2023 annual report
purpose
powers
progress
our strategy
chevron’s strategy is to leverage our strengths to safely deliver lower carbon
energy to a growing world
Our objective is to safely deliver higher returns, lower carbon and superior shareholder value in any business
environment. We are building on our capabilities, assets and customer relationships as we aim to lead in lower
carbon intensity oil, products and natural gas, as well as advance new products and solutions that reduce the
carbon emissions of major industries. We aim to grow our oil and gas business, lower the carbon intensity of our
operations and grow lower carbon businesses in renewable fuels, carbon capture and offsets, hydrogen and other
emerging technologies.
DJ Basin
Colorado
Shale & tight
~400,000 net barrels
per day of oil-equivalent
production expected
in 2024
delivering value and resilience
Our high-quality assets, along with our people and technology that unlock their value and the customers that
rely on them, are the foundation of our competitive advantage and our long-term value creation. Our assets
are diverse and competitive, spanning from conventional oil fields to deepwater projects, from shale plays to
liquefied natural gas plants, refineries and chemical plants.
Our operations are not only reliable and profitable, but also resilient – maintained with a focus on operational
excellence, capital efficiency and process safety. We also strive to lower our carbon intensity and promote a lower
carbon future. We invest in innovation and transformational technology to scale lower carbon solutions, and we
lower the carbon intensity of our operations through energy efficiency, methane management, flaring reduction
and other means.
These assets enable us to balance scale, returns, and risk, and to adapt to the evolving energy landscape.
3.1
million
barrels net oil-equivalent
daily production
2.7
million
barrels per day of
refined product sales
22.4
kilograms
CO
2
e/BOE upstream oil
carbon intensity
11.9
percent
return on capital employed
Chevron Corporation 2023 Annual Report
I
table of contents
to our stockholders .............................................................. IV
beliefs drive our strategy ................................................ VIII
board of directors ................................................................. X
director: one-on-one ..........................................................XII
corporate officers .............................................................. XIV
chevron at a glance .......................................................... XVI
chevron stock performance ........................................ XVIII
financial and operating highlights ................................. XX
process safety, reliability and integrity ..................... XXII
financials ................................................................................ 33
glossary of energy and financial terms ........................ 116
stockholder and investor information .......................... 118
Albert Lea Biorefinery
Minnesota
Bio-diesel
35,000 barrels per day
effective capacity of
combined renewable fuel
production across our
nine biorefineries
purpose
powers progress
Chevron’s purpose – providing the
affordable, reliable, ever-cleaner energy
that enables human progress – is at
the heart of The Chevron Way. Last
year reminded us of the importance
of that purpose as we achieved record
production levels to meet record global
energy demand. At the same time, we
continued to reduce carbon intensity
in our operations and advance lower
carbon solutions.
It’s all part of building a resilient energy
system that powers human progress.
Learn more at:
chevron.co/progress
to our stockholders
In a year of geopolitical turmoil and economic
uncertainty, Chevron remained focused on its
purpose: providing the affordable, reliable, ever-
cleaner energy that enables human progress. We
fulfill that purpose by executing our strategy:
leveraging our strengths to safely deliver lower
carbon energy to a growing world.
We believe a resilient energy system must be
capable of enabling economic prosperity, energy
security and environmental protection. This will
be advanced by human ingenuity, innovation,
leadership and action. These beliefs inform our
strategy and decisions.
executing our strategy
Leveraging our strengths starts with the right mix of
high-quality assets. Value is delivered through the
capabilities of our people and technology to meet
customer needs now and in the future.
Our advantaged portfolio delivered annual
production of 3.1 million barrels of oil-equivalent per
day in 2023 – the highest in our history.
To further strengthen that portfolio, in October,
we agreed to acquire Hess Corporation. This
is Chevron’s fourth major deal in recent years,
following the acquisitions of Noble Energy in 2020,
Renewable Energy Group in 2022 and PDC Energy
in 2023.
These actions support our longstanding
financial priorities:
•
Grow the dividend consistently: In January 2024,
we raised the per-share dividend 8% to $1.63 per
quarter. And 2023 marked 36 consecutive years of
higher annual dividends per share.
•
Invest capital efficiently: We strengthened our
portfolio to grow both traditional and new energy
supplies, advanced major capital projects and
completed several strategic acquisitions.
•
Maintain a strong balance sheet: We maintained
our financial strength with a net debt ratio of
7.3% and eliminated more than $4 billion of debt,
including all debt assumed in the PDC acquisition.
•
Return excess cash to stockholders: We returned
a record $26.3 billion to stockholders in 2023
through dividends of $11.3 billion and share
repurchases of $14.9 billion.
the energy landscape
In 2023, global energy consumption set new records,
demonstrating the important role of oil and natural
gas in powering the world’s economy. Global oil
consumption reached a new high of ~102 million
barrels per day; U.S. natural gas demand set new
records; and global LNG demand continued to grow.
In 2024, oil and gas consumption are projected to
surpass 2023 records even as significant growth in
new energies is also expected to continue.
Global energy investment totaled a record
~$2.8 trillion in 2023, with just over one-third
directed to traditional energy, including oil and
gas. Annual global energy investment is projected
to reach $3 trillion for the balance of this decade to
meet expected demand growth.
Chevron Corporation 2023 Annual Report
IV
delivering results
Amid this evolving landscape, Chevron
continues to play a leading role in supplying the
energy the world needs and helping to build the
lower carbon energy system of the future.
In 2023, our upstream operations produced
3.1 million oil-equivalent barrels per day,
with upstream capital expenditures of over
$13 billion. We added approximately 980 million
barrels of net oil-equivalent proved reserves,
which equates to approximately 86% of net
oil‑equivalent production for the year.
The PDC Energy acquisition added 275,000 net
acres adjacent to Chevron’s existing Colorado
operations in the DJ Basin and an additional
25,000 net acres in the Permian Basin.
In the Permian Basin, production averaged an
all-time high of 783,000 barrels of oil‑equivalent
per day, a 10% increase from 2022. We expect to
achieve Permian production of 1 million barrels
of oil-equivalent per day in 2025.
In the Gulf of Mexico, we reached first oil at the
Mad Dog 2 project and completed installation of
the floating production unit for the Anchor Field,
an important milestone toward achieving first
production, expected in 2024.
chevron new energies continues to advance lower carbon
solutions to help customers meet their lower carbon ambitions
In Kazakhstan, we achieved mechanical completion
on the Future Growth Project, which is designed
to further increase total daily production from
the Tengiz reservoir and maximize the ultimate
recovery of resources. In Australia, we achieved
first natural gas production from the Gorgon
Stage Two development, and in Israel, we reached
final investment decision to construct a third
gathering pipeline, expected to increase natural gas
production capacity at the Leviathan Field.
Throughout the company, we are implementing
projects designed to reduce the carbon intensity of
our operations. In 2023, we launched a solar power
project with a joint venture partner in New Mexico
to provide renewable energy for our Permian Basin
operations. And we plan to install new technologies
on Chevron’s LNG vessels that are expected to
reduce the carbon intensity of our fleet.
In downstream, we continue to evolve our refining
system to produce lower carbon intensity fuels
and products. We successfully converted the
diesel hydrotreater at our El Segundo Refinery
to process either 100% renewable feedstock or
traditional feedstocks.
We also announced a commercial collaboration with
Corteva Inc. and Bunge to purchase next generation
renewable feedstocks to meet increasing demand
for these products. And the renewable diesel
expansion of our Geismar Biorefinery is on track to
start up this year.
Our Chevron Phillips Chemical Company affiliate
reached final investment decision on a joint venture
with QatarEnergy to build an integrated polymers
facility in Qatar, and continued the construction of a
similar facility in Texas.
Chevron New Energies continues to advance lower
carbon solutions to help customers meet their lower
carbon ambitions and to reduce the carbon intensity
of our operations.
We expanded our Bayou Bend CCS Hub project,
positioning it to be one of the largest carbon
storage projects in the U.S.
We also acquired a majority stake in ACES Delta,
a green hydrogen production and storage hub
in Utah. And we are exploring development of a
hydrogen and ammonia production facility on the
U.S. Gulf Coast and the potential use of hydrogen
fuel cells in powering locomotives.
looking to the future
As we navigate a world of uncertainty, we remain
grounded in the vision, purpose and values of
The Chevron Way. We’ll continue to provide the
energy that powers the world today, as we build
new businesses capable of becoming a larger part
of the energy system that powers tomorrow.
That’s human progress.
Thank you for your support and the continued
trust you place in us.
Sincerely,
Michael K. Wirth
Chairman of the Board
and Chief Executive Officer
Chevron Corporation 2023 Annual Report
VI
Richmond Refinery
California
1.78 million barrels per day
of crude unit distillation
capacity combined across
our eight consolidated
and affiliate refineries
Chevron Corporation 2023 Annual Report
VII
beliefs drive our strategy
leveraging our strengths to safely deliver
lower carbon energy to a growing world
we stay true to our strategy,
guided by our fundamental beliefs
Energy is essential to modern life
The future is lower carbon
Human ingenuity fuels innovation
Leadership carries great responsibility
we have the right mix
of high-quality assets
Shale & Tight
Deepwater
LNG
Heavy Oil
Refining & Marketing
Petrochemicals
we tap the power of our portfolio
through our people and technology
Engaging the full potential of our people
Scaling affordable, innovative technology solutions
we’re building businesses that
will play a larger role in our future
Renewable Fuels
Carbon Capture & Offsets
Hydrogen
Chevron Corporation 2023 Annual Report
VIII
Gorgon
Australia
Liquefied natural gas
159,000 metric tons
per day of LNG production
across consolidated and
affiliate assets in 2023
Chevron Corporation 2023 Annual Report
IX
board of directors
The Board of Directors of Chevron directs the affairs of the corporation and is committed to sound principles of
corporate governance. The Directors bring a proven track record of success across a broad range of experiences at
the policymaking level.
Michael K. (Mike) Wirth, 63
Chairman of the Board and Chief Executive Officer
since February 2018. Prior to his current
role, Wirth served as Vice Chairman of the Board in 2017 and Executive Vice President of
Midstream & Development from 2016 to 2018. In that role, he was responsible for supply
and trading, shipping, pipeline and power operating units; corporate strategy; business
development; and corporate affairs.
Wirth was Executive Vice President of Downstream & Chemicals from 2006 to 2015. He served
as President of Global Supply and Trading from 2003 to 2006.
Wirth serves on the board of directors of the American Petroleum Institute and Catalyst, and
is a member of the National Petroleum Council, the Business Roundtable, the World Economic
Forum International Business Council and the American Society of Corporate Executives.
Wirth joined Chevron in 1982 as a design engineer. He earned a bachelor’s degree in chemical
engineering from the University of Colorado.
Wanda M. Austin, 69
Lead Director
since 2022 and a
Director
since 2016. She holds an adjunct Research
Professor appointment at the University
of Southern California’s Viterbi School’s
Department of Industrial and Systems
Engineering. She is a retired President and
Chief Executive Officer of The Aerospace
Corporation, a leading architect for the
United States’ national security space
programs. She is also a Director of Amgen
Inc. and Apple Inc. (2,3)
John B. Frank, 67
Director
since 2017. He is Vice Chairman
of Oaktree Capital Group LLC, a global
investment management company with
expertise in credit strategies. He is one
of four members of Oaktree’s Executive
Committee and was previously the firm’s
Principal Executive Officer. He is also a
Director of Daily Journal Corporation and
Oaktree Capital Group LLC and its subsidiary,
Oaktree Specialty Lending Corporation. (1)
Alice P. Gast, 65
Director
since 2012. She was President
of Imperial College London, a public
research university specializing in science,
engineering, medicine and business.
Previously, she was President of Lehigh
University in Pennsylvania. Prior to that, she
was Vice President for Research, Associate
Provost and Robert T. Haslam Chair in
Chemical Engineering at the Massachusetts
Institute of Technology. (2,4)
Enrique Hernandez, Jr., 68
Director
since 2008. He is Executive
Chairman of Inter-Con Security Systems
Inc., a global provider of security and facility
support services to governments, utilities
and industrial customers. He is also Chairman
of the Board of McDonald’s Corporation and
a Director of The Macerich Company. (3,4)
Chevron Corporation 2023 Annual Report
X
Marillyn A. Hewson, 70
Director
since 2021. She was Executive
Chairman, Chairman, President and Chief
Executive Officer of Lockheed Martin
Corporation, a security and aerospace
company. She is also a Director of
Johnson & Johnson. (1)
Jon M. Huntsman Jr., 64
Director
since 2020 and from 2014 to
2017 when he resigned to serve as the U.S.
Ambassador to Russia. He served as Vice
Chair of Policy at Ford Motor Company from
May 2021 to January 2023. Previously, he
served as U.S. Ambassador to China and was
Governor of Utah for two consecutive terms.
He is also a Director of Ford Motor Company
and Mobileye. (3,4)
Charles W. Moorman, 72
Director
since 2012. He is a retired Chairman
of the Board, Chief Executive Officer and
President of Norfolk Southern Corporation,
a freight and transportation company.
He served as a Senior Advisor to Amtrak
from 2018 to 2023, having previously
served as Amtrak’s President and Chief
Executive Officer. He is also a Director of
Oracle Corporation. (2,3)
Dambisa F. Moyo, 55
Director
since 2016. She is Co-Principal
of Versaca Investments, a family office
focused on growth investing globally. She
sits as a member of the House of Lords in
Britain, as Baroness Moyo of Knightsbridge.
Previously, she served as Chief Executive
Officer of Mildstorm LLC, focusing on the
global economy and international affairs.
Prior to that, she worked at Goldman Sachs
in various roles and at the World Bank in
Washington, D.C. (1)
Debra Reed-Klages, 67
Director
since 2018. She is a retired Chairman,
Chief Executive Officer and President of
Sempra Energy, an energy services holding
company. Previously, she was Executive Vice
President of Sempra Energy and President
and Chief Executive Officer of San Diego Gas
& Electric and Southern California Gas Co.
She is also a Director of Caterpillar Inc. and
Lockheed Martin Corporation. (1)
D. James Umpleby III, 66
Director
since 2018. He is Chairman and
Chief Executive Officer of Caterpillar Inc., a
leading manufacturer of construction and
mining equipment, diesel and natural gas
engines, industrial gas turbines and diesel-
electric locomotives. Previously, he was
Group President of Caterpillar’s Energy and
Transportation business segment. (2,4)
Cynthia J. Warner, 65
Director
since 2022. She was President
and Chief Executive Officer of Renewable
Energy Group, Inc. (REG) and a member of
REG’s board of directors. Previously, she
was Executive Vice President, Operations
for Andeavor. She is also a Director of
Sempra Energy and Bloom Energy, as well
as a Trustee of the Committee for Economic
Development and a member of the National
Petroleum Council. (4)
1 Audit: Debra Reed-Klages, Chair
2 Board Nominating and Governance: Wanda M. Austin, Chair
3 Management Compensation: Charles W. Moorman, Chair
4 Public Policy and Sustainability: Enrique Hernandez, Jr., Chair
committees of the board
Chevron Corporation 2023 Annual Report
XI
director: one-on-one
a conversation with dr. wanda m. austin, lead independent director,
on chevron’s achievements, governance and outlook
what is the board’s role in representing
stockholders and governing the company?
First and foremost, we are dedicated to affirming
that Chevron maintains a high level of integrity,
transparency and accountability and that the
company complies with all applicable laws and
regulations. The Board oversees Chevron’s strategic
direction, performance and risk management. We
review and approve the company’s strategic plan
and annual budget, and we monitor the progress
and results of its operations. The Board also
assesses the major risks facing the company and
seeks to ensure that there are adequate policies
and controls to mitigate them. One of the Board’s
key roles is to appoint and evaluate the CEO and
other senior executives, and to ensure that they
are aligned on the company’s vision, mission and
values. We set compensation and incentives for the
executive team and hold them accountable for their
performance and conduct.
what accomplishment in 2023 is most
notable for you?
Chevron’s acquisition of PDC Energy and the
anticipated acquisition of Hess demonstrate
strong discipline in identifying both traditional and
new energy M&A opportunities that strengthen
the company’s portfolio. These acquisitions
were evaluated and approved by the Board.
The acquisition of PDC Energy closed in 2023
and is expected to create value for Chevron and
its stockholders and increase the company’s
production, reserves and cash flow. Chevron is well
positioned for future growth and leadership in the
energy industry.
how does chevron address ESG-related
matters and advance a lower carbon future?
The Board oversees Chevron’s governance and
reporting framework, which reflects the company’s
focus on stakeholder engagement, transparency
and measurable outcomes on environmental, social
and governance issues. We believe that these issues
are critical for Chevron’s long-term success.
To demonstrate transparency, Chevron publishes
reports that provide insights into its environmental,
social and governance strategy and performance.
For example, the Approach to Tax and Transparency
Report highlights aspects of Chevron’s governance
and control framework, interactions with tax
authorities, approach to tax, and risk management.
This report was issued in September 2023 and
includes important tax information based on our
2022 Form 10-K.
Chevron’s latest voluntary report on climate-
related risks and opportunities aligns with the
recommendations of the Task Force on Climate
Related Financial Disclosures framework and details
progress on greenhouse gases and other metrics for
environmental performance. This Climate Change
Resilience Report details Chevron’s approach and
the actions the company is taking to help advance
a lower carbon future through its governance, risk
management, strategy, portfolio, performance
and policy, and metrics. The Board reviewed this
report, which also describes Chevron’s support
for a life‑cycle approach to carbon accounting to
facilitate informed decision making throughout the
value chain. The latest report was issued in October
2023 and covers the period from 2019 to 2022.
Chevron has a long history of reporting on
sustainability topics, issuing its first such report
in 2003 and releasing six climate-related reports
since 2017. The company continuously seeks to
improve its environmental, social and governance
reporting practices and engage with its stakeholders
on these matters.
what makes you confident about
chevron’s future?
I am optimistic about Chevron’s future for
three reasons:
First, our people: Chevron has the technical and
human capacity to help advance a lower carbon
future. The company is reducing its carbon
emissions intensity, increasing its efficiency, and
supporting renewable and low-carbon energy.
Chevron is also helping its customers and partners
achieve their emission reduction goals.
Second, our portfolio: the company has a strong and
diversified portfolio of businesses, products and
services. Chevron provides solutions that enhance
its customers’ performance, safety and quality. It
can adapt to changing markets and customer needs
and find new opportunities for growth and value.
This gives Chevron a competitive edge and a loyal
customer base.
Third, our financial strength: Chevron has a robust
and flexible balance sheet that allows management
to invest in growth and innovation and reward
stockholders. The company has a disciplined capital
strategy and is generating strong cash flow. This
allows it to sustain its growth and share its success
with its investors.
I am confident that Chevron is positioned to create
value and deliver results in 2024 and well beyond. I
am proud to be part of the Board of Directors, and I
look forward to working with the management team,
the employees, the customers and the stockholders
to achieve our shared goals and purpose.
Chevron Corporation 2023 Annual Report
XIII
corporate officers
Paul R. Antebi, 52
Vice President and General Tax Counsel
since 2021. Responsible for directing
Chevron’s worldwide tax activities.
Previously, the company’s Deputy General
Tax Counsel. Joined the company in 1998.
Marissa Badenhorst, 48
Vice President, Health, Safety and
Environment (HSE)
since 2022. Responsible
for leading the company’s HSE management,
including audit and assurance and
emergency response. Previously, General
Manager of Enterprise Process Safety.
Prior to that, Technical Manager, Chevron
Australia. Joined the company in 2000.
Eimear P. Bonner, 50
Vice President and Chief Financial Officer
since 2024. Responsible for audit, controller,
investor relations, tax and treasury activities
worldwide. Previously President Chevron
Technical Center and Chief Technology
Officer. Joined the company in 1998.
Mary A. Francis, 59
Corporate Secretary and Chief Governance
Officer
since 2015. Responsible for
providing advice and counsel to the Board
of Directors and senior management on
corporate governance matters, managing the
company’s corporate governance function,
and serving on the Law Function Executive
Committee. Previously, Chief Corporate
Counsel. Joined the company in 2002.
Jeff B. Gustavson, 51
Vice President, Lower Carbon Energies
since 2021. Responsible for lower carbon
solutions that have the potential to scale,
including commercialization opportunities
in hydrogen, carbon capture, and offsets
and support of ongoing growth in biofuels.
Previously, Vice President, Mid-Continent
Business Unit; and President, Chevron
Canada Limited. Joined the company in 1999.
Alana K. Knowles, 59
Vice President and Controller
since 2023.
Responsible for corporatewide accounting,
financial reporting and analysis, internal
controls, accounting policy, and digital
finance. Previously, Vice President, Finance,
Downstream & Chemicals and Midstream;
and Assistant Treasurer, Operating Company
Financing. Joined the company in 1988.
A. Nigel Hearne, 56
Executive Vice President, Oil, Products &
Gas
since 2022. Responsible for the entire
value chain, ensuring a more integrated
approach to capital allocation, asset class
excellence and value chain optimization.
Previously, President of Chevron Eurasia-
Pacific Exploration and Production Company.
Prior to that, Managing Director of Chevron
Australia. Joined the company in 1989.
Balaji Krishnamurthy, 47
Vice President, Chevron Technical Center
since 2024. Responsible for overseeing
technical services in support of Chevron’s
global operations, the development and
scaling of innovative technology solutions
to support the current and future energy
system, as well as the application of
engineering standards across the company.
Previously, Vice President, Strategy &
Sustainability; and President of Chevron
Canada Limited. Joined the company in 2002.
Chevron Corporation 2023 Annual Report
XIV
Molly T. Laegeler, 46
Vice President, Strategy & Sustainability
since 2023. Responsible for guiding
development of the company’s key
strategies, including capital allocation
and sustainability efforts. Previously,
Vice President of Chevron North America
Exploration & Production Company’s San
Joaquin Valley business unit. Joined the
company in 2005.
Navin K. Mahajan, 57
Vice President and Treasurer
since
2019. Responsible for Chevron’s banking,
financing, cash management, insurance,
pension investments, and credits and
receivables activities. Previously, Vice
President of Finance for Downstream &
Chemicals, Assistant Treasurer of Operating
Company Financing, and Chief Compliance
Officer. Joined the company in 1996.
Rhonda J. Morris, 58
Vice President
since 2016 and
Chief Human
Resources Officer
since 2019. Responsible
for human resources, diversity and inclusion,
ombuds, and employee assistance/work life
services. Previously, Vice President, Human
Resources, Downstream & Chemicals. Joined
the company in 1991.
Frank W. Mount, 54
Vice President, Corporate Business
Development
since 2023. Responsible for
identifying and developing new, large-scale
business opportunities worldwide, including
mergers and acquisitions. Previously,
President of M&A and Origination; and
General Manager of Investor Relations.
Joined the company in 1993.
Mark A. Nelson, 60
Vice Chairman
since 2023. Responsible for
Chevron Strategy & Sustainability, Corporate
Affairs, Corporate Business Development,
Information Technology and Procurement/
Supply Chain Management. Previously,
Executive Vice President, Downstream &
Chemicals. Joined the company in 1985.
Colin E. Parfitt, 60
Vice President, Midstream
since 2019.
Responsible for shipping, pipeline, power
and energy management, and supply
and trading operating units. Previously,
President, Supply and Trading; and Vice
President, Sales and Marketing, Chevron
Oronite Company LLC. Joined the company
in 1995.
R. Hewitt Pate, 61
Vice President and General Counsel
since 2009. Responsible for directing
the company’s worldwide legal affairs.
Previously, Chair, Competition Practice,
Hunton & Williams LLP, Washington, D.C.,
and Assistant Attorney General, Antitrust
Division, U.S. Department of Justice. Joined
the company in 2009.
Albert J. Williams, 55
Vice President, Corporate Affairs
since 2021. Responsible for overseeing
government affairs, public affairs, social
investment and performance, and the
company’s worldwide efforts to protect and
enhance its reputation. Previously, Managing
Director of Chevron Australia and head of
the Australasia business unit. Joined the
company in 1991.
executive committee
Michael K. Wirth, Eimear P. Bonner, Jeff B. Gustavson, A. Nigel
Hearne, Balaji Krishnamurthy, Rhonda J. Morris, Mark A. Nelson,
and R. Hewitt Pate.
retiring officers
Pierre R. Breber,
retired March 2024, Vice President and Chief
Financial Officer since 2019. Previously, Executive Vice President
of Downstream & Chemicals. Joined the company in 1989.
Chevron Corporation 2023 Annual Report
XV
Anchor
U.S. Gulf of Mexico
Deepwater
197,000 net oil-equivalent
barrels per day across our
deepwater Gulf assets
in 2023
Chevron Corporation 2023 Annual Report
XVI
chevron at a glance
Chevron is one of the world’s leading integrated
energy companies. We believe affordable, reliable
and ever-cleaner energy is essential to enabling
human progress. Chevron produces crude oil and
natural gas; manufactures transportation fuels,
lubricants, petrochemicals and additives; and
develops technologies that enhance our business
and the industry. We aim to grow our oil and
gas business, lower the carbon intensity of our
operations and grow lower carbon businesses
in renewable fuels, carbon capture and offsets,
hydrogen and other emerging technologies.
Our success is driven by a dedicated, diverse
and highly skilled global workforce united by
The Chevron Way – our enduring statement of
culture – and our focus on delivering industry-
leading results and superior stockholder value.
We aim to lead our industry in health, safety
and environmental performance. The
protection of people, assets, communities and
the environment is our highest priority.
11.1
billion
barrels net oil-equivalent proved reserves
1, 2
$261.6
billion
total assets
1
63.7
million
acres of land leased for oil and gas
exploration and production
1
$196.9
billion
sales and other operating revenues
3
Chevron Corporation 2023 Annual Report
XVII
1
At December 31, 2023
2
For definition of “reserves,” see glossary of energy
and financial terms, page 117
3
Year ended December 31, 2023
chevron stock performance
Indexed dividend growth
Basis 2008 = 100
Cha
rt s
howi
ng t
he 6
.0%
CVX
coump
ound annual
growth rate
Total stockholder returns*
(as of 12/31/2023)
3-year
Ch
art
sh
owi
ng the 58
.1% stockholder return over 1 year compared to Peer group: BP p.l.c. (ADS), ExxonMobil, Shell p.l.c. (ADS), TotalEnergies SE (ADR)
5-year
Ch
ar
t s
how
ing
the 12.2%
stockholder return over 5 years compared to Peer group: BP p.l.c. (ADS), ExxonMobil, Shell p.l.c. (ADS), TotalEnergies SE (ADR)
10-year
Ch
ar
t s
how
ing the 9.6
% stockholder return over 10 years compared to Peer group: BP p.l.c. (ADS), ExxonMobil, Shell p.l.c. (ADS), TotalEnergies SE (ADR)
* Annualized total stockholder return (TSR) as of 12/31/2023. Includes stock price
appreciation and reinvested dividends when paid. For TSR comparison purposes, ADR/
ADS prices and dividends are used for non-U.S.-based companies. Dividends include both
cash and scrip share distributions.
