Wells Fargo Adjusts Valero Energy Price Target to $159 From $160

Chevron Corporation CVX reported adjusted fourth-quarter earnings per share of $2.06, missing the Zacks Consensus Estimate of $2.19 and well below the year-ago adjusted profit of $3.45. The underperformance stemmed from weaker oil price realizations and a dip in refined product sales margins.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The company generated revenue of $52.2 billion. The sales figure beat the Zacks Consensus Estimate of $47 billion and increased 10.7% year over year due to higher-than-expected U.S. production in the company’s key upstream segment. The unit’s domestic output of 1,646 thousand oil-equivalent barrels per day (MBOE/d) came in slightly above the consensus mark of 1,635 MBOE/d.

Importantly, CVX hiked its quarterly cash dividend by 5% to $1.71 per share. The dividend will be paid out on March 19, 2025, to its shareholders of record as of Feb. 14.

Chevron Corporation Price, Consensus and EPS Surprise

Chevron Corporation price-consensus-eps-surprise-chart | Chevron Corporation Quote

Segment Performance

Upstream: Chevron’s production of crude oil and natural gas — at 3,350 MBOE/d (59% liquids) — fell 1.2% year over year. The latest volume statistics primarily reflect higher output from the Permian basin — America's hottest and lowest-cost shale region, partly offset by hurricane-associated production loss in the Gulf of America and asset sale in Canada.

The U.S. output rose 3% year over year to 1,646 MBOE/d but the company’s international operations (accounting for 51% of the total) dropped 5% to 1,704 MBOE/d.

Despite volumes declining from last year and lower oil realizations, Chevron’s fourth-quarter 2024 upstream segment profit surged 171.4% to $4.3 billion. This was primarily due to the absence of certain charges from a year ago.

At $53.12 per barrel, Chevron’s average realized liquids prices in the United States were 9.5% below the year-earlier levels, while prices overseas decreased 9.7% to $67.33 per barrel. As far as natural gas is concerned, the commodity was unchanged in the United States and rose 4.9% internationally.

Downstream: Chevron’s downstream segment recorded a loss of $248 million, plunging from last year’s profit of $1.1 billion. The slip underlined lower product sales margins and higher operating expenses in the United States.

Cash Flows, Capital Expenditure

The company recorded $8.7 billion in cash flow from operations, compared to $12.4 billion the year-ago period due to a drop in earnings and asset retirement obligations. Chevron’s free cash flow for the quarter was $4.4 billion.

Further, Chevron paid $2.9 billion in dividends and bought back $4.6 billion worth of its shares.

The Zacks Rank #3 (Hold) company spent around $4.3 billion in capital and exploratory expenditures during the quarter, compared to the year-ago period’s $4.4 billion.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Balance Sheet

As of Dec. 31, the only energy component of the Dow Jones Industrial Average had $6.8 billion in cash and cash equivalents and total debt of $24.5 billion with a debt-to-total capitalization of about 13.9%.

Important Energy Earnings

While we have discussed Chevron’s fourth-quarter results in detail, let’s take a look at some other key oil/energy reports of this season.

Oil service biggie SLB SLB reported fourth-quarter 2024 adjusted earnings per share of 92 cents, ahead of the Zacks Consensus Estimate of 90 cents and higher than the year-ago quarter’s profit of 86 cents. The robust numbers reflect broad-based growth and margin expansion, especially in the Middle East and Asia. Additionally, advancements in AI and autonomous operations continue to contribute significantly to SLB’s results.

Along with the quarterly earnings, SLB announced approvals from the board of directors to hike quarterly dividends by 3.6%. The company has also decided on an accelerated share repurchase (“ASR”) program involving the repurchase of $2.3 billion of its common stock. Notably, the ASR is part of SLB’s broader plan to return a minimum of $4 billion to its shareholders in 2025 through dividends and stock repurchases.

Refining major Valero Energy VLO reported fourth-quarter 2024 adjusted earnings of 88 cents per share, which beat the Zacks Consensus Estimate of 13 cents. Total quarterly revenues of $30.8 billion beat the Zacks Consensus Estimate by $27 million. Better-than-expected quarterly results can be primarily attributed to an increase in renewable diesel margins and lower total cost of sales.

VLO’s fourth-quarter capital investment totaled $547 million, of which $452 million was allocated toward sustaining the business. The company had cash and cash equivalents of $4.7 billion at the end of the fourth quarter. As of Dec. 31, 2024, it had a total debt of $8.1 billion and finance lease obligations of $2.4 billion.

Energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures, and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.

As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan projects a net income of $2.8 billion, up 8% from the 2024 level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous year’s level.

Zacks Investment Research

Europe’s largest oil company, Shell plc SHEL, reported fourth-quarter 2024 earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $1.20. The bottom line came in well below the Zacks Consensus Estimate of $1.78 and fell from the year-earlier quarter’s earnings of $2.22 per American Depositary Share (ADS), dragged down by weaker realized prices, drop in trading margins and lower LNG sales.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Shell’s revenues of $66.8 billion were down from $80.1 billion in fourth-quarter 2023 and missed the consensus mark by 16.6%.

