Chevron Corporation (CVX.US) surprises with higher-than-expected Q4 profits: a 20% surge in production offsets falling oil prices, no increase in capital expenditure for increased production in Venezuela.

Due to the increase in supplies in the Gulf of Mexico and Kazakhstan driving oil production to skyrocket, Chevron Corporation (CVX.US) exceeded analysts' expectations in the fourth quarter, helping to alleviate the impact of falling oil prices. Adjusted net profit for the fourth quarter was $1.52 per share, beating analysts' average expectations by $0.14. At the same time, Chevron Corporation raised its dividend by 4% to $1.78 per share, but this was $0.10 lower than expected. Revenue was $46.87 billion (down 10.3% year-on-year), higher than market expectations. With new supplies coming online from locations like Tengiz in Kazakhstan and assets acquired from the Hess acquisition integrated, production in the fourth quarter increased by over 20% compared to the same period the previous year, reaching 4.05 million barrels per day. Chevron Corporation reported a net profit of $2.77 billion, or $1.39 per share, for the quarter, a decrease of approximately 14% compared to the net profit of $3.24 billion (or $1.84 per share) in the same period last year. Eimear Bonner, CFO of Chevron Corporation, stated in an interview, "Our previously mentioned cash flow inflection point and cash generation target - we achieved it in 2025. We said it and we did it, and it has indeed put us in a favorable position." Chevron Corporation expects further growth this year, with production projected to increase by 7% to 10%, mainly coming from oil fields in Guyana and the Eastern Mediterranean region. Chevron Corporation CEO Mike Wirth spent most of last year on restructuring, reducing operating costs, and completing the acquisition of Hess, which gave the company a 30% share in the giant oil discovery project in Guyana. The company paid out $12.8 billion in dividends in 2025, and repurchased $12.1 billion worth of stocks, which is at the lower end of the company's previous guidance range of $10 billion to $20 billion. Over the past five years, Chevron Corporation has spent over $100 billion on stock buybacks and dividends, equivalent to almost a third of its market value. Wirth said, "We successfully integrated Hess, launched multiple major projects, achieved record production, and restructured our business. Despite the fall in oil prices, this has still brought industry-leading free cash flow growth and excellent shareholder returns." However, due to two fires in power generators, Chevron Corporation was forced to temporarily close its Tengiz field in Kazakhstan this month, which has a daily output of millions of barrels. In the first quarter, upstream production for Chevron Corporation is expected to decrease by 185,000 to 225,000 barrels of oil equivalent per day due to maintenance and shutdowns, and downstream earnings may decrease by $275 million to $325 million due to refinery maintenance. Compared to major competitor Exxon Mobil Corporation (XOM.US), Chevron Corporation has a smaller refining scale, which means it did not benefit much from the rise in fuel production profit margins in the fourth quarter. Upstream business profits fell by 30% year-on-year to $3 billion in the fourth quarter. Downstream business profit was $823 million, reversing the loss of $248 million in the previous quarter. The company pointed out that the refined products sales margin improved. Investment issue in Venezuela: Produce-to-spend rather than inject new capital for cash flow The spending discipline that Wall Street has always upheld is facing pressure from US President Trump, who wants Chevron Corporation to make significant investments in Venezuela. Chevron Corporation is the only US oil giant to have special permission from the US Treasury Department to operate in Venezuela. Wall Street believes that Chevron Corporation is the most likely US oil company to benefit from US intervention in Venezuela. According to Mark Nelson, Vice Chairman of Chevron Corporation, in the next 18 to 24 months, Chevron Corporation's oil production in Venezuela could increase by 50%, but will use existing local equipment and other assets. His comments indicate that the company's capital budget will not undergo significant changes and has been at the lower end of its long-term guidance range, even before the arrest of Venezuelan President Nicolas Maduro by the Trump administration on January 3. In a statement, Chevron Corporation said it will work with the US and Venezuelan governments "to advance common energy goals." In an interview, Bonner stated that Chevron Corporation plans to use the cash from oil sales to fund its investments in Venezuelan oil, rather than injecting new capital into the country. Chevron Corporation plans to increase its production in Venezuela by 50% in the next two years, but will not change overall capital spending. Bonner pointed out that the production growth plan in Venezuela would require additional authorization from the US Treasury Department. She said, "Our model is a venture capital model. Any change in investment or capital levels, we will evaluate it like any other asset or investment opportunity in our portfolio. It must have an appropriate return on investment." As the only oil giant operating in Venezuela, Chevron Corporation's cautious approach to injecting new funds is a real test of the speed of recovery in the Venezuelan oil industry. Despite having the largest oil reserves in the world on paper, Venezuelan leaders have a history of nationalizing oil fields developed by US and European oil companies. Currently, Chevron Corporation produces approximately 250,000 barrels of oil per day through a joint venture with the Venezuelan state oil company Petroleos de Venezuela SA. This accounts for about 2% of Chevron Corporation's annual cash flow. Bonner welcomed efforts by Venezuelan Deputy President Delcy Rodriguez to reform the country's nationalist oil policies, which are expected to lower taxes and allow more foreign investment. Bonner said, "These reforms seem to be moving in the right direction to ensure that Venezuela has all the elements needed to become a future investment destination: rule of law, business stability, and competitiveness. This seems like a step in the right direction."