S&P 500
Peer group: BP p.l.c. (ADS), ExxonMobil, Shell p.l.c. (ADS), TotalEnergies SE (ADR).
Dividends include both cash and scrip share distributions for European peers.
Chevron
Peer group: BP p.l.c. (ADS), ExxonMobil, Shell p.l.c. (ADS), TotalEnergies SE (ADR)
Chevron
Chevron Corporation 2023 Annual Report
XVIII
2023 marked the 36th consecutive year
chevron increased the annual per-share dividend payout
Five-year cumulative total returns
(calendar years ended December 31)
Char
t sh
owin
g t
he
Five
-yea
r cu
mula
tive
tot
al r
etur
ns c
ompa
red
to P
eer group: BP p.l.c. (ADS), ExxonMobil, Shell p.l.c. (ADS), TotalEnergies SE (ADR)
S&P 500
Peer group: BP p.l.c. (ADS), ExxonMobil, Shell p.l.c. (ADS), TotalEnergies SE (ADR)
Chevron
Chevron Corporation 2023 Annual Report
XIX
Performance graph
The stock performance graph above shows how an initial investment of $100 in Chevron stock would have
compared with an equal investment in the S&P 500 Index or the competitor peer group. The comparison covers a
five-year period beginning December 31, 2018, and ending December 31, 2023, and the peer group is weighted by
market capitalization as of the beginning of each year. It includes the reinvestment of all dividends that an investor
would be entitled to receive and is adjusted for stock splits. The interim measurement points show the value of
$100 invested on December 31, 2018, as of the end of each year between 2019 and 2023.
financial and operating highlights
financial highlights
1
2023
2022
2021
Net income attributable to Chevron Corporation
$
21,369
$
35,465
$
15,625
Sales and other operating revenues
$
196,913
$
235,717
$
155,606
Cash flow from operating activities
$
35,609
$
49,602
$
29,187
Capital expenditures (Capex)
$
15,829
$
11,974
$
8,056
Affiliate Capital Expenditures (Affiliate Capex)
$
3,534
$
3,366
$
3,167
Total assets at year-end
$
261,632
$
257,709
$
239,535
Total debt and finance lease obligations at year-end
$
20,836
$
23,339
$
31,369
Chevron Corporation stockholders’ equity at year-end
$
160,957
$
159,282
$
139,067
Common shares outstanding at year-end (Thousands)
2
1,851,480
1,901,048
1,915,638
Per-share data
Net income attributable to
Chevron Corporation – diluted
$
11.36
$
18.28
$
8.14
Cash dividends
$
6.04
$
5.68
$
5.31
Chevron Corporation stockholders’ equity
$
86.93
$
83.79
$
72.60
Total debt to total debt-plus equity ratio
3
11.5%
12.8%
18.4%
Net debt ratio
3
7.3%
3.3%
15.6%
Return on stockholders’ equity
3
13.3%
23.8%
11.5%
Return on average capital employed
3
11.9%
20.3%
9.4%
1
Millions of dollars, except per-share amounts
2
Net of Chevron Benefit Plan Trust shares, see page 66 for more information
3
See pages 50–51 for additional information
Chevron Corporation 2023 Annual Report
XX
Cash returned to stockholders
(Billions of dollars)
C
ha
rt
s
howi
ng t
he d
ebt
rati
o and net debt ratio over the past five years
Cash returned to stockholders
– Total amount of cash returned
to stockholders in the form of dividends and share repurchases.
Return on average capital employed
(Percent)
Cha
rt
sh
owi
ng t
he R
etur
n on
cap
ital employed over the past five years
Return on Average Capital Employed
– Net income attributable
to Chevron (adjusted for after-tax interest expense and
noncontrolling interest) divided by average capital employed.
Chevron Corporation 2023 Annual Report
XXI
operating highlights
1
2023
2022
2021
Net production of crude oil, condensate and synthetic oil
(Thousands of barrels per day)
1,497
1,440
1,553
Net production of natural gas liquids
(Thousands of barrels per day)
333
279
261
Net production of natural gas
(Millions of cubic feet per day)
7,744
7,677
7,709
Net oil-equivalent production
(Thousands of oil-equivalent barrels per day)
3,120
2,999
3,099
Net proved reserves of crude oil, condensate and synthetic oil
2
(Millions of barrels)
4,777
4,997
5,075
Net proved reserves of natural gas liquids
2
(Millions of barrels)
1,229
1,088
1,038
Net proved reserves of natural gas
2
(Billions of cubic feet)
30,381
30,864
30,908
Net proved oil-equivalent reserves
2
(Millions of barrels)
11,069
11,229
11,264
Refinery crude oil input
(Thousands of barrels per day)
1,560
1,504
1,479
Sales of refined products
(Thousands of barrels per day)
2,732
2,614
2,454
Number of employees at year-end
3
40,212
38,258
37,498
1
Includes equity in affiliates, except number of employees
2
At year-end
3
Excludes service station employees (5,388 in 2023)
process safety, reliability and integrity
Process safety, reliability and integrity involves
technical teams from engineering, operations and
maintenance working together to detect and reduce
risk from the physical and chemical features of the
materials we process and the equipment we use.
These highly skilled teams strive to design, operate
and maintain safe systems that work as intended.
The teams’ goal is to manage operating system
integrity using design principles and engineering and
operating practices to prevent and mitigate incidents.
Our Operational Excellence Management System
(OEMS) establishes expectations that provide
a framework for managing risks and ensuring
compliance with legal, regulatory and Operational
Excellence (OE) requirements. These expectations
help create a strong culture of safety, reliability and
integrity in the company.
Competency involves establishing and reinforcing
measurable expectations for experience, skills
and capabilities. Risk management systematically
assesses risks and identifies safeguards to prevent
or mitigate incidents or impacts. Assurance verifies
safeguards are in place and functioning. Leadership
is crucial to ensuring that our expectations are
applied to process safety, reliability and integrity.
Learn more about how we protect people and the environment at:
chevron.co/safety
competency
Competency involves ensuring that
employees have the necessary skills
and knowledge to perform their jobs
safely and effectively while complying
with all applicable laws, regulations
and policies. Competency-building
programs provide employees with
the training and development
opportunities they need to build their
skills and knowledge.
risk management
We use a risk management process
to identify, assess, prioritize and
mitigate health, environmental and
safety risks through standardized
procedures for existing operations and
new project design, including aspects
of construction. Viewed broadly, risk
management helps us understand key
risks to the business – risks that may or
may not be process safety related – in
addition to process safety technical
risks and associated safeguards.
leadership
Using the OEMS, our leaders establish
a culture with values, competencies
and behaviors that seeks a consistent
and disciplined application of safety
practices, processes and procedures.
Leaders are responsible for building
and sustaining an OE culture, focusing
on preventing high‑consequence
incidents and impacts by understanding
and mitigating risks, and managing
and assuring safeguards. Promoting
a culture of risk awareness and
demonstrating our values and behaviors
are important duties for any leader.
5 steps of stop work authority
Chevron Corporation 2023 Annual Report
XXII
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Key Financial Results.................................................................................
34
Earnings by Major Operating Area ...........................................................
34
Business Environment and Outlook .........................................................
34
Noteworthy Developments ........................................................................
40
Results of Operations ................................................................................
41
Consolidated Statement of Income...........................................................
43
Selected Operating Data...........................................................................
45
Liquidity and Capital Resources................................................................
46
Financial Ratios and Metrics.....................................................................
50
Financial and Derivative Instrument Market Risk.....................................
51
Transactions With Related Parties............................................................
52
Litigation and Other Contingencies...........................................................
52
Environmental Matters...............................................................................
53
Critical Accounting Estimates and Assumptions......................................
54
New Accounting Standards.......................................................................
57
Quarterly Results ......................................................................................
58
Consolidated Financial Statements
Reports of Management............................................................................
59
Report of Independent Registered Public Accounting Firm
(PCAOB ID: 238)........................................................................................
60
Consolidated Statement of Income...........................................................
62
Consolidated Statement of Comprehensive Income................................
63
Consolidated Balance Sheet.....................................................................
64
Consolidated Statement of Cash Flows....................................................
65
Consolidated Statement of Equity ............................................................
66
Supplemental Information on Oil and Gas Producing Activities ............
102
Notes to the Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies...........................
67
Note 2
Changes in Accumulated Other Comprehensive Losses.......
70
Note 3
Information Relating to the Consolidated Statement of
Cash Flows...............................................................................
71
Note 4
New Accounting Standards......................................................
72
Note 5
Lease Commitments.................................................................
72
Note 6
Summarized Financial Data - Chevron U.S.A. Inc..................
74
Note 7
Summarized Financial Data - Tengizchevroil LLP...................
74
Note 8
Summarized Financial Data - Chevron Phillips Chemical
Company LLC...........................................................................
74
Note 9
Fair Value Measurements........................................................
75
Note 10
Financial and Derivative Instruments.......................................
76
Note 11
Assets Held for Sale.................................................................
77
Note 12
Equity........................................................................................
77
Note 13
Earnings Per Share..................................................................
77
Note 14
Operating Segments and Geographic Data............................
78
Note 15
Investments and Advances......................................................
81
Note 16
Litigation....................................................................................
82
Note 17
Taxes.........................................................................................
85
Note 18
Properties, Plant and Equipment.............................................
88
Note 19
Short-Term Debt.......................................................................
88
Note 20
Long-Term Debt........................................................................
89
Note 21
Accounting for Suspended Exploratory Wells.........................
89
Note 22
Stock Options and Other Share-Based Compensation..........
90
Note 23
Employee Benefit Plans...........................................................
92
Note 24
Other Contingencies and Commitments.................................
97
Note 25
Asset Retirement Obligations...................................................
98
Note 26
Revenue....................................................................................
99
Note 27
Other Financial Information......................................................
99
Note 28
Financial Instruments - Credit Losses....................................
100
Note 29
Acquisition of PDC Energy, Inc..............................................
101
Note 30
Agreement to Acquire Hess Corporation...............................
101
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF
“SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Annual Report of Chevron Corporation contains forward-looking statements relating to Chevron’s operations and energy transition plansthat are based on management’s
current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words orphrases such as “anticipates,” “expects,” “intends,”
“plans,” “targets,” “advances,” “commits,” “drives,” “aims,” “forecasts,” “projects,” “believes,”“approaches,” “seeks,” “schedules,” “estimates,” “positions,” “pursues,” “progress,”
“may,” “can,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,”“guidance,” “focus,” “on track,” “goals,” “objectives,” “strategies,” “opportunities,” “poised,” “potential,”
“ambitions,” “aspires” and similar expressions, andvariations or negatives of these words, are intended to identify such forward-looking statements, but not all forward-looking
statements include such words.These statements are not guarantees of future performance and are subject to numerous risks, uncertainties and other factors, many of which
are beyond thecompany’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in suchforward-
looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report.Unless legally required,
Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, futureevents or otherwise.
Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and naturalgas prices and
demand for the company’s products, and production curtailments due to market conditions; crude oil production quotas or other actions thatmight be imposed by the Organization
of Petroleum Exporting Countries and other producing countries; technological advancements; changes to governmentpolicies in the countries in which the company operates;
public health crises, such as pandemics and epidemics, and any related government policies andactions; disruptions in the company’s global supply chain, including supply chain
constraints and escalation of the cost of goods and services; changingeconomic, regulatory and political environments in the various countries in which the company operates;
general domestic and international economic, marketand political conditions, including the military conflict between Russia and Ukraine, the war between Israel and Hamas and
the global response to thesehostilities; changing refining, marketing and chemicals margins; actions of competitors or regulators; timing of exploration expenses; timing of crude
oilliftings; the competitiveness of alternate-energy sources or product substitutes; development of large carbon capture and offset markets; the results of operationsand financial
condition of the company’s suppliers, vendors, partners and equity affiliates; the inability or failure of the company’s joint-venture partners to fundtheir share of operations and
development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gasdevelopment projects; potential delays in the
development, construction or start-up of planned projects; the potential disruption or interruption of the company’soperations due to war, accidents, political events, civil unrest,
severe weather, cyber threats, terrorist acts, or other natural or human causes beyond thecompany’s control; the potential liability for remedial actions or assessments under
existing or future environmental regulations and litigation; significantoperational, investment or product changes undertaken or required by existing or future environmental
statutes and regulations, including internationalagreements and national or regional legislation and regulatory measures related to greenhouse gas emissions and climate
change; the potential liability resultingfrom pending or future litigation; the ability to successfully integrate the operations of the company and PDC Energy, Inc. and achieve
the anticipated benefitsfrom the transaction, including the expected incremental annual free cash flow; the risk that Hess Corporation (Hess) stockholders do not approve the
potentialtransaction, and the risk that regulatory approvals are not obtained or are obtained subject to conditions that are not anticipated by the company and Hess;uncertainties
as to whether the potential transaction will be consummated on the anticipated timing or at all, or if consummated, will achieve its anticipatedeconomic benefits, including as a
result of regulatory proceedings and risks associated with third party contracts containing material consent, anti-assignment,transfer or other provisions that may be related to
the potential transaction that are not waived or otherwise satisfactorily resolved; the company’s ability tointegrate Hess’ operations in a successful manner and in the expected
time period; the possibility that any of the anticipated benefits and projected synergies ofthe potential transaction will not be realized or will not be realized within the expected
time period; the company’s future acquisitions or dispositions of assets orshares or the delay or failure of such transactions to close based on required closing conditions;
the potential for gains and losses from asset dispositions orimpairments; government mandated sales, divestitures, recapitalizations, taxes and tax audits, tariffs, sanctions,
changes in fiscal terms or restrictions on scopeof company operations; foreign currency movements compared with the U.S. dollar; higher inflation and related impacts; material
reductions in corporateliquidity and access to debt markets; changes to the company’s capital allocation strategies; the effects of changed accounting rules under generally
acceptedaccounting principles promulgated by rule-setting bodies; the company’s ability to identify and mitigate the risks and hazards inherent in operating in the globalenergy
industry; and the factors set forth under the heading “Risk Factors” on pages 20 through 26 in the Annual Report on Form 10-K, and as updated in the future. Other unpredictable
or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements.
Chevron Corporation 2023 Annual Report
33
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Key Financial Results
Millions of dollars, except per-share amounts
2023
2022
2021
Net Income (Loss) Attributable to Chevron Corporation
$
21,369
$
35,465
$
15,625
Per Share Amounts:
Net Income (Loss) Attributable to Chevron Corporation
– Basic
$
11.41
$
18.36
$
8.15
– Diluted
$
11.36
$
18.28
$
8.14
Dividends
$
6.04
$
5.68
$
5.31
Sales and Other Operating Revenues
$
196,913
$
235,717
$
155,606
Return on:
Capital Employed
11.9%
20.3%
9.4%
Stockholders’ Equity
13.3%
23.8%
11.5%
Earnings by Major Operating Area
Millions of dollars
2023
2022
2021
Upstream
United States
$
4,148
$
12,621
$
7,319
International
13,290
17,663
8,499
Total Upstream
17,438
30,284
15,818
Downstream
United States
3,904
5,394
2,389
International
2,233
2,761
525
Total Downstream
6,137
8,155
2,914
All Other
(2,206)
(2,974)
(3,107)
Net Income (Loss) Attributable to Chevron Corporation
1,2
$
21,369
$
35,465
$
15,625
1
Includes foreign currency effects:
$
(224)
$
669
$
306
2
Income net of tax, also referred to as “earnings” in the discussions that follow.
Refer
to
the
Results
of
Operations
section
for
a
discussion
of
financial
results
by
major
operating
area
for
the
three
years
ended
December
31,
2023.
Throughout
the
document,
certain
totals
and
percentages
may
not
sum
to
their
component
parts
due to rounding.
Business Environment and Outlook
Chevron
Corporation
is
a
global
energy
company
with
direct
and
indirect
subsidiaries
and
affiliates
that
conduct
substantial
business
activities
in
the
following
countries:
Angola,
Argentina,
Australia,
Bangladesh,
Brazil,
Canada,
China,
Egypt,
Equatorial
Guinea,
Israel,
Kazakhstan,
Mexico,
Nigeria,
the
Partitioned
Zone
between
Saudi
Arabia
and
Kuwait,
the
Philippines, Republic of Congo, Singapore, South Korea, Thailand, the United Kingdom, the United States and Venezuela.
The
company’s
objective
is
to
safely
deliver
higher
returns,
lower
carbon
and
superior
shareholder
value
in
any
business
environment.
Earnings
of
the
company
depend
mostly
on
the
profitability
of
its
upstream
business
segment.
The
most
significant factor affecting the results of operations for the upstream segment is the price of crude oil, which is determined in
global
markets
outside
of
the
company’s
control.
In
the
company’s
downstream
business,
crude
oil
is
the
largest
cost
component
of
refined
products.
Periods
of
sustained
lower
commodity
prices
could
result
in
the
impairment
or
write-off
of
specific
assets
in
future
periods
and
cause
the
company
to
adjust
operating
expenses,
including
employee
reductions,
and
capital expenditures, along with other measures intended to improve financial performance.
Governments, companies, communities and other stakeholders are increasingly supporting efforts to address climate change.
International
initiatives
and
national,
regional
and
state
legislation
and
regulations
that
aim
to
directly
or
indirectly
reduce
GHG
emissions
are
in
various
stages
of
design,
adoption
and
implementation.
These
policies
and
programs,
some
of
which
support the global net zero emissions ambitions of the Paris Agreement, can change the amount of energy consumed, the rate
of
energy-demand
growth,
the
energy
mix
and
the
relative
economics
of
one
fuel
versus
another.
Implementation
of
jurisdiction-specific
policies and programs can be dependent on, and can affect the pace of, technological advancements, the
granting
of
necessary
permits
by
governing
authorities,
the
availability
of
cost-effective,
verifiable
carbon
credits,
the
availability
of suppliers
that can meet sustainability
and other standards, evolving regulatory
or other requirements
affecting
ESG
standards
or
other
disclosures
and
evolving
standards
for
tracking,
reporting,
marketing
and
advertising
relating
to
emissions and emission reductions and removals.
Some of these policies and programs include renewable and low carbon fuel standards, such as the Renewable Fuel Standard
program
in
the
U.S.
and
California’s
Low
Carbon
Fuel
Standard;
programs
that
price
GHG
emissions,
including
Chevron Corporation 2023 Annual Report
34
Management’s Discussion and Analysis of Financial Condition and Results of Operations
California’s Cap-and-Trade Program; performance standards, including methane-specific regulations such as the U.S. EPA’s
Standards
of
Performance
for
New,
Reconstructed,
and
Modified
Sources
and
Emissions
Guidelines
for
Existing
Sources;
and
measures
that
provide
various
incentives
for
lower
carbon
activities,
including
carbon
capture
and
storage
and
the
production
of
hydrogen
and
sustainable
aviation
fuel,
such
as
the
U.S.
Inflation
Reduction
Act.
Requirements
for
these
and
other
similar
policies
and
programs
are
complex,
ever
changing,
program
specific
and
encompass:
(1)
the
blending
of
renewable
fuels
into
transportation
fuels;
(2)
the
purchasing,
selling,
utilizing
and
retiring
of
allowances
and
carbon
credits;
and
(3)
other
emissions
reduction
measures
including
efficiency
improvements
and
capturing
GHG
emissions.
These
compliance
policies
and
programs
have
had
and
may
continue
to
have
negative
impacts
on
the
company
now
and
in
the
future
including,
but
not
limited
to,
the
displacement
of
hydrocarbon
and
other
products
and/or
the
impairment
of
assets.
These
policies
have
also
enabled
opportunities
for
Chevron
in
its
lower
carbon
businesses.
For
example,
the
acquisition
of
Renewable
Energy
Group,
Inc.
(REG)
in
2022
grew
the
company’s
renewable
fuels
production
capacity
and
increased
the
company’s
carbon
credit
generation
activities.
Although
we
expect
the
company’s
costs
to
comply
with
these
policies
and
programs to continue to increase, these costs currently do not have a material impact on the company’s financial condition or
results of operations.
Significant uncertainty remains as to the pace and extent to which the transition to a lower carbon future will progress, which
is
dependent,
in
part,
on
further
advancements
and
changes
in
policy,
technology,
and
customer
and
consumer
preferences.
The
level
of
expenditure
required
to
comply
with
new
or
potential
climate
change-related
laws
and
regulations
and
the
amount
of
additional
investments
needed
in
new
or
existing
technology
or
facilities,
such
as
carbon
capture
and
storage,
is
difficult
to
predict
with
certainty
and
is
expected
to
vary
depending
on
the
actual
laws
and
regulations
enacted,
available
technology
options,
customer
and
consumer
preferences,
the
company’s
activities
and
market
conditions.
As
discussed
below,
in
2021,
the
company
announced
planned
capital
spend
of
approximately
$10
billion
through
2028
in
lower
carbon
investments.
Although
the
future
is
uncertain,
many
published
outlooks
conclude
that
fossil
fuels
will
remain
a
significant
part of an energy system that increasingly incorporates lower carbon sources of supply for many years to come.
Chevron
supports
the
Paris
Agreement’s
global
approach
to
governments
addressing
climate
change
and
continues
to
take
actions to help lower the carbon intensity of its operations while continuing to meet the demand for energy. Chevron believes
that
broad,
market-based
mechanisms
are
the
most
efficient
approach
to
addressing
GHG
emission
reductions.
Chevron
integrates
climate
change-related
issues and the regulatory
and other responses to these issues into its strategy and planning,
capital
investment
reviews
and
risk
management
tools
and
processes,
where
it
believes
they
are
applicable.
They
are
also
factored into the company’s long-range supply, demand and energy price forecasts. These forecasts reflect estimates of long-
range
effects
from
climate
change-related
policy
actions,
such
as
electric
vehicle
and
renewable
fuel
penetration,
energy
efficiency standards and demand response to oil and natural gas prices.
The
company
will
continue
to
develop
oil
and
gas
resources
to
meet
customers’
and
consumers’
demand
for
energy.
At
the
same
time,
Chevron
believes
that
the
future
of
energy
is
lower
carbon.
The company
will
continue
to
maintain
flexibility
in
its
portfolio
to
be
responsive
to
changes
in
policy,
technology
and
customer
and
consumer
preferences.
Chevron
aims
to
grow
its
oil
and
gas
business,
lower
the
carbon
intensity
of
its
operations
and
grow
lower
carbon
businesses
in
renewable
fuels,
carbon capture
and offsets,
hydrogen and other emerging
technologies.
To grow its
lower carbon businesses,
Chevron
plans
to
target
sectors
of
the
economy
where
emissions
are
harder
to
abate
or
that
cannot
be
easily
electrified,
while
leveraging
the
company’s
capabilities,
assets,
partnerships
and
customer
relationships.
The
company’s
oil
and
gas
business
may increase or decrease depending upon regulatory or market forces, among other factors.
In 2021, Chevron announced the following aspirations and targets that are aligned with its lower carbon strategy:
2050
Net
Zero
Upstream
Aspiration
Chevron
aspires
to
achieve
net
zero
for
upstream
production
Scope
1
and
2
GHG
emissions
on an equity basis by 2050. The company believes accomplishing
this aspiration
depends on, among other things,
partnerships
with
multiple
stakeholders
including
customers,
continuing
progress
on
commercially
viable
technology,
government
policy,
successful
negotiations
for
carbon
capture
and
storage
and
nature-based
projects,
availability
and
acceptability
of
cost-effective,
verifiable
offsets
in
the
global
market,
and
granting
of
necessary
permits
by
governing
authorities.
2028
Upstream
Production
GHG
Intensity
Targets
These
metrics
include
Scope
1,
direct
emissions,
and
Scope
2,
indirect
emissions
associated
with
imported
electricity
and
steam,
and
are
net
of
emissions
from
exported
electricity
and
steam.
The
2028 GHG emissions intensity targets on an equity ownership basis include:
Chevron Corporation 2023 Annual Report
35
Management’s Discussion and Analysis of Financial Condition and Results of Operations
•
Oil
production
GHG
intensity
of
24
kilograms
(kg)
carbon
dioxide
equivalent
per
barrel
of
oil-equivalent
(CO
2
e/boe),
•
Gas production GHG intensity of 24 kg CO
2
e/boe,
•
Methane intensity of 2 kg CO
2
e/boe, and
•
Flaring GHG intensity of 3 kg CO
2
e/boe.
The
company
also
targets
no
routine
flaring
by
2030.
Chevron
uses
emissions
intensity
targets,
which
enable
the
company
to
assess,
quantify
and
transparently
communicate
its
own
carbon
performance
in
a
standardized
way.
2028
Portfolio
Carbon
Intensity
Target
The
company
also
introduced
a
portfolio
carbon
intensity
(PCI)
metric,
which
is
a
measure
of
the
carbon
intensity
across
the
full
value
chain
of
Chevron’s
entire
business.
This
metric
encompasses
the
company’s
upstream
and
downstream
business
and
includes
Scope
1
(direct
emissions),
Scope
2
(indirect
emissions
from
imported
electricity
and
steam),
and
certain
Scope
3
(primarily
emissions
from
use
of
sold
products)
emissions.
The
company’s
PCI
target
is
71
grams
(g)
carbon
dioxide
equivalent
(CO
2
e)
per
megajoule
(MJ)
by
2028.
Planned
Lower-Carbon
Capital
Spend
through
2028
In
2021,
the
company
established
planned
capital
spend
of
approximately
$10
billion
through
2028
to
advance
its
lower
carbon
strategy,
which
includes
approximately
$2
billion
to
lower
the
carbon
intensity
of
its
oil
and
gas
operations,
and
approximately
$8
billion
for
lower
carbon
investments
in
renewable
fuels,
hydrogen
and
carbon
capture
and
offsets.
We
anticipate
additional
capital
spending
as
the
company
progresses
toward
its
2050
upstream
production
Scope
1
and
2
net
zero
aspiration
and
further
grows
its
lower
carbon
business
lines.
Since
2021,
the
company
has
spent
$6.5
billion
in
lower
carbon
investments,
including
$2.9
billion
associated
with
the
acquisition
of
REG
in
2022.
Chevron’s
goals,
targets
and
aspirations
reflect
Chevron’s
current
plans,
and
Chevron
may
change
them
for
various
reasons,
including
market
conditions;
changes
in
its
portfolio;
and
financial,
operational,
regulatory,
reputational,
legal
and
other
factors.
