UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20192020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 001-00368
Chevron CorporationCorporation
(Exact name of registrant as specified in its charter)
| 6001 Bollinger Canyon Road | |||||||||||||||||||||||
| Delaware | 94-0890210 | San Ramon, | California | 94583-2324 | |||||||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | (Address of principal executive offices) (Zip Code) | |||||||||||||||||||||
incorporation or organization) | Identification No.) | ||||||||||||||||||||||
Registrant’s telephone number, including area code (925) (925) 842-1000
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
| Common stock, par value $.75 per share | CVX | New York Stock Exchange | ||||||||||||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☑ | Accelerated filer | ☐ | ||||||||||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||||||||||||||||||||
| Emerging growth company | ☐ | ||||||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter — $236.2$166.6 billion (As of June 28, 2019)30, 2020)
Number of Shares of Common Stock outstanding as of February 10, 20202021 — 1,879,324,7651,926,376,764
DOCUMENTS INCORPORATED BY REFERENCE
(To The Extent Indicated Herein)
Notice of the 20202021 Annual Meeting and 20202021 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, in connection with the company’s 20202021 Annual Meeting of Stockholders (in Part III)
TABLE OF CONTENTS
| ITEM | PAGE | ||||||||||
1
| ITEM | PAGE | |
| 4. | Mine Safety Disclosures | |
| Information about our Executive Officers | ||
| 16. | Form 10-K Summary | |
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Annual Report on Form 10-K of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’smanagement's current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words or phrases such as “anticipates,[“anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “positions,” “pursues,” “may,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on schedule,” “on track,” “is slated,” “goals,” “objectives,” “strategies,” “opportunities,” “poised”“poised,” “potential”] and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-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, future events or otherwise.
Among the important factors that could cause actual results to differ materially from those projected in the forward-looking statements are: changing crude oil and natural gas prices;prices and demand for our products, and production curtailments due to market conditions; crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries (OPEC) and other producing countries; public health crises, such as pandemics (including coronavirus (COVID-19)) and epidemics, and any related government policies and actions; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic and political conditions; changing refining, marketing and chemicals margins; the company’s ability to realize anticipated cost savings, expenditure reductions and efficiencies associated with enterprise transformation initiatives; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of the company’s suppliers, vendors, partners and equity affiliates, particularly during extended periods of low prices for crude oil and natural gas;gas during the COVID-19 pandemic; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats, terrorist acts, and public health crises, such as pandemics and epidemics; crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries, or other natural or human causes beyond the company’s control; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic and political conditions; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant operational, investment or product changes required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures to limit or reduce greenhouse gas emissions; the potential liability resulting from pending or future litigation; the company’s ability to achieve the anticipated benefits from the acquisition of Noble Energy, Inc.; the company’s future acquisitions or dispositions of assets or shares or the delay or failure of such transactions to close based on required closing conditions; the potential for gains and losses from asset dispositions or impairments; government-mandatedgovernment mandated sales, divestitures, recapitalizations, industry-specific taxes, tariffs, sanctions, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; material reductions in corporate liquidity and access to debt markets; the receipt of required Board authorizations to pay future dividends; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; the company’s ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and the factors set forth under the heading “Risk Factors” on pages 18 through 2123 in this report. Other unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements.
2
PART I
Item 1. Business
General Development of Business
Summary Description of Chevron
Chevron Corporation,* a Delaware corporation, manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to U.S. and international subsidiaries that engage in integrated energy and chemicals operations. Upstream operations consist primarily of exploring for, developing, producing and producingtransporting crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by major international oil export pipelines; transporting, storage and marketing of natural gas; and a gas-to-liquids plant. Downstream operations consist primarily of refining crude oil into petroleum products; marketing of crude oil, refined products and refined products;lubricants; transporting 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.
A list of the company’s major subsidiaries is presented in Exhibit 21.1 on page E-1. As of December 31, 2019, Chevron had approximately 48,200 employees (including about 3,500 service station employees). Approximately 25,400 employees (including about 3,200 service station employees), or 53 percent, were employed in U.S. operations.
