CVX · Q1 2026 Earnings

Cautious

Chevron Corporation

Reported April 9, 2026

30-second summary

30-second take: Chevron printed Q1 2026 earnings of $2.2B / $1.11 per share reported, $2.8B / $1.41 adjusted, with CFFO ex-working capital of $7.1B and adjusted FCF of $4.1B — all absorbing ~$3B of unfavorable timing effects (evenly split inventory valuation and mark-to-market on paper derivatives linked to physical cargoes) and a $360M legal reserve charge that landed within the pre-announced $350–400M range. Buybacks held at $2.5B, inside the $2.5–3B range; organic capex was $3.9B (light-first-half pattern). Production rose ~500K BOED YoY on Hess integration and organic growth. Most importantly, full-year 2026 guidance was reaffirmed in full: 7–10% production growth, $18–19B capex, and the $3–4B end-2026 structural cost target. The FCF-vs-returns gap we have flagged narrowed less than headline EPS suggests once you back out the ~$3B timing drag and the working-capital build — Bonner flagged ~$1B of the paper positions unwinding in Q2, with the majority of related cargoes delivered in April.

Guidance

Chevron reaffirms FY2026 production and cost targets but discloses substantial Q1 sequential headwinds: $2.7–3.7B timing charge, $2.0–4.0B working capital outflow, and $350–400M legal settlement, partially offset by $1.6–2.2B commodity tailwind.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

Metric	Period	Guide	YoY
Production (Upstream net oil-equivalent)	Q1 FY2026	3.8 - 3.9 MMBOED	—
Upstream commodity price benefit vs prior quarter	Q1 FY2026	$1.6 - $2.2 billion	—
Timing effects (after-tax headwind)	Q1 FY2026	$(2.7) - $(3.7) billion	—
Working capital impact	Q1 FY2026	$(2.0) - $(4.0) billion outflow	—
Legal matter charge (Downstream)	Q1 FY2026	$(350) - $(400) million	—

Reaffirmed unchanged this quarter: Production growth (excluding asset sales) (7% to 10%), Structural cost reduction target ($3 to $4 billion by end of 2026)

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Upstream net oil-equivalent production	3.8 - 3.9 MMBOED
Upstream commodity price impacts vs Q4 2025	$1.6 - 2.2 billion benefit
Timing effects (after-tax)	$(2.7) - (3.7) billion headwind
Working capital impact	$(2.0) - (4.0) billion outflow
Legal matter charge (Downstream)	$(350) - (400) million
Weighted-average shares outstanding	1.98 billion

Management tone

Q2 Hess-deal cash-flow bridge → Q3 operational execution → Q4 structural cost expansion and Venezuela optionality → Q1 absorbing a supply-shock-driven timing hit without flinching on FY targets.

The reaffirmation of every FY2026 number despite ~$3B of timing drag is the central message. Bonner closed prepared remarks with "2026 guidance is unchanged" and explicitly tied the 2030 framework (>10% adjusted FCF and EPS growth, 3% ROCE improvement at $70 Brent) to assets operating today rather than aspirational projects. The buyback range was held at $2.5–3B with Bonner noting "eight weeks into the conflict is too early to have a different view on the fundamental outlook around price."

The Middle East conflict has reframed the Q&A backdrop without changing the capital framework. The first analyst question (Neil Mehta, Goldman Sachs) was whether the conflict shifts Chevron's $70 Brent mid-cycle planning assumption. Wirth: "too early for firm conclusions… you will see capital and cost discipline no matter what. You will see us invest in highly competitive assets with scale and longevity no matter what." Direct portfolio impact in Q1 was limited — less than 5% of the portfolio is in the region; Partitioned Zone running at near-minimum to manage storage; Tamar and Leviathan at full capacity.

Hess integration has crossed from narrative claim to operational evidence. Arun Jayaram's (JP Morgan) question drew specific operational data from Wirth: Asia refineries expected to run over 40% Chevron equity crude in Q2 (vs. ~15% historically per Wirth's downstream-era reference); U.S. refineries currently over 50% equity crude. Wirth: "we're not going to quantify the value that we're capturing, but I think you'll see it flow through in the numbers, and it is meaningful." The qualifier matters — management is showcasing throughput evidence but declining to put a dollar value on the uplift.