Refer
to
“Risk
Factors”
in
Part
I,
Item
1A,
on
pages
20
through
26
of the company's Annual Report on
Form 10-K
for
further
discussion
of
GHG
regulation
and
climate
change
and
the
associated
risks
to
Chevron’s
business,
including
the
risks
impacting
Chevron’s
lower
carbon
strategy
and
its
aspirations,
targets
and
plans.
Income
Taxes
The
effective
tax
rate
for
the
company
can
change
substantially
during
periods
of
significant
earnings
volatility.
This
is
due
to
the
mix
effects
that
are
impacted
by
both
the
absolute
level
of
earnings
or
losses
and
whether
they
arise
in
higher
or
lower
tax
rate
jurisdictions.
As
a
result,
a
decline
or
increase
in
the
effective
income
tax
rate
in
one
period
may
not
be
indicative
of
expected
results
in
future
periods.
Additional
information
related
to
the
company’s
effective
income
tax
rate
is
included
in
Note
17
Taxes
to
the
Consolidated
Financial
Statements.
The
Inflation
Reduction
Act
(IRA),
enacted
in
the
United
States
on
August
16,
2022,
imposes
several
new
taxes
that
were
effective
in
2023,
including
a
15
percent
minimum
tax
on
book
income
and
a
one
percent
excise
tax
on
stock
repurchases.
The
IRA
also
implements
various
incentives
for
lower
carbon
activities,
including
carbon
capture
and
storage
and
the
production
of
hydrogen
and
sustainable
aviation
fuel,
and
extends
the
federal
biodiesel
mixture
excise
tax
credit
through
December
31,
2024.
The
IRA
has
not
had
a
material
impact
on
our
results
of
operations.
In
December
2021,
the
Organization
for
Economic
Co-operation
and
Development
(OECD)
issued
model
rules
for
a
new
15
percent
global
minimum
tax
(Pillar
Two),
and
various
jurisdictions
in
which
the
company
operates
enacted
or
are
in
the
process
of
enacting
Pillar
Two
legislation.
Certain
aspects
of
the
tax
under
the
Pillar
Two
framework
will
be
effective
beginning
in
2024
in
some
jurisdictions
and
in
2025
(or
later)
in
others.
Although
we
do
not
currently
expect
that
Pillar
Two
will
have
a
material
impact
on
our
results
of
operations,
we
are
continuing
to
evaluate
the
impact
of
legislative
adoption
by
individual
countries.
Supply
Chain
and
Inflation
Impacts
The
company
is
actively
managing
its
contracting,
procurement
and
supply
chain
activities
to
effectively
manage
costs
and
facilitate
supply
chain
resiliency
and
continuity
in
support
of
the
company’s
operational
goals.
Third
party
costs
for
capital
and
operating
expenses
can
be
subject
to
external
factors
beyond
the
company’s
control
including,
but
not
limited
to:
severe
weather
or
civil
unrest,
delays
in
construction,
global
and
local
supply
chain
distribution
issues,
inflation,
tariffs
or
other
taxes
imposed
on
goods
or
services,
and
market-based
prices
charged
by
the
industry’s
material
and
service
providers.
Chevron
utilizes
contracts
with
various
pricing
mechanisms,
which
may
result
in
a
lag
before
the
company’s
costs
reflect
changes
in
market
trends.
Chevron Corporation 2023 Annual Report
36
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
While
macroeconomic
inflation
is
easing,
trends
in
the
costs
of
goods
and
services
vary
by
spend
category.
The
labor
market
remains
tight,
and
suppliers
are
passing
along
wage
rate
increases
for
labor
intensive
operations.
Chevron
has
applied
inflation
mitigation
strategies
in
an
effort
to
temper
these
cost
increases,
including
fixed
price
and
index-based
contracts.
Lead
times
for
key
capital
equipment
remain
long.
Chevron
has
addressed
lead
times
by
partnering
with
suppliers
on
demand
planning,
volume
commitments,
standardization
and
scope
optimization.
Raw
material
prices
have
declined,
leading
to
a
lower
cost
for
drilling
pipe,
chemicals
and
construction
materials.
Onshore
drilling
activity
in
the
United
States
declined;
however,
availability
of
specialized
offshore
drilling
rigs,
supply
vessels
and
equipment
to
perform
onshore
hydraulic
fracturing
remains
under
pressure.
Refer
to
the
Cautionary
Statement
Relevant
to
Forward-Looking
Information
on
page
33
and
to
Item
1A.
Risk
Factors
of
the company's Annual Report on Form 10-K
for
a
discussion
of
some
of
the
inherent
risks
that
could
materially
impact
the
company’s
results
of
operations
or
financial
condition.
Acquisition
and
Disposition
of
Assets
The
company
continually
evaluates
opportunities
to
dispose
of
assets
that
are
not
expected
to
provide
sufficient
long-term
value
and
to
acquire
assets
or
operations
complementary
to
its
asset
base
to
help
augment
the
company’s
financial
performance
and
value
growth.
Asset
dispositions
and
restructurings
may
result
in
significant
gains
or
losses
in
future
periods.
In
addition,
some
assets
are
sold
along
with
their
related
liabilities,
such
as
abandonment
and
decommissioning
obligations.
In
certain
instances,
such
transferred
obligations
have,
and
may
in
the
future,
revert
to
the
company
and
result
in
losses
that
could
be
significant.
In
fourth
quarter
2023,
the
company
recognized
an
after-tax
loss
of
$1.9
billion
related
to
abandonment
and
decommissioning
obligations
from
previously
sold
oil
and
gas
production
assets
in
the
U.S.
Gulf
of
Mexico,
as
companies
that
purchased
these
assets
have
filed
for
protection
under
Chapter
11
of
the
U.S.
Bankruptcy
Code,
and
the
company
believes
it
is
now
probable
and
estimable
that
a
portion
of
these
obligations
will
revert
to
the
company.
The
cash
outlays
for
these
abandonment
and
decommissioning
obligations
are
expected
to
take
place
over
the
next
decade.
Other
Impacts
The
company
closely
monitors
developments
in
the
financial
and
credit
markets,
the
level
of
worldwide
economic
activity,
and
the
implications
for
the
company
of
movements
in
prices
for
crude
oil
and
natural
gas.
Management
takes
these
developments
into
account
in
the
conduct
of
daily
operations
and
for
business
planning.
Earnings
trends
for
the
company’s
major
business
areas
are
described
as
follows:
Upstream
Earnings
for
the
upstream
segment
are
closely
aligned
with
industry
prices
for
crude
oil
and
natural
gas.
Crude
oil
and
natural
gas
prices
are
subject
to
external
factors
over
which
the
company
has
no
control,
including
product
demand
connected
with
global
economic
conditions,
industry
production
and
inventory
levels,
technology
advancements,
production
quotas
or
other
actions
imposed
by
OPEC+
countries,
actions
of
regulators,
weather-related
damage
and
disruptions,
competing
fuel
prices,
natural
and
human
causes
beyond
the
company’s
control,
and
regional
supply
interruptions
or
fears
thereof
that
may
be
caused
by
military
conflicts,
civil
unrest
or
political
uncertainty.
Any
of
these
factors
could
also
inhibit
the
company’s
production
capacity
in
an
affected
region.
The
company
closely
monitors
developments
in
the
countries
in
which
it
operates
and
holds
investments
and
seeks
to
manage
risks
in
operating
its
facilities
and
businesses.
The
longer-term
trend
in
earnings
for
the
upstream
segment
is
also
a
function
of
other
factors,
including
the
company’s
ability
to
efficiently
find,
acquire
and
produce
crude
oil
and
natural
gas,
changes
in
fiscal
terms
of
contracts,
the
pace
of
energy
transition,
and
changes
in
tax,
environmental
and
other
applicable
laws
and
regulations.
The
company
has
begun
to
experience
regulatory
challenges
and
delays
in
obtaining
permits
to
conduct
operations
in
certain
jurisdictions.
These
challenges
have,
and
may
continue
to,
impact
the
company’s
plans
for
future
investments.
For
example,
during
fourth
quarter
2023,
the
company
impaired
a
portion
of
its
U.S.
upstream
assets,
primarily
in
California,
due
to
continuing
regulatory
challenges
in
the
state
that
have
resulted
in
lower
anticipated
future
investment
levels
in
its
business
plans.
The
company
expects
to
continue
operating
the
impacted
assets
for
many
years
to
come.
Chevron
has
interests
in
Venezuelan
assets
operated
by
independent
affiliates.
Chevron
has
been
conducting
limited
activities
in
Venezuela
consistent
with
the
authorization
provided
pursuant
to
general
licenses
issued
by
the
United
States
government.
In
fourth
quarter
2022,
Chevron
received
General
License
41
from
the
United
States
government,
enabling
the
company
to
resume
activity
in
Venezuela
subject
to
certain
limitations,
and
the
company
continues
such
activities
under
this
General
License.
The
financial
results
for
Chevron’s
business
in
Venezuela
are
being
recorded
as
non-equity
investments
since
2020,
where
income
is
only
recognized
when
cash
is
received
and
production
and
reserves
are
not
included
in
the
company’s
results.
Crude
oil
liftings
in
Venezuela
started
in
first
quarter
2023,
which
have
positively
impacted
the
company’s
2023
results,
but
future
results
remain
uncertain.
Chevron Corporation 2023 Annual Report
37
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Governments
(including
Russia)
have
imposed
and
may
impose
additional
sanctions
and
other
trade
laws,
restrictions
and
regulations
that could lead to disruption
in our ability
to produce, transport
and/or export crude in the region around Russia.
An adverse effect on the Caspian Pipeline Consortium (CPC) operations could have a negative impact on the Tengiz field in
Kazakhstan
and
the
company’s
results
of
operations
and
financial
position.
The
financial
impacts
of
such
risks,
including
presently
imposed
sanctions,
are
not
currently
material
for
the
company;
however,
it
remains
uncertain
how
long
these
conditions may last or how severe they may become.
Chevron holds a 39.7 percent interest in the Leviathan field and a 25 percent interest in the Tamar gas field in Israel. In early
October
2023,
due
to
a
war
between
Israel
and
Hamas,
the
Government
of
Israel
directed
the
company
to
shut
down
production at the Tamar gas field. Approximately one month later, the company resumed production, and the Tamar gas field
is
currently
operational.
The
Leviathan
gas
field
was
not
impacted
by
the
war
and
is
currently
operational.
The
financial
impacts
of
the
Tamar
shutdown
and
other
operational
impacts
were
not
material
for
the
company.
However,
given
the
ongoing conflict, the future impacts on the company’s results of operations and financial condition remain uncertain.
Commodity
Prices
The
following
chart
shows
the
trend
in
benchmark
prices
for
Brent
crude
oil,
West
Texas
Intermediate
(WTI) crude oil and U.S. Henry Hub natural gas. The Brent price averaged $83 per barrel for the full-year 2023, compared to
$101
in
2022.
As
of
mid-February
2024,
the
Brent
price
was
$85
per
barrel.
The
WTI
price
averaged
$78
per
barrel
for
the
full-year
2023,
compared
to
$95
in
2022.
As
of
mid-February
2024,
the
WTI
price
was
$77
per
barrel.
The
majority
of
the
company’s equity crude production is priced based on the Brent benchmark.
0.00
5.00
10.00
15.00
20.00
0
30
60
90
120
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
HH
$/mcf
Oil
$/bbl
WTI Crude Oil, Brent Crude Oil and Henry Hub Natural Gas Spot Prices - Quarterly Average
Brent
WTI
Henry Hub
2022
2023
Source: Platts
2021
Crude
prices
were
volatile
in
2023
due
to
tapering
of
post-pandemic
demand
resurgence,
OPEC+
supply
cuts,
Federal
Reserve
interest
rate
action,
and
the
proliferation
of
geopolitical
conflict.
The
company’s
average
realization
for
U.S.
crude
oil
and
NGLs
in
2023
was
$59
per
barrel,
down
23
percent
from
2022.
The
company’s
average
realization
for
international
crude oil and NGLs in 2023 was $72 per barrel, down 21 percent from 2022.
In contrast to price movements in the global market for crude oil, prices for natural gas are also impacted by regional supply
and
demand
and
infrastructure
conditions
in
local
markets.
In
the
United
States,
prices
at
Henry
Hub
averaged
$2.56
per
thousand
cubic
feet
(MCF)
during
2023,
compared
with
$6.36
per
MCF
during
2022.
High
storage
levels
and
strong
production resulted in these lower prices. As of mid-February 2024, the Henry Hub spot price was $1.73 per MCF. (See page
45 for the company’s average natural gas realizations for the U.S.)
Outside
the
United
States,
prices
for
natural
gas
also
depend
on
a
wide
range
of
supply,
demand
and
regulatory
circumstances.
The
company’s
long-term
contract
prices
for
liquefied
natural
gas
(LNG)
are
typically
linked
to
crude
oil
prices.
Most
of
the
equity
LNG
offtake
from
the
operated
Australian
LNG
projects
is
committed
under
binding
long-term
contracts,
with
some
sold
in
the
Asian
spot
LNG
market.
International
natural
gas
realizations
averaged
$7.69
per
MCF
during 2023, compared with $9.75 per MCF during 2022, mainly due to lower LNG prices.
Production
The
company’s
worldwide
net
oil-equivalent
production
in
2023
was
3.1
million
barrels
per
day,
4
percent
higher
than
in
2022
primarily
due
to
the
acquisition
of
PDC
Energy,
Inc.
(PDC)
and
growth
in
the
Permian
Basin.
About
26
percent
of
the
company’s
net
oil-equivalent
production
in
2023
occurred
in
OPEC+
member
countries
of
Angola,
Equatorial Guinea, Kazakhstan, Nigeria, the Partitioned Zone between Saudi Arabia and Kuwait and Republic of Congo.
Chevron Corporation 2023 Annual Report
38
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
company
estimates
its
net
oil-equivalent
production
in
2024
to
increase
four
to
seven
percent
over
2023,
assuming
a
Brent
crude
oil
price
of
$80
per
barrel
and
including
expected
asset
sales.
This
estimate
is
subject
to
many
factors
and
uncertainties,
including
quotas
or
other
actions
that
may
be
imposed
by
OPEC+;
price
effects
on
entitlement
volumes;
changes
in
fiscal
terms
or
restrictions
on
the
scope
of
company
operations;
delays
in
construction;
reservoir
performance;
greater-than-expected
declines
in
production
from
mature
fields;
start-up
or
ramp-up
of projects;
acquisition
and divestment
of
assets;
fluctuations
in
demand
for
crude
oil
and
natural
gas
in
various
markets;
weather
conditions
that
may
shut
in
production;
civil
unrest;
changing
geopolitics;
delays
in
completion
of
maintenance
turnarounds;
storage
constraints
or
economic
conditions
that
could
lead
to
shut-in
production;
or
other
disruptions
to
operations.
The
outlook
for
future
production
levels
is
also
affected
by
the
size
and
number
of
economic
investment
opportunities
and
the
time
lag
between
initial
exploration
and
the
beginning
of
production.
The
company
has
increased
its
investment
emphasis
on
short-cycle
projects.
Net natural gas production
Millions of cubic feet per day
Europe
Australia
Asia
Africa
Other Americas
United States
Net natural gas
liquids production
Thousands of barrels per day
Europe
Australia
Asia
Africa
Other Americas
United States
Net proved reserves
by geographic area
Billions of BOE
*
Europe
Australia
Asia
Africa
Other Americas
United States
*
BOE (barrels of oil-equivalent)
Net crude oil production
Thousands of barrels per day
Europe
Australia
Asia
Africa
Other Americas
United States
Natural gas
Natural gas liquids
Crude oil
*
BOE (barrels of oil-equivalent)
Net proved reserves
by product
Billions of BOE
*
Proved
Reserves
Net
proved
reserves
for
consolidated
companies
and
affiliated
companies
totaled
11.1
billion
barrels
of
oil-equivalent at year-end 2023, a slight decrease from year-end 2022. The reserve replacement ratio in 2023 was 86 percent.
The 5 and 10 year reserve replacement ratios were 82 percent and 99 percent, respectively. Refer to Table V for a tabulation
of the company’s proved net oil and gas reserves by geographic area, at the beginning of 2021 and each year-end from 2021
through
2023,
and
an
accompanying
discussion
of
major
changes
to
proved
reserves
by
geographic
area
for
the
three-year
period ending December 31, 2023.
Refer
to
the
“Results
of
Operations”
section
on
pages
41
and
42
for
additional
discussion
of
the
company’s
upstream
business.
Downstream
Earnings for the downstream segment are closely tied to margins on the refining, manufacturing and marketing
of
products
that
include
gasoline,
diesel,
jet
fuel,
lubricants,
fuel
oil,
fuel
and
lubricant
additives,
petrochemicals
and
renewable fuels. Industry margins are sometimes volatile and can be affected by the global and regional supply-and-demand
balance
for
refined
products
and
petrochemicals,
and
by
changes
in
the
price
of
crude
oil,
other
refinery
and
petrochemical
feedstocks,
and
natural
gas.
Industry
margins
can
also
be
influenced
by
inventory
levels,
geopolitical
events,
costs
of
materials and services, refinery or chemical plant capacity utilization, maintenance programs, and disruptions at refineries or
chemical plants resulting from unplanned outages due to severe weather, fires or other operational events.
Other
factors
affecting
profitability
for
downstream
operations
include
the
reliability
and
efficiency
of
the
company’s
refining,
marketing
and
petrochemical
assets,
the
effectiveness
of
its
crude
oil
and
product
supply
functions,
and
the
volatility of tanker-charter rates for the company’s shipping operations, which are driven by the industry’s demand for crude
oil
and
product
tankers.
Other
factors
beyond
the
company’s
control
include
the
general
level
of
inflation
and
energy
Chevron Corporation 2023 Annual Report
39
Management’s Discussion and Analysis of Financial Condition and Results of Operations
costs
to
operate
the
company’s
refining,
marketing
and
petrochemical
assets,
and
changes
in
tax,
environmental,
and
other
applicable laws and regulations.
The
company’s
most
significant
marketing
areas
are
the
West
Coast
and
Gulf
Coast
of
the
United
States
and
Asia
Pacific.
Chevron
operates
or has significant
ownership interests
in refineries
in each of these areas.
Additionally,
the company has a
growing presence in renewable fuels in the United States after acquiring REG in 2022.
Refer to the “Results of Operations” section on page 42 for additional discussion of the company’s downstream operations.
All
Other
consists
of
worldwide
cash
management
and
debt
financing
activities,
corporate
administrative
functions,
insurance operations, real estate activities and technology companies.
Noteworthy Developments
Key noteworthy developments and other events during 2023 and early 2024 included the following:
Angola
Received approvals to extend Block 0 concession through 2050.
Australia
Achieved
first
natural
gas
production
from
the
Gorgon
Stage
2
development,
supporting
long-term
energy
supply
in the Asia-Pacific region.
Israel
Reached
final
investment
decision
to
construct
a
third
gathering
pipeline
that
is
expected
to
increase
natural
gas
production capacity from approximately 1.2 to nearly 1.4 billion cubic feet per day from the Leviathan reservoir.
Japan
Announced agreements to conduct pilot tests on advanced closed loop geothermal technology.
Kazakhstan
Achieved
mechanical
completion
on
the
Future
Growth
Project
at
the
company’s
50
percent-owned
affiliate,
Tengizchevroil.
United
States
Announced
an
agreement
to
install
new
technologies
on
the
company’s
LNG
vessels
that
are
intended
to
reduce the carbon intensity of its LNG fleet operations.
United States
Expanded the Bayou Bend carbon capture and sequestration hub on the U.S. Gulf Coast through an acquisition
of nearly 100,000 acres, and became the operator of the hub.
United
States
Announced
commercial
collaboration
to
purchase
next
generation
renewable
feedstocks
that
are
intended
to
benefit farmers and increase supplies to meet a growing demand for lower carbon renewable fuels.
United States
Acquired 73 exploration blocks in Gulf of Mexico lease sale 259 and submitted winning bids on an additional
28 exploration blocks in Gulf of Mexico lease sale 261, subject to final government approval.
United States
Achieved first oil at the Mad Dog 2 project in the Gulf of Mexico.
United States
Started operations of a solar power project with a joint venture partner in New Mexico to provide lower carbon
energy for the Permian Basin.
United
States
Converted
the
diesel
hydrotreater
at
the
El
Segundo,
California
refinery
to
process
either
100
percent
renewable or traditional feedstocks.
United
States
Completed
the
acquisition
of
PDC,
adding
275,000
net
acres
in
the
Denver-Julesburg
(DJ)
Basin
and
25,000
net acres in the Permian Basin.
United
States
Completed
the
acquisition
of
a
majority
stake
in
ACES
Delta,
LLC,
which
is
developing
a
green
hydrogen
production and storage hub in Utah.
United
States
Announced
a
definitive
agreement
to
acquire
Hess
Corporation
(Hess),
which
is
expected
to
strengthen
Chevron’s long-term performance by adding world-class assets and people.
Venezuela
Received approval to extend licenses with PetroBoscan, S.A. and PetroIndependiente, S.A. through 2041.
Common
Stock
Dividends
The
2023
annual
dividend
was
$6.04
per
share,
making
2023
the
36th
consecutive
year
that
the
company
increased
its
annual
per
share
dividend
payout.
In
January
2024,
the
company’s
Board
of
Directors
increased
its
quarterly dividend by $0.12 per share, approximately eight percent, to $1.63 per share payable in March 2024.
Common
Stock
Repurchase
Program
The
company
repurchased
$14.9
billion
of
its
common
stock
in
2023
under
its
stock
repurchase program. For more information on the common stock repurchase program, see Liquidity and Capital Resources.
Chevron Corporation 2023 Annual Report
40
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
The
following
section
presents
the
results
of
operations
and
variances
on
an
after-tax
basis
for
the
company’s
business
segments – Upstream and Downstream – as well as for “All Other.” Earnings are also presented for the U.S. and international
geographic areas of the Upstream and Downstream business segments. Refer to Note 14 Operating Segments and Geographic
Data
for
a
discussion
of
the
company’s
“reportable
segments.”
This
section
should
also
be
read
in
conjunction
with
the
discussion
in
Business
Environment
and
Outlook.
Refer
to
the
Selected
Operating
Data
for
a
three-year
comparison
of
production
volumes,
refined
product
sales
volumes
and
refinery
inputs.
A
discussion
of
variances
between
2022
and
2021
can
be
found
in
the
“Results
of
Operations”
section
on
pages
39
through
40
of
the
company’s
2022
Annual
Report
on
Form 10-K filed with the SEC on February 23, 2023.
United States
International
Worldwide Downstream
earnings
Billions of dollars
$
U.S. refined product sales
Thousands of barrels per day
Other
Fuel oil
Diesel/Gas oil
Jet fuel
Gasoline
United States
International
Worldwide Upstream
earnings
Billions of dollars
$
Other
Fuel oil
Diesel/Gas oil
Jet fuel
Gasoline
International refined
product sales*
Thousands of barrels per day
U.S. Upstream
Unit
*
2023
2022
2021
Earnings
$MM
$
4,148
$
12,621
$
7,319
Net Oil-Equivalent Production
MBOED
1,349
1,181
1,139
Liquids Production
MBD
997
888
858
Natural Gas Production
MMCFD
2,112
1,758
1,689
Liquids Realization
$/BBL
$
59.19
$
76.71
$
56.06
Natural Gas Realization
$/MCF
$
1.67
$
5.55
$
3.11
*
MBD — thousands of barrels per day; MMCFD — millions of cubic feet per day; BBL — Barrel; MCF — thousands of cubic feet; MBOED — thousands of barrels of
oil-equivalent per day.
U.S.
upstream
earnings
decreased
by
$8.5
billion
primarily
due
to
lower
realizations
of
$6.2
billion,
$1.9
billion
in
charges
related to abandonment and decommissioning obligations for previously sold oil and gas producing assets in the U.S. Gulf of
Mexico,
and
higher
impairment
charges
of
$1.8 billion,
mainly
from
assets
in California.
Partially
offsetting
these items
are
higher
sales
volumes
of
$1.9 billion.
Higher
2023 operating
expenses
of
$460 million
were
more
than
offset
by the
absence
of a 2022 early contract termination at Sabine Pass of $600 million.
Net
oil-equivalent
production
was
up
168,000
barrels
per
day,
or
14
percent,
primarily
due
to
the
acquisition
of
PDC
and
growth in the Permian Basin.
Chevron Corporation 2023 Annual Report
41
Management’s Discussion and Analysis of Financial Condition and Results of Operations
International Upstream
Unit
(2)
2023
2022
2021
Earnings
(1)
$MM
$
13,290
$
17,663
$
8,499
Net Oil-Equivalent Production
MBOED
1,771
1,818
1,960
Liquids Production
MBD
833
831
956
Natural Gas Production
MMCFD
5,632
5,919
6,020
Liquids Realization
$/BBL
$
71.70
$
90.71
$
64.53
Natural Gas Realization
$/MCF
$
7.69
$
9.75
$
5.93
(1)
Includes foreign currency effects:
$
376
$
816
$
302
(2)
MBD — thousands of barrels per day; MMCFD — millions of cubic feet per day; BBL — Barrel; MCF — thousands of cubic feet; MBOED — thousands of barrels of
oil-equivalent per day.
International
upstream
earnings
decreased
by
$4.4
billion
primarily
due
to
lower
realizations
of
$7.2 billion
and
lower
sales
volumes
of
$280
million,
partially
offset
by
lower
depreciation
expense
of
$1.4
billion
mainly
due
to
absence
of
write-off
and impairment charges in 2022, lower operating expenses of $820 million and a favorable one-time tax benefit in Nigeria of
$560 million. Foreign currency effects had an unfavorable impact on earnings of $440 million between periods.
Net oil-equivalent production was down 47,000 barrels per day, or 3 percent. The decrease was primarily due to normal field
declines, shutdowns and lower production following expiration of the Erawan concession in Thailand.
U.S. Downstream
Unit
*
2023
2022
2021
Earnings
$MM
$
3,904
$
5,394
$
2,389
Refinery Crude Oil Inputs
MBD
934
866
903
Refined Product Sales
MBD
1,287
1,228
1,139
*
MBD — thousands of barrels per day.
U.S. downstream earnings decreased by $1.5 billion primarily due to lower margins on refined product sales of $660 million,
higher operating expenses of $490 million and lower earnings from the 50 percent-owned CPChem of $220 million.
Refinery
crude
oil
input
was
up
68,000
barrels
per
day,
or
8
percent,
primarily
due
to
a
smaller
impact
from
planned
turnaround
activity
at
the
Richmond,
California
refinery
and
higher
crude
oil
processed
in
place
of
other
feedstocks
at
the
Pascagoula,
Mississippi
refinery.
