Chevron profit disappoints as refining posts first loss in four years

By Shariq Khan, Sheila Dang and Seher Dareen

(Reuters) -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 the downtrend in refining margins is set to continue this year.

The second-largest U.S. oil producer posted total earnings of $3.24 billion for the three months ended Dec. 31, up from $2.26 billion in the same period last year.

However, its adjusted earnings per share of $2.06 were below Wall Street's $2.11 estimate, pushing the company's stock down 1.2% to $154.48 per share in premarket trading.

Profit on fuel sales tumbled across the industry last year, as a post-pandemic demand surge faded and economic activity faltered in the United States and China, the two largest oil consumers.

Chevron's downstream business lost $248 million in the fourth quarter of 2024, compared with a profit of $1.15 billion in the same period a year ago.

Margins softened in both U.S. and international markets, but weak jet fuel demand aggravated troubles for the Houston-based company's domestic business. U.S. fuel sales fell 3% year-over-year, Chevron said.

Refining margins were unlikely to stay at the elevated levels seen just after the pandemic, Wirth said in an interview.

"This trend we have seen of margins softening through 2024 is something you can expect to continue to see, to extend into 2025," he said.

Weak refining margins also weighed on Exxon Mobil's earnings, but the No. 1 U.S. oil producer beat estimates as it benefited from low output costs and lucrative projects in Guyana.

Chevron remains locked in a bitter arbitration battle with Exxon and China's CNOOC over its proposed $53-billion takeover of Hess, which owns a 30% stake in Exxon's Guyana holdings.

Discussions with Exxon to attempt to settle the dispute have ended and Chevron is focused on the arbitration, Wirth said.

Exxon shares were up 1% premarket.

RECORD OUTPUT

While refining struggled, Chevron's oil production held relatively flat in the fourth quarter at 3.35 million barrels of oil equivalent per day, compared with 3.39 million boepd a year ago.

Production from the Permian Basin of Texas and New Mexico grew 14% year-over-year to a record 992,000 boepd, bringing the company within touching distance of a target to reach 1 million boepd in the top U.S. oilfield this year, Wirth said.

Future growth will come partly from the Gulf of America, the company said, renaming the region known internationally as the Gulf of Mexico, in a nod to an executive order by U.S. President Donald Trump to rechristen the ocean basin.

Chevron expects its global output to grow 6% to 8% this year, and 3% to 6% in 2026, assuming Brent crude oil prices of around $70 a barrel, the company said. Brent currently trades around $77.

The company hiked its quarterly dividend 5% to $1.71 per share and reaffirmed expectations of adding $10 billion in free cash flow over the next two years.

Chevron also pledged to continue buying back $10 billion to $20 billion of its shares each year, depending on market conditions.

(Reporting by Shariq Khan in New York and Sheila Dang in Houston, Seher Dareen and Arunima Kumar in Bengaluru; Editing by Muralikumar Anantharaman, Saumyadeb Chakrabarty and Rod Nickel)