How CVX (Chevron) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a global energy giant like Chevron Corporation makes money is essential for investors and anyone interested in the business of oil and gas. In this post, we break down Chevron's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Chevron Overview

Chevron Corporation operates as one of the world’s largest integrated oil and gas companies, engaging in the exploration, production, and refining of petroleum, as well as the marketing of energy products and petrochemicals. Revenue comes primarily from the sale of crude oil, natural gas, refined petroleum products, and chemicals. The company’s business segments include Upstream (exploration and production), Downstream (refining and marketing), and a growing Renewables & Energy Solutions segment.

Revenue Breakdown

• Total Revenue (Q2 2025): $56.2B (+7% YoY)
  • Upstream: $32.8B (58% of total)
  • Downstream: $20.1B (36% of total)
  • Renewables & Energy Solutions: $3.3B (6% of total)
  • Growth is powered by higher crude oil prices, increased production volumes, and expansion in renewables.

Gross Profit and Margins

• Gross Profit: $18.7B (33.3% gross margin)
  • Cost of Revenue: $37.5B (+5% YoY)
  • Chevron maintains robust margins due to its scale, operational efficiencies, and a diversified portfolio across the energy value chain.
• Most costs come from raw material procurement (crude oil and feedstocks), production expenses, and refinery operations.

Operating Income and Expenses

• Operating Income: $11.2B (+9% YoY, 19.9% margin)
• Operating Expenses: $7.5B (+4% YoY)
  • R&D: $0.7B (+8% YoY, 1.2% of revenue) — Focused on advanced drilling, carbon capture, and renewable fuels technology.
  • SG&A: $2.1B (+3% YoY, 3.7% of revenue) — Includes global marketing, administrative functions, and logistics.
  • Chevron continues to prioritize innovation and invest in energy transition while maintaining efficiency in its core operations.

Net Income

• Pre-Tax Income: $10.6B (+10% YoY, 18.9% margin)
• Income Tax: $2.7B (25.5% effective tax rate)
• Net Income: $7.9B (+11% YoY, 14.1% net margin)
• Chevron converts a significant portion of sales into profit due to its scale, integrated operations, and disciplined capital allocation.

What Drives Chevron's Money Machine?

• Upstream Production: 58% of revenue comes from oil and gas exploration and production, with high margins driven by efficient extraction and favorable commodity prices.
• Production Volume: Daily production averaged 3.2 million barrels of oil equivalent, up 4% YoY.
• Strategic Investment: Chevron invested $2.8B in capital expenditures this quarter, targeting Permian Basin expansion, LNG projects, and renewable energy assets.
• Future Growth Areas: Renewables & Energy Solutions segment is expanding rapidly, though not yet a major profit contributor.

Visualizing Chevron's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially production and refining costs) taking the largest chunk.
• Even after significant investments in R&D and capital projects, 14.1% of revenue drops to the bottom line.

Key Takeaways

• Chevron's money comes overwhelmingly from upstream oil and gas production, with downstream refining and renewables providing diversification.
• High gross and net margins illustrate the power of Chevron's integrated business model and operational scale.
• Heavy investment in energy transition and technology, balanced by efficiency in operating costs.
• Ongoing growth is driven by commodity price strength, production increases, and expansion into renewables.

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FAQ About Chevron Corporation's Income Statement

1. What is the main source of Chevron's revenue in 2025?

Chevron generates over 58% of its revenue from upstream oil and gas production. Additional revenue comes from downstream refining and marketing 36% and renewables 6%.

2. How profitable is Chevron in Q2 2025?

Chevron reported net income of $7.9B in Q2 2025, with a net margin of approximately 14.1%, reflecting strong profitability driven by high commodity prices and operational efficiency.

3. What are the largest expense categories for Chevron?

The biggest expenses on Chevron's income statement are cost of revenue (primarily production and refining costs), followed by operating expenses. R&D investment reached $0.7B in Q2 2025, as Chevron prioritizes advanced energy technologies and the energy transition.

4. Why does the Renewables & Energy Solutions segment operate at a loss?

Renewables & Energy Solutions, despite generating $3.3B in revenue, posted an operating loss of over $0.4B in Q2 2025. This is because Chevron aggressively invests in new energy technologies and infrastructure, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Chevron's effective tax rate compare to previous years?

Chevron's effective tax rate in Q2 2025 was 25.5%, consistent with previous years. This moderate rate is primarily due to international operations and tax benefits from capital investments.