Permian and Venezuela continue to be discussed as deliberate plateaus, not constrained ones. Doug Leggate (Wolfe Research) pressed on whether the supply disruption changes the case for incremental capital into Venezuela or Permian. Wirth held the line on both: TCO and Permian each producing >1M BOE/d with "all the big pistons in the engine firing," Venezuela still recycling cash flow with the ~$1.5B year-start receivable paying down faster at higher prices, full payoff expected at some point in 2027. The Petro Independencia equity stake was increased to 49% and the Ayacucho 8 acreage position expanded via the PDVSA asset swap — option value, not committed growth capital.

Q&A highlights

Neil Mehta · Goldman Sachs

Perspective on current Middle East conflict in context of 44-year career; long-term implications for energy system; whether event changes mid-cycle pricing assumption of $70 Brent.

Conflict is significant disruption; too early for firm conclusions on long-term changes; new equilibrium will differ but specifics unclear. Chevron will maintain consistency: capital/cost discipline, invest in competitive assets with scale/longevity, drive strong returns and free cash flow, maintain strong balance sheet. Portfolio provides visibility through 2030 with predictable cash flow growth.

44 years of experience managing unexpected eventsVisibility through 2030 with predictable cash flow growth$70 Brent mid-cycle planning assumption maintained for nowWill fine-tune strategy if needed as conflict resolves

Arun Jayaram · JP Morgan

Value capture opportunities from refining optimization and increased waterborne crude exposure post-Hess merger; integration benefits experience in 1Q and forward earnings power impact.

Global enterprise optimization team managing upstream-downstream integration. Asia refineries running 40% Chevron equity crude in Q2 (vs. historical 15-20%). U.S. refineries over 50% equity crude. Company historically ran 15% equity crude, 85% market crude; now inverted. Ability to direct flows captures value across price movements. Integration effects meaningful but not quantified.

Historical equity crude throughput: 15%Q2 Asia expected equity crude: 40%U.S. refineries equity crude: 50%+Jones Act waiver used to move crudes Gulf to West Coast

Doug Luggett · Wolf Research

Capital allocation specifics: will Chevron incrementally deploy more capital to Venezuela (changed fiscal terms, improved security) and Permian (former growth asset now stabilized) given current supply disruption?

Permian and TCO producing over 1M boe/d; all major 'pistons firing'; strong growth momentum Q2 expected. Portfolio creates options. Too early to make big changes; conflict resolution unclear. Venezuela: still recycling cash flow, debt recovery accelerating at higher prices, fiscal terms unclear (tax/royalty ranges), dispute resolution issues remain. Will operate current mode pending further progress. Permian: running for strong FCF, could accelerate but no signal needed given capital efficiency; shifting focus to growth might dilute reliability focus.

TCO: >1M boe/d (above nameplate)Permian: solidly >1M boe/dVenezuela receivables: ~$1.5B at year-start, paying down fasterVenezuela expected debt payoff: 2027

Devin McDermott · Morgan Stanley

Capital allocation strategy at higher prices: balance between shareholder returns, cash build, and growth spending; rationale for unchanged buyback range; conditions to shift capital toward Permian growth.

No changes to capital allocation framework or ranges despite higher prices. Four priorities maintained: (1) Growing dividend (39 consecutive years), (2) Capital-efficient investment ($18-19B budget, 7-10% production growth), (3) Strong balance sheet, (4) Buyback $2.5-3B range. Only 8 weeks into conflict; too early to change view on fundamental price outlook or whether changes are structural. Comfortable and disciplined approach unchanged.

39 consecutive years of dividend growth2026 capex budget: $18-19B (on track)Production growth guidance: 7-10%Buyback range: $2.5-3B (unchanged)

Sam Margolin · Wells Fargo

Given extraordinary volatility and potential localized shortages, has Chevron adjusted operating posture regarding timing effects, derivative exposure, and supply chain management?

Unusual environment but company has playbook from 2020 demand collapse and 2022 Ukraine conflict. Focus on optimizing supply into markets, managing financial exposures and counterparty risks. Timing effects (~$3B in Q1) are normal in volatile markets; ~$1B expected to unwind Q2. No overreaction warranted. Asia refineries running highest utilization due to ability to direct equity crudes. Using crew substitution and directing diverse sources (TCO, Guyana, Permian, Venezuela, Argentina waterborne crudes). Supply management very sensitive to customer/counterparty implications.

