q2 and Q1 2024 similarly noted strong growth but increased capital discipline. | Exceeded 1 million barrels/day in December. Shifting from aggressive growth to a more balanced ~9–10% in 2025, slower in 2026. | Production remains high, emphasizing shareholder returns over unlimited growth. |
Continued structural cost reduction efforts (targeting $2–3 billion) highlighted each quarter, with shifting reliance on operational efficiencies vs. asset sales | Q3 2024 broke down efforts into asset sales and improvement initiatives. Q2 2024 and Q1 2024 had no specific mention of this program. | Expecting $1.5–2B in savings by 2025, full $2–3B by 2026, focusing on operational efficiencies and portfolio impacts. | Increased shift to internal efficiencies; asset sales remain part but less emphasized. |
Hess acquisition uncertainties and regulatory hurdles, mentioned intermittently as a key factor influencing future strategy | Q3 2024 discussed arbitration timing. Q2 2024 covered FTC review and arbitration. Q1 2024 highlighted shareholder vote and regulatory milestones. | Completion expected in Q3 2025. Confident outlook, minimal new hurdles noted. | Maintained confidence with ongoing regulatory and arbitration steps. |
Downstream segment margin pressures reemerging in later periods, especially related to refining and chemicals under macroeconomic headwinds | Q3 2024 experienced lower U.S. refining margins and oversupply in chemicals. Q2 2024 noted oversupplied renewable fuels. Q1 2024 had references to lower refining margins but less detail. | Refining and chemicals margins under pressure, viewed as part of a cyclical pattern. | Increasingly noted margin challenges amid broader macro factors. |
New exploration frontiers (Namibia, Gulf of Mexico, Eastern Mediterranean) introduced in earlier quarters but not repeated in more recent calls | Q3 2024 also omitted Namibia but highlighted new Gulf of Mexico technology, Eastern Med expansions. Q2 and Q1 2024 mentioned Namibia drilling plans and expansions in both GOM and Eastern Med. | Namibia not discussed. Continuing projects in the Gulf of Mexico (Anchor, Ballymore) and Eastern Med (Tamar, Leviathan expansions). | Shifted focus away from Namibia updates, GOM and Eastern Med are still highlighted. |
Growing attention to renewable fuels and hydrogen investments, counterbalanced by oversupply concerns and falling credit values | Q3 2024 provided no new details. Q2 2024 highlighted oversupply and lower credit values. Q1 2024 focused on expansions and joint ventures. | Ongoing investments (Geismar renewable diesel expansion, Utah green hydrogen) with no Q4 oversupply comments. | Continued pursuit of low-carbon projects; oversupply concerns surfaced mainly in Q2. |
Strong balance sheet and shareholder returns (low net debt ratio, share buybacks, dividend growth) consistently referenced as a strategic priority | Q3 2024 under 12% net debt ratio, record quarterly buybacks. Q2 2024 net debt ~10.7%. Q1 2024 single-digit net debt, 8% dividend hike. | Net debt ~10%, share repurchases at $10–$20B range, dividend up 5%. | Consistent focus on robust balance sheet and growing shareholder distributions. |
Heightened political and regulatory risks (Kazakhstan concession terms, DJ Basin proposals) posing potential challenges to future operations | Q3 2024, Q2 2024, and Q1 2024 provided minimal or no new details on DJ Basin or broader political risks. | Acknowledge negotiations with Kazakh government, no new DJ Basin regulatory details. | Kazakhstan focus remains, less mention of DJ Basin in recent calls. |
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Free Cash Flow Guidance
Q: How does 2027 free cash flow compare to prior guidance?
A: Chevron reaffirmed that its 2027 free cash flow guidance is aligned with previous projections, despite portfolio changes like the PDC acquisition and Canadian asset divestitures. Growth is expected from projects coming online around that time, including CP projects, Eastern Mediterranean projects at Tamar and Leviathan, and $2 to $3 billion of structural cost reductions underway. Detailed 2027 outlook will be provided later in the year. -
Permian Production Outlook
Q: What's the right amount of unconventionals in your portfolio?
A: Chevron's Permian production reached over 1 million barrels a day in December, with an 18% growth for the full year. The company expects 9-10% production growth in 2025, with growth moderating thereafter. Unconventionals, including Permian, DJ Basin, Bakken (post-Hess acquisition), and Argentina, could approach 50% of total production, providing strong cash generation with lower capital investment. -
Power Business Expansion
Q: How does Chevron plan to derisk its power business expansion?
