Chevron Q2 Profit Plunges 43% as Hess Deal Costs $215M but Production Hits New Highs

Chevron (NYSE: CVX) stumbled in its latest quarter, as sliding crude prices and a hit from its Hess acquisition sapped profits. The energy giant's net income for Q2 fell to $2.49 billion, down roughly 43% from $4.43 billion a year ago. That works out to $1.45 per share, compared to $2.43 per share in the same period last year.

Part of the drag came from a $215 million loss associated with the fair value of Hess Corporation shares. Chevron closed the deal for Hess on July 18, a $53 billion purchase that faced a serious roadblock from Exxon Mobil (NYSE: XOM), which claimed rights over Hess assets in Guyana. That dispute was ultimately settled in Chevron's favor by arbitration, allowing the acquisition to cross the finish line after a lengthy delay.

On an adjusted basis stripping out the one-time Hess share charge and other items, Chevron's earnings beat analysts' consensus estimates, delivering $1.77 per share versus $1.70 expected. Revenue clocked in at $44.82 billion, slightly above the $43.82 billion street forecast.

Production volume looked solid, with Chevron pumping roughly 3.4 million barrels per day globally, up 3% compared to Q2 2024. U.S. output jumped 8%, reaching 1.69 million barrels per day, largely thanks to the Permian Basin hitting the 1 million bpd mark. The Hess transaction brings additional assets in the Bakken formation, Gulf of Mexico, and Guyana, poised to broaden Chevron's footprint.

Even with increased production, the company's upstream profits took a hit, sliding 38% to $2.72 billion from $4.47 billion a year earlier amid the weaker oil price environment. On the flip side, refining saw a boost, with earnings climbing 23% to $737 million, helped by better margins on product sales.

Chevron expects that the Hess acquisition's earning contribution will start showing up in Q4 and aims to trim costs by $1 billion annually by the end of next year. For a company pivoting after a bruising second quarter, the question now is how quickly these new assets and cost cuts can offset the current slump in prices.