01—Abstract
Summary
Summary of the 8-K filed January 31, 2025. Cited figures are marked; the original filing is the authoritative source.
Chevron reported unaudited fourth quarter 2024 earnings of $3.2 billiona ($1.84 per diluted share), up from $2.3 billion a year earlier, but adjusted earnings fell to $3.6 billion ($2.06 per share) from $6.5 billion, as the prior-year quarter benefited from a different mix of items and the current quarter absorbed $715 million of severance and $400 million of impairment charges.
For full-year 2024, reported earnings were $17.7 billionb ($9.72 per diluted share) versus $21.4 billion in 2023, and adjusted earnings were $18.3 billion ($10.05 per share) versus $24.7 billion. Downstream was the weak spot, posting a $248 million loss in the quarter on lower refined product margins, while upstream earnings of $4.3 billion were the main support. Operationally, the company set annual production records, with worldwide net oil-equivalent output up 7% and U.S. output up 19% for 2024.
Key project start-ups included the Anchor deepwater project in the Gulf of America and the Future Growth Project at Tengizchevroil in Kazakhstan, which management expects to ramp toward roughly one million barrels of oil-equivalent per day. Chevron returned a record $27.0 billionc to shareholders in 2024, including $15.2 billion of buybacks and $11.8 billion of dividends, and the board raised the quarterly dividend 5% to $1.71 per share. Free cash flow fell to $15.0 billion for the year from $19.8 billion, and the net debt ratio rose to 10.4% from 7.3%, reflecting lower operating cash flow and higher debt.
Looking ahead, management highlighted asset sales in Canada, the Republic of Congo and Alaska, progress on the pending Hess acquisition after Hess stockholder approval and FTC clearance, and a target of $2d-3 billion in structural cost reductions by the end of 2026. Investors will be watching whether these cost savings and the Hess integration translate into the free cash flow growth management has projected, and whether downstream margins recover.
02—Key points
Key Highlights
- Fourth quarter 2024 reported earnings were $3.2 billion ($1.84 per diluted share), versus $2.3 billion a year earlier, while adjusted earnings fell to $3.6 billion ($2.06 per share) from $6.5 billion.
- Full-year 2024 reported earnings were $17.7 billion ($9.72 per share) versus $21.4 billion in 2023; adjusted earnings were $18.3 billion ($10.05 per share) versus $24.7 billion.
- Record shareholder returns of $27.0 billion in 2024, including $15.2 billion in share repurchases and $11.8 billion in dividends; quarterly dividend raised 5% to $1.71 per share.
- Worldwide and U.S. net oil-equivalent production rose 7% and 19% to annual records, driven largely by the Permian Basin and the full-year contribution of PDC Energy.
- Downstream posted a $248 million loss in Q4 2024 due to lower refined product margins, higher operating expenses and impairments, a sharp contrast to the $6.1 billion full-year 2023 downstream result (2024: $1.7 billion).
- Free cash flow declined to $15.0 billion in 2024 from $19.8 billion, and the net debt ratio rose to 10.4% from 7.3% as total debt increased to $24.5 billion.
- Management announced a $2-3 billion structural cost reduction target by end-2026 and noted progress on the pending Hess acquisition and asset sales in Canada, Congo and Alaska.
03—Questions
Frequently Asked Questions
Why did reported earnings rise in Q4 2024 while adjusted earnings fell sharply?
Reported earnings of $3.2 billion were boosted by $722 million of favorable foreign currency effects, which are excluded from adjusted earnings. Adjusted earnings fell to $3.6 billion from $6.5 billion a year earlier because the prior-year quarter included larger underlying results, while the current quarter absorbed $715 million of severance and $400 million of impairment charges. Adjusted figures strip out these special items and currency effects to show underlying performance.
How did shareholder returns and cash flow trend in 2024?
Chevron returned a record $27.0 billion to shareholders in 2024, including $15.2 billion of buybacks and $11.8 billion of dividends. Cash flow from operations fell to $31.5 billion from $35.6 billion, and free cash flow dropped to $15.0 billion from $19.8 billion. Shareholder distributions therefore exceeded free cash flow, which helps explain the rise in the net debt ratio to 10.4%.
What drove the weakness in the downstream business?
The U.S. downstream segment lost $348 million in Q4 2024, and international downstream earned $100 million. Results were hurt by lower margins on refined product sales, higher operating expenses including severance, and impairments. U.S. refinery inputs fell 6% year over year during the Pasadena refinery upgrade, which was completed in the quarter.
What growth catalysts should investors watch in 2025?
The Future Growth Project at Tengizchevroil in Kazakhstan started up in January 2025 and is expected to ramp total output to around one million barrels of oil-equivalent per day. The Anchor deepwater project in the Gulf of America, the Permian Basin, and the pending Hess acquisition are also key drivers. Management expects these projects, together with cost reductions, to support significant free cash flow growth.
What is the status of the Hess acquisition and the cost reduction program?
Hess stockholders approved the merger and the FTC cleared its antitrust review, but the filing notes the deal remains subject to an ongoing arbitration over preemptive rights in the Stabroek Block joint operating agreement and other closing conditions. Chevron also targets $2-3 billion in structural cost reductions by the end of 2026, measured against 2024 levels, to be achieved through efficiencies, divestments and other savings.
04—Continue