These
increases
were
partially
offset
by
planned
turnaround
impacts
at
the
El
Segundo,
California refinery in first quarter 2023.
Refined
product
sales
were
up
59,000
barrels
per
day,
or
5
percent,
primarily
due
to
higher
jet
fuel
demand
and
higher
renewable fuel sales following the REG acquisition.
International Downstream
Unit
(2)
2023
2022
2021
Earnings
(1)
$MM
$
2,233
$
2,761
$
525
Refinery Crude Oil Inputs
MBD
626
639
576
Refined Product Sales
MBD
1,445
1,386
1,315
(1)
Includes foreign currency effects:
$
(12)
$
235
$
185
(2)
MBD — thousands of barrels per day.
International downstream earnings decreased by $528 million primarily due to higher operating expenses of $360 million and
an unfavorable swing in foreign currency effects of $247 million between periods.
Refinery crude oil input was down 13,000 barrels per day, or 2 percent, compared to the year-ago period.
Refined product sales were up 59,000 barrels per day, or 4 percent, primarily due to higher demand for jet fuel and gasoline.
Chevron Corporation 2023 Annual Report
42
Management’s Discussion and Analysis of Financial Condition and Results of Operations
All Other
Unit
2023
2022
2021
Net charges
*
$MM
$
(2,206)
$
(2,974)
$
(3,107)
*
Includes foreign currency effects:
$
(588)
$
(382)
$
(181)
All
Other
consists
of
worldwide
cash
management
and
debt
financing
activities,
corporate
administrative
functions,
insurance operations, real estate activities, and technology companies.
Net
charges
decreased
by
$768
million
primarily
due
to
lower
employee
benefit
costs
and
higher
interest
income,
partially
offset by an unfavorable swing of $206 million in foreign currency effects.
Consolidated Statement of Income
Comparative amounts for certain income statement categories are shown below. A discussion of variances between 2022 and
2021
can
be
found
in
the
“Consolidated
Statement
of
Income”
section
on
pages
41
and
42
of
the
company’s
2022
Annual
Report on Form 10-K.
Millions of dollars
2023
2022
2021
Sales and other operating revenues
$
196,913
$
235,717
$
155,606
Sales
and
other
operating
revenues
decreased
in
2023
mainly
due
to
lower
commodity
prices,
partially
offset
by
higher
refined product sales volumes.
Millions of dollars
2023
2022
2021
Income (loss) from equity affiliates
$
5,131
$
8,585
$
5,657
Income
from
equity
affiliates
decreased
in
2023
mainly
due
to
lower
upstream-related
earnings
from
Tengizchevroil
in
Kazakhstan
and
Angola
LNG
and
lower
downstream-related
earnings
from
GS
Caltex
in
Korea
and
CPChem.
Refer
to
Note 15 Investments and Advances for a discussion of Chevron’s investments in affiliated companies.
Millions of dollars
2023
2022
2021
Other income (loss)
$
(1,095)
$
1,950
$
1,202
Other
income
decreased
in
2023
mainly
due
to
charges
related
to
abandonment
and
decommissioning
obligations
from
previously
sold
oil
and
gas
production
assets
in
the
U.S.
Gulf
of
Mexico,
an
unfavorable
swing
in
foreign
currency
effects
and lower gains on asset sales, partially offset by income from Venezuela non-equity investments and higher interest income.
Millions of dollars
2023
2022
2021
Purchased crude oil and products
$
119,196
$
145,416
$
92,249
Crude oil and product purchases decreased in 2023 primarily due to lower commodity prices.
Millions of dollars
2023
2022
2021
Operating, selling, general and administrative expenses
$
29,028
$
29,026
$
24,740
Operating,
selling,
general
and
administrative
expenses
were
relatively
unchanged
compared
to
last
year.
Higher
transportation
and
materials
and
supplies
expenses
were
offset
by
lower
employee
benefit
costs
and
the
absence
of
early
contract termination fees at Sabine Pass in 2022.
Millions of dollars
2023
2022
2021
Exploration expense
$
914
$
974
$
549
Exploration expenses in 2023 decreased primarily due to lower charges for well write-offs.
Millions of dollars
2023
2022
2021
Depreciation, depletion and amortization
$
17,326
$
16,319
$
17,925
Depreciation,
depletion and amortization
expenses increased in 2023 primarily
due to higher impairment
charges and higher
production, partially offset by lower rates.
Chevron Corporation 2023 Annual Report
43
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Millions of dollars
2023
2022
2021
Taxes other than on income
$
4,220
$
4,032
$
3,963
Taxes other than on income increased in 2023 primarily due to higher excise taxes.
Millions of dollars
2023
2022
2021
Interest and debt expense
$
469
$
516
$
712
Interest and debt expenses decreased in 2023 mainly due to higher capitalized interest and lower debt balances.
Millions of dollars
2023
2022
2021
Other components of net periodic benefit costs
$
212
$
295
$
688
Other
components
of
net
periodic
benefit
costs
decreased
in
2023
primarily
due
to
lower
pension
settlement
costs
as
fewer
lump-sum pension distributions were made in the current year, partially offset by the impact of higher interest rates.
Millions of dollars
2023
2022
2021
Income tax expense (benefit)
$
8,173
$
14,066
$
5,950
The decrease in income tax expense in 2023 of $5.9 billion is due to the decrease in total income before tax for the company
of
$20.1
billion.
The
decrease
in
income
before
taxes
for
the
company
is
primarily
the
result
of
lower
upstream
realizations
and downstream margins.
U.S.
income
before
tax
decreased
from
$21.0
billion
in
2022
to
$8.6
billion
in
2023.
This
$12.4
billion
decrease
in
income
was
primarily
driven
by
lower
upstream
realizations
and
downstream
margins,
charges
related
to
abandonment
and
decommissioning
obligations,
and
higher
impairment
charges,
partially
offset
by
higher
sales
volumes.
The
decrease
in
income had a direct impact on the company’s U.S. income tax resulting in a decrease to tax expense of $2.7 billion between
year-over-year periods, from $4.5 billion in 2022 to $1.8 billion in 2023.
International
income
before
tax
decreased
from
$28.7
billion
in
2022
to
$21.0
billion
in
2023.
This
$7.7
billion
decrease
in
income was primarily driven by lower upstream realizations, partly offset by the absence of a 2022 write-off and impairment
charges. The decrease in income primarily drove the $3.2 billion decrease in international income tax expense between year-
over-year periods, from $9.6 billion in 2022 to $6.4 billion in 2023.
Refer also to the discussion of the effective income tax rate in Note 17 Taxes.
Chevron Corporation 2023 Annual Report
44
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Selected Operating Data
1,2
Unit
2023
2022
2021
U.S. Upstream
Net Crude Oil and Natural Gas Liquids (NGLs) Production
MBD
997
888
858
Net Natural Gas Production
3
MMCFD
2,112
1,758
1,689
Net Oil-Equivalent Production
MBOED
1,349
1,181
1,139
Sales of Natural Gas
4
MMCFD
4,637
4,354
3,986
Sales of NGLs
MBD
354
276
201
Revenues from Net Production
Crude
$/BBL
$
75.04
$
92.41
$
65.29
NGLs
$/BBL
$
20.04
$
33.80
$
28.46
Liquids (weighted average of Crude and NGLs)
$/BBL
$
59.19
$
76.71
$
56.06
Natural Gas
$/MCF
$
1.67
$
5.55
$
3.11
International Upstream
Net Crude Oil and NGLs Production
5
MBD
833
831
956
Net Natural Gas Production
3
MMCFD
5,632
5,919
6,020
Net Oil-Equivalent Production
5
MBOED
1,771
1,818
1,960
Sales of Natural Gas
MMCFD
6,025
5,786
5,178
Sales of NGLs
MBD
94
107
84
Revenues from Liftings
Crude
$/BBL
$
74.29
$
93.73
$
65.77
NGLs
$/BBL
$
24.01
$
37.56
$
40.35
Liquids (weighted average of Crude and NGLs)
$/BBL
$
71.70
$
90.71
$
64.53
Natural Gas
$/MCF
$
7.69
$
9.75
$
5.93
Worldwide Upstream
Net Oil-Equivalent Production
5
United States
MBOED
1,349
1,181
1,139
International
MBOED
1,771
1,818
1,960
Total
MBOED
3,120
2,999
3,099
U.S. Downstream
Gasoline Sales
6
MBD
642
639
655
Other Refined Product Sales
MBD
645
589
484
Total Refined Product Sales
MBD
1,287
1,228
1,139
Sales of Natural Gas
4
MMCFD
32
24
21
Sales of NGLs
MBD
22
27
29
Refinery Crude Oil Input
MBD
934
866
903
International Downstream
Gasoline Sales
6
MBD
353
336
321
Other Refined Product Sales
MBD
1,092
1,050
994
Total Refined Product Sales
7
MBD
1,445
1,386
1,315
Sales of Natural Gas
4
MMCFD
1
3
—
Sales of NGLs
MBD
153
127
96
Refinery Crude Oil Input
MBD
626
639
576
1
Includes company share of equity affiliates.
2
MBD – thousands of barrels per day; MMCFD – millions of cubic feet per day; MBOED – thousands of barrels of oil-equivalents per day; Bbl – barrel; MCF – thousands of
cubic feet. Oil-equivalent gas (OEG) conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil; MBOED - thousands of barrels of oil-equivalent per day.
3
Includes natural gas consumed in operations:
United States
MMCFD
64
53
44
International
MMCFD
532
517
548
4
Downstream sales of Natural Gas separately identified from Upstream.
5
Includes net production of synthetic oil:
Canada
MBD
51
45
55
6
Includes branded and unbranded gasoline.
7
Includes sales of affiliates:
MBD
389
389
357
Chevron Corporation 2023 Annual Report
45
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
Sources and Uses of Cash
The strength of the company’s balance sheet enables it to fund any timing differences throughout
the year between cash inflows and outflows.
Cash,
Cash
Equivalents
and
Marketable
Securities
Total
balances
were
$8.2
billion
and
$17.9
billion
at
December
31,
2023
and
2022,
respectively.
The
company
holds
its
cash
with
a
diverse
group
of
major
financial
institutions
and
has
processes
and
safeguards
in
place
designed
to
manage
its
cash
balances
and
mitigate
the
risk
of
loss.
Cash
provided
by
operating
activities
in
2023
was
$35.6
billion,
compared
to
$49.6
billion
in
2022,
primarily
due
to
lower
upstream
realizations
and
refining
margins.
Cash
provided
by
operating
activities
was
net
of
contributions
to
employee
pension
plans
of
approximately
$1.1
billion
in
2023
and
$1.3 billion
in
2022. Capital
expenditures
totaled
$15.8 billion
in
2023 compared
to
$12.0
billion
in
2022.
Proceeds
and
deposits
related
to
asset
sales
and
return
of
investments
totaled
$669
million
in
2023
compared to $2.6 billion in 2022. Cash flow from financing activities includes proceeds from shares issued for stock options
of $261 million in 2023, compared with a higher than typical $5.8 billion in 2022 when a large number of stock options were
exercised.
Restricted cash of $1.1 billion and $1.4 billion at December 31, 2023 and 2022, respectively, was held in cash and short-term
marketable securities and recorded as “Deferred charges and other assets” and “Prepaid expenses and other current assets” on
the
Consolidated
Balance
Sheet.
These
amounts
are
generally
associated
with
upstream
decommissioning
activities,
tax
payments and funds held in escrow for tax-deferred exchanges.
Dividends
Dividends paid to common stockholders were $11.3 billion in 2023 and $11.0 billion in 2022.
Debt
and Finance Lease
Liabilities
Total
debt
and
finance
lease
liabilities
were
$20.8 billion
at
December
31, 2023, down
from $23.3 billion at year-end 2022.
The
$2.5
billion
decrease
in
total
debt
and
finance
lease
liabilities
during
2023 was primarily
due
to
the
repayment
of
long-
term
notes
that
matured
during
the
year.
The
company’s
debt
and
finance
lease
liabilities
due
within
one
year,
consisting
primarily of the current portion of long-term debt and redeemable long-term obligations, totaled $5.1 billion at December 31,
2023, compared with $6.0 billion at year-end 2022. Of these amounts, $4.5 billion and $4.1 billion were reclassified to long-
term
debt
at
the
end
of
2023
and
2022,
respectively.
At
year-end
2023,
settlement
of
these
obligations
was
not
expected
to
require
the
use
of
working
capital
in
2024,
as
the
company
had
the
intent
and
the
ability,
as
evidenced
by
committed
credit
facilities, to refinance them on a long-term basis.
During
third
quarter
2023,
the
company
assumed
$1.5
billion
of
debt
in
conjunction
with
the
PDC
acquisition,
including
balances outstanding under the revolving credit facility, PDC’s 6.125% notes due 2024 (2024 notes) and PDC’s 5.75% notes
due
2026
(2026
notes).
The
outstanding
balances
under
the
revolving
credit
facility
and
the
2024
notes
were
repaid
during
third
quarter
2023.
The
company
also
irrevocably
deposited
sufficient
U.S.
Treasury
securities
with
U.S.
Bank
Trust
Company,
N.A.,
as
trustee,
to
fund
the
redemption
of
the
2026
notes,
resulting
in
the
indenture
being
satisfied
and
discharged.
The company has access to a commercial paper program as a financing source for working capital or other short-term needs.
The company had no commercial paper outstanding as of December 31, 2023.
Chevron Corporation 2023 Annual Report
46
The major
debt rating
agencies routinely evaluate the company’s debt, and the company’s cost of borrowing can increase or
decrease
depending
on
these
debt
ratings.
The
company
has
outstanding
public
bonds
issued
by
Chevron
Corporation,
Chevron
U.S.A.
Inc.
(CUSA),
Noble
Energy,
Inc.
(Noble),
and
Texaco
Capital
Inc.
Most
of
these
securities
are
the
obligations
of,
or
guaranteed
by,
Chevron
Corporation
and
are
rated
AA-
by
Standard
and
Poor’s
Corporation
and
Aa2
by
Moody’s
Investors
Service.
The
company’s
U.S.
commercial
paper
is
rated
A-1+
by
Standard
and
Poor’s
and
P-1
by
Moody’s. All of these ratings denote high-quality, investment-grade securities.
The
company’s
future
debt
level
is
dependent
primarily
on
results
of
operations,
cash
that
may
be
generated
from
asset
dispositions,
the
capital
program,
lending
commitments
to
affiliates
and
shareholder
distributions.
Based
on
its
high-quality
debt ratings, the company believes that it has substantial borrowing capacity to meet unanticipated cash requirements. During
extended
periods
of
low
prices
for
crude
oil
and
natural
gas
and
narrow
margins
for
refined
products
and
commodity
chemicals,
the
company
has
the
ability
to
modify
its
capital
spending
plans
and
discontinue
or
curtail
the
stock
repurchase
program.
This provides
the flexibility
to continue paying the common stock dividend and remain committed
to retaining the
company’s high-quality debt ratings.
Committed Credit Facilities
Information related to committed credit facilities is included in Note 19 Short-Term Debt.
Summarized
Financial
Information
for
Guarantee
of
Securities
of
Subsidiaries
CUSA
issued
bonds
that
are
fully
and
unconditionally guaranteed on an unsecured basis by Chevron Corporation (together, the “Obligor Group”). The tables below
contain
summary
financial
information
for
Chevron
Corporation,
as
Guarantor,
excluding
its
consolidated
subsidiaries,
and
CUSA,
as
the
issuer,
excluding
its
consolidated
subsidiaries.
The
summary
financial
information
of
the
Obligor
Group
is
presented
on
a
combined
basis,
and
transactions
between
the
combined
entities
have
been
eliminated.
Financial
information
for non-guarantor entities has been excluded.
Year Ended
December 31, 2023
Year Ended
December 31, 2022
(Millions of dollars) (unaudited)
Sales and other operating revenues
$
100,405
$
126,911
Sales and other operating revenues - related party
44,553
50,082
Total costs and other deductions
102,773
121,757
Total costs and other deductions - related party
35,781
43,042
Net income (loss)
$
12,190
$
15,043
All Other
Downstream
Upstream
Affiliate
capital expenditures
Billions of dollars
21
22
23
0.0
6.0
3.0
9.0
12.0
18.0
15.0
$3.5
All Other
Downstream
Upstream
Capital expenditures
by segment
Billions of dollars
21
22
23
0.0
3.0
9.0
6.0
12.0
15.0
18.0
$15.8
21
22
23
0.0
40.0
30.0
20.0
10.0
Debt at year-end
Billions of dollars
$20.8
$12.6
Total debt
Net debt*
*
Refer to page 50-51 of the
company's 2023
Annual Report
on Form 10-K
for calculations of
total debt and net debt.
20.0
0.0
50.0
30.0
10.0
40.0
Cash from operating
activities compared with
capital expenditures and
shareholder distributions
Billions of dollars
21
22
23
Dividends
Capital expenditures
Stock repurchases
Cash from operating activities
$35.6
$42.1
21
22
23
0.0
20.0
15.0
10.0
5.0
Debt ratios
Percent
11.5%
7.3%
Debt ratio
Net debt ratio*
*
Refer to page 50-51 of the
company's 2023
Annual Report
on Form 10-K
for calculations of
debt ratio and net debt ratio.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Chevron Corporation 2023 Annual Report
47
Management’s Discussion and Analysis of Financial Condition and Results of Operations
At December 31,
2023
At December 31,
2022
(Millions of dollars) (unaudited)
Current assets
$
19,006
$
28,781
Current assets - related party
18,375
12,326
Other assets
54,558
50,505
Current liabilities
20,512
22,663
Current liabilities - related party
132,474
118,277
Other liabilities
28,849
27,353
Total net equity (deficit)
$
(89,896)
$
(76,681)
Common
Stock
Repurchase
Program
In
first
quarter
2023,
the
company
purchased
a
total
of
22.4
million
shares
for
$3.7 billion
under the February 2019 stock repurchase
program.
On January 25, 2023, the Board of Directors authorized the
repurchase of the company’s shares of common stock in an aggregate amount of $75 billion (the “2023 Program”). The 2023
Program took effect on April 1, 2023, and does not have a fixed expiration date. As of December 31, 2023, the company had
purchased
a
total
of
70.4
million
shares
for
$11.2
billion,
resulting
in
$63.8
billion
remaining
under
the
2023
Program.
In
aggregate,
the
company
purchased
92.8
million
shares
for
$14.9
billion
in
2023.
In
connection
with
the
pending
transaction
with
Hess,
share
repurchases
have
been
restricted
pursuant
to
SEC
regulations
since
the
acquisition
announcement
and
will
be restricted
until the date of the Hess stockholder vote. Chevron expects share repurchases in the first quarter of 2024 to be
around $3 billion plus or minus 20 percent, depending primarily on the timing of the Hess definitive proxy statement mailing.
Repurchases
of
shares
of
the
company’s
common
stock
may
be
made
from
time
to
time
in
the
open
market,
by
block
purchases,
in
privately
negotiated
transactions
or
in
such
other
manner
as
determined
by
the
company.
The
timing
of
the
repurchases
and
the
actual
amount
repurchased
will
depend
on
a
variety
of
factors,
including
the
market
price
of
the
company’s
shares,
general
market
and
economic
conditions,
and
other
factors.
The
stock
repurchase
program
does
not
obligate the company to acquire any particular amount of common stock and may be suspended or discontinued at any time.
Capital Expenditures
Capital expenditures (Capex) primarily includes additions to fixed asset or investment accounts for the
company’s
consolidated
subsidiaries
and
is
disclosed
in
the
Consolidated
Statement
of
Cash
Flows.
Capex
by
business
segment for 2023, 2022 and 2021 is as follows:
Year ended December 31
Capex
2023
2022
2021
Millions of dollars
U.S.
Int’l.
Total
U.S.
Int’l.
Total
U.S.
Int’l.
Total
Upstream
$
9,842
$
3,836
$
13,678
$
6,847
$
2,718
$
9,565
$
4,554
$
2,221
$
6,775
Downstream
1,536
237
1,773
1,699
375
2,074
806
234
1,040
All Other
351
27
378
310
25
335
221
20
241
Capex
$
11,729
$
4,100
$
15,829
$
8,856
$
3,118
$
11,974
$
5,581
$
2,475
$
8,056
Capex
for
2023
was
$15.8
billion,
32
percent
higher
than
2022
due
to
higher
investments
in
the
United
States,
including
about
$450
million
invested
in
PDC assets
post-acquisition
and
approximately
$650
million
of
inorganic
spend,
mainly
due
to the acquisition of a majority stake in ACES Delta, LLC. Capex excludes the acquisition cost of PDC.
The
company
estimates
that
2024
Capex
will
be
approximately
$16
billion.
In
the
upstream
business,
Capex
is
estimated
to
be
$14
billion,
two-thirds
of
which
is
expected
to
be
in
the
U.S.,
and
includes
around
$5
billion
for
Permian
Basin
development
and
roughly
$1.5
billion
for
other
shale
&
tight
assets
in
the
U.S.
About
25
percent
of
U.S
upstream
Capex
is
planned
for
projects
in
the
Gulf
of
Mexico.
Worldwide
downstream
spending
in
2024
is
estimated
to
be
$1.5
billion
with
80 percent allocated in the U.S. In addition, investments in technology businesses and other corporate operations in 2024 are
projected
to
be
about
$0.5
billion.
Lower
carbon
Capex
included
in
the
upstream
and
downstream
segments
totals
around
$2
billion,
including
investments
to
lower
the
carbon
intensity
of
Chevron’s
traditional
operations
and
grow
new
energy
business lines.
Affiliate
Capital
Expenditures
Equity
affiliate
capital
expenditures
(Affiliate
Capex)
primarily
includes
additions
to
fixed
asset and investment accounts in the equity affiliate companies’ financial statements and does not require cash outlays by the
company.
Affiliate Capex by business segment for 2023, 2022 and 2021 is as follows:
Chevron Corporation 2023 Annual Report
48
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year ended December 31
Affiliate Capex
2023
2022
2021
Millions of dollars
U.S.
Int’l.
Total
U.S.
Int’l.
Total
U.S.
Int’l.
Total
Upstream
$
—
$
2,310
$
2,310
$
—
$
2,406
$
2,406
$
2
$
2,404
$
2,406
Downstream
983
241
1,224
768
192
960
365
396
761
All Other
—
—
—
—
—
—
—
—
—
Affiliate Capex
$
983
$
2,551
$
3,534
$
768
$
2,598
$
3,366
$
367
$
2,800
$
3,167
Affiliate Capex for 2023 was $3.5 billion, 5 percent higher than 2022 due to higher spend at CPChem’s two major integrated
polymer projects.
Affiliate
Capex
is
expected
to
be
$3
billion
in
2024.
Nearly
half
of
Affiliate
Capex
is
for
Tengizchevroil’s
FGP/WPMP
Project in Kazakhstan and about a third is for CPChem.
The company monitors market conditions and can adjust future capital outlays should conditions change.
Noncontrolling Interests
The company had noncontrolling interests of $972 million at December 31, 2023 and $960 million
at
December
31,
2022.
Distributions
to
noncontrolling
interests
net
of
contributions
totaled
$40
million
and
$114
million
in
2023
and
2022,
respectively.
Included
within
noncontrolling
interests
at
December
31,
2023
is
$166
million
of
redeemable
noncontrolling interest.
Pension Obligations
Information related to pension plan contributions is included in Note 23 Employee Benefit Plans, under
the heading “Cash Contributions and Benefit Payments.”
Contractual
Obligations
Information
related
to
the
company’s
significant
contractual
obligations
is
included
in
Note
19
Short-Term
Debt, in
Note 20 Long-Term Debt and in Note 5 Lease Commitments. The aggregate
amount of interest
due on
these
obligations,
excluding
leases,
is:
2024
–
$554;
2025
–
$494;
2026
–
$413;
2027
–
$358;
2028
–
$319;
after
2028
–
$3,212.
Long-Term
Unconditional
Purchase
Obligations
and
Commitments,
Including
Throughput
and
Take-or-Pay
Agreements
Information
related
to
these
off-balance
sheet
matters
is
included
in
Note
24
Other
Contingencies
and
Commitments, under the heading “Long-Term Unconditional Purchase Obligations and Commitments, Including Throughput
and Take-or-Pay Agreements.”
Direct
Guarantees
Information
related
to
guarantees
is
included
in
Note
24
Other
Contingencies
and
Commitments
under
the heading “Guarantees.”
Indemnifications
Information
related
to
indemnifications
is
included
in
Note
24
Other
Contingencies
and
Commitments
under the heading “Indemnifications.”
Chevron Corporation 2023 Annual Report
49
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Ratios and Metrics
The
following
represent
several
metrics
the
company
believes
are
useful
measures
to
monitor
the
financial
health
of
the
company and its performance over time:
Current
Ratio
Current
assets
divided
by
current
liabilities,
which
indicates
the
company’s
ability
to
repay
its
short-term
liabilities
with
short-term
assets.
The
current
ratio
in
all
periods
is
adversely
affected
by
the
fact
that
Chevron’s
inventories
are
valued
on
a
last-in,
first-out
basis.
At
year-end
2023,
the
book
value
of
inventory
was
lower
than
replacement
costs,
based on average acquisition costs during the year, by approximately $6.5 billion.
At December 31
Millions of dollars
2023
2022
2021
Current assets
$
41,128
$
50,343
$
33,738
Current liabilities
32,258
34,208
26,791
Current Ratio
1.3
1.5
1.3
Interest
Coverage
Ratio
Income
before
income
tax
expense,
plus
interest
and
debt
expense
and
amortization
of
capitalized
interest,
less
net
income
attributable
to
noncontrolling
interests,
divided
by
before-tax
interest
costs.
This
ratio
indicates
the
company’s ability to pay interest on outstanding debt.
Year ended December 31
Millions of dollars
2023
2022
2021
Income (Loss) Before Income Tax Expense
$
29,584
$
49,674
$
21,639
Plus: Interest and debt expense
469
516
712
Plus: Before-tax amortization of capitalized interest
223
199
215
Less: Net income attributable to noncontrolling interests
42
143
64
Subtotal for calculation
30,234
50,246
22,502
Total financing interest and debt costs
$
617
$
630
$
775
Interest Coverage Ratio
49.0
79.8
29.0
Free
Cash
Flow
The
cash
provided
by
operating
activities
less
capital
expenditures,
which
represents
the
cash
available
to
creditors and investors after investing in the business.
Year ended December 31
Millions of dollars
2023
2022
2021
Net cash provided by operating activities
$
35,609
$
49,602
$
29,187
Less: Capital expenditures
15,829
11,974
8,056
Free Cash Flow
$
19,780
$
37,628
$
21,131
Debt
Ratio
Total
debt
as
a
percentage
of
total
debt
plus
Chevron
Corporation
Stockholders’
Equity,
which
indicates
the
company’s leverage.
