Chevron Q4 Earnings Review: A Critical Test at Key Support Levels
2min read Chevron (CVX) reported Q4 earnings that fell short of Wall Street expectations, with adjusted EPS at $2.06 versus the consensus estimate of $2.11. Revenue, however, surpassed forecasts at $52.23 billion, significantly above the expected $48.41 billion. While the company delivered record production and shareholder returns, weak refining margins weighed heavily on results, marking the first downstream loss in four years. This report comes at a critical time, with CVX stock hovering around key support levels at the 50-day and 200-day moving averages in the $153-$155 range. Holding these levels will be crucial for maintaining investor confidence.
Adding to the uncertainty, Trump’s latest tariff threats could further pressure energy companies. However, he has indicated oil imports may be exempt, reducing the immediate risk to Chevron’s business. Still, the broader macroeconomic environment, including inflationary pressures in deepwater drilling, remains a concern.
Segment Performance: Strength in Upstream, Weakness in Downstream
Chevron’s Upstream business was a bright spot, delivering $4.3 billion in earnings, well ahead of expectations of $4.02 billion. This was a substantial improvement from $1.59 billion a year ago, thanks to higher production and stronger international realizations.
U.S. Upstream earnings came in at $1.42 billion, a notable swing from a $1.35 billion loss last year, but below the $1.86 billion expected. The shortfall was largely due to lower oil realizations and hurricane-related production disruptions in the Gulf of Mexico.
International Upstream earnings were $2.88 billion, slightly down (-1.7%) from last year, but outperforming expectations of $2.22 billion. Favorable foreign currency movements in Australia helped offset higher operating expenses and impairments.
Despite these earnings fluctuations, Chevron achieved record production levels, with total production at 3.35 million barrels of oil equivalent per day (boepd), only slightly below last year’s 3.39 million boepd and above estimates of 3.32 million boepd. This was driven by strong U.S. output, particularly from the Permian Basin (+19% year-over-year production growth), though downtime at Kazakhstan’s Tengizchevroil (TCO) project and asset sales in Canada and Myanmar weighed on international volumes.
In stark contrast, the Downstream segment was a major drag, posting a $248 million loss versus a $1.15 billion profit last year. Wall Street had expected a $215 million profit, making this miss particularly painful.
U.S. Downstream reported a loss, attributed to lower refining margins, weaker jet fuel demand, and impairments.
International Downstream earnings were just $100 million, a staggering 85% drop from last year, as weak refining margins impacted profitability despite an 8% increase in refined product sales.
This marks Chevron’s first downstream loss since 2020, underscoring how the industry-wide compression in refining margins is weighing on fuel producers.
Key Corporate Actions: Dividend Increase and Cost-Cutting Initiatives
Despite the earnings miss, Chevron raised its quarterly dividend by 5% to $1.71 per share, slightly below the expected $1.72. The company also continued its aggressive shareholder return program, having repurchased over $15 billion in stock in 2024.
Chevron remains committed to capital discipline and efficiency improvements, with a target of $2-$3 billion in structural cost reductions by 2026. Recent asset sales in Canada, the Republic of Congo, and Alaska, along with progress on the $53 billion Hess acquisition, indicate a continued effort to optimize its portfolio.
CEO Mike Wirth emphasized that Chevron is strengthening its asset base and positioning itself for significant free cash flow growth, though the macro environment remains challenging.
Market Reaction and Stock Outlook: Key Support Levels in Play
Chevron shares fell 1.9% in pre-market trading, reflecting investor disappointment in the weaker-than-expected earnings and refining losses. However, the stock is sitting at a critical technical juncture. The $153-$155 range, where both the 50-day and 200-day moving averages converge, will be a major test for the stock. If CVX holds these levels, it could signal resilience, particularly as oil prices remain steady. However, a breakdown below this range could trigger further selling pressure.
With Trump’s tariff threats lingering, the energy sector remains in a vulnerable position. While Chevron is less exposed to direct tariff impacts due to Trump’s apparent exemption for oil imports, the broader economic implications of trade tensions and potential cost inflation in deepwater drilling remain key risks.
Conclusion: A Mixed Quarter with Critical Tests Ahead
Chevron’s Q4 results were a tale of two businesses. Upstream performed well, with record production levels and better-than-expected international earnings, but Downstream was a disaster, posting its first loss since 2020 amid weak fuel demand and compressed refining margins.
