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    CVX
    Earnings call· Dec 2024(Q4 FY24)

    CHEVRON CORP CVX

    Jan 31, 2025 Source

    Executive summary

    Chevron Q4 FY24 — Record Production & Shareholder Returns, FGP Online

    Chevron delivered strong Q4 FY24 results, achieving record production and returning $27 billion to shareholders. The company is poised for significant free cash flow growth, targeting an additional $10 billion annually by 2026, driven by key project start-ups like FGP and Gulf of America assets. Management also announced a 5% dividend increase and plans for structural cost reductions, while navigating Q4 earnings impacts from special items and lower margins.

    Highlights

    6

    • Achieved record production globally and in the United States in 2024, with Permian production growing nearly 18%.

    • Returned a record $27 billion in cash to shareholders through dividends and buybacks in 2024.

    • Repurchased $30 billion over the past 2 years, reducing outstanding share count by 10%.

    • Announced a 5% increase in dividend, marking the 38th consecutive year of increases.

    • Achieved first oil at the Future Growth Project (FGP) at TCO, adding 260,000 barrels of oil production capacity and expected to reach 1 million boe/d within three months.

    • Expect to add $10 billion of annual free cash flow growth by 2026.

    Concerns

    4

    • Q4 adjusted earnings were $900 million lower than Q3.

    • Q4 cash flow excluding working capital was impacted by $2.5 billion in nonrecurring and accounting items (tax charges of $1.5 billion, special items of $500 million, other impacts of $500 million).

    • Adjusted upstream earnings impacted by revisions to asset retirement obligations and timing effects.

    • Adjusted downstream earnings lower due to softer refining and chemicals margins and timing effects.

    Guidance & targets

    17
    CategoryTargetConfidence
    Annual Free Cash Flow Growth
    $10 billion
    high materiality
    High
    TCO FGP Production Rate
    1 million boe/d
    high materiality
    High
    TCO FGP Free Cash Flow to Chevron
    $5 billion
    high materiality
    High
    TCO FGP Free Cash Flow to Chevron
    $6 billion
    high materiality
    High
    Permian Production
    1 million boe/d
    high materiality
    High
    Permian Production Growth
    9% or 10%
    medium materiality
    High
    Permian Production Growth
    a little bit less than 9% or 10%
    medium materiality
    Medium
    Gulf of America Production
    300,000 bbl/d
    high materiality
    High
    Ballymore Project In-Service
    mid-2025
    medium materiality
    High
    Petrochemical Projects Completion
    beyond 2026
    medium materiality
    High
    ACES Green Hydrogen Project Start-up
    late 2025
    medium materiality
    High
    Organic Capital Expenditure
    $14 billion to $16 billion
    high materiality
    High
    Affiliate Capital Expenditure
    trend down further
    medium materiality
    High
    Structural Cost Reductions
    $2 billion to $3 billion
    high materiality
    High
    Annual Production Growth (excluding asset sales)
    around 6%
    high materiality
    High
    2025 Production Growth Weighting
    weighted towards H2 2025
    low materiality
    High
    Structural Cost Reductions
    $1.5 billion to $2 billion
    high materiality
    High

    Operational metrics

    23
    Adjusted Earnings
    $3.6 billion$900 million lower than Q3
    Q4 FY24

    Adjusted earnings were $2.06 per share. Included in the quarter were special items totaling $1.1 billion related to restructuring and impairment charges.

    Adjusted EPS
    $2.06
    Q4 FY24

    Adjusted earnings were $3.6 billion, or $2.06 per share.

    Foreign Currency Gains
    $720 million
    Q4 FY24
    Adjusted Return on Capital Employed (ROCE)
    10.5%
    FY24

    Maintained double-digit returns with adjusted ROCE of 10.5% for the year.

    Asset Sales Proceeds
    nearly $8 billion
    FY24
    Shares Repurchased
    5%
    FY24
    Net Debt Ratio
    10%
    FY24

    ending the year with a net debt ratio of 10%.