At December 31
Millions of dollars
2023
2022
2021
Short-term debt
$
529
$
1,964
$
256
Long-term debt
20,307
21,375
31,113
Total debt
20,836
23,339
31,369
Total Chevron Corporation Stockholders’ Equity
160,957
159,282
139,067
Total debt plus total Chevron Corporation Stockholders’ Equity
$
181,793
$
182,621
$
170,436
Debt Ratio
11.5
%
12.8
%
18.4
%
Chevron Corporation 2023 Annual Report
50
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Net Debt Ratio
Total debt less cash and cash equivalents and marketable securities as a percentage of total debt less cash and
cash
equivalents
and
marketable
securities,
plus
Chevron
Corporation
Stockholders’
Equity,
which
indicates
the
company’s
leverage, net of its cash balances.
At December 31
Millions of dollars
2023
2022
2021
Short-term debt
$
529
$
1,964
$
256
Long-term debt
20,307
21,375
31,113
Total Debt
20,836
23,339
31,369
Less: Cash and cash equivalents
8,178
17,678
5,640
Less: Marketable securities
45
223
35
Total adjusted debt
12,613
5,438
25,694
Total Chevron Corporation Stockholders’ Equity
160,957
159,282
139,067
Total adjusted debt plus total Chevron Corporation Stockholders’ Equity
$
173,570
$
164,720
$
164,761
Net Debt Ratio
7.3
%
3.3
%
15.6
%
Capital
Employed
The
sum
of
Chevron
Corporation
Stockholders’
Equity,
total
debt
and
noncontrolling
interests,
which
represents the net investment in the business.
At December 31
Millions of dollars
2023
2022
2021
Chevron Corporation Stockholders’ Equity
$
160,957
$
159,282
$
139,067
Plus: Short-term debt
529
1,964
256
Plus: Long-term debt
20,307
21,375
31,113
Plus: Noncontrolling interest
972
960
873
Capital Employed at December 31
$
182,765
$
183,581
$
171,309
Return
on
Average
Capital
Employed
(ROCE)
Net
income
attributable
to
Chevron
(adjusted
for
after-tax
interest
expense
and
noncontrolling
interest)
divided
by
average
capital
employed.
Average
capital
employed
is
computed
by
averaging
the
sum
of
capital
employed
at
the
beginning
and
end
of
the
year.
ROCE
is
a
ratio
intended
to
measure
annual
earnings
as
a
percentage of historical investments in the business.
Year ended December 31
Millions of dollars
2023
2022
2021
Net income attributable to Chevron
$
21,369
$
35,465
$
15,625
Plus: After-tax interest and debt expense
432
476
662
Plus: Noncontrolling interest
42
143
64
Net income after adjustments
21,843
36,084
16,351
Average capital employed
$
183,173
$
177,445
$
174,175
Return on Average Capital Employed
11.9
%
20.3
%
9.4
%
Return
on
Stockholders’
Equity
(ROSE)
Net
income
attributable
to
Chevron
divided
by
average
Chevron
Corporation
Stockholders’
Equity.
Average
stockholders’
equity
is
computed
by
averaging
the
sum
of
stockholders’
equity
at
the
beginning and end of the year. ROSE is a ratio intended to measure earnings as a percentage of shareholder investments.
Year ended December 31
Millions of dollars
2023
2022
2021
Net income attributable to Chevron
$
21,369
$
35,465
$
15,625
Chevron Corporation Stockholders’ Equity at December 31
160,957
159,282
139,067
Average Chevron Corporation Stockholders’ Equity
160,120
149,175
135,378
Return on Average Stockholders’ Equity
13.3
%
23.8
%
11.5
%
Financial
and
Derivative
Instrument
Market
Risk
The
market
risk
associated
with
the
company’s
portfolio
of
financial
and
derivative
instruments
is
discussed
below.
The
estimates
of
financial
exposure
to
market
risk
do
not
represent
the
company’s
projection
of
future
market
changes.
The
actual
impact
of
future
market
changes
could
differ
materially
due
to
factors
discussed
elsewhere
in
this
report,
including
those
set
forth
under
the
heading
Item
1A.
Risk
Factors
of the company's Annual Report on Form 10-K
.
Chevron Corporation 2023 Annual Report
51
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Derivative
Commodity
Instruments
Chevron
is
exposed
to
market
risks
related
to
the
price
volatility
of
crude
oil,
refined
products,
NGLs,
natural
gas,
liquefied
natural
gas
and
refinery
feedstocks.
The
company
uses
derivative
commodity
instruments
to
manage
these
exposures
on a
portion
of
its activity,
including
firm
commitments
and anticipated
transactions
for
the
purchase,
sale
and
storage
of
crude
oil,
refined
products,
NGLs,
natural
gas,
liquefied
natural
gas
and
feedstock
for
company
refineries.
The
company
also
uses
derivative
commodity
instruments
for
limited
trading
purposes.
The
results
of
these activities were not material to the company’s financial position, results of operations or cash flows in 2023.
The
company’s
market
exposure
positions
are
monitored
on
a
daily
basis
by
an
internal
Risk
Control
group
in
accordance
with
the
company’s
risk
management
policies.
The
company’s
risk
management
practices
and
its
compliance
with
policies
are reviewed by the Audit Committee of the company’s Board of Directors.
Derivatives
beyond
those
designated
as
normal
purchase
and
normal
sale
contracts
are
recorded
at
fair
value
on
the
Consolidated
Balance
Sheet
with
resulting
gains
and
losses
reflected
in
income.
Fair
values
are
derived
principally
from
published
market
quotes
and
other
independent
third-party
quotes.
The
change
in
fair
value
of
Chevron’s
derivative
commodity instruments in 2023 was not material to the company’s results of operations.
The company uses the Monte Carlo simulation method as its Value-at-Risk (VaR) model to estimate the maximum potential
loss
in
fair
value,
at
the
95
percent
confidence
level
with
a
one-day
holding
period,
from
the
effect
of
adverse
changes
in
market
conditions
on
derivative
commodity
instruments
held
or
issued.
Based
on
these
inputs,
the
VaR
for
the
company’s
primary risk exposures in the area of derivative
commodity instruments
at December 31, 2023 and 2022 was not material
to
the company’s cash flows or results of operations.
Foreign
Currency
The
company
may
enter
into
foreign
currency
derivative
contracts
to
manage
some
of
its
foreign
currency
exposures.
These
exposures
include
revenue
and
anticipated
purchase
transactions,
including
foreign
currency
capital
expenditures
and
lease
commitments.
The
foreign
currency
derivative
contracts,
if
any,
are
recorded
at
fair
value
on
the
balance
sheet
with
resulting
gains
and
losses
reflected
in
income.
There
were
no
open
foreign
currency
derivative
contracts at December 31, 2023.
Interest Rates
The company may enter into interest rate swaps from time to time as part of its overall strategy to manage the
interest rate risk on its debt. Interest rate swaps, if any, are recorded at fair value on the balance sheet with resulting gains and
losses reflected in income. At year-end 2023, the company had no interest rate swaps.
Transactions With Related Parties
Chevron
enters
into
a
number
of
business
arrangements
with
related
parties,
principally
its
equity
affiliates.
These
arrangements
include
long-term
supply
or
offtake
agreements
and
long-term
purchase
agreements.
Refer
to
“Other
Information” in Note 15 Investments and Advances for further discussion. Management believes these agreements have been
negotiated on terms consistent with those that would have been negotiated with an unrelated party.
Litigation and Other Contingencies
Ecuador
Information related to Ecuador matters is included in Note 16 Litigation under the heading “Ecuador.”
Climate
Change
Information
related
to
climate
change-related
matters
is
included
in
Note
16
Litigation
under
the
heading
“Climate Change.”
Louisiana
Information related to Louisiana coastal matters is included in Note 16 Litigation under the heading “Louisiana.”
Environmental
The
following
table
displays
the
annual
changes
to
the
company’s
before-tax
environmental
remediation
reserves, including those for U.S. federal Superfund sites and analogous sites under state laws.
Millions of dollars
2023
2022
2021
Balance at January 1
$
868
$
960
$
1,139
Net additions
327
182
114
Expenditures
(259)
(274)
(293)
Balance at December 31
$
936
$
868
$
960
The
company
records
asset
retirement
obligations
when
there
is
a
legal
obligation
associated
with
the
retirement
of
long-
lived
assets
and
the
liability
can
be
reasonably
estimated.
These
asset
retirement
obligations
include
costs
related
to
Chevron Corporation 2023 Annual Report
52
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
environmental
issues.
The
liability
balance
of
approximately
$13.8
billion
for
asset
retirement
obligations
at
year-end
2023
is
related
primarily
to
upstream
properties.
For
the
company’s
other
ongoing
operating
assets,
such
as
refineries
and
chemicals
facilities,
no
provisions
are
made
for
exit
or
cleanup
costs
that
may
be
required
when
such
assets
reach
the
end
of
their
useful
lives
unless
a
decision
to
sell
or
otherwise
decommission
the
facility
has
been
made,
as
the
indeterminate
settlement
dates
for
the
asset
retirements
prevent
estimation
of
the
fair
value
of
the
asset
retirement
obligation.
Refer
to
the
discussion
below
for
additional
information
on
environmental
matters
and
their
impact
on
Chevron,
and
on
the
company’s
2023
environmental
expenditures.
Refer
to
Note
24
Other
Contingencies
and
Commitments
for
additional
discussion
of
environmental
remediation
provisions
and
year-end
reserves,
and
for
abandonment
and
decommissioning
obligations
for
previously
sold
assets.
Refer
also
to
Note
25
Asset
Retirement
Obligations
for
additional
discussion
of
the
company’s
asset
retirement
obligations.
Suspended
Wells
Information
related
to
suspended
wells
is
included
in
Note
21
Accounting
for
Suspended
Exploratory
Wells.
Income
Taxes
Information
related
to
income
tax
contingencies
is
included
in
Note
17
Taxes
and
in
Note
24
Other
Contingencies
and
Commitments
under
the
heading
“Income
Taxes.”
Other
Contingencies
Information
related
to
other
contingencies
is
included
in
Note
24
Other
Contingencies
and
Commitments
under
the
heading
“Other
Contingencies.”
Environmental
Matters
The
company
is
subject
to
various
international
and
U.S.
federal,
state
and
local
environmental,
health
and
safety
laws,
regulations
and
market-based
programs.
These
laws,
regulations
and
programs
continue
to
evolve
and
are
expected
to
increase
in
both
number
and
complexity
over
time
and
govern
not
only
the
manner
in
which
the
company
conducts
its
operations,
but
also
the
products
it
sells.
Consideration
of
environmental
issues
and
the
responses
to
those
issues
through
international
agreements
and
national,
regional
or
state
legislation
or
regulations
are
integrated
into
the
company’s
strategy
and
planning,
capital
investment
reviews
and
risk
management
tools
and
processes,
where
applicable.
They
are
also
factored
into
the
company’s
long-range
supply,
demand
and
energy
price
forecasts.
These
forecasts
reflect
long-range
effects
from
renewable
fuel
penetration,
energy
efficiency
standards,
climate-related
policy
actions,
and
demand
response
to
oil
and
natural
gas
prices.
In
addition,
legislation
and
regulations
intended
to
address
hydraulic
fracturing
also
continue
to
evolve
in
many
jurisdictions
where
we
operate.
Refer
to
Item
1A.
Risk
Factors
of the company's Annual Report on Form
10-K
for
a
discussion
of
some
of
the
inherent
risks
of
increasingly
restrictive
environmental
and
other
regulation
that
could
materially
impact
the
company’s
results
of
operations
or
financial
condition.
Refer
to
Business
Environment
and
Outlook
on
pages
34
through
36
for
a
discussion
of
legislative
and
regulatory
efforts
to
address
climate
change.
Most
of
the
costs
of
complying
with
existing
laws
and
regulations
pertaining
to
company
operations
and
products
are
embedded
in
the
normal
costs
of
doing
business.
However,
it
is
not
possible
to
predict
with
certainty
the
amount
of
additional
investments
in
new
or
existing
technology
or
facilities
or
the
amounts
of
increased
operating
costs
to
be
incurred
in
the
future
to
prevent,
control,
reduce
or
eliminate
releases
of
hazardous
materials
or
other
pollutants
into
the
environment;
remediate
and
restore
areas
damaged
by
prior
releases
of
hazardous
materials;
or
comply
with
new
environmental
laws
or
regulations.
Although
these
costs
may
be
significant
to
the
results
of
operations
in
any
single
period,
the
company
does
not
presently
expect
them
to
have
a
material
adverse
effect
on
the
company’s
liquidity
or
financial
position.
Accidental
leaks
and
spills
requiring
cleanup
may
occur
in
the
ordinary
course
of
business.
The
company
may
incur
expenses
for
corrective
actions
at
various
owned
and
previously
owned
facilities
and
at
third-party-owned
waste
disposal
sites
used
by
the
company.
An
obligation
may
arise
when
operations
are
closed
or
sold
or
at
non-Chevron
sites
where
company
products
have
been
handled
or
disposed
of.
Most
of
the
expenditures
to
fulfill
these
obligations
relate
to
facilities
and
sites
where
past
operations
followed
practices
and
procedures
that
were
considered
acceptable
at
the
time
but
now
require
investigative
or
remedial
work
or
both
to
meet
current
standards.
Using
definitions
and
guidelines
established
by
the
American
Petroleum
Institute,
Chevron
estimated
its
worldwide
environmental
spending
in
2023
at
approximately
$2.5
billion
for
its
consolidated
companies.
Included
in
these
expenditures
were
approximately
$0.5
billion
of
environmental
capital
expenditures
and
$2.0
billion
of
costs
associated
Chevron Corporation 2023 Annual Report
53
Management’s Discussion and Analysis of Financial Condition and Results of Operations
with
the
prevention,
control,
abatement
or
elimination
of
hazardous
substances
and
pollutants
from
operating,
closed
or
divested sites, and the decommissioning and restoration of sites.
For 2024, total worldwide environmental capital expenditures are estimated at $0.5 billion. These capital costs are in addition
to the ongoing costs of complying with environmental regulations and the costs to remediate previously contaminated sites.
Critical Accounting Estimates and Assumptions
Management
makes
many
estimates
and
assumptions
in
the
application
of
accounting
principles
generally
accepted
in
the
United
States
of
America
(GAAP)
that
may
have
a
material
impact
on the
company’s
consolidated
financial
statements
and
related
disclosures
and
on
the
comparability
of
such
information
over
different
reporting
periods.
Such
estimates
and
assumptions
affect
reported
amounts
of
assets,
liabilities,
revenues
and
expenses,
as
well
as
disclosures
of
contingent
assets
and liabilities. Estimates and assumptions are based on management’s experience and other information available prior to the
issuance
of
the
financial
statements.
Materially
different
results
can
occur
as
circumstances
change
and
additional
information becomes known.
The discussion in this section of “critical”
accounting estimates
and assumptions is according to the disclosure guidelines of
the SEC, wherein:
1.
the
nature
of
the
estimates
and
assumptions
is
material
due
to
the
levels
of
subjectivity
and
judgment
necessary to account for highly uncertain matters, or the susceptibility of such matters to change; and
2.
the impact of the estimates and assumptions on the company’s financial condition or operating performance is
material.
The
development
and
selection
of
accounting
estimates
and
assumptions,
including
those
deemed
“critical,”
and
the
associated disclosures in this discussion have been discussed with the Audit Committee of the Board of Directors. The areas
of accounting and the associated “critical” estimates and assumptions made by the company are as follows:
Oil
and Gas Reserves
Crude
oil,
NGLs and
natural
gas reserves
are estimates
of future
production
that impact
certain
asset
and
expense
accounts
included
in
the
Consolidated
Financial
Statements.
Proved
reserves
are
the
estimated
quantities
of
oil
and
gas
that
geoscience
and
engineering
data
demonstrate
with
reasonable
certainty
to
be
economically
producible
in
the
future
under
existing
economic
conditions,
operating
methods
and
government
regulations.
Proved
reserves
include
both
developed
and
undeveloped
volumes.
Proved
developed
reserves
represent
volumes
expected
to
be
recovered
through
existing
wells
with
existing
equipment
and
operating
methods.
Proved
undeveloped
reserves
are
volumes
expected
to
be
recovered
from
new
wells
on
undrilled
proved
acreage,
or
from
existing
wells
where
a
relatively
major
expenditure
is
required
for
recompletion.
Variables
impacting
Chevron’s
estimated
volumes
of
crude
oil
and
natural
gas
reserves
include
field performance, available technology, commodity prices, and development, production and carbon costs.
The
estimates
of
crude
oil,
NGLs
and
natural
gas
reserves
are
important
to
the
timing
of
expense
recognition
for
costs
incurred
and
to
the
valuation
of
certain
oil
and
gas
producing
assets.
Impacts
of
oil
and
gas
reserves
on
Chevron’s
Consolidated Financial Statements, using the successful efforts method of accounting, include the following:
1.
Depreciation,
Depletion
and
Amortization
(DD&A)
-
Capitalized
exploratory
drilling
and
development
costs
are
depreciated
on
a
unit-of-production
(UOP)
basis
using
proved
developed
reserves.
Acquisition
costs
of
proved
properties
are
amortized
on
a
UOP
basis
using
total
proved
reserves.
During
2023,
Chevron’s
UOP
DD&A
for
oil
and
gas
properties
was
$10.8
billion,
and
proved
developed
reserves
at
the
beginning
of
2023
were
6.5
billion
barrels
for
consolidated
companies.
If
the
estimates
of
proved
reserves
used
in
the
UOP
calculations for consolidated operations had been lower by five percent across all oil and gas properties, UOP
DD&A in 2023 would have increased by approximately $600 million.
2.
Impairment
-
Oil
and
gas
reserves
are
used
in
assessing
oil
and
gas
producing
properties
for
impairment.
A
significant
reduction
in
the
estimated
reserves
of
a
property
would
trigger
an
impairment
review.
Proved
reserves (and, in some cases, a portion of unproved resources) are used to estimate future production volumes
in
the
cash
flow
model.
For
a
further
discussion
of
estimates
and
assumptions
used
in
impairment
assessments, see
Impairment of Properties, Plant and Equipment and Investments in Affiliates
below.
Refer
to
Table
V,
“Proved
Reserve
Quantity
Information,”
for
the
changes
in
proved
reserve
estimates
for
each
of
the
three
years
ended
December
31,
2021,
2022
and
2023,
and
to
Table
VII,
“Changes
in
the
Standardized
Measure
of
Discounted
Future
Net
Cash
Flows
From
Proved
Reserves”
for
estimates
of
proved
reserve
values
for
each
of
the
three
years
ended
December 31, 2021, 2022 and 2023.
Chevron Corporation 2023 Annual Report
54
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This
Oil
and
Gas
Reserves
commentary
should
be
read
in
conjunction
with
the
Properties,
Plant
and
Equipment
section
of
Note
1
Summary
of
Significant
Accounting
Policies,
which
includes
a
description
of
the
“successful
efforts”
method
of
accounting for oil and gas exploration and production activities.
Impairment
of
Properties,
Plant
and
Equipment
and
Investments
in
Affiliates
The
company
assesses
its
properties,
plant
and equipment (PP&E) for possible impairment whenever events or changes in circumstances indicate that the carrying value
of
the
assets
may
not
be
recoverable.
If
the
carrying
value
of
an
asset
exceeds
the
future
undiscounted
cash
flows
expected
from the asset, an impairment charge is recorded for the excess of the carrying value of the asset over its estimated fair value.
Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters,
such as future commodity prices, operating expenses, carbon costs, production profiles, the pace of the energy transition, and
the
outlook
for
global
or
regional
market
supply-and-demand
conditions
for
crude
oil,
NGLs,
natural
gas,
commodity
chemicals
and
refined
products.
However,
the
impairment
reviews
and
calculations
are
based
on
assumptions
that
are
generally
consistent
with
the
company’s
business
plans
and
long-term
investment
decisions.
Refer
also
to
the
discussion
of
impairments
of properties, plant and equipment in Note 18 Properties, Plant and Equipment and to the section on Properties,
Plant and Equipment in Note 1 Summary of Significant Accounting Policies.
The
company
performs
impairment
assessments
when
triggering
events
arise
to
determine
whether
any
write-down
in
the
carrying
value
of
an
asset
or
asset
group
is
required.
For
example,
when significant
downward revisions
to
crude
oil,
NGLs
and
natural
gas
reserves
are
made
for
any
single
field
or
concession,
an
impairment
review
is
performed
to
determine
if
the
carrying value of the asset remains recoverable. Similarly, a significant downward revision in the company’s crude oil, NGLs
or
natural
gas
price
outlook
would trigger
impairment
reviews for impacted
upstream
assets.
In addition,
impairments
could
occur due to changes in national, state or local environmental regulations or laws, including those designed to stop or impede
the development or production of oil and gas. Also, if the expectation of sale of a particular asset or asset group in any period
has
been
deemed
more
likely
than
not,
an
impairment
review
is
performed,
and
if
the
estimated
net
proceeds
exceed
the
carrying value of the asset or asset group, no impairment charge is required. Such calculations are reviewed each period until
the asset or asset group is disposed. Assets that are not impaired on a held-and-used basis could possibly become impaired if
a
decision
is
made
to
sell
such
assets.
That
is,
the
assets
would
be
impaired
if
they
are
classified
as
held-for-sale
and
the
estimated proceeds from the sale, less costs to sell, are less than the assets’ associated carrying values.
Investments
in
common
stock
of
affiliates
that
are
accounted
for
under
the
equity
method,
as
well
as
investments
in
other
securities
of
these
equity
investees,
are
reviewed
for
impairment
when
the
fair
value
of
the
investment
falls
below
the
company’s
carrying
value.
When
this
occurs,
a
determination
must
be
made
as
to
whether
this
loss
is
other-than-temporary,
in
which
case
the
investment
is
impaired.
Because
of
the
number
of
differing
assumptions
potentially
affecting
whether
an
investment is impaired in any period or the amount of the impairment, a sensitivity analysis is not practicable.
A sensitivity
analysis
of
the
impact
on earnings
for these periods
if other assumptions
had been used in impairment
reviews
and impairment calculations is not practicable, given the broad range of the company’s PP&E and the number of assumptions
involved in the estimates.
That is, favorable
changes to some assumptions
might
have avoided the need to impair any assets
in
these
periods,
whereas
unfavorable
changes
might
have
caused
an
additional
unknown
number
of
other
assets
to
become
impaired, or resulted in larger impacts on impaired assets.
Asset Retirement Obligations
In the determination of fair value for an asset retirement obligation (ARO), the company uses
various
assumptions
and
judgments,
including
such
factors
as
the
existence
of
a
legal
obligation,
estimated
amounts
and
timing
of
settlements,
discount
and
inflation
rates,
and
the
expected
impact
of
advances
in
technology
and
process
improvements. A sensitivity analysis of the ARO impact on earnings for 2023 is not practicable, given the broad range of the
company’s
long-lived
assets
and
the
number
of
assumptions
involved
in
the
estimates.
That
is,
favorable
changes
to
some
assumptions
would
have
reduced
estimated
future
obligations,
thereby
lowering
accretion
expense
and
amortization
costs,
whereas
unfavorable
changes
would
have
the
opposite
effect.
Refer
to
Note
25
Asset
Retirement
Obligations
for
additional
discussions on asset retirement obligations.
Pension
and
Other
Postretirement
Benefit
Plans
Note
23
Employee
Benefit
Plans
includes
information
on
the
funded
status of the company’s pension and other postretirement benefit (OPEB) plans reflected on the Consolidated Balance Sheet;
the components of pension and OPEB expense reflected on the Consolidated Statement of Income; and the related underlying
assumptions.
Chevron Corporation 2023 Annual Report
55
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
determination
of
pension
plan
expense
and
obligations
is
based
on
a
number
of
actuarial
assumptions.
Two
critical
assumptions are the expected long-term rate of return on plan assets and the discount rate applied to pension plan obligations.
Critical
assumptions
in
determining
expense
and
obligations
for
OPEB
plans,
which
provide
for
certain
health
care
and
life
insurance
benefits
for
qualifying
retired
employees
and
which
are
not
funded,
are
the
discount
rate
and
the
assumed
health
care
cost-trend
rates.
Information
related
to
the
company’s
processes
to
develop
these
assumptions
is
included
in
Note
23
Employee
Benefit
Plans
under
the
relevant
headings.
Actual
rates
may
vary
significantly
from
estimates
because
of
unanticipated changes beyond the company’s control.
For
2023,
the
company
used
an
expected
long-term
rate
of
return
of
7.0
percent
and
a
discount
rate
for
service
costs
of
5.2
percent
and
a
discount
rate
for
interest
cost
of
5.0
percent
for
the
primary
U.S.
pension
plan.
The actual
return
for
2023
was
10.9
percent.
For
the
10
years
ended
December
31,
2023,
actual
asset
returns
averaged
5.3
percent
for
this
plan.
Additionally,
with
the
exception
of
three
years
within
this
10-year
period,
actual
asset
returns
for
this
plan
equaled
or
exceeded 7.0 percent during each year.
Total pension expense for 2023 was $557 million. An increase in the expected long-term return on plan assets or the discount
rate
would
reduce
pension
plan
expense,
and
vice
versa.
As
an
indication
of
the
sensitivity
of
pension
expense
to
the
long-
term rate of return assumption, a one percent increase in this assumption for the company’s primary U.S. pension plan, which
accounted
for
about
55
percent
of
companywide
pension
expense,
would
have
reduced
total
pension
plan
expense
for
2023
by
approximately
$78
million.
A
one
percent
increase
in
the
discount
rates
for
this
same
plan
would
have
reduced
pension
expense for 2023 by approximately $105 million.
The aggregate funded status recognized at December 31, 2023, was a net liability of approximately $1.5 billion. An increase
in the discount rate would decrease the pension obligation, thus changing the funded status of a plan. At December 31, 2023,
the
company
used
a
discount
rate
of
5.0
percent
to
measure
the
obligations
for
the
primary
U.S.
pension
plan.
As
an
indication
of the sensitivity
of pension liabilities
to the discount rate assumption, a 0.25 percent increase in the discount rate
applied
to
the
company’s
primary
U.S.
pension
plan,
which
accounted
for
about
65
percent
of
the
companywide
pension
obligation,
would
have
reduced
the
plan
obligation
by
approximately
$279
million,
and
would
have
changed
the
plan’s
funded status from a deficit of $80 million to a surplus of $199 million.
