Chevron misses earnings estimates as oil prices weigh
Record production and 4% dividend increase offset by lower commodity prices in Q4
Chevron missed fourth-quarter earnings expectations as lower oil prices offset record production levels, though the energy giant rewarded shareholders with its 39th consecutive dividend increase.
The California-based company reported adjusted earnings per share of $1.52 for the fourth quarter of 2025, falling short of analyst estimates of $1.71. Revenue reached $45.79 billion, below the $47.42 billion consensus forecast. The stock declined 1.18% in pre-market trading following the announcement.
Despite the earnings shortfall, Chevron delivered strong operational performance, with worldwide oil and gas production rising 12% year-over-year to a record 4,045 thousand barrels of oil equivalent per day. U.S. production surged 16%, boosted significantly by the company's recent acquisition of Hess Corporation, which contributed 495 MBOED in the third quarter.
The board declared a quarterly dividend of $1.78 per share, a 4.1% increase from the previous payout, marking the 39th consecutive year of dividend growth. The dividend is payable March 10, 2026, to shareholders of record as of February 17. Chevron's commitment to shareholder returns has positioned it as one of the most reliable dividend payers in the energy sector, with management expressing confidence in sustaining payouts even if Brent crude were to drop to $50 per barrel.
Lower commodity prices weighed heavily on the company's bottom line. West Texas Intermediate crude has traded around $64 per barrel in January, while Brent crude hovered near $69, both down significantly from year-ago levels. The U.S. Energy Information Administration forecasts Brent will average $56 per barrel in 2026, a 19% decline from 2025 levels, as global oil production outpaces demand.
"Lower price realizations pressured Chevron's earnings in the quarter," analysts at Morgan Stanley noted in a recent report, citing reduced oil price assumptions for 2026-2027 that led to lighter cash flow expectations for the company. The investment bank adjusted its price target on Chevron shares to $176.12, representing modest upside from current levels.
Chevron generated $10.8 billion in cash flow during the quarter, underscoring the company's operational efficiency even in a challenging price environment. The company maintains a strong AA credit rating and holds nearly $8 billion in cash, providing financial flexibility to navigate the volatile energy landscape.
The diversified nature of Chevron's operations has helped mitigate some of the impact from falling oil prices. While upstream operations face pressure from weaker prices, downstream refining operations can become more profitable during periods of lower crude costs, providing a degree of financial stability to the integrated business model.
Looking ahead, investors will focus on Chevron's ability to maintain production growth while managing costs in a lower-price environment. The company's long-term strategy balances conventional energy demands with initiatives aimed at enhancing sustainability, positioning it to navigate the evolving energy transition.
Analysts remain cautiously optimistic about Chevron's prospects, with 15 rating the stock a buy or strong buy, 10 recommending hold, and just one suggesting sell. The company's consistent dividend increases and strong balance sheet continue to attract income-focused investors despite near-term earnings pressure from volatile oil markets.