CVX · Chevron Corporation

Chevron's preliminary Q1 2026 guidance reveals significant headwinds from timing effects of $(2.7)-(3.7) billion, driven by mark-to-market adjustments on financial derivatives hedging hydrocarbon shipments and LIFO accounting in a rising price environment. These non-cash impacts, primarily in the Downstream segment, are expected to reverse in future periods as physical deliveries occur, supporting overall net profit neutrality over time. Compounding this, working capital is forecasted to drain $(2.0)-(4.0) billion, attributable to seasonal patterns and elevated commodity prices, adversely affecting cash flow from operations excluding working capital. Positively, the Upstream segment counters with $1.6-2.2 billion in earnings uplift from higher prices relative to Q4 2025. Production guidance of 3.8-3.9 MMBOED reflects operational challenges, including downtime at Tengizchevroil and curtailments in the Middle East (Israel and Partitioned Zone) amid ongoing conflict-related volatility. A Downstream litigation reserve of $(350)-(400) million, tied to ceased operations, is designated as a special item further pressuring earnings and cash flows. Shares outstanding hold steady at 1.98 billion, balanced by repurchases offset by $1 billion in employee stock option exercises. This outlook, influenced by Middle East tensions, underscores Chevron's exposure to commodity volatility while highlighting hedging strategies and segment dynamics ahead of full results on or around May 1, 2026. Investors should note the preliminary nature, subject to audit and potential adjustments.