For
the
company’s
OPEB
plans,
expense
for
2023
was
$86
million,
and
the
total
liability,
all
unfunded
at
the
end
of
2023,
was
$2.0
billion.
For
the
primary
U.S.
OPEB
plan,
the
company
used
a
discount
rate
for
service
cost
of
5.3
percent
and
a
discount
rate
for
interest
cost
of
5.1
percent
to
measure
expense
in
2023,
and
a
5.0
percent
discount
rate
to
measure
the
benefit
obligations
at
December
31,
2023.
Discount
rate
changes,
similar
to
those
used
in
the
pension
sensitivity
analysis,
resulted in an immaterial impact on 2023 OPEB expense and OPEB liabilities at the end of 2023.
Differences
between
the
various
assumptions
used
to
determine
expense
and
the
funded
status
of
each
plan
and
actual
experience
are included
in actuarial
gain/loss.
Refer to page 93 in Note 23 Employee Benefit Plans for more information
on
the
$3.7
billion
of
before-tax
actuarial
losses
recorded
by
the
company
as
of
December
31,
2023.
In
addition,
information
related
to
company
contributions
is
included
on
page
96
in
Note
23
Employee
Benefit
Plans
under
the
heading
“Cash
Contributions and Benefit Payments.”
Business
Combinations
—
Purchase-Price
Allocation
Accounting
for
business
combinations
requires
the
allocation
of
the
company’s
purchase
price
to
the
various
assets
and
liabilities
of
the
acquired
business
at
their
respective
fair
values.
The
company uses all available information to make these fair value determinations. Determining the fair value of assets acquired
generally
involves
assumptions
regarding
the
amounts
and
timing
of
future
revenues
and
expenditures,
as
well
as
discount
rates. For additional discussion of purchase price allocations, refer to Note 29 Acquisition of PDC Energy, Inc.
Contingent
Losses
Management
also
makes
judgments
and
estimates
in
recording
liabilities
for
claims,
litigation,
tax
matters,
transferred
liabilities
from
previously
sold
assets,
and
environmental
remediation.
Actual
costs
can
frequently
vary
from estimates for a variety of reasons. For example, the costs for settlement of claims and litigation can vary from estimates
based
on
differing
interpretations
of
laws,
opinions
on
culpability
and
assessments
on
the
amount
of
damages.
Similarly,
liabilities
for
environmental
remediation
are
subject
to
change
because
of
changes
in
laws,
regulations
and
their
interpretation,
the determination
of additional
information
on the extent and nature of site contamination,
and improvements
in technology.
Under
the
accounting
rules,
a
liability
is
generally
recorded
for
these
types
of
contingencies
if
management
determines
the
loss
to
be
both
probable
and
estimable.
The
company
generally
reports
these
losses
as
“Operating
expenses,”
“Selling,
general
and
administrative
expenses”
or
“Other
income
(loss)”
on
the
Consolidated
Statement
of
Income.
An
exception
to
this handling is for income
tax matters,
for which benefits are recognized only if management
determines
the tax position is
Chevron Corporation 2023 Annual Report
56
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
more
likely
than
not
(i.e.,
likelihood
greater
than
50
percent)
to
be
allowed
by
the
tax
jurisdiction.
For
additional
discussion
of
income
tax
uncertainties,
refer
to
Note
24
Other
Contingencies
and
Commitments
under
the
heading
“Income
Taxes.”
Refer
also
to
the
business
segment
discussions
elsewhere
in
this
section
for
the
effect
on
earnings
from
losses
associated
with
certain
litigation,
environmental
remediation
and
tax
matters
for
the
three
years
ended
December
31,
2023.
An
estimate
as
to
the
sensitivity
to
earnings
for
these
periods
if
other
assumptions
had
been
used
in
recording
these
liabilities
is
not
practicable
because
of
the
number
of
contingencies
that
must
be
assessed,
the
number
of
underlying
assumptions
and
the
wide
range
of
reasonably
possible
outcomes,
both
in
terms
of
the
probability
of
loss
and
the
estimates
of
such
loss.
For
further
information,
refer
to
“Changes
in
management’s
estimates
and
assumptions
may
have
a
material
impact
on
the
company’s
consolidated
financial
statements
and
financial
or
operational
performance
in
any
given
period”
in
Item
1A.
Risk
Factors,
on
page
26
of the company's Annual Report on Form 10-K
.
New
Accounting
Standards
Refer
to
Note
4
New
Accounting
Standards
for
information
regarding
new
accounting
standards.
Chevron Corporation 2023 Annual Report
57
Quarterly Results
Unaudited
2023
2022
Millions of dollars, except per-share amounts
4th Q
3rd Q
2nd Q
1st Q
4th Q
3rd Q
2nd Q
1st Q
Revenues and Other Income
Sales and other operating revenues
$48,933
$51,922
$47,216
$48,842
$54,523
$63,508
$65,372
$52,314
Income from equity affiliates
990
1,313
1,240
1,588
1,623
2,410
2,467
2,085
Other income (loss)
(2,743)
845
440
363
327
726
923
(26)
Total Revenues and Other Income
47,180
54,080
48,896
50,793
56,473
66,644
68,762
54,373
Costs and Other Deductions
Purchased crude oil and products
28,477
32,328
28,984
29,407
32,570
38,751
40,684
33,411
Operating expenses
6,510
6,299
6,057
6,021
6,401
6,357
6,318
5,638
Selling, general and administrative expenses
969
1,163
1,128
881
1,454
1,028
863
967
Exploration expenses
254
301
169
190
453
116
196
209
Depreciation, depletion and amortization
6,254
4,025
3,521
3,526
4,764
4,201
3,700
3,654
Taxes other than on income
1,062
1,021
1,041
1,096
864
1,046
882
1,240
Interest and debt expense
120
114
120
115
123
128
129
136
Other components of net periodic benefit costs
44
91
39
38
36
208
(13)
64
Total Costs and Other Deductions
43,690
45,342
41,059
41,274
46,665
51,835
52,759
45,319
Income (Loss) Before Income Tax Expense
3,490
8,738
7,837
9,519
9,808
14,809
16,003
9,054
Income Tax Expense (Benefit)
1,247
2,183
1,829
2,914
3,430
3,571
4,288
2,777
Net Income (Loss)
$
2,243
$
6,555
$
6,008
$
6,605
$
6,378
$11,238
$11,715
$
6,277
Less: Net income (loss) attributable to noncontrolling interests
(16)
29
(2)
31
25
7
93
18
Net Income (Loss) Attributable to Chevron Corporation
$
2,259
$
6,526
$
6,010
$
6,574
$
6,353
$11,231
$11,622
$
6,259
Per Share of Common Stock
Net Income (Loss) Attributable to Chevron Corporation
– Basic
$
1.23
$
3.48
$
3.22
$
3.48
$
3.34
$
5.81
$
5.98
$
3.23
– Diluted
$
1.22
$
3.48
$
3.20
$
3.46
$
3.33
$
5.78
$
5.95
$
3.22
Dividends per share
$
1.51
$
1.51
$
1.51
$
1.51
$
1.42
$
1.42
$
1.42
$
1.42
Chevron Corporation 2023 Annual Report
58
Management’s Responsibility for Financial Statements
To the Stockholders of Chevron Corporation
Management of Chevron Corporation is responsible for preparing the accompanying consolidated financial statements and
the
related
information
appearing
in
this
report.
The
statements
were
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America
and
fairly
represent
the
transactions
and
financial
position
of
the
company. The financial statements include amounts that are based on management’s best estimates and judgments.
As stated in its report included herein, the independent registered public accounting firm of PricewaterhouseCoopers LLP
has
audited
the
company’s
consolidated
financial
statements
in
accordance
with
the
standards
of
the
Public
Company
Accounting Oversight Board (United States).
The Board
of
Directors
of
Chevron
has
an
Audit
Committee
composed
of
directors
who are
not
officers
or employees
of
the
company.
The
Audit
Committee
meets
regularly
with
members
of
management,
the
internal
auditors
and
the
independent
registered
public
accounting
firm
to
review
accounting,
internal
control,
auditing
and
financial
reporting
matters. Both the internal auditors and the independent registered public accounting firm have free and direct access to the
Audit Committee without the presence of management.
The
company’s
management
has
evaluated,
with
the
participation
of
the
Chief
Executive
Officer
and
Chief
Financial
Officer,
the
effectiveness
of
the
company’s
disclosure
controls
and
procedures
(as
defined
in
the
Exchange
Act
Rules
13a-15(e)
and
15d-15(e))
as
of
December
31,
2023.
Based
on
that
evaluation,
management
concluded
that
the
company’s
disclosure
controls
are
effective
in
ensuring
that
information
required
to
be
recorded,
processed,
summarized
and
reported
are
done
within
the
time
periods
specified
in
the
U.S.
Securities
and
Exchange
Commission’s
rules
and
forms.
Management’s Report on Internal Control Over Financial Reporting
The
company’s
management
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
financial
reporting,
as
defined
in
the
Exchange
Act
Rules
13a-15(f)
and
15d-15(f).
The
company’s
management,
including
the
Chief
Executive
Officer
and
Chief
Financial
Officer,
conducted
an
evaluation
of
the
effectiveness
of
the
company’s
internal
control
over
financial
reporting
based
on
the
Internal
Control
–
Integrated
Framework
(2013)
issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
(COSO).
Based
on
the
results
of
this
evaluation,
the
company’s
management
concluded
that
internal
control
over
financial
reporting
was
effective
as
of
December
31,
2023.
The
company
excluded
PDC
Energy,
Inc.
(PDC)
from
our
assessment
of
internal
control
over
financial
reporting
as
of
December 31, 2023 because it was acquired by the company in a business combination during 2023. Total assets and total
revenue
of
PDC,
a
wholly-owned
subsidiary,
represent
five
percent
and
one
percent,
respectively,
of
the
related
consolidated financial statement amounts as of and for the year ended December 31, 2023.
The effectiveness of the company’s internal control over financial reporting as of December 31, 2023, has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report included herein.
Michael K. Wirth
Pierre R. Breber
Alana K. Knowles
Chairman of the Board
Vice President
Vice President
and Chief Executive Officer
and Chief Financial Officer
and Controller
February 26, 2024
Chevron Corporation 2023 Annual Report
59
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Chevron Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We
have
audited
the
accompanying
consolidated
balance
sheet
of
Chevron
Corporation
and
its
subsidiaries
(the
“Company”)
as
of
December
31,
2023
and
2022,
and
the
related
consolidated
statements
of
income,
of
comprehensive
income,
of
equity
and
of
cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,
2023,
including
the
related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as
the “consolidated
financial
statements”).
We also have audited the Company’s internal control over financial reporting as
of
December
31,
2023,
based
on
criteria
established
in
Internal
Control
-
Integrated
Framework
(2013)
issued
by
the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control
over
financial
reporting
as
of
December
31,
2023,
based
on
criteria
established
in
Internal
Control
-
Integrated
Framework
(2013) issued by the COSO.
Basis for Opinions
The Company’s
management
is responsible
for these consolidated
financial
statements,
for maintaining
effective
internal
control
over
financial
reporting,
and
for
its
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying
Management’s
Report
on
Internal
Control
Over
Financial
Reporting.
Our
responsibility
is
to
express
opinions
on
the
Company’s
consolidated
financial
statements
and
on
the
Company’s
internal
control
over
financial
reporting
based on our audits.
We are a public accounting
firm registered
with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities
laws and the applicable
rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted
our
audits
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement,
whether
due
to
error
or
fraud,
and
whether
effective
internal
control
over
financial
reporting
was
maintained in all material respects.
Our
audits
of
the
consolidated
financial
statements
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
consolidated
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
consolidated
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.
Our
audit
of
internal
control
over
financial
reporting
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audits
also
included
performing
such
other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
As
described
in
Management’s
Report
on
Internal
Control
over
Financial
Reporting,
management
has
excluded
PDC
Energy,
Inc.
(PDC)
from
its
assessment
of
internal
control
over
financial
reporting
as
of
December
31,
2023
because
it
was
acquired
by
the
Company
in
a
business
combination
during
2023.
We
have
also
excluded
PDC
from
our
audit
of
internal control over financial reporting. PDC is a wholly-owned subsidiary whose total assets and total revenues excluded
from
management’s
assessment
and
our
audit
of
internal
control
over
financial
reporting
represent
five
percent
and
one
percent,
respectively,
of
the
related
consolidated
financial
statement
amounts
as
of
and
for
the
year
ended
December
31,
2023.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
A
company’s
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that
(i)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
Chevron Corporation 2023 Annual Report
60
transactions
and
dispositions
of
the
assets
of
the
company;
(ii)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
receipts
and
expenditures
of
the
company
are
being
made
only
in
accordance
with
authorizations
of
management
and
directors
of
the
company;
and
(iii)
provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use,
or
disposition
of
the
company’s
assets
that
could
have
a
material
effect
on
the
financial
statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
of
effectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
with
the
policies
or
procedures
may
deteriorate.
Critical
Audit
Matters
The
critical
audit
matter
communicated
below
is
a
matter
arising
from
the
current
period
audit
of
the
consolidated
financial
statements
that
was
communicated
or
required
to
be
communicated
to
the
audit
committee
and
that
(i)
relates
to
accounts
or
disclosures
that
are
material
to
the
consolidated
financial
statements
and
(ii)
involved
our
especially
challenging,
subjective,
or
complex
judgments.
The
communication
of
critical
audit
matters
does
not
alter
in
any
way
our
opinion
on
the
consolidated
financial
statements,
taken
as
a
whole,
and
we
are
not,
by
communicating
the
critical
audit
matter
below,
providing
a
separate
opinion
on
the
critical
audit
matter
or
on
the
accounts
or
disclosures
to
which
it
relates.
The
Impact
of
Proved
Developed
Crude
Oil
and
Natural
Gas
Reserves
on
Upstream
Property,
Plant,
and
Equipment,
Net
As
described
in
Notes
1
and
18
to
the
consolidated
financial
statements,
the
Company’s
upstream
property,
plant
and
equipment,
net
balance
was
$135.0
billion
as
of
December
31,
2023,
and
depreciation,
depletion
and
amortization
expense
was
$15.8
billion
for
the
year
ended
December
31,
2023.
The
Company
follows
the
successful
efforts
method
of
accounting
for
crude
oil
and
natural
gas
exploration
and
production
activities.
Depreciation
and
depletion
of
all
capitalized
costs
of
proved
crude
oil
and
natural
gas
producing
properties,
except
mineral
interests,
are
expensed
using
the
unit-of-production
method,
generally
by
individual
field,
as
the
proved
developed
reserves
are
produced.
Depletion
expenses
for
capitalized
costs
of
proved
mineral
interests
are
recognized
using
the
unit-of-production
method
by
individual
field
as
the
related
proved
reserves
are
produced.
As
disclosed
by
management,
variables
impacting
the
Company’s
estimated
volumes
of
proved
crude
oil
and
natural
gas
reserves
include
field
performance,
available
technology,
commodity
prices,
and
development,
production
and
carbon
costs.
Reserves
are
estimated
by
Company
asset
teams
composed
of
earth
scientists
and
engineers.
As
part
of
the
internal
control
process
related
to
reserves
estimation,
the
Company
maintains
a
Reserves
Advisory
Committee
(RAC)
(the
Company’s
earth
scientists,
engineers
and
RAC
are
collectively
referred
to
as
“management’s
specialists”).
The
principal
considerations
for
our
determination
that
performing
procedures
relating
to
the
impact
of
proved
developed
crude
oil
and
natural
gas
reserves
on
upstream
property,
plant,
and
equipment,
net
is
a
critical
audit
matter
are
(i)
the
significant
judgment
by
management,
including
the
use
of
management’s
specialists,
when
developing
the
estimates
of
proved
developed
crude
oil
and
natural
gas
reserves,
which
in
turn
led
to
(ii)
a
high
degree
of
auditor
judgment,
subjectivity,
and
effort
in
performing
procedures
and
evaluating
audit
evidence
obtained
related
to
the
data,
methods
and
assumptions
used
by
management
and
its
specialists
in
developing
the
estimates
of
proved
developed
crude
oil
and
natural
gas
reserves.
Addressing
the
matter
involved
performing
procedures
and
evaluating
audit
evidence
in
connection
with
forming
our
overall
opinion
on
the
consolidated
financial
statements.
These
procedures
included
testing
the
effectiveness
of
controls
relating
to
management’s
estimates
of
proved
developed
crude
oil
and
natural
gas
reserves.
The
work
of
management’s
specialists
was
used
in
performing
the
procedures
to
evaluate
the
reasonableness
of
the
proved
developed
crude
oil
and
natural
gas
reserves.
As
a
basis
for
using
this
work,
the
specialists’
qualifications
were
understood
and
the
Company’s
relationship
with
the
specialists
was
assessed.
The
procedures
performed
also
included
evaluation
of
the
methods
and
assumptions
used
by
the
specialists,
tests
of
data
used
by
the
specialists
and
an
evaluation
of
the
specialists’
findings
related
to
estimated
future
production
volumes
by
comparing
the
estimate
to
relevant
historical
and
current
period
information,
as
applicable.
San
Francisco,
California
February
26,
2024
We
have
served
as
the
Company’s
auditor
since
1935.
Chevron Corporation 2023 Annual Report
61
Consolidated Statement of Income
Millions of dollars, except per-share amounts
Year ended December 31
2023
2022
2021
Revenues and Other Income
Sales and other operating revenues
$
196,913
$
235,717
$
155,606
Income (loss) from equity affiliates
5,131
8,585
5,657
Other income (loss)
(1,095)
1,950
1,202
Total Revenues and Other Income
200,949
246,252
162,465
Costs and Other Deductions
Purchased crude oil and products
119,196
145,416
92,249
Operating expenses
24,887
24,714
20,726
Selling, general and administrative expenses
4,141
4,312
4,014
Exploration expenses
914
974
549
Depreciation, depletion and amortization
17,326
16,319
17,925
Taxes other than on income
4,220
4,032
3,963
Interest and debt expense
469
516
712
Other components of net periodic benefit costs
212
295
688
Total Costs and Other Deductions
171,365
196,578
140,826
Income (Loss) Before Income Tax Expense
29,584
49,674
21,639
Income Tax Expense (Benefit)
8,173
14,066
5,950
Net Income (Loss)
21,411
35,608
15,689
Less: Net income (loss) attributable to noncontrolling interests
42
143
64
Net Income (Loss) Attributable to Chevron Corporation
$
21,369
$
35,465
$
15,625
Per Share of Common Stock
Net Income (Loss) Attributable to Chevron Corporation
- Basic
$
11.41
$
18.36
$
8.15
- Diluted
$
11.36
$
18.28
$
8.14
See accompanying Notes to the Consolidated Financial Statements.
Chevron Corporation 2023 Annual Report
62
Consolidated Statement of Comprehensive Income
Millions of dollars
Year ended December 31
2023
2022
2021
Net Income (Loss)
$
21,411
$
35,608
$
15,689
Currency translation adjustment
Unrealized net change arising during period
11
(41)
(55)
Unrealized holding gain (loss) on securities
Net gain (loss) arising during period
1
(1)
(1)
Derivatives
Net derivatives gain (loss) on hedge transactions
(11)
65
(6)
Reclassification to net income
33
(80)
6
Income tax benefit (cost) on derivatives transactions
(5)
3
—
Total
17
(12)
—
Defined benefit plans
Actuarial gain (loss)
Amortization to net income of net actuarial loss and settlements
244
599
1,069
Actuarial gain (loss) arising during period
(550)
1,050
1,244
Prior service credits (cost)
Amortization to net income of net prior service costs and curtailments
(13)
(19)
(14)
Prior service (costs) credits arising during period
(29)
(96)
—
Defined benefit plans sponsored by equity affiliates - benefit (cost)
6
100
127
Income tax benefit (cost) on defined benefit plans
151
(489)
(647)
Total
(191)
1,145
1,779
Other Comprehensive Gain (Loss), Net of Tax
(162)
1,091
1,723
Comprehensive Income (Loss)
21,249
36,699
17,412
Comprehensive loss (income) attributable to noncontrolling interests
(42)
(143)
(64)
Comprehensive Income (Loss) Attributable to Chevron Corporation
$
21,207
$
36,556
$
17,348
See accompanying Notes to the Consolidated Financial Statements.
Chevron Corporation 2023 Annual Report
63
Consolidated Balance Sheet
Millions of dollars, except per-share amounts
At December 31
2023
2022
Assets
Cash and cash equivalents
$
8,178
$
17,678
Marketable securities
45
223
Accounts and notes receivable (less allowance: 2023 - $301; 2022 - $457)
19,921
20,456
Inventories:
Crude oil and products
6,059
5,866
Chemicals
406
515
Materials, supplies and other
2,147
1,866
Total inventories
8,612
8,247
Prepaid expenses and other current assets
4,372
3,739
Total Current Assets
41,128
50,343
Long-term receivables, net (less allowances: 2023 - $340; 2022 - $552)
942
1,069
Investments and advances
46,812
45,238
Properties, plant and equipment, at cost
346,081
327,785
Less: Accumulated depreciation, depletion and amortization
192,462
184,194
Properties, plant and equipment, net
153,619
143,591
Deferred charges and other assets
13,734
12,310
Goodwill
4,722
4,722
Assets held for sale
675
436
Total Assets
$
261,632
$
257,709
Liabilities and Equity
Short-term debt
$
529
$
1,964
Accounts payable
20,423
18,955
Accrued liabilities
7,655
7,486
Federal and other taxes on income
1,863
4,381
Other taxes payable
1,788
1,422
Total Current Liabilities
32,258
34,208
Long-term debt
1
20,307
21,375
Deferred credits and other noncurrent obligations
24,226
20,396
Noncurrent deferred income taxes
18,830
17,131
Noncurrent employee benefit plans
4,082
4,357
Total Liabilities
2
$
99,703
$
97,467
Preferred stock (authorized 100,000,000 shares; $1.00 par value; none issued)
—
—
Common stock (authorized 6,000,000,000 shares; $0.75 par value; 2,442,676,580 shares issued
at December 31, 2023 and 2022)
1,832
1,832
Capital in excess of par value
21,365
18,660
Retained earnings
200,025
190,024
Accumulated other comprehensive losses
(2,960)
(2,798)
Deferred compensation and benefit plan trust
(240)
(240)
Treasury stock, at cost (2023 - 577,028,776 shares; 2022 - 527,460,237 shares)
(59,065)
(48,196)
Total Chevron Corporation Stockholders’ Equity
160,957
159,282
Noncontrolling interests (includes redeemable noncontrolling interest of $166 and $142 at
December 31, 2023 and 2022)
972
960
Total Equity
161,929
160,242
Total Liabilities and Equity
$
261,632
$
257,709
1
Includes finance lease liabilities of $574 and $403 at December 31, 2023 and 2022, respectively.
2
Refer to Note 24 Other Contingencies and Commitments.
See accompanying Notes to the Consolidated Financial Statements.
Chevron Corporation 2023 Annual Report
64
Consolidated Statement of Cash Flows
Millions of dollars
Year ended December 31
2023
2022
2021
Operating Activities
Net Income (Loss)
$
21,411
$
35,608
$
15,689
Adjustments
Depreciation, depletion and amortization
17,326
16,319
17,925
Dry hole expense
436
486
118
Distributions more (less) than income from equity affiliates
(885)
(4,730)
(1,998)
Net before-tax gains on asset retirements and sales
(138)
(550)
(1,021)
Net foreign currency effects
578
(412)
(7)
Deferred income tax provision
298
2,124
700
Net decrease (increase) in operating working capital
(3,185)
2,125
(1,361)
Decrease (increase) in long-term receivables
150
153
21
Net decrease (increase) in other deferred charges
(300)
(212)
(320)
Cash contributions to employee pension plans
(1,120)
(1,322)
(1,751)
Other
1,038
13
1,192
Net Cash Provided by Operating Activities
35,609
49,602
29,187
Investing Activities
Acquisition of businesses, net of cash received
55
(2,862)
—
Capital expenditures
(15,829)
(11,974)
(8,056)
Proceeds and deposits related to asset sales and returns of investment
669
2,635
1,791
Net sales (purchases) of marketable securities
175
117
(1)
Net repayment (borrowing) of loans by equity affiliates
(302)
(24)
401
Net Cash Used for Investing Activities
(15,232)
(12,108)
(5,865)
Financing Activities
Net borrowings (repayments) of short-term obligations
135
263
(5,572)
Proceeds from issuances of long-term debt
150
—
—
Repayments of long-term debt and other financing obligations
(4,340)
(8,742)
(7,364)
Cash dividends - common stock
(11,336)
(10,968)
(10,179)
Net contributions from (distributions to) noncontrolling interests
(40)
(114)
(36)
Net sales (purchases) of treasury shares
(14,678)
(5,417)
38
Net Cash Provided by (Used for) Financing Activities
(30,109)
(24,978)
(23,113)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
(114)
(190)
(151)
Net Change in Cash, Cash Equivalents and Restricted Cash
(9,846)
12,326
58
Cash, Cash Equivalents and Restricted Cash at January 1
19,121
6,795
6,737
Cash, Cash Equivalents and Restricted Cash at December 31
$
9,275
$
19,121
$
6,795
See accompanying Notes to the Consolidated Financial Statements.
Chevron Corporation 2023 Annual Report
65
Consolidated Statement of Equity
Amounts in millions of dollars
Common
Stock
1
Retained
Earnings
Acc. Other
Comprehensive
Income (Loss)
Treasury
Stock
(
at cost
)
Chevron Corp.