A: Chevron is leveraging its strengths by operating nearly 5 gigawatts of reliable power today and partnering with GE to secure turbine reservations. The company doesn't intend to be a merchant power player but aims to provide high-reliability power solutions for premium customers, including hyperscalers. This aligns with meeting demand growth while focusing on lower carbon energy solutions. -
Underlying Cash Flow Components
Q: Explain one-offs affecting cash flow this quarter?
A: Cash flow excluding working capital was impacted by nonrecurring items totaling $2.5 billion. This includes a $1.5 billion tax charge from the Canadian asset sale (offset in working capital), $500 million in charges identified as special items, and another $500 million from affiliate distributions and unique commercial activities. -
TCO Free Cash Flow and OpEx
Q: Is TCO's free cash flow guidance impacted by higher OpEx?
A: The free cash flow guidance for TCO remains at $5 billion for 2025 and $6 billion for 2026. This is driven by increased production and significantly reduced affiliate CapEx as projects complete. Operational OpEx is expected to come down as the plant gets stabilized, contributing to the free cash flow. -
Eastern Mediterranean Projects
Q: How are operations in the Eastern Med progressing amid improved politics?
A: Chevron is pleased with diminishing tensions and expects projects at Tamar and Leviathan to come online by the end of the year or early 2026. A pipelay vessel will be remobilized in the first half to complete work. Production is expected to increase by 25% over the next 2 years and nearly 50% by 2030. -
Gulf of Mexico Developments
Q: What have you learned from recent Gulf of Mexico projects?
A: Recent wells at Anchor are performing above expectations. Chevron successfully operates in high-pressure, high-temperature regimes, with two wells online and more coming. The Gulf of Mexico remains an important basin with significant running room and potential for both tiebacks and greenfield developments. -
Exploration in Namibia
Q: Will you continue exploration after the first well failed?
A: Despite not finding hydrocarbons in the first well, Chevron gained valuable geological information in the Orange and Walvis basins. Encouraged by a working petroleum system in the area, the company plans to use the data to inform future exploration, highlighting cost-effective drilling operations. -
Impact of U.S. Policy Changes
Q: How might recent energy policies affect Chevron's operations?
A: Chevron welcomes a more balanced energy discussion that recognizes oil and gas as vital. The company expects policies encouraging more access and regular lease sales, along with bipartisan support for permit reform, benefiting American energy abundance and security. -
Capital Commitment to Power Venture
Q: What's the capital commitment for the power venture?
A: While specific details are confidential, Chevron has secured turbine reservations with payments and will fund the venture alongside partners. The company emphasizes that its overall CapEx guidance remains unchanged, and the power venture will be managed within this framework. -
Potential CapEx Adjustments
Q: Is there potential to lower CapEx or cut upstream spending post-Hess?
A: Chevron remains disciplined with CapEx, currently in the middle of the $14 to $16 billion range. The company could be at the lower end based on market conditions and opportunities. Investments will be optimized within the portfolio, funding only the best projects, including the power venture, without necessarily increasing total CapEx. -
FGP Ramp-Up and Debottlenecking
Q: How is the FGP ramp-up progressing and any debottlenecking plans?
A: Early operations at FGP are stable and encouraging, with well deliverability meeting or exceeding expectations. The focus is on safe and reliable ramp-up to full capacity. Debottlenecking is a future consideration but not the current focus as operations are in initial stages. -
Refining and Chemicals Outlook
Q: How will you improve leverage in the refining and chemicals business?
A: Chevron focuses on operational reliability, cost structure optimization, and product flexibility to improve margins. Examples include increased capacity to run light oil at the Pasadena refinery and integration with the Pascagoula refinery to optimize production and respond to market conditions. -
Wheatstone Transaction Clarification
Q: Does 'monetize' mean selling Wheatstone assets?
A: Chevron is focusing on monetizing resources over time by acquiring Woodside's interest in the Wheatstone project and related assets while divesting its interest in the Northwest Shelf. This strategy aims to optimize resources in the Carnarvon Basin without plans to sell the facility to external investors. -
Argentina Operations Outlook
Q: How do you see Argentina's potential under new leadership?
A: Chevron is encouraged by positive developments in Argentina, including reduced inflation and potential reforms under President Milei. The company plans to monitor the situation closely and may increase investment if reforms lead to a more stable and investable environment.