Q1 timing effects: ~$3B totalQ2 expected unwinding: ~$1BAsia refinery approach: highest achievable utilizationCrew management: able to substitute and redirect flows

Answers to last quarter's watch list

Cost program decomposition — Not resolved. The $3–4B end-2026 structural cost target was reaffirmed but with no fresh decomposition between Hess synergies, organizational restructuring, and shale efficiency.

Not resolved

Venezuela authorizations — Wirth confirmed the ~$1.5B year-start receivable is paying down faster at higher prices, with full payoff expected at some point in 2027 and contribution at 1–2% of operating cash flow. The PDVSA asset swap (Petro Independencia stake raised to 49%, Ayacucho 8 acreage) was disclosed as creating optionality, not committed growth. Fiscal terms (tax, royalties, dispute resolution) still unclear.

Continue monitoring

TCO Q1 2026 production trajectory — TCO returned to full service in March after February electrical-system repairs; two of three CPC single-point moorings available (third later this year). Plant expected at near-full availability for the remainder of 2026. De-bottlenecking work completed late 2025 is running in its new configuration with "encouraging" early performance; specific guidance deferred to next call. $6B FY TCO Chevron-share FCF at $70 Brent reaffirmed. Status: Largely resolved

FCF-vs-returns gap — Q1 adjusted FCF of $4.1B (including a $1B TCO loan repayment) against $2.5B buybacks plus the dividend kept the gap open but narrower than the pre-announcement headwind stack implied. Bonner flagged ~$1B of paper-position timing unwind in Q2 and a working-capital release in H2 as the recovery path. Status: Quarter-on-quarter improvement expected

Permian 2026 capex disclosure — Not provided. The $18–19B FY2026 envelope was reaffirmed but Permian-specific capex remains undisclosed for a fifth quarter.

Not resolved

What to watch into next quarter

Timing-effects unwind — Bonner's prepared remarks flagged ~$1B of Q1's ~$3B timing effects expected to reverse in Q2, with the majority of related cargoes delivered in April. Watch whether the actual Q2 unwind matches that guide or whether volatility persists, which would suggest structural rather than transitional pressure.

Working capital release in H2 — Bonner reiterated the seasonal pattern of an H1 build and H2 release, with magnitude price-dependent. Watch the Q2 print for early evidence and the commercial paper paydown cadence (>$5B issued in Q1, ~half paid back in April).

TCO de-bottlenecking quantification — Management deferred specific de-bottlenecking guidance to the next call once more operational data accrues. Watch for the first quantified uplift figure above the existing >1M BOED rate.

Microsoft Power Project FID — Wirth confirmed exclusive negotiations with Microsoft, EPC selected, air permit submitted, water agreement reached, turbines being delivered this year. FID targeted "later this year" subject to definitive agreements. Watch the next call for contract structure and return economics.

Mid-cycle Brent assumption — Wirth held $70 Brent through eight weeks of conflict. Watch whether the next quarterly call moves that assumption or maintains discipline, which is a direct signal on how management is reading the structural-vs-cyclical nature of the supply shock.

Sources

Chevron Q1 2026 interim disclosure press release (Form 8-K exhibit), filed April 9, 2026 — https://www.sec.gov/Archives/edgar/data/93410/000009341026000108/cvx-20260409.htm
Chevron Q1 2026 earnings conference call — Bonner prepared remarks on Q1 results ($2.2B reported earnings / $1.11 EPS; $2.8B adjusted / $1.41; $7.1B CFFO ex-WC; $4.1B adjusted FCF; $3.9B organic capex; $2.5B buybacks; ~$3B aggregate timing effects evenly split inventory valuation and MTM on paper derivatives; ~$1B paper-position unwind expected in Q2; $360M legal reserve charge; ~+500K BOED YoY production; >$5B commercial paper issued, ~half paid down in April).
Chevron Q1 2026 earnings conference call — Wirth prepared remarks and Q&A (Mehta on $70 Brent mid-cycle; Jayaram on Asia >40% Q2 equity crude vs. ~15% historical Wirth reference, U.S. >50% equity crude; Leggate on Venezuela receivable payoff by 2027 and Permian plateau; McDermott on capital framework; Margolin on timing effects playbook; Betty Jing on TCO return to full service in March and $6B FY TCO FCF at $70 Brent reaffirmed).

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