    Dividend Increase
    5%
    Q1 FY25

    Today, we announced a 5% increase in the dividend, marking the 38th consecutive year with an annual increase to dividend payment per share.

    Share Buyback Program
    $10 billion to $20 billion
    Annual

    intend to maintain a buyback range of $10 billion to $20 billion per year depending on market conditions.

    Total Cash Returned to Shareholders
    $75 billion
    Past 3 years

    In the past 3 years, we've returned $75 billion in cash to shareholders via dividends and share buybacks.

    CO2 Emissions Abated
    700,000 tons
    FY24

    completed projects designed to abate over 700,000 tons of CO2 emissions annually.

    Bio-based Diesel Sales
    over 20 million barrels
    FY24

    In 2024, we sold over 20 million barrels of bio-based diesel.

    TCO FGP Production Capacity Added
    260,000 barrels
    FY25

    FGP adds 260,000 barrels of oil production capacity to the existing plants.

    Permian Production
    992,000 barrels
    Q4 FY24

    We delivered 992,000 barrels a day in the fourth quarter.

    Permian Production
    over 1 million barrels
    December 2024

    We were over 1 million barrels a day in December.

    Permian Production Growth
    18%YoY
    FY24

    For the full year, we saw a growth of 18%.

    Permian Compound Annual Growth Rate
    16%
    Past 5 years

    Over the last 5 years, we've delivered compound annual growth of 16%.

    Permian Company-Operated Rigs
    40% fewer
    Current vs. few years ago

    achieve these production levels with 40% fewer company-operated rigs than our plans included just a few years ago.

    Petrochemical Projects Completion Status
    more than 50%
    Current

    Our petrochemical growth projects in the U.S. and Qatar are more than 50% complete.

    ACES Green Hydrogen Electrolyzer Capacity
    over 200 megawatts
    Future

    will have over 200 megawatts of electrolyzer capacity.

    Natural Gas-Fired Turbines Secured
    7
    Future

    We have secured slot reservations to purchase 7 natural gas-fired turbines from GE Vernova with deliveries beginning late 2026.

    Structural Cost Reductions
    $1.5 billion to $2 billion
    FY25

    So in terms of the profile at 2025, between $1.5 billion to $2 billion.

    Worldwide Oil Equivalent Production Growth
    7%YoY
    FY24

    Last year, worldwide oil equivalent production was the highest in our history. Benefiting from a larger position in the DJ Basin following our acquisition of PDC Energy and nearly 18% growth in the Permian.

    Industry KPIs

    3
    MetricValueDetails
    D c efficiency rig activity40% fewerrigs
    Basin level production volume992,000bbl/d
    FCF shareholder distributions$27 billionUSD

    Deals & partnerships

    5
    PDC EnergyFull integration of acquired company.

    fully integrating PDC Energy, expanding our position in the DJ Basin

    VariousPortfolio optimization through asset sales and swaps.

    optimizing our portfolio through asset sales and swaps that maximize long-term value

    WoodsideAsset swap to increase equity in Wheatstone and Julimar-Brunello, divesting interest in Northwest Shelf.

    Last month, we announced an asset swap that will increase our equity in Wheatstone, which enables long-term asset development and monetization.

    BungeConstruction of a new oilseed processing plant in Louisiana for renewable fuels.

    at our Bunge joint venture, construction continues at the new oilseed processing plant in Louisiana, increasing our exposure across the renewable fuels value chain.

    Undisclosed partners (hyperscalers)Jointly develop scalable, reliable power solutions to support growing energy demand from U.S. data centers.

    Earlier this week, we announced plans to jointly develop scalable, reliable power solutions to support growing energy demand from U.S. data centers.

    Risks & headwinds

    7
    Q4 adjusted earnings declineQ4 FY24

    $900 million lower than Q3

    Q4 cash flow impact from nonrecurring and accounting itemsQ4 FY24

    $2.5 billion impact (comprising $1.5 billion tax charges, $500 million special items, $500 million other impacts)

    Mitigation: These are largely one-off items, not structural.

