The Stock of Chevron Drops for the First Time in Four Years as the Company Records a Refining Loss

Chevron Corp.'s stock dropped 3.9% on Friday after the oil giant's refining segment reported a loss for the first time in four years, impacted by weaker profit margins on oil sales.

‍

The company also fell short of Wall Street’s profit expectations for the fourth quarter, despite surpassing revenue estimates by a significant margin. Additionally, Chevron announced an increase in its quarterly dividend.

‍

The Houston-based energy company posted a net income of $3.2 billion, or $1.84 per share, for the quarter, up from $2.3 billion, or $1.22 per share, in the same period last year. However, adjusted earnings per share came in at $2.06, falling below the FactSet consensus estimate of $2.11.

‍

Revenue climbed to $52.23 billion, up from $47.18 billion a year ago, exceeding the $46.60 billion expected by analysts.

‍

"In 2024, we achieved record production, returned record cash to shareholders, and launched key growth projects," said CEO Mike Wirth in prepared remarks.

‍

Wirth highlighted several key projects, including the high-pressure Anchor project in the “Gulf of America,” a term introduced by President Donald Trump’s recent executive order aimed at renaming the Gulf of Mexico.

‍

In Kazakhstan, Chevron’s joint venture, Tengizchevroil, completed the Wellhead Pressure Management Project and initiated the Future Growth Project, designed to enhance field production.

‍

Beyond expansion efforts, the company finalized asset sales in Canada, the Republic of Congo, and Alaska. It also moved forward with its acquisition of Hess Corp. and introduced a cost-cutting plan aimed at reducing structural expenses by $2 billion to $3 billion by the end of 2026.

‍

Chevron repurchased more than $15 billion worth of shares in 2024 and is now increasing its quarterly dividend by 5% to $1.71 per share.

‍

Production levels remained relatively steady, averaging 3.35 million barrels per day, compared to 3.39 million barrels per day in the prior year.

‍

The company’s upstream segment, which involves oil and gas exploration and production, reported earnings of $1.42 billion, a significant turnaround from a loss of $1.35 billion a year ago.

‍

However, the refining and downstream business took a hit, posting a loss of $348 million, a sharp decline from the $470 million in income recorded a year earlier. The downturn was attributed to lower profit margins on refined fuel sales, increased operating costs due to severance charges, and asset impairments. Additionally, U.S. fuel sales declined by 3%.

‍

Chevron’s struggles in refining align with broader industry headwinds. Rival Exxon Mobil, which also reported earnings on Friday, had warned earlier in January that lower oil prices and weaker refining margins would likely pressure its financial results.

‍

U.S. crude oil prices, as measured by the West Texas Intermediate (WTI) benchmark, fell around 6.5% in the fourth quarter due to an oversupply of oil and mounting concerns over a slowing Chinese economy.

‍

Despite these challenges, Chevron’s stock has gained 1.9% over the past year. However, it has significantly underperformed compared to the S&P 500, which has surged 25% in the same period.

‍