Chevron's refining division posts its first loss in 4 years, missing earnings estimates
Chevron Corp. reported earnings for the fourth quarter below Wall Street expectations on Friday. Weak margins forced its refining division into a loss, its first since 2020. Shares fell more than 2%.
Mike Wirth, CEO of Chevron, said that the downward trend in margins for refining is expected to continue into this year.
The second largest U.S. oil company posted a total profit of $3.24 Billion for the three-month period ending Dec. 31. This is up from $2.26 Billion in the same time last year.
The company's adjusted earnings per share, which were $2.06, fell below the Wall Street estimate of $2.11, due to weak fuel sales.
Fuel sales profit fell across the industry in 2012, as demand for oil slowed down after the pandemic and the economic situation in China and the United States, two of the largest oil consumers, deteriorated.
Chevron’s downstream business suffered a loss of $248 million during the fourth quarter 2024. This compares to a profit made of $1.15bn in the same time period last year.
Margins softened in both U.S. and international markets, but weak jet fuel demand aggravated troubles for the Houston-headquartered company's domestic business. Chevron reported that U.S. fuels sales were down 3% on an annual basis.
CEO Wirth stated in an interview that the refining margins would not likely remain at the high levels seen after the pandemic.
He said that the trend of softening margins through 2024 will continue into 2025.
Chevron's fourth-quarter oil production was relatively unchanged, at 3,35 million barrels equivalents per day (boepd), as compared to 3.39 million boepd one year earlier.
In its conference call presentation the company said it expects a 6% production growth through 2026, excluding its asset sales. Growth will be geared towards the second half of the year 2025, as the projects in Tengiz, Kazakhstan, and the Gulf of Mexico are brought online.
Wirth stated that the Permian basin of Texas and New Mexico was close to achieving a target of 1 million barrels per day.
Chevron said that it would continue its share-buyback program, which is worth $10 to $20 billion annually. It also projected a free cash flow of $5 billion by 2025 and $6 million in 2026, if Brent remains at $70 per barrel. Reporting by Shariq KHan in New York, Sheila DANG in Houston, Seher Darien and Arunima Kumru in Bengaluru. Editing by Muralikumar Aantharaman and Saumyadeb Chkrabarty.
(source: Reuters)