Overview of Petroleum Industry
Petroleum industry operations and profitability are influenced by many factors. Prices for crude oil, natural gas, petroleum products and petrochemicals are generally determined by supply and demand. Production levels from the members of the Organization of Petroleum Exporting Countries (OPEC), Russia and the United States are the major factors in determining worldwide supply. Demand for crude oil and its products and for natural gas is largely driven by the conditions of local, national and global economies, although weather patterns and taxation relative to other energy sources also play a significant part. Laws and governmental policies, particularly in the areas of taxation, energy and the environment, affect where and how companies invest, conduct their operations and formulate their products and, in some cases, limit their profits directly.
Strong competition exists in all sectors of the petroleum and petrochemical industries in supplying the energy, fuel and chemical needs of industry and individual consumers. In the upstream business, Chevron competes with fully integrated, major global petroleum companies, as well as independent and national petroleum companies, for the acquisition of crude oil and natural gas leases and other properties and for the equipment and labor required to develop and operate those properties. In its downstream business, Chevron competes with fully integrated, major petroleum companies, as well as independent refining and marketing, transportation and chemicals entities and national petroleum companies in the refining, manufacturing, sale and marketing of fuels, lubricants, additives and petrochemicals.
Operating Environment
Refer to pages 2831 through 3438 of this Form 10-K in Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the company’s current business environment and outlook.
Chevron’s Strategic Direction
Chevron’s primary objective is to deliver industry-leading resultshigher returns, lower carbon and superior shareholder value in any business environment. In the upstream, the company’s strategy is to deliver industry-leading returns while developing high-value resource opportunities. In the downstream, the company’s strategy is to grow earnings acrossbe the value chainleading downstream and make targeted investmentschemicals company that delivers on customer needs. In seeking to lead the industry in returns. In support of the company’s approach to the energy transition,help advance a lower carbon future, Chevron is focused on lowering its carbon intensity cost efficiently, increasing the userenewables and offsets in support of renewables in its business, and investing in future breakthrough technologies.low-carbon technologies to enable commercial solutions.
Information about the company is available on the company’s website at www.chevron.com. Information contained on the company’s website is not part of this Annual Report on Form 10-K. The company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on the company’s website soon after such reports are filed with or furnished to the U.S. Securities and Exchange Commission (SEC). The reports are also available on the SEC’s website at www.sec.gov.
* Incorporated in Delaware in 1926 as Standard Oil Company of California, the company adopted the name Chevron Corporation in 1984 and ChevronTexaco Corporation in 2001. In 2005, ChevronTexaco Corporation changed its name to Chevron Corporation. As used in this report, the term “Chevron” and such terms as “the company,” “the corporation,” “our,” “we,” “us” and "its" may refer to Chevron Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole, but unless stated otherwise they do not include “affiliates” of Chevron — i.e., those companies accounted for by the equity method (generally owned 50 percent or less) or non-equity method investments. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies, each of which manages its own affairs.
3
Human Capital Management
Chevron is focused on investing in its employees and its culture. Chevron hires, develops, and strives to retain critical talent, and fosters a culture that values diversity and inclusion and employee engagement, all of which support the company’s overall objective to deliver industry leading performance. Chevron’s leadership reinforces and monitors the company’s investment in people and the company’s culture. This includes reviews of metrics addressing critical function hiring, leadership development, attrition, diversity and inclusion, and employee engagement.
