Chevron reports $3.2bn in Q4 2024 earnings as oil production growth accelerates

Chevron Corporation (NYSE: CVX) delivered strong fourth-quarter 2024 earnings of $3.2 billion, showcasing the resilience of its upstream operations despite challenges in refining margins. The company’s oil production growth reached record levels, with global output climbing 7% and U.S. production rising 19% from the previous year. These gains helped offset lower downstream earnings, which were impacted by weaker refined product margins and higher operating costs.

Chevron also returned a record $27 billion to shareholders in 2024, reinforcing its commitment to capital discipline. However, adjusted earnings fell to $3.6 billion in Q4 2024, down from $6.5 billion a year earlier, reflecting lower realizations and severance charges.

How Did Oil Production Growth Impact Chevron’s Q4 2024 Earnings?

Chevron’s upstream performance was the primary driver of its earnings growth. The company reported $4.3 billion in upstream earnings for Q4 2024, a sharp increase from $1.6 billion in the same period last year. The rise was fueled by a significant boost in U.S. oil production, particularly in the Permian Basin, where output grew by nearly 18% year-over-year.

The company successfully launched several high-impact projects, including the industry-first high-pressure Anchor project in the Gulf of Mexico. Additionally, in Kazakhstan, the Future Growth Project came online, with production expected to ramp up significantly in 2025.

Despite these gains, international upstream earnings declined slightly, impacted by higher operating expenses and foreign currency fluctuations. Chevron also faced production downtimes at Tengizchevroil (TCO) and asset sales in Canada, contributing to a minor dip in international volumes.

Why Did Chevron’s Downstream Segment Struggle in Q4 2024?

While upstream operations thrived, Chevron’s downstream segment posted weaker results, with U.S. downstream reporting a $348 million loss in Q4. The decline was primarily due to lower refined product margins, higher severance costs, and the ongoing upgrade of the Pasadena Refinery.

Internationally, downstream earnings fell to $100 million, down from $677 million in Q4 2023. This drop was attributed to weaker global refining margins and impairments, though it was partially offset by favorable foreign currency adjustments in Australia.

Despite short-term challenges, Chevron remains focused on enhancing refining efficiency. The Pasadena Refinery upgrade increased its lighter crude processing capacity by nearly 15%, positioning the company for improved profitability in 2025.

How Did Chevron Reward Shareholders in 2024?

Chevron maintained a strong commitment to shareholder value, distributing $27 billion in share buybacks and dividends—the highest in its history. The company repurchased $15.2 billion in shares and paid out $11.8 billion in dividends, highlighting its robust free cash flow generation.

Looking ahead, Chevron raised its quarterly dividend by 5%, increasing payouts to $1.71 per share, payable on March 10, 2025. This marks the 37th consecutive year of annual dividend increases, reinforcing its long-term commitment to investors.

What Cost-Cutting Measures and Asset Sales Did Chevron Implement?

In response to industry volatility, Chevron implemented aggressive cost-cutting measures and strategic asset sales. The company announced a $2-3 billion structural cost reduction target by 2026, focusing on operational efficiencies and streamlining corporate expenses.

Chevron also completed major asset divestments, selling interests in Canada, Alaska, and the Republic of Congo. The company is progressing its high-profile acquisition of Hess Corporation, which recently secured Hess shareholder approval and Federal Trade Commission clearance.

These strategic moves position Chevron for long-term free cash flow growth, despite near-term market fluctuations.

What Does Chevron’s Financial Stability Look Like Going Into 2025?

Chevron continued to generate strong cash flow, reporting $8.7 billion in cash flow from operations (CFFO) in Q4 2024. However, full-year free cash flow dropped to $15 billion, down from $19.8 billion in 2023, reflecting higher capital expenditures and lower refining margins.

The company’s debt ratio stood at 13.9% at year-end, slightly above 11.5% in 2023, but well within a sustainable range. Chevron remains financially resilient, supported by disciplined capital management and strong liquidity.

What Is Chevron’s Strategy for Future Growth?

Looking forward, Chevron is expanding its global energy footprint, securing new exploration acreage in the Gulf of Mexico, Angola, Brazil, and Namibia. The company is also advancing low-carbon initiatives, investing in carbon capture, hydrogen, and renewable fuels to meet evolving energy transition goals.

Despite near-term headwinds, Chevron’s record oil production growth, shareholder returns increase, and strategic cost reductions reinforce its long-term stability. As the energy landscape continues to evolve, Chevron remains well-positioned for future expansion and profitability.