Meanwhile, Shell repurchased $3.6 billion of shares in the fourth quarter and hiked its dividend by 5%. The London-based company expects another $3.5 billion worth of repurchases for the first quarter.

Shell PLC Unsponsored ADR Price, Consensus and EPS Surprise

Shell PLC Unsponsored ADR price-consensus-eps-surprise-chart | Shell PLC Unsponsored ADR Quote

Inside Shell’s Segments

Upstream: The segment recorded a profit of $1.7 billion (excluding items) during the quarter, down from $3.1 billion (adjusted) in the year-ago period and below the Zacks Consensus Estimate of $2 billion. This primarily reflects the impact of lower oil and gas prices.

At $70.69 per barrel, the group’s worldwide realized liquids prices were 11% below the year-earlier levels, while natural gas prices fell 7%.

Shell’s upstream volumes averaged 1,859 thousand oil-equivalent barrels per day (MBOE/d), down a marginal 0.6% from the year-ago period but ahead of the Zacks Consensus Estimate of 1,851 MBOE/d, mainly due to new crude production. Liquids production totaled 1,332 thousand barrels per day (a decrease of 2.1% year over year) and natural gas output came in at 3,056 million standard cubic feet per day (up 3.5%).

Chemicals and Products: In this segment, the London-based supermajor reported an adjusted loss of $229 million, reversing from a profit of $29 million in the year-ago period. The unfavorable comparison was due to a drop in trading and optimization margins, weak realized prices and unfavorable tax movements. Meanwhile, refinery utilization came in at 76% compared with 81% during the December-end quarter of 2023. The figure was also lower than the consensus mark of 78%.

Integrated Gas: The unit reported an adjusted income of $2.2 billion, deteriorating from $4 billion in the October-December quarter of 2023 and below the Zacks Consensus Estimate of $2.8 billion. Results were primarily impacted by lower LNG sales volumes, which fell 14.3% from the fourth quarter of 2023 to 15.50 million tons (consensus called for 16.23 million tons). Total Integrated Gas production remained essentially flat year over year at 905 MBOE/d.

Marketing: The segment recorded an income of $839 million (excluding items) during the quarter compared to the year-ago earnings of $794 million due to lower operating expenses. The Zacks Consensus Estimate pegged the Marketing unit income at $885 million.

Renewables and Energy Solutions: The segment logged an adjusted loss of $311 million, reflecting a deterioration from the year-ago income of $173 million and underperforming the consensus mark by $44 million. The performance blip reflects adverse tax effects and rising costs. External power sales were up 12% year over year to 76 terawatt hours, though piped gas sales fell 6% to 165 terawatt hours.

Financial Performance

As of Dec. 31, 2024, the Zacks Rank #3 (Hold) company had $39.1 billion in cash and $77.1 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 17.7%, down from 18.8% a year ago.

You can see the complete list of today’s Zacks #1 Rank stocks here.

During the quarter under review, Shell generated cash flow from operations of $13.2 billion, returned $2.1 billion to its shareholders through dividends and spent $6.5 billion on capital projects.

The company’s cash flow from operations increased 4.7% from the year-earlier level. Meanwhile, the group raked in $8.7 billion in free cash flow during the fourth quarter compared to $6.9 billion a year ago.

Guidance

Shell expects first-quarter 2025 upstream volumes of 1,750-1,950 MBOE/d, while Integrated Gas production is expected between 930 MBOE/d and 990 MBOE/d. The company also foresees marketing sales volumes of 2,500-3,000 thousand barrels per day and refinery utilization in the range of 80-88%.

Important Energy Earnings So Far

While we have discussed Shell’s fourth-quarter results in detail, let’s take a look at some other key oil/energy reports of this season so far.

Oil service biggie SLB SLB reported fourth-quarter 2024 adjusted earnings per share of 92 cents, ahead of the Zacks Consensus Estimate of 90 cents and higher than the year-ago quarter’s profit of 86 cents. The robust numbers reflect broad-based growth and margin expansion, especially in the Middle East and Asia. Additionally, advancements in AI and autonomous operations continue to contribute significantly to SLB’s results.

Along with the quarterly earnings, SLB announced approvals from the board of directors to hike quarterly dividends by 3.6%. The company has also decided on an accelerated share repurchase (“ASR”) program involving the repurchase of $2.3 billion of its common stock. Notably, the ASR is part of SLB’s broader plan to return a minimum of $4 billion to its shareholders in 2025 through dividends and stock repurchases.

Refining major Valero Energy VLO reported fourth-quarter 2024 adjusted earnings of 88 cents per share, which beat the Zacks Consensus Estimate of 13 cents. Total quarterly revenues of $30.8 billion beat the Zacks Consensus Estimate by $27 million. Better-than-expected quarterly results can be primarily attributed to an increase in renewable diesel margins and lower total cost of sales.

VLO’s fourth-quarter capital investment totaled $547 million, of which $452 million was allocated toward sustaining the business. The company had cash and cash equivalents of $4.7 billion at the end of the fourth quarter. As of Dec. 31, 2024, it had a total debt of $8.1 billion and finance lease obligations of $2.4 billion.

Energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures, and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.

As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan projects a net income of $2.8 billion, up 8% from the 2024 level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous year’s level.

Zacks Investment Research