The following table summarizes Chevron’s number of employees by gender, where data is available, and by region as of December 31, 2020.
| At December 31, 2020 | ||||||||||||||||||||||||||
| Female | Male | Gender data not available 1 | Total Employees | |||||||||||||||||||||||
| Number of Employees | Percentage | Number of Employees | Percentage | Number of Employees | Percentage | Number of Employees | Percentage | |||||||||||||||||||
| U.S. | 6,632 | 28 | % | 16,606 | 70 | % | 491 | 2 | % | 23,729 | 50 | % | ||||||||||||||
| Other Americas | 894 | 26 | % | 2,484 | 73 | % | 33 | 1 | % | 3,411 | 7 | % | ||||||||||||||
| Africa | 715 | 17 | % | 3,507 | 83 | % | 6 | — | % | 4,228 | 9 | % | ||||||||||||||
| Asia | 2,982 | 29 | % | 7,334 | 71 | % | 80 | 1 | % | 10,396 | 22 | % | ||||||||||||||
| Australia | 1,746 | 40 | % | 2,584 | 60 | % | 6 | — | % | 4,336 | 9 | % | ||||||||||||||
| Europe | 410 | 25 | % | 1,226 | 75 | % | 0 | — | % | 1,636 | 3 | % | ||||||||||||||
Total Employees 2 | 13,379 | 28 | % | 33,741 | 71 | % | 616 | 1 | % | 47,736 | 100 | % | ||||||||||||||
1 Includes employees where gender data was not collected or employee chose not to disclose gender.
2 Includes 5,108 service station employees; 2,312 and 1,672 new employees came from the 2020 Puma Energy (Australia) Holdings Pty. Ltd and Noble Energy, Inc. acquisitions, respectively.
Hiring, Development and Retention
The company’s approach to attracting, developing and retaining its employees is anchored in a career-oriented employment model. Chevron recruits new employees through partnerships with universities and diversity associations. In 2020, over 500 students participated in the company’s first ever virtual internship program. In addition, the company recruits experienced hires to target critical skills.
Development programs are designed to build leadership capabilities at all levels and ensure the company’s workforce has the technical and operating capabilities to produce energy safely and reliably. Chevron’s leadership regularly reviews metrics on employee training and development programs, which are continually evolving to better meet the needs of the business. For instance, Chevron recently launched learning initiatives focused on digital innovation, including new Digital Academy and Digital Scholars programs. In addition, to ensure business continuity, leadership regularly reviews the talent pipeline, identifies and develops succession candidates, and builds succession plans for leadership positions. The Board provides oversight of CEO and executive succession planning.
Chevron’s 2020 annual voluntary attrition was 4.1 percent, in line with its historical rates. The voluntary attrition rate generally excludes employee departures under enterprise-wide restructuring programs. Chevron believes its low voluntary attrition rate is in part a result of the company’s commitment to employee development and career advancement.
Diversity and Inclusion
Chevron is committed to advancing diversity and inclusion in the workplace so that employees are enabled to contribute to their full potential. The company believes innovative solutions to its most complex challenges emerge when diverse people, ideas, and experiences come together in an inclusive environment. Chevron reinforces the value of diversity and inclusion through accountability, communication, training and personnel selection processes. Examples of initiatives to further advance diversity and inclusion include the company’s Neurodiversity program through which the company employs neurodiverse individuals and leverages their talents, its Elevate program which focuses on learning opportunities to promote a deeper understanding of employees in underrepresented groups, and its Returnship initiative which provides support for women re-entering the workforce. In addition, Chevron has twelve employee networks (voluntary groups of employees that come together based on shared identity or interests) and more than fifteen diversity councils across its business units that help align diversity and inclusion efforts with business strategies.
4
Employee engagement is an indicator of employee well-being and commitment to the company’s values, purpose and strategies. Chevron regularly conducts employee surveys to assess the health of the company’s culture. Recent surveys have indicated a high degree of employee engagement. In 2020, the company’s employee survey focused on the COVID-19 impact on employee well-being and the company’s response to the pandemic. The survey results positively reinforced actions taken by Chevron, and helped inform further actions to address the impact on employees and their families through enhanced mental health and wellness support, financial assistance for unplanned childcare needs and remote learning resources, among other efforts. The company also has long-standing programs such as Ombuds, an independent resource designed to equip employees with options to address and resolve workplace issues; a company hotline, where employees can report concerns to the Corporate Compliance department; and its Employee Assistance Program, a confidential consulting service that can help employees resolve a broad range of personal, family and work-related concerns or problems.