    Softer refining and chemicals marginsQ4 FY24

    lower

    Mitigation: Operating reliably and efficiently, executing competitive projects, increasing flexibility (e.g., Pasadena refinery expansion to run Permian crude).

    Revisions to asset retirement obligationsQ4 FY24

    Impacted adjusted upstream earnings

    Geopolitical tensions in Eastern MediterraneanOngoing

    tensions diminishing

    Mitigation: No real change to plans, projects in execution (Tamar, Leviathan) expected to come online, pipelay vessel to be remobilized.

    US electricity grid and distribution infrastructure challengesOngoing

    already-taxed distribution infrastructure

    Mitigation: New power solutions for data centers are designed to be off-grid and behind-the-meter to avoid further taxing the existing grid.

    Argentina political and macroeconomic instabilityOngoing

    encouraging signs... in years gone by, and then things kind of move the other direction

    Mitigation: Watching for 'more durable set of reforms' to increase confidence for capital investment.

    What to watch in Q1 FY25

    5

    TCO FGP Full Production Rate

    within the next 3 months
    Currentstable and very encouraging
    Target1 million boe/d

    Why it matters

    This is a major project milestone expected to drive significant free cash flow growth for Chevron.

    We expect to achieve full production rates, 1 million barrels of oil equivalent per day within the next 3 months.

    Q&A highlights

    5

    Clarification on the $5.3 billion cash flow, which was lower than expected, and any one-offs.

    Eimear Bonner explained that Q4 cash flow was impacted by $2.5 billion in nonrecurring and accounting items: $1.5 billion in tax charges from a Canadian asset sale, $500 million in special items (restructuring/impairment charges) not adjusted for cash flow, and another $500 million from affiliate distributions and unique commercial activity.

    “So when you add up the 3 elements, that's about $2.5 billion to take into consideration for the cash flow this quarter.”

    asked by Biraj Borkhataria · answered by Eimear Bonner

    2 min read5 chapters

    Detailed Narrative

    01

    Record Performance & Shareholder Returns

    Chevron achieved record global and U.S. production in 2024, with Permian production growing nearly 18%. The company returned a record $27 billion to shareholders through dividends and buybacks, repurchasing $30 billion over two years and reducing share count by 10%. A 5% dividend increase was announced, marking the 38th consecutive year of increases.

    02

    Strategic Project Milestones

    Key milestones included the full integration of PDC Energy, asset sales and swaps, and the completion of WPMP. Notably, the Future Growth Project (FGP) at TCO achieved first oil, adding 260,000 barrels of oil production capacity and expected to reach 1 million boe/d within three months. Gulf of America projects (Anchor, Whale, Ballymore) are ramping up, contributing to expected production growth to 300,000 bbl/d.

    03

    Free Cash Flow Growth & Capital Discipline

    Chevron anticipates adding $10 billion in annual free cash flow by 2026, driven by advantaged upstream assets and reduced affiliate CapEx. The company maintains capital discipline, with organic CapEx expected to remain within the $14 billion to $16 billion range. Structural cost reductions of $2 billion to $3 billion are targeted by the end of 2026, achieved through asset sales, technology scaling, and efficiency improvements.

    04

    New Energies & Lower Carbon Initiatives

    The company is advancing renewable fuels with the Geismar renewable diesel expansion and the Bunge joint venture. The ACES Green hydrogen project in Utah is set for start-up later in 2025, featuring over 200 megawatts of electrolyzer capacity. Chevron is also developing CCUS plans and recently announced a joint development for scalable power solutions for U.S. data centers, securing 7 natural gas-fired turbines from GE Vernova for deliveries starting late 2026.

    05

    Q4 Financials & Outlook

    Fourth-quarter adjusted earnings were $3.6 billion ($2.06 per share), but $900 million lower than Q3, impacted by softer refining/chemicals margins and timing effects. Cash flow excluding working capital was notably impacted by $2.5 billion in nonrecurring items, including $1.5 billion in tax charges from asset sales and $500 million in special items. Despite these, the company ended the year with a strong balance sheet and a net debt ratio of 10%.

    AI-generated summary of the company’s earnings call. Not investment advice.