Chevron Corporation Earnings - Q4 2025 Analysis & Highlights
Chevron's Q4 2025 earnings call highlighted strong financial performance, record production levels, and strategic growth initiatives, alongside discussions on capital allocation, cost reduction programs, and regional opportunities in Venezuela and the Eastern Mediterranean.
Key Financial Results
Chevron reported fourth quarter earnings of $2.8 billion, or $1.39 per share.
Adjusted earnings were $3 billion, or $1.52 per share.
Cash flow from operations was $10.8 billion for the quarter and included $1.7 billion from a draw-down in working capital.
Adjusted free cash flow was $20 billion for the year and included the first loan repayment from TCO and $1.8 billion in asset sales.
Excluding asset sales, adjusted free cash flow was up over 35% year-over-year, even with oil prices down nearly 15%.
Compared to last quarter, adjusted earnings were lower by roughly $600 million.
Business Segment Results
Adjusted Upstream earnings decreased primarily due to lower liquids prices.
Adjusted Downstream earnings were lower largely due to lower chemicals earnings and refining volumes.
Production reached record levels globally and in the US.
Tamar optimization project start-up is in progress, increasing gross capacity to approximately 1.6 billion cubic feet per day.
Early production has now resumed at TCO, and the majority of the plant capacity is expected to be online within the coming week, with unconstrained production levels within February.
Chevron delivered the highest US refinery throughput in two decades, reflecting recent expansion projects and higher efficiency.
Capital Allocation
Organic CapEx was $5.1 billion for the quarter and full-year organic CapEx was in line with guidance.
Inorganic CapEx related mostly to lease acquisitions and new energies investments.
Chevron repurchased shares at the high end of its fourth quarter guidance range at $3 billion.
Share repurchases combined with the Hess shares, acquired at a discount, were over $14 billion.
Chevron returned more than $100 billion in dividends and buybacks over the last four years.
Chevron announced a 4% increase in the quarterly dividend.
Industry Trends and Dynamics
Demand for oil is growing arguably 1% a year, and gas is growing a little bit more strongly than that.
The long-term outlook for chemicals is positive due to a growing middle class and global population.
Competitive Landscape
Chevron has a very strong downstream position in California with scale, complexity in conversion capacity, flexible crude sourcing, advanced logistics, and a strong retail brand.
Chevron is as competitive as anybody and advantaged versus other competitors in California.
Some refineries are closing in California, which will take capacity out of the system.
Macroeconomic Environment
California's energy policymaking has made it more difficult to invest.
Places like California enact policies to become less attractive to investment, while Venezuela is trying to become more attractive.
Growth Opportunities and Strategies
Production reached record levels globally and in the US, supported by key milestones and strategic actions.
Completion of the Future Growth Project at Tengiz added 260,000 barrels of oil per day.
Start-up of Ballymore and Whale and the ramp-up of Anchor in the Gulf of America are advancing toward a goal of 300,000 barrels of oil equivalent per day in 2026.
Achieving 1 million barrels of oil equivalent per day in the Permian is shifting focus to free cash flow growth.
Closing the Hess acquisition created a premier upstream portfolio with the highest cash margins in the industry.
Chevron sees the potential to further grow production volumes in Venezuela by up to 50% over the next 18 to 24 months.
Leviathan recently reached FID to further expand production capacity.
Aphrodite has now entered FEED, working toward developing a competitive investment in Cyprus.
Chevron launched a structural cost reduction program, with $1.5 billion delivered in 2025 and $2 billion captured in the annual run rate.
Chevron has restructured its operating model to be leaner and faster, with a more intense focus on benchmarking and prioritization.
Chevron is testing chemical surfactants in other basins outside of the Permian, including the DJ and Bakken.
Chevron is implementing long lateral development in 60% of Bakken wells this year, and up to 90% in 2027.
Financial Guidance and Outlook
Chevron's full year 2026 guidance of $6 billion of Chevron-share free cash flow from TCO at $70 Brent is unchanged.
Chevron expects a build in working capital in the first quarter of 2026.
Chevron expects continued growth in cash flow, driven by low-risk production growth, ongoing cost savings, and continued capital discipline.
Chevron expects volume growth to continue in 2026 as it sees the benefits of project ramp-ups, a full year of Hess assets, and continued efficiency in its shale portfolio.
A full year of Permian above 1 million barrels of oil per day and Bakken production underpin the expected growth in shale and tight.
Recent and upcoming project start-ups in Guyana, the Gulf of America, and the Eastern Mediterranean are anticipated to increase offshore production by approximately 200,000 barrels of oil equivalent per day.
TCO is expected to grow 30,000 barrels of oil equivalent per day, delivering near its original plan as the 2026 maintenance schedule has been optimized.
Growth in high margin assets is anticipated to contribute to a 7% to 10% increase in production year-over-year, excluding the impact of asset sales.
Chevron expects to deliver on its expanded target of $3 billion to $4 billion in cost savings by the end of 2026, with more than 60% of savings coming from durable efficiency gains.
Chevron's diversified portfolio has a dividend and CapEx breakeven below $50 Brent.
Chevron's balance sheet is in excellent shape, with significant debt capacity that provides additional resilience and flexibility.
Combined with a near-term expansion, Leviathan's gross capacity is anticipated to reach roughly 2.1 billion cubic feet per day at the end of the decade, contributing to a doubling of current earnings and free cash flow.
Venezuela Operations
Chevron's operations in Venezuela have continued uninterrupted.
Chevron is in four different joint ventures with PDVSA, three of which are producing assets.
Since 2022, production has grown by over 200,000 barrels a day.
Gross production is now up around 250,000 barrels a day.
The activity on the ground is entirely funded through the cash within those ventures.
The current license agreement requires Chevron to pay certain taxes and royalties, enables repayment of debts, and the additional cash goes back into operations for normal operating costs.
Chevron can take another 100,000 barrels a day of Venezuelan crude into its system at Pascagoula and on the West Coast at El Segundo.
Kazakhstan Operations
TCO experienced a temporary issue on the power distribution system.
Production was safely put in a recycle mode while the team identified the root cause.
Early production has now resumed, and the majority of the plant capacity is expected to be online within the coming week, with unconstrained production levels within February.
Two mooring berths are back in service at CPC.
One of the three offshore single point moorings at Novorossiysk was hit by a submarine drone in December.
Chevron is back up to two loading berths now, and a third is slated for maintenance later this year.