Description of Business and Properties
The upstream and downstream activities of the company and its equity affiliates are widely dispersed geographically, with operations and projects* in North America, South America, Europe, Africa, Middle East, Asia and Australia. Tabulations of segment sales and other operating revenues, earnings and income taxes for the three years ending December 31, 2019,2020, and assets as of the end of 20192020 and 20182019 — for the United States and the company’s international geographic areas — are in Note 12 to the Consolidated Financial Statements beginning on page 68.74. Similar comparative data for the company’s investments in and income from equity affiliates and property, plant and equipment are in Note 13 beginning on page 7177 and Note 16 on page 77.82. Refer to page 3944 of this Form 10-K in Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the company’s capital and exploratory expenditures.
Upstream
Reserves
Refer to Table V beginning on page 96103 for a tabulation of the company’s proved crude oil, condensate, natural gas liquids (NGLs), synthetic oil and natural gas reserves by geographic area, at the beginning of 20172018 and at each year-end from 20172018 through 2019.2020. Reserves governance, technologies used in establishing proved reserves additions, and major changes to proved reserves by geographic area for the three-year period ended December 31, 2019,2020, are summarized in the discussion for Table V. Discussion is also provided regarding the nature of, status of, and planned future activities associated with the development of proved undeveloped reserves. The company recognizes reserves for projects with various development periods, sometimes exceeding five years. The external factors that impact the duration of a project include scope and complexity, remoteness or adverse operating conditions, infrastructure constraints, and contractual limitations.
At December 31, 2019, 282020, 27 percent of the company’s net proved oil-equivalent reserves were located in the United States, 2318 percent were located in Australia and 1920 percent were located in Kazakhstan.
The net proved reserve balances at the end of each of the three years 20172018 through 20192020 are shown in the following table:
| At December 31 | At December 31 | ||||||||||||||||||||||||||||
| 2019 | 2018 | 2017 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||
| Liquids — Millions of barrels | Liquids — Millions of barrels | ||||||||||||||||||||||||||||
| Consolidated Companies | 4,771 | 4,975 | 4,530 | Consolidated Companies | 4,475 | 4,771 | 4,975 | ||||||||||||||||||||||
| Affiliated Companies | 1,750 | 1,815 | 2,012 | Affiliated Companies | 1,672 | 1,750 | 1,815 | ||||||||||||||||||||||
| Total Liquids | 6,521 | 6,790 | 6,542 | Total Liquids | 6,147 | 6,521 | 6,790 | ||||||||||||||||||||||
| Natural Gas — Billions of cubic feet | Natural Gas — Billions of cubic feet | ||||||||||||||||||||||||||||
| Consolidated Companies | 26,587 | 28,733 | 27,514 | Consolidated Companies | 27,006 | 26,587 | 28,733 | ||||||||||||||||||||||
| Affiliated Companies | 2,870 | 2,843 | 3,222 | Affiliated Companies | 2,916 | 2,870 | 2,843 | ||||||||||||||||||||||
| Total Natural Gas | 29,457 | 31,576 | 30,736 | Total Natural Gas | 29,922 | 29,457 | 31,576 | ||||||||||||||||||||||
Oil-Equivalent — Millions of barrels1 | Oil-Equivalent — Millions of barrels1 | ||||||||||||||||||||||||||||
| Consolidated Companies | 9,202 | 9,764 | 9,116 | Consolidated Companies | 8,976 | 9,202 | 9,764 | ||||||||||||||||||||||
| Affiliated Companies | 2,229 | 2,289 | 2,549 | Affiliated Companies | 2,158 | 2,229 | 2,289 | ||||||||||||||||||||||
| Total Oil-Equivalent | 11.431 | 12.053 | 11.665 | Total Oil-Equivalent | 11,134 | 11,431 | 12,053 | ||||||||||||||||||||||