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2020
$
18,421
$
160,377
$
(5,612)
$
(41,498)
$
131,688
$
1,038
$
132,726
Treasury stock transactions
315
—
—
—
315
—
315
NBLX acquisition
138
(148)
—
377
367
(321)
46
Net income (loss)
—
15,625
—
—
15,625
64
15,689
Cash dividends ($5.31 per share)
—
(10,179)
—
—
(10,179)
(53)
(10,232)
Stock dividends
—
(3)
—
—
(3)
—
(3)
Other comprehensive income
—
—
1,723
—
1,723
—
1,723
Purchases of treasury shares
—
—
—
(1,383)
(1,383)
—
(1,383)
Issuances of treasury shares
—
—
—
1,040
1,040
—
1,040
Other changes, net
—
(126)
—
—
(126)
145
19
Balance at December 31, 2021
$
18,874
$
165,546
$
(3,889)
$
(41,464)
$
139,067
$
873
$
139,940
Treasury stock transactions
63
—
—
—
63
—
63
Net income (loss)
—
35,465
—
—
35,465
143
35,608
Cash dividends ($5.68 per share)
—
(10,968)
—
—
(10,968)
(118)
(11,086)
Stock dividends
—
(3)
—
—
(3)
—
(3)
Other comprehensive income
—
—
1,091
—
1,091
—
1,091
Purchases of treasury shares
—
—
—
(11,255)
(11,255)
—
(11,255)
Issuances of treasury shares
1,315
—
—
4,523
5,838
—
5,838
Other changes, net
—
(16)
—
—
(16)
62
46
Balance at December 31, 2022
$
20,252
$
190,024
$
(2,798)
$
(48,196)
$
159,282
$
960
$
160,242
Treasury stock transactions
174
—
—
—
174
—
174
PDC Energy, Inc. acquisition
2,550
—
—
3,970
6,520
—
6,520
Net income (loss)
—
21,369
—
—
21,369
42
21,411
Cash dividends ($6.04 per share)
—
(11,336)
—
—
(11,336)
(54)
(11,390)
Stock dividends
—
(9)
—
—
(9)
—
(9)
Other comprehensive income
—
—
(162)
—
(162)
—
(162)
Purchases of treasury shares
2
—
—
—
(15,085)
(15,085)
—
(15,085)
Issuances of treasury shares
17
—
—
246
263
—
263
Other changes, net
(36)
(23)
—
—
(59)
24
(35)
Balance at December 31, 2023
$
22,957
$
200,025
$
(2,960)
$
(59,065)
$
160,957
$
972
$
161,929
Common Stock Share Activity
Issued
3
Treasury
Outstanding
Balance at December 31, 2020
2,442,676,580
(517,490,263)
1,925,186,317
Purchases
—
(13,015,737)
(13,015,737)
Issuances
—
17,635,477
17,635,477
Balance at December 31, 2021
2,442,676,580
(512,870,523)
1,929,806,057
Purchases
—
(69,912,961)
(69,912,961)
Issuances
—
55,323,247
55,323,247
Balance at December 31, 2022
2,442,676,580
(527,460,237)
1,915,216,343
Purchases
—
(92,849,905)
(92,849,905)
Issuances
—
43,281,366
43,281,366
Balance at December 31, 2023
2,442,676,580
(577,028,776)
1,865,647,804
1
Beginning and ending balances for
all
periods include capital in
excess of
par,
common stock issued at par
for
$1,832,
and $(240) associated with Chevron’s Benefit Plan
Trust. Changes reflect capital in excess of par.
2
Includes excise tax on share repurchases.
3
Beginning and ending total issued share balances include 14,168,000 shares associated with Chevron’s Benefit Plan Trust.
See accompanying Notes to the Consolidated Financial Statements.
Chevron Corporation 2023 Annual Report
66
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Note 1
Summary of Significant Accounting Policies
General
The company’s
Consolidated
Financial
Statements
are prepared
in accordance
with accounting principles
generally
accepted in the United States of America. These require the use of estimates and assumptions that affect the assets, liabilities,
revenues
and
expenses
reported
in
the
financial
statements,
as
well
as
amounts
included
in
the
notes
thereto,
including
discussion and disclosure of contingent liabilities. Although the company uses its best estimates and judgments, actual results
could differ from these estimates as circumstances change and additional information becomes known. Prior years’ data have
been reclassified in certain cases to conform to the 2023 presentation basis.
Subsidiary
and
Affiliated
Companies
The
Consolidated
Financial
Statements
include
the
accounts
of
controlled
subsidiary
companies
more
than
50
percent-owned
and
any
variable
interest
entities
in
which
the
company
is
the
primary
beneficiary.
Undivided
interests
in
oil
and
gas
joint
ventures
and
certain
other
assets
are
consolidated
on
a
proportionate
basis.
Investments
in
and
advances
to
affiliates
in
which
the
company
has
a
substantial
ownership
interest
of
approximately
20 percent
to 50 percent,
or for which the company exercises
significant
influence
but not control
over policy decisions, are
accounted for by the equity method.
Investments
in affiliates
are assessed for possible impairment
when events indicate that the fair value of the investment may
be
below
the
company’s
carrying
value.
When
such
a condition
is deemed to be other than temporary,
the carrying
value of
the
investment
is
written
down
to
its
fair
value,
and
the
amount
of
the
write-down
is
included
in
net
income.
In
making
the
determination as to whether a decline is other than temporary, the company considers such factors as the duration and extent
of
the
decline,
the
investee’s
financial
performance,
and
the
company’s
ability
and
intention
to
retain
its
investment
for
a
period
that
will
be
sufficient
to
allow
for
any
anticipated
recovery
in
the
investment’s
market
value.
The
new
cost
basis
of
investments in these equity investees is not changed for subsequent recoveries in fair value.
Differences
between
the
company’s
carrying
value
of
an
equity
investment
and
its
underlying
equity
in
the
net
assets
of
the
affiliate are assigned to the extent practicable to specific assets and liabilities based on the company’s analysis of the various
factors
giving
rise
to
the
difference.
When
appropriate,
the
company’s
share
of
the
affiliate’s
reported
earnings
is
adjusted
quarterly to reflect the difference between these allocated values and the affiliate’s historical book values.
Noncontrolling
Interests
Ownership
interests
in
the
company’s
subsidiaries
held
by
parties
other
than
the
parent
are
presented
separately
from
the
parent’s
equity
on
the
Consolidated
Balance
Sheet.
The
amount
of
consolidated
net
income
attributable
to
the
parent
and
the
noncontrolling
interests
are
both
presented
on
the
face
of
the
Consolidated
Statement
of
Income and Consolidated Statement of Equity. Included within noncontrolling interest is redeemable noncontrolling interest.
Fair
Value Measurements
The three
levels
of the fair
value hierarchy
of inputs
the company uses to measure
the fair
value
of
an
asset
or
a
liability
are
as
follows.
Level
1
inputs
are
quoted
prices
in
active
markets
for
identical
assets
or
liabilities.
Level
2
inputs
are
inputs
other
than
quoted
prices
included
within
Level
1
that
are
directly
or
indirectly
observable
for
the
asset or liability. Level 3 inputs are inputs that are not observable in the market.
Derivatives
The majority
of the company’s activity in derivative commodity instruments is intended to manage the financial
risk
posed
by
physical
transactions.
For
some
of
this
derivative
activity,
the
company
may
elect
to
apply
fair
value
or
cash
flow
hedge
accounting
with
changes
in
fair
value
recorded
as
components
of
accumulated
other
comprehensive
income
(loss).
For
other
similar
derivative
instruments,
generally
because
of
the
short-term
nature
of
the
contracts
or
their
limited
use,
the
company
does
not
apply
hedge
accounting,
and
changes
in
the
fair
value
of
those
contracts
are
reflected
in
current
income.
For
the
company’s
commodity
trading
activity,
gains and losses
from
derivative
instruments
are reported
in current
income.
The
company
may
enter
into
interest
rate
swaps
from
time
to
time
as
part
of
its
overall
strategy
to
manage
the
interest
rate
risk
on
its
debt.
Interest
rate
swaps
related
to
a
portion
of
the
company’s
fixed-rate
debt,
if
any,
may
be
accounted
for
as
fair
value
hedges.
Interest
rate
swaps
related
to
floating-rate
debt,
if
any,
are
recorded
at
fair
value
on
the
balance
sheet
with
resulting
gains
and
losses
reflected
in
income.
Where
Chevron is a party to master
netting
arrangements,
fair
value
receivable
and
payable
amounts
recognized
for
derivative
instruments
executed
with
the
same
counterparty
are
generally offset on the balance sheet.
Inventories
Crude oil, products and chemicals inventories are generally stated at cost, using a last-in, first-out method. In the
aggregate,
these
costs
are
below
market.
“Materials,
supplies
and
other”
inventories
are
primarily
stated
at
cost
or
net
realizable value.
Chevron Corporation 2023 Annual Report
67
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Properties,
Plant
and
Equipment
The
successful
efforts
method
is
used
for
crude
oil
and
natural
gas
exploration
and
production activities. All costs for development wells, related plant and equipment, proved mineral interests in crude oil and
natural
gas
properties,
and
related
asset
retirement
obligation
(ARO)
assets
are
capitalized.
Costs
of
exploratory
wells
are
capitalized
pending
determination
of
whether
the
wells
found
proved
reserves.
Costs
of
wells
that
are
assigned
proved
reserves remain capitalized. Costs also are capitalized for exploratory wells that have found crude oil and natural gas reserves
even if the reserves cannot be classified as proved when the drilling is completed, provided the exploratory well has found a
sufficient
quantity
of
reserves
to
justify
its
completion
as
a
producing
well
and
the
company
is
making
sufficient
progress
assessing
the
reserves
and
the
economic
and
operating
viability
of
the
project.
All
other
exploratory
wells
and
costs
are
expensed.
Refer
to
Note
21
Accounting
for
Suspended
Exploratory
Wells
for
additional
discussion
of
accounting
for
suspended exploratory well costs.
Long-lived
assets
to
be
held
and
used,
including
proved
crude
oil
and
natural
gas
properties,
are
assessed
for
possible
impairment
by
comparing
their
carrying
values
with
their
associated
undiscounted,
future
net
cash
flows.
Events
that
can
trigger assessments for possible impairments include write-downs of proved reserves based on field performance, significant
decreases
in
the
market
value
of
an
asset
(including
changes
to
the
commodity
price
forecast
or
carbon
costs),
significant
change in the extent or manner of use of or a physical change in an asset, and a more likely than not expectation that a long-
lived
asset
or
asset
group
will
be
sold
or
otherwise
disposed
of
significantly
sooner
than
the
end
of
its
previously
estimated
useful
life.
Impaired
assets
are
written
down to
their
estimated
fair
values,
generally
their
discounted,
future
net
cash
flows.
For
proved
crude
oil
and
natural
gas
properties,
the
company
performs
impairment
reviews
on
a
country,
concession,
PSC,
development area or field basis, as appropriate. In downstream, impairment reviews are performed on the basis of a refinery,
a
plant,
a
marketing/lubricants
area
or
distribution
area,
as
appropriate.
Impairment
amounts
are
recorded
as
incremental
“Depreciation, depletion and amortization” expense.
Long-lived
assets
that
are
held
for
sale
are
evaluated
for
possible
impairment
by
comparing
the
carrying
value
of
the
asset
with
its
fair
value
less
the
cost
to
sell.
If
the
net
book
value
exceeds
the
fair
value
less
cost
to
sell,
the
asset
is
considered
impaired and adjusted to the lower value. Refer to Note 9 Fair Value Measurements relating to fair value measurements. The
fair value of a liability
for an ARO is recorded as an asset and a liability when there is a legal obligation associated with the
retirement
of
a
long-lived
asset
and
the
amount
can
be
reasonably
estimated.
Refer
also
to
Note
25
Asset
Retirement
Obligations relating to AROs.
Depreciation
and
depletion
of
all
capitalized
costs
of
proved
crude
oil
and
natural
gas
producing
properties,
except
mineral
interests,
are
expensed
using
the
unit-of-production
method,
generally
by
individual
field,
as
the
proved
developed
reserves
are
produced.
Depletion
expenses
for
capitalized
costs
of
proved
mineral
interests
are
recognized
using
the
unit-of-production
method
by
individual
field
as
the
related
proved
reserves
are
produced.
Impairments
of
capitalized
costs
of unproved mineral interests are expensed.
The
capitalized
costs
of
all
other
plant
and
equipment
are
depreciated
or
amortized
over
their
estimated
useful
lives.
In
general, the declining-balance method is used to depreciate plant and equipment in the United States; the straight-line method
is generally used to depreciate international plant and equipment and to amortize finance lease right-of-use assets.
Gains
or
losses
are
not
recognized
for
normal
retirements
of
properties,
plant
and
equipment
subject
to
composite
group
amortization
or
depreciation.
Gains
or
losses
from
abnormal
retirements
are
recorded
as
expenses,
and
from
sales
as
“Other
income.”
Expenditures
for
maintenance
(including
those
for
planned
major
maintenance
projects),
repairs
and
minor
renewals
to
maintain
facilities
in
operating
condition
are
generally
expensed
as
incurred.
Major
replacements
and
renewals
are
capitalized.
Leases
Leases
are
classified
as
operating
or
finance
leases.
Both
operating
and
finance
leases
recognize
lease
liabilities
and
associated
right-of-use
assets.
The
company
has
elected
the
short-term
lease
exception
and
therefore
only
recognizes
right-of-use
assets
and
lease
liabilities
for
leases
with
a
term
greater
than
one
year.
The
company
has
elected
the
practical
expedient to not separate non-lease components from lease components for most asset classes except for certain asset classes
that have significant non-lease (i.e., service) components.
Where
leases
are
used
in
joint
ventures,
the
company
recognizes
100
percent
of
the
right-of-use
assets
and
lease
liabilities
when
the
company
is
the
sole
signatory
for
the
lease
(in
most
cases,
where
the
company
is
the
operator
of
a
joint
venture).
Lease
costs
reflect
only
the
costs
associated
with
the
operator’s
working
interest
share.
The
lease
term
includes
the
committed
lease
term
identified
in
the
contract,
taking
into
account
renewal
and
termination
options
that
management
is
Chevron Corporation 2023 Annual Report
68
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
reasonably certain to exercise. The company uses its incremental borrowing rate as a proxy for the discount rate based on the
term of the lease unless the implicit rate is available.
Goodwill
Goodwill resulting from a business combination is not subject to amortization. The company tests such goodwill at
the
reporting
unit
level
for
impairment
annually
at
December
31,
or
more
frequently
if
an
event
occurs
or
circumstances
change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.
Environmental
Expenditures
Environmental
expenditures
that
relate
to
ongoing
operations
or
to
conditions
caused
by
past
operations are expensed. Expenditures that create future benefits or contribute to future revenue generation are capitalized.
Liabilities related to future remediation costs are recorded when environmental assessments or cleanups or both are probable
and the costs can be reasonably estimated. For crude oil, natural gas and mineral-producing properties, a liability for an ARO
is made in accordance
with accounting standards for asset retirement
and environmental
obligations.
Refer to Note 25 Asset
Retirement Obligations for a discussion of the company’s AROs. For abandonment and decommissioning obligations related
to previously sold assets, refer to Note 24 Other Contingencies and Commitments.
For U.S. federal Superfund sites and analogous sites under state laws, the company records a liability for its designated share
of
the
probable
and
estimable
costs,
and
probable
amounts
for
other
potentially
responsible
parties
when
mandated
by
the
regulatory
agencies
because
the
other
parties
are not able to pay their
respective
shares.
The gross amount of environmental
liabilities
is
based
on
the
company’s
best
estimate
of
future
costs
using
currently
available
technology
and
applying
current
regulations
and
the
company’s
own
internal
environmental
policies.
Future
amounts
are
not
discounted.
Recoveries
or
reimbursements are recorded as assets when receipt is reasonably assured.
Currency
Translation
The
U.S.
dollar
is
the
functional
currency
for
substantially
all
of
the
company’s
consolidated
operations
and
those
of
its
equity
affiliates.
For
those
operations,
all
gains
and
losses
from
currency
remeasurement
are
included in current period income. The cumulative translation effects for those few entities, both consolidated and affiliated,
using functional
currencies
other than the U.S. dollar
are included
in “Currency
translation
adjustment”
on the Consolidated
Statement of Equity.
Revenue
Recognition
The
company
accounts
for
each
delivery
order
of
crude
oil,
NGLs,
natural
gas,
petroleum
and
chemical products as a separate performance obligation. Revenue is recognized when the performance obligation is satisfied,
which
typically
occurs
at
the
point
in
time
when
control
of
the
product
transfers
to
the
customer.
Payment
is
generally
due
within
30
days
of
delivery.
The
company
accounts
for
delivery
transportation
as
a
fulfillment
cost,
not
a
separate
performance
obligation,
and
recognizes
these
costs
as
an
operating
expense
in
the
period
when
revenue
for
the
related
commodity is recognized.
Revenue
is
measured
as
the
amount
the
company
expects
to
receive
in
exchange
for
transferring
commodities
to
the
customer. The company’s commodity sales are typically based on prevailing market-based prices and may include discounts
and allowances. Until market prices become known under terms of the company’s contracts, the transaction price included in
revenue is based on the company’s estimate of the most likely outcome.
Discounts
and
allowances
are
estimated
using
a
combination
of
historical
and
recent
data
trends.
When
deliveries
contain
multiple
products,
an
observable
standalone
selling
price
is
generally
used
to
measure
revenue
for
each
product.
The
company includes estimates in the transaction price only to the extent that a significant reversal of revenue is not probable in
subsequent periods.
Stock
Options
and
Other
Share-Based
Compensation
The
company
issues
stock
options
and
other
share-based
compensation
to
certain
employees.
For
equity
awards,
such
as
stock
options
and
certain
restricted
stock
units,
total
compensation
cost
is
based
on
the
grant
date
fair
value,
and
for
liability
awards,
such
as
stock
appreciation
rights,
total
compensation
cost
is
based
on
the
settlement
value.
The
company
recognizes
stock-based
compensation
expense
for
all
awards
over
the
service
period
required
to
earn
the
award,
which
is
the
shorter
of
the
vesting
period
or
the
time
period
in
which
an
employee
becomes
eligible
to
retain
the
award
at
retirement.
The
company’s
Long-Term
Incentive
Plan
(LTIP)
awards include stock options and stock appreciation rights, which have graded vesting provisions by which one-third of each
award
vests
on each
of
the
first,
second
and
third
anniversaries
of the date of grant. In addition,
performance
shares
granted
under
the
company’s
LTIP
will
vest
at
the
end
of
the
three-year
performance
period.
For
awards
granted
under
the
company’s
LTIP
beginning
in
2017,
stock
options
and
stock
appreciation
rights
have
graded
vesting
by
which
one-third
of
each award vests annually
on each January 31 on or after the first anniversary
of the grant date. Special restricted
stock unit
awards have cliff vesting by which the total award will vest on January 31 on or after the third anniversary of the grant date.
Standard
restricted
stock
unit
awards
have
cliff
vesting
by
which
the
total
award
will
vest
on
January
31
on
or
after
Chevron Corporation 2023 Annual Report
69
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
the
fifth
anniversary
of
the
grant
date,
subject
to
adjustment
upon termination
pursuant
to
the
satisfaction
of
certain
criteria.
Commencing for grants issued in January 2023 and after, standard restricted stock units vest ratably on an annual basis over a
three-year period. The company amortizes these awards on a straight-line basis.
Note 2
Changes in Accumulated Other Comprehensive Losses
The
change
in
Accumulated
Other
Comprehensive
Losses
(AOCL)
presented
on
the
Consolidated
Balance
Sheet
and
the
impact of significant amounts reclassified from AOCL on information presented in the Consolidated Statement of Income for
the year ended December 31, 2023, are reflected in the table below.
Currency
Translation
Adjustments
Unrealized
Holding Gains
(Losses) on
Securities
Derivatives
Defined
Benefit
Plans
Total
Balance at December 31, 2020
$
(107)
$
(10)
$
—
$(5,495)
$
(5,612)
Components of Other Comprehensive Income (Loss)
1
:
Before Reclassifications
(55)
(1)
(6)
949
887
Reclassifications
2,3
—
—
6
830
836
Net Other Comprehensive Income (Loss)
(55)
(1)
—
1,779
1,723
Balance at December 31, 2021
$
(162)
$
(11)
$
—
$(3,716)
$
(3,889)
Components of Other Comprehensive Income (Loss)
1
:
Before Reclassifications
(41)
(1)
68
703
729
Reclassifications
2, 3
—
—
(80)
442
362
Net Other Comprehensive Income (Loss)
(41)
(1)
(12)
1,145
1,091
Balance at December 31, 2022
$
(203)
$
(12)
$
(12)
$(2,571)
$
(2,798)
Components of Other Comprehensive Income (Loss)
1
:
Before Reclassifications
11
1
(16)
(397)
(401)
Reclassifications
2, 3
—
—
33
206
239
Net Other Comprehensive Income (Loss)
11
1
17
(191)
(162)
Balance at December 31, 2023
$
(192)
$
(11)
$
5
$(2,762)
$
(2,960)
1
All amounts are net of tax.
2
Refer
to
Note
23
Employee
Benefit
Plans,
for
reclassified
components,
including
amortization
of
actuarial
gains
or
losses,
amortization
of
prior
service
costs
and
settlement
losses, totaling $231 that are included in employee benefit costs for the year ended December 31, 2023. Related income taxes for the same period, totaling $25, are reflected in
Income Tax Expense on the Consolidated Statement of Income. All other reclassified amounts were insignificant.
3
Refer to Note 10 Financial and Derivative Instruments for cash flow hedging.
Chevron Corporation 2023 Annual Report
70
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Note 3
Information Relating to the Consolidated Statement of Cash Flows
Year ended December 31
2023
2022
2021
Distributions more (less) than income from equity affiliates includes the following:
Distributions from equity affiliates
$
4,246
$
3,855
$
3,659
(Income) loss from equity affiliates
(5,131)
(8,585)
(5,657)
Distributions more (less) than income from equity affiliates
$
(885)
$
(4,730)
$
(1,998)
Net decrease (increase) in operating working capital was composed of the following:
Decrease (increase) in accounts and notes receivable
$
1,187
$
(2,317)
$
(7,548)
Decrease (increase) in inventories
(320)
(930)
(530)
Decrease (increase) in prepaid expenses and other current assets
(1,202)
(226)
19
Increase (decrease) in accounts payable and accrued liabilities
(49)
2,750
5,475
Increase (decrease) in income and other taxes payable
(2,801)
2,848
1,223
Net decrease (increase) in operating working capital
$
(3,185)
$
2,125
$
(1,361)
Net cash provided by operating activities includes the following cash payments:
Interest on debt (net of capitalized interest)
$
465
$
525
$
699
Income taxes
10,416
9,148
4,355
Proceeds and deposits related to asset sales and returns of investment consisted of the following gross
amounts:
Proceeds and deposits related to asset sales
$
446
$
1,435
$
1,352
Returns of investment from equity affiliates
223
1,200
439
Proceeds and deposits related to asset sales and returns of investment
$
669
$
2,635
$
1,791
Net sales (purchases) of marketable securities consisted of the following gross amounts:
Marketable securities purchased
$
(289)
$
(7)
$
(4)
Marketable securities sold
464
124
3
Net sales (purchases) of marketable securities
$
175
$
117
$
(1)
Net repayment (borrowing) of loans by equity affiliates:
Borrowing of loans by equity affiliates
$
(368)
$
(108)
$
—
Repayment of loans by equity affiliates
66
84
401
Net repayment (borrowing) of loans by equity affiliates
$
(302)
$
(24)
$
401
Net borrowings (repayments) of short-term obligations consisted of the following gross and net
amounts:
Repayments of short-term obligations
$
—
$
—
$
(6,906)
Proceeds from issuances of short-term debt obligations
—
—
4,448
Net borrowings (repayments) of short-term obligations with three months or less maturity
135
263
(3,114)
Net borrowings (repayments) of short-term obligations
$
135
$
263
$
(5,572)
Net sales (purchases) of treasury shares consists of the following gross and net amounts:
Shares issued for share-based compensation plans
$
261
$
5,838
$
1,421
Shares purchased under share repurchase and deferred compensation plans
(14,939)
(11,255)
(1,383)
Net sales (purchases) of treasury shares
$
(14,678)
$
(5,417)
$
38
Net contributions from (distributions to) noncontrolling interests consisted of the following gross and
net amounts:
Distributions to noncontrolling interests
$
(54)
$
(118)
$
(53)
Contributions from noncontrolling interests
14
4
17
Net contributions from (distributions to) noncontrolling interests
$
(40)
$
(114)
$
(36)
The
“Other”
line
in
the
Operating
Activities
section
includes
changes
in
postretirement
benefits
obligations
and
other
long-
term liabilities.
The
Consolidated
Statement
of
Cash
Flows
excludes
changes
to
the
Consolidated
Balance
Sheet
that
did
not
affect
cash.
“Depreciation,
depletion
and
amortization”
and
“Deferred
income
tax
provision”
collectively
include
approximately
$1,765
in
non-cash
reductions
to
“Properties,
plant
and
equipment”
and
“Investments
and
advances”
in
2023
relating
to
impairments,
mainly
of
upstream
assets
in
California.
“Other
income
(loss)”
and
“Deferred
income
tax
provision”
collectively
include
a
$1,950 charge related to non-cash increases to “Deferred credits and other noncurrent obligations” related to abandonment and
decommissioning obligations
from
previously sold
oil
and gas
production assets
in the
U.S. Gulf of Mexico. The cash outlays
for these abandonment and decommissioning obligations are expected to take place over the next decade.
Chevron Corporation 2023 Annual Report
71
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Refer
also
to
Note
25
Asset
Retirement
Obligations
for
a
discussion
of
revisions
to
the
company’s
AROs
that
also
did
not
involve cash receipts or payments for the three years ending December 31, 2023.
The components of “Capital expenditures” are presented in the following table:
Year ended December 31
2023
2022
2021
Additions to properties, plant and equipment
*
$
14,788
$
10,349
$
7,515
Additions to investments
690
1,147
460
Current-year dry hole expenditures
326
309
83
Payments for other assets and liabilities, net
25
169
(2)
Capital expenditures
$
15,829
$
11,974
$
8,056
*
Excludes non-cash movements of $1,559 in 2023, $334 in 2022 and $316 in 2021.
The
table
below
quantifies
the
beginning
and
ending
balances
of
restricted
cash
and
restricted
cash
equivalents
in
the
Consolidated Balance Sheet:
Year ended December 31
2023
2022
2021
Cash and cash equivalents
$
8,178
$
17,678
$
5,640
Restricted cash included in “Prepaid expenses and other current assets”
275
630
333
Restricted cash included in “Deferred charges and other assets”
822
813
822
Total cash, cash equivalents and restricted cash
$
9,275
$
19,121
$
6,795
Note 4
New Accounting Standards
Segment
Reporting
(Topic
280)
Improvements
to
Reportable
Segment
Disclosures
In
November
2023,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standard
Update
(ASU)
2023-07,
which
becomes
effective
for
fiscal
years
beginning
after
December
15, 2023, and interim
periods
within fiscal
years beginning after
December
15, 2024.
The
standard
requires
companies
to
disclose
significant
segment
expenses.
The
company
does
not
expect
the
standard
to
have a material effect on its consolidated financial statements and has begun evaluating disclosure presentation alternatives.
Income
Taxes
(Topic
740)
Improvements
to
Income
Tax
Disclosures
In
December
2023,
the
FASB
issued
ASU
2023-09,
which
becomes
effective
for
fiscal
years
beginning
after
December
15,
2024.
The
standard
requires
companies
to
disclose
specific categories in the income tax rate reconciliation table and the amount of income taxes paid per major jurisdiction. The
company
does
not
expect
the
standard
to
have
a
material
effect
on
its
consolidated
financial
statements
and
has
begun
evaluating disclosure presentation alternatives.
Note 5
Lease Commitments
The
company
enters
into
leasing
arrangements
as
a
lessee;
any
lessor
arrangements
are
not
significant.
Operating
lease
arrangements
mainly
involve
land,
bareboat
charters,
terminals,
drill
ships,
drilling
rigs,
time
chartered
vessels,
office
buildings and warehouses, and exploration and production equipment. Finance leases primarily include facilities, vessels and
office buildings.
Details
of
the
right-of-use
assets
and
lease
liabilities
for
operating
and
finance
leases,
including
the
balance
sheet
presentation, are as follows:
Chevron Corporation 2023 Annual Report
72
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
At December 31, 2023
At December 31, 2022
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
Deferred charges and other assets
$
5,422
$
—
$
4,262
$
—
Properties, plant and equipment, net
—
583
—
392
Right-of-use assets*
$
5,422
$
583
$
4,262
$
392
Accrued Liabilities
$
1,538
$
—
$
1,111
$
—
Short-term Debt
—
60
—
45
Current lease liabilities
1,538
60
1,111
45
Deferred credits and other noncurrent obligations
3,696
—
2,920
—
Long-term Debt
—
574
—
403
Noncurrent lease liabilities
3,696
574
2,920
403
Total lease liabilities
$
5,234
$
634
$
4,031
$
448
Weighted-average remaining lease term (in years)
6.7
12.6
7.0
11.9
Weighted-average discount rate
3.3 %
4.5 %
1.9 %
4.1 %
*
Includes
non-cash
additions
of
$2,556
and
$233
in
2023,
and
$1,807
and
$3
in
2022
for
right-of-use
assets
obtained
in
exchange
for
new
and
modified
lease
liabilities
for
operating and finance leases, respectively.
Total lease costs consist of both amounts recognized in the Consolidated Statement of Income during the period and amounts
capitalized as part of the cost of another asset. Total lease costs incurred for operating and finance leases were as follows:
Year-ended December 31
2023
2022
2021
Operating lease costs*
$
2,984
$
2,359
$
2,199
Finance lease costs
52
57
66
Total lease costs
$
3,036
$
2,416
$
2,265
*
Includes variable and short-term lease costs.
Cash paid for amounts included in the measurement of lease liabilities was as follows:
Year-ended December 31
2023
2022
2021
Operating cash flows from operating leases
$
2,271
$
1,892
$
1,670
Investing cash flows from operating leases
713
467
398
Operating cash flows from finance leases
15
18
21
Financing cash flows from finance leases
42
44
193
At December 31, 2023, the estimated future undiscounted cash flows for operating and finance leases were as follows:
At December 31, 2023
Operating
Leases
Finance
Leases
Year
2024
$
1,673
$
84
2025
1,153
79
2026
734
76
2027
544
68
2028
396
66
Thereafter
1,364
443
Total
$
5,864
$
816
Less: Amounts representing interest
630
182
Total lease liabilities
$
5,234
$
634
Additionally, the company has $232 in future undiscounted cash flows for operating leases not yet commenced. These leases
are primarily
for drill ships, drilling rigs and storage tanks. For those leasing arrangements where the underlying asset is not
yet constructed, the lessor is primarily involved in the design and construction of the asset.
Chevron Corporation 2023 Annual Report
73
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Note 6
Summarized Financial Data – Chevron U.S.A. Inc.
Chevron
U.S.A. Inc.
(CUSA) is
a
major
subsidiary
of
Chevron
Corporation.
CUSA and
its
subsidiaries
manage
and
operate
most
of
Chevron’s
U.S.
businesses.
Assets
include
those
related
to
the
exploration
and
production
of
crude
oil,
natural
gas
liquids
and
natural
gas
and
those
associated
with
the
refining,
marketing,
supply
and
distribution
of
products
derived
from
petroleum,
excluding
most
of
the
regulated
pipeline
operations
of
Chevron.
CUSA
also
holds
the
company’s
investment
in
the
Chevron
Phillips
Chemical
Company
LLC
joint
venture,
which
is
accounted
for
using
the
equity
method.
The
summarized financial information for CUSA and its consolidated subsidiaries is as follows:
Year ended December 31
2023
2022
2021
Sales and other operating revenues
$
152,347
$
183,032
$
120,380
Total costs and other deductions
144,482
166,955
114,641
Net income (loss) attributable to CUSA
4,598
13,315
6,904
At December 31
2023
2022
Current assets
$
19,489
$
18,704
Other assets
54,460
50,153
Current liabilities
20,624
22,452
Other liabilities
22,227
19,274
Total CUSA net equity
$
31,098
$
27,131
Memo: Total debt
$
9,740
$
10,800
Note 7
Summarized Financial Data – Tengizchevroil LLP
Chevron
has
a
50
percent
equity
ownership
interest
in
Tengizchevroil
LLP
(TCO).
Refer
to
Note
15
Investments
and
Advances for a discussion of TCO operations. Summarized financial information for 100 percent of TCO is presented in the
table below:
Year ended December 31
2023
2022
2021
Sales and other operating revenues
$
19,578
$
23,795
$
15,927
Costs and other deductions
10,193
11,596
8,186
Net income attributable to TCO
6,569
8,566
5,418
At December 31
2023
2022
Current assets
$
3,919
$
6,522
Other assets
57,454
54,506
Current liabilities
2,372
3,567
Other liabilities
12,782
12,312
Total TCO net equity
$
46,219
$
45,149
Note 8
Summarized Financial Data – Chevron Phillips Chemical Company LLC
Chevron
has
a
50
percent
equity
ownership
interest
in
Chevron
Phillips
Chemical
Company
LLC
(CPChem).
Refer
to
Note
15 Investments
and
Advances
for a discussion
of CPChem operations.
Summarized
financial
information
for 100 percent
of
CPChem is presented in the table below:
Year ended December 31
2023
2022
2021
Sales and other operating revenues
$
11,560
$
14,180
$
14,104
Costs and other deductions
10,561
12,870
10,862
Net income attributable to CPChem
1,173
1,662
3,684
Chevron Corporation 2023 Annual Report
74
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
At December 31
2023
2022
Current assets
$
3,284
$
3,472
Other assets
16,425
15,184
Current liabilities
1,757
2,146
Other liabilities
3,269
2,941
Total CPChem net equity
$
14,683
$
13,569
Note 9
Fair Value Measurements
The
tables
below
show
the
fair
value
hierarchy
for
assets
and
liabilities
measured
at
fair
value
on
a
recurring
and
nonrecurring basis at December 31, 2023 and 2022.
Marketable
Securities
The
company
calculates
fair
value
for
its
marketable
securities
based
on
quoted
market
prices
for
identical
assets.
The fair
values reflect
the cash that would have been received
if the instruments
were sold at December 31,
2023.
Derivatives
The company records most of its derivative instruments – other than any commodity derivative contracts that are
accounted
for
as
normal
purchase
and
normal
sale
–
on
the
Consolidated
Balance
Sheet
at
fair
value,
with
the
offsetting
amount
to
the
Consolidated
Statement
of
Income.
The
company
designates
certain
derivative
instruments
as
cash
flow
hedges
that,
if
applicable,
are
reflected
in
the
table
below.
Derivatives
classified
as
Level
1
include
futures,
swaps
and
options
contracts
valued
using
quoted
prices
from
active
markets
such
as
the
New
York
Mercantile
Exchange.
Derivatives
classified
as
Level
2
include
swaps,
options
and
forward
contracts,
the
fair
values
of
which
are
obtained
from
third-party
broker quotes, industry pricing services and exchanges. The company obtains multiple sources of pricing information for the
Level
2
instruments.
Since
this
pricing
information
is
generated
from
observable
market
data,
it
has
historically
been
very
consistent. The company does not materially adjust this information.
Properties,
Plant
and
Equipment
In
2023,
the
company
impaired
a
portion
of
its
U.S.
upstream
assets,
primarily
in
California,
due
to
continuing
regulatory
challenges
in
the
state
that
have
resulted
in
lower
anticipated
future
investment
levels
in
its
business
plans.
The
company
did
not
have
any
individually
material
impairments
of
long-lived
assets
measured
at fair value on a nonrecurring basis to report in 2022.
Investments
and
Advances
The
company
did
not
have
any
material
impairments
of
investments
and
advances
measured
at
fair value on a nonrecurring basis to report in 2023 or 2022.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
At December 31, 2023
At December 31, 2022
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Marketable securities
$
45
$
45
$
—
$
—
$
223
$
223
$
—
$
—
Derivatives - not designated
152
24
128
—
184
111
73
—
Derivatives - designated
7
7
—
—
—
—
—
—
Total assets at fair value
$
204
$
76
$
128
$
—
$
407
$
334
$
73
$
—
Derivatives - not designated
262
160
102
—
43
33
10
—
Derivatives - designated
—
—
—
—
15
15
—
—
Total liabilities at fair value
$
262
$
160
$
102
$
—
$
58
$
48
$
10
$
—
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
At December 31
At December 31
Total
Level 1
Level 2
Level 3
Before-Tax
Loss
Year 2023
Total
Level 1
Level 2
Level 3
Before-Tax
Loss
Year 2022
Properties, plant and equipment, net (held
and used)
$
484
$
—
$
—
$
484
$
2,175
$
54
$
—
$
—
$
54
$
518
Properties, plant and equipment, net (held
for sale)
—
—
—
—
5
—
—
—
—
432
Investments and advances
207
5
165
37
352
33
2
—
31
9
Total nonrecurring assets at fair value
$
691
$
5
$
165
$
521
$
2,532
$
87
$
2
$
—
$
85
$
959
At
year-end
2023,
the
company
had
assets
measured
at
fair
value
Level
3
using
unobservable
inputs
of
$521.
The
carrying
value
of
these
assets
were
written
down
to
fair
value
based
on
estimates
derived
from
discounted
cash
flow
models.
Cash
Chevron Corporation 2023 Annual Report
75
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
flows
were
determined
using
estimates
of
future
production,
an
outlook
of
future
price
based
on
published
prices
and
a
discount rate believed to be consistent with those used by principal market participants.
Assets
and
Liabilities
Not
Required
to
Be
Measured
at
Fair
Value
The
company
holds
cash
equivalents
in
U.S.
and
non-U.S.
portfolios.
The
instruments
classified
as
cash
equivalents
are
primarily
bank
time
deposits
with
maturities
of
90
days
or
less
and
money
market
funds.
“Cash
and
cash
equivalents”
had
carrying/fair
values
of
$8,178
and
$17,678
at
December
31,
2023,
and
December
31,
2022,
respectively.
The
fair
values
of
cash
and
cash
equivalents
are
classified
as
Level 1 and reflect the cash that would have been received if the instruments were settled at December 31, 2023.
“Cash
and
cash
equivalents”
do
not
include
investments
with
a
carrying/fair
value
of
$1,097
and
$1,443
at
December
31,
2023,
and
December
31,
2022,
respectively.
At
December
31,
2023,
these
investments
are
classified
as
Level
1
and
include
restricted funds related to certain upstream decommissioning activities, a financing program and tax payments.
Long-term
debt,
excluding
finance
lease
liabilities,
of
$14,612 and
$16,258 at December
31, 2023, and December
31, 2022,
respectively,
had
estimated
fair
values
of
$13,709
and
$14,959,
respectively.
Long-term
debt
primarily
includes
corporate
issued
bonds.
The
fair
value
of
corporate
bonds
is
$13,321
and
classified
as
Level
1.
The
fair
value
of
other
long-term
debt
classified as Level 2 is $388.
The
carrying
values
of
other
short-term
financial
assets
and
liabilities
on
the
Consolidated
Balance
Sheet
approximate
their
fair values. Fair value remeasurements of other financial instruments at December 31, 2023 and 2022, were not material.
Note 10
Financial and Derivative Instruments
Derivative
Commodity
Instruments
The company’s
derivative
commodity
instruments
principally
include
crude
oil,
natural
gas, liquefied natural gas and refined product futures, swaps, options, and forward contracts. The company applies cash flow
hedge
accounting
to
certain
commodity
transactions,
where
appropriate,
to
manage
the
market
price
risk
associated
with
forecasted
sales
of
crude
oil.
The
company’s
derivatives
are
not
material
to
the
company’s
financial
position,
results
of
operations
or liquidity.
The company believes it has no material
market or credit risks to its operations, financial
position or
liquidity as a result of its commodity derivative activities.
The
company
uses
derivative
commodity
instruments
traded
on
the
New
York
Mercantile
Exchange
and
on
electronic
platforms
of
the
Inter-Continental
Exchange
and
Chicago
Mercantile
Exchange.
In
addition,
the
company
enters
into
swap
contracts
and
option
contracts
principally
with
major
financial
institutions
and
other
oil
and
gas
companies
in
the
“over-the-counter”
markets,
which
are
governed
by
International
Swaps
and
Derivatives
Association
agreements
and
other
master
netting
arrangements.
Depending
on
the
nature
of
the
derivative
transactions,
bilateral
collateral
arrangements
may
also be required.
Derivative
instruments
measured
at
fair
value
at
December
31,
2023,
2022
and
2021,
and
their
classification
on
the
Consolidated Balance Sheet and Consolidated Statement of Income are as follows:
Consolidated Balance Sheet: Fair Value of Derivatives
At December 31
Type of Contract
Balance Sheet Classification
2023
2022
Commodity
Accounts and notes receivable
$
151
$
175
Commodity
Long-term receivables, net
8
9
Total assets at fair value
$
159
$
184
Commodity
Accounts payable
$
216
$
46
Commodity
Deferred credits and other noncurrent obligations
46
12
Total liabilities at fair value
$
262
$
58
Consolidated Statement of Income: The Effect of Derivatives
Type of Derivative
Statement of
Gain/(Loss)
Year ended December 31
Contract
Income Classification
2023
2022
2021
Commodity
Sales and other operating revenues
$
(304)
$
(651)
$
(685)
Commodity
Purchased crude oil and products
(154)
(226)
(64)
Commodity
Other income (loss)
(47)
10
(46)
$
(505)
$
(867)
$
(795)
Chevron Corporation 2023 Annual Report
76
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
The amount reclassified
from AOCL to “Sales and other operating revenues” from designated hedges was a decrease of $33
in
2023,
compared
with
an
increase
of
$80
in
the
prior
year.
At
December
31,
2023,
before-tax
deferred
gains
in
AOCL
related
to
outstanding
crude
oil
price
hedging
contracts
were
$7,
all
of
which
is
expected
to
be
reclassified
into
earnings
during the next 12 months as the hedged crude oil sales are recognized in earnings.
The
table
below
represents
gross
and
net
derivative
assets
and
liabilities
subject
to
netting
agreements
on
the
Consolidated
Balance Sheet at December 31, 2023 and 2022.
Consolidated Balance Sheet: The Effect of Netting Derivative Assets and Liabilities
At December 31, 2023
Gross Amounts
Recognized
Gross Amounts
Offset
Net Amounts
Presented
Gross Amounts
Not Offset
Net
Amounts
Derivative Assets - not designated
$
2,394
$
2,242
$
152
$
4
$
148
Derivative Assets - designated
$
8
$
1
$
7
$
—
$
7
Derivative Liabilities - not designated
$
2,504
$
2,242
$
262
$
15
$
247
Derivative Liabilities - designated
$
1
$
1
$
—
$
—
$
—
At December 31, 2022
Derivative Assets - not designated
$
2,591
$
2,407
$
184
$
5
$
179
Derivative Assets - designated
$
8
$
8
$
—
$
—
$
—
Derivative Liabilities - not designated
$
2,450
$
2,407
$
43
$
—
$
43
Derivative Liabilities - designated
$
23
$
8
$
15
$
—
$
15
Derivative assets and liabilities are classified on the Consolidated Balance Sheet as “Accounts and notes receivable,” “Long-
term
receivables,”
“Accounts
payable,”
and
“Deferred
credits
and
other
noncurrent
obligations.”
Amounts
not
offset
on
the
Consolidated Balance Sheet represent positions that do not meet all the conditions for “a right of offset.”
Concentrations
of Credit Risk
The company’s financial
instruments
that are exposed to concentrations
of credit risk consist
primarily
of
its
cash
equivalents,
marketable
securities,
derivative
financial
instruments
and
trade
receivables.
The
company’s
short-term
investments
are
placed
with
a
wide
array
of
financial
institutions
with
high
credit
ratings.
Company
investment
policies
limit
the
company’s
exposure
both
to
credit
risk
and
to
concentrations
of credit
risk. Similar
policies
on
diversification
and
creditworthiness
are
applied
to
the
company’s
counterparties
in
derivative
instruments.
For
a
discussion
of credit risk on trade receivables, see Note 28 Financial Instruments - Credit Losses.
Note 11
Assets Held for Sale
At
December
31,
2023,
the
company
classified
$675
of
net
properties,
plant
and
equipment
as
“Assets
held
for
sale”
on the
Consolidated
Balance
Sheet.
These
assets
are
associated
with
upstream
operations
that
are
anticipated
to
be
sold
in
the
next
12 months. The revenues and earnings contributions of these assets in 2023 were not material.
Note 12
Equity
Retained
earnings
at
December
31,
2023
and
2022,
included
$34,359
and
$33,570,
respectively,
for
the
company’s
share
of
undistributed earnings of equity affiliates.
At
December
31,
2023,
about
101
million
shares
of
Chevron’s
common
stock
remained
available
for
issuance
from
the
104
million
shares
that
were
reserved
for
issuance
under
the
2022 Chevron
Long-Term
Incentive
Plan.
In
addition,
578,044
shares
remain
available
for
issuance
from
the
1,600,000
shares
of
the
company’s
common
stock
that
were
reserved
for
awards under the Chevron Corporation Non-Employee Directors’ Equity Compensation and Deferral Plan.
Note 13
Earnings Per Share
Basic
earnings
per
share
(EPS)
is
based
upon
“Net
Income
(Loss)
Attributable
to
Chevron
Corporation”
(“earnings”)
and
includes
the effects
of deferrals
of salary
and other compensation
awards that are invested
in Chevron stock units by certain
officers
and
employees
of
the
company.
Diluted
EPS
includes
the
effects
of
these
items
as
well
as
the
dilutive
effects
of
outstanding
stock
options
awarded
under
the
company’s
stock
option
programs
(refer
to
Note
22
Stock
Options
and
Other
Share-Based Compensation). The table below sets forth the computation of basic and diluted EPS:
Chevron Corporation 2023 Annual Report
77
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Year ended December 31
2023
2022
2021
Basic EPS Calculation
Earnings available to common stockholders - Basic*
$
21,369
$
35,465
$
15,625
Weighted-average number of common shares outstanding
1,873
1,931
1,916
Add: Deferred awards held as stock units
—
—
—
Total weighted-average number of common shares outstanding
1,873
1,931
1,916
Earnings per share of common stock - Basic
$
11.41
$
18.36
$
8.15
Diluted EPS Calculation
Earnings available to common stockholders - Diluted*
$
21,369
$
35,465
$
15,625
Weighted-average number of common shares outstanding
1,873
1,931
1,916
Add: Deferred awards held as stock units
—
—
—
Add: Dilutive effect of employee stock-based awards
7
9
4
Total weighted-average number of common shares outstanding
1,880
1,940
1,920
Earnings per share of common stock - Diluted
$
11.36
$
18.28
$
8.14
*
There was no effect of dividend equivalents paid on stock units or dilutive impact of employee stock-based awards on earnings.
Note 14
Operating Segments and Geographic Data
Although
each
subsidiary
of
Chevron
is
responsible
for
its
own
affairs,
Chevron
Corporation
manages
its
investments
in
these
subsidiaries
and
their
affiliates.
The
investments
are
grouped
into
two
business
segments,
Upstream
and
Downstream,
representing
the
company’s
“reportable
segments”
and
“operating
segments.”
Upstream
operations
consist
primarily
of
exploring
for,
developing,
producing
and
transporting
crude
oil
and
natural
gas;
liquefaction,
transportation
and
regasification
associated
with liquefied natural gas (LNG); transporting crude oil by major international oil export pipelines;
processing,
transporting,
storage
and
marketing
of
natural
gas;
carbon
capture
and
storage;
and
a
gas-to-liquids
plant.
Downstream
operations
consist
primarily
of
refining
of
crude
oil
into
petroleum
products;
marketing
of
crude
oil,
refined
products,
and
lubricants;
manufacturing
and
marketing
of
renewable
fuels;
transporting
of
crude
oil
and refined
products
by
pipeline,
marine
vessel,
motor
equipment
and
rail
car;
and
manufacturing
and
marketing
of
commodity
petrochemicals,
plastics
for
industrial
uses,
and
fuel
and
lubricant
additives.
All
Other
activities
of
the
company
include
worldwide
cash
management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, and
technology activities.
The company’s segments are managed by “segment managers” who report to the “chief operating decision maker” (CODM).
The
segments
represent
components
of
the
company
that
engage
in
activities
(a)
from
which
revenues
are
earned
and
expenses
are
incurred;
(b)
whose
operating
results
are
regularly
reviewed
by
the
CODM,
which
makes
decisions
about
resources
to
be
allocated
to
the
segments
and
assesses
their
performance;
and
(c)
for
which
discrete
financial
information
is
available.
The
company’s
primary
country
of
operation
is
the
United
States
of
America,
its
country
of
domicile.
Other
components
of
the company’s operations are reported as “International” (outside the United States).
Segment
Earnings
The
company
evaluates
the
performance
of
its
operating
segments
on
an
after-tax
basis,
without
considering
the
effects
of
debt
financing
interest
expense
or
investment
interest
income,
both
of
which
are
managed
by
the
company
on
a
worldwide
basis.
Corporate
administrative
costs
are
not
allocated
to
the
operating
segments.
However,
operating segments are billed for the direct use of corporate services. Non-billable costs remain at the corporate level in “All
Other.” Earnings by major operating area are presented in the following table:
Chevron Corporation 2023 Annual Report
78
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Year ended December 31
2023
2022
2021
Upstream
United States
$
4,148
$
12,621
$
7,319
International
13,290
17,663
8,499
Total Upstream
17,438
30,284
15,818
Downstream
United States
3,904
5,394
2,389
International
2,233
2,761
525
Total Downstream
6,137
8,155
2,914
Total Segment Earnings
23,575
38,439
18,732
All Other
Interest expense
(432)
(476)
(662)
Interest income
491
261
36
Other
(2,265)
(2,759)
(2,481)
Net Income (Loss) Attributable to Chevron Corporation
$
21,369
$
35,465
$
15,625
Segment
Assets
Segment
assets
do
not
include
intercompany
investments
or
receivables.
Assets
at
year-end
2023
and
2022
are as follows:
At December 31
2023
2022
Upstream
United States
$
58,750
$
44,246
International
131,685
134,489
Goodwill
4,370
4,370
Total Upstream
194,805
183,105
Downstream
United States
33,066
31,676
International
21,070
21,193
Goodwill
352
352
Total Downstream
54,488
53,221
Total Segment Assets
249,293
236,326
All Other
United States
10,292
17,861
International
2,047
3,522
Total All Other
12,339
21,383
Total Assets – United States
102,108
93,783
Total Assets – International
154,802
159,204
Goodwill
4,722
4,722
Total Assets
$
261,632
$
257,709
Segment
Sales
and
Other
Operating
Revenues
Operating
segment
sales
and
other
operating
revenues,
including
internal
transfers,
for
the
years
2023,
2022
and
2021,
are
presented
in
the
table
on
the
next
page.
Products
are
transferred
between
operating segments at internal product values that approximate market prices.
Revenues for the upstream segment are derived primarily from the production and sale of crude oil and natural gas, as well as
the
sale
of
third-party
production
of
natural
gas.
Revenues
for
the
downstream
segment
are
derived
from
the
refining
and
marketing
of
petroleum
products
such
as
gasoline,
jet
fuel,
gas
oils,
lubricants,
residual
fuel
oils
and
other
products
derived
from
crude
oil.
This
segment
also
generates
revenues
from
the
manufacture
and
sale
of
fuel
and
lubricant
additives
and
the
transportation
and
trading
of
refined
products
and
crude
oil.
“All
Other”
activities
include
revenues
from
insurance
operations, real estate activities and technology companies.
Chevron Corporation 2023 Annual Report
79
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Year ended December 31*
2023
2022
2021
Upstream
United States
$
40,115
$
50,822
$
29,219
International
43,805
56,156
40,921
Subtotal
83,920
106,978
70,140
Intersegment Elimination — United States
(26,307)
(29,870)
(15,154)
Intersegment Elimination — International
(11,871)
(13,815)
(10,994)
Total Upstream
45,742
63,293
43,992
Downstream
United States
83,567
91,824
57,209
International
78,058
87,741
58,098
Subtotal
161,625
179,565
115,307
Intersegment Elimination — United States
(8,793)
(5,529)
(2,296)
Intersegment Elimination — International
(1,794)
(1,728)
(1,521)
Total Downstream
151,038
172,308
111,490
All Other
United States
595
515
506
International
2
3
2
Subtotal
597
518
508
Intersegment Elimination — United States
(462)
(400)
(382)
Intersegment Elimination — International
(2)
(2)
(2)
Total All Other
133
116
124
Sales and Other Operating Revenues
United States
124,277
143,161
86,934
International
121,865
143,900
99,021
Subtotal
246,142
287,061
185,955
Intersegment Elimination — United States
(35,562)
(35,799)
(17,832)
Intersegment Elimination — International
(13,667)
(15,545)
(12,517)
Total Sales and Other Operating Revenues
$
196,913
$
235,717
$
155,606
*
Other than the United States, no other country accounted for 10 percent or more of the company’s Sales and Other Operating Revenues.
Segment Income Taxes
Segment income tax expense for the years 2023, 2022 and 2021 is as follows:
Year ended December 31
2023
2022
2021
Upstream
United States
$
1,141
$
3,678
$
1,934
International
5,733
9,055
4,192
Total Upstream
6,874
12,733
6,126
Downstream
United States
1,109
1,515
547
International
519
280
203
Total Downstream
1,628
1,795
750
All Other
(329)
(462)
(926)
Total Income Tax Expense (Benefit)
$
8,173
$
14,066
$
5,950
Other
Segment
Information
Additional
information
for
the
segmentation
of
major
equity
affiliates
is
contained
in
Note
15
Investments
and
Advances.
Information
related
to
properties,
plant
and
equipment
by
segment
is
contained
in
Note
18
Properties, Plant and Equipment.
Chevron Corporation 2023 Annual Report
80
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Note 15
Investments and Advances
Equity in earnings, together with investments in and advances to companies accounted for using the equity method and other
investments
accounted
for
at
or
below
cost,
is
shown
in
the
following
table.