1 Oil-equivalent conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil.
* As used in this report, the term “project” may describe new upstream development activity, individual phases in a multiphase development, maintenance activities, certain existing assets, new investments in downstream and chemicals capacity, investments in emerging and sustainable energy activities, and certain other activities. All of these terms are used for convenience only and are not intended as a precise description of the term “project” as it relates to any specific governmental law or regulation. 5 |
Net Production of Liquids and Natural Gas
The following table summarizes the net production of liquids and natural gas for 20192020 and 20182019 by the company and its affiliates. Worldwide oil-equivalent production of 3.0583.083 million barrels per day in 20192020 was up more than 4approximately 1 percent from 2018.2019. Production increases from shale and tight properties and the Wheatstone project in AustraliaNoble Energy, Inc. (Noble) acquisition were partially offset by normal field declines.production curtailments associated with OPEC and coordinating countries’ (OPEC+) restrictions and market conditions, and asset sale related decreases of 100,000 barrels per day. Refer to the “Results“Results of Operations” section beginning on page 3237 for a detailed discussion of the factors explaining the changes in production for crude oil, condensate, natural gas liquids, synthetic oil and natural gas, and refer to Table V on pages 99107 through 101109 for information on annual production by geographical region.
| Components of Oil-Equivalent | |||||||||||||||||||||||||||||
| Oil-Equivalent | Liquids | Natural Gas | |||||||||||||||||||||||||||
| Thousands of barrels per day (MBPD) | (MBPD)1 | (MBPD) | (MMCFPD) | ||||||||||||||||||||||||||
| Millions of cubic feet per day (MMCFPD) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
United States2 | 1,058 | 929 | 790 | 724 | 1,607 | 1,225 | |||||||||||||||||||||||
| Other Americas | |||||||||||||||||||||||||||||
| Argentina | 25 | 27 | 21 | 23 | 24 | 25 | |||||||||||||||||||||||
| Brazil | 6 | 8 | 6 | 8 | 1 | 2 | |||||||||||||||||||||||
Canada3 | 159 | 135 | 138 | 119 | 126 | 95 | |||||||||||||||||||||||
Colombia4 | 2 | 11 | — | — | 14 | 64 | |||||||||||||||||||||||
| Total Other Americas | 192 | 181 | 165 | 150 | 165 | 186 | |||||||||||||||||||||||
| Africa | |||||||||||||||||||||||||||||
| Angola | 87 | 95 | 78 | 86 | 53 | 52 | |||||||||||||||||||||||
Equatorial Guinea2 | 11 | — | 5 | — | 42 | — | |||||||||||||||||||||||
| Nigeria | 183 | 209 | 140 | 173 | 260 | 215 | |||||||||||||||||||||||
| Republic of Congo | 46 | 52 | 44 | 49 | 13 | 13 | |||||||||||||||||||||||
| Total Africa | 327 | 356 | 267 | 308 | 368 | 280 | |||||||||||||||||||||||
| Asia | |||||||||||||||||||||||||||||
Azerbaijan4 | 7 | 20 | 7 | 18 | 3 | 10 | |||||||||||||||||||||||
| Bangladesh | 107 | 110 | 3 | 4 | 622 | 638 | |||||||||||||||||||||||
| China | 32 | 31 | 15 | 16 | 100 | 93 | |||||||||||||||||||||||
| Indonesia | 138 | 109 | 131 | 101 | 43 | 52 | |||||||||||||||||||||||
Israel2 | 20 | — | — | — | 116 | — | |||||||||||||||||||||||
| Kazakhstan | 55 | 49 | 32 | 28 | 136 | 129 | |||||||||||||||||||||||
| Myanmar | 15 | 15 | — | — | 92 | 93 | |||||||||||||||||||||||
Partitioned Zone5 | 18 | — | 17 | — | 3 | — | |||||||||||||||||||||||
Philippines4 | 5 | 26 | 1 | 3 | 25 | 136 | |||||||||||||||||||||||
| Thailand | 207 | 238 | 54 | 65 | 918 | 1,038 | |||||||||||||||||||||||
| Total Asia | 604 | 598 | 260 | 235 | 2,058 | 2,189 | |||||||||||||||||||||||
| Australia | |||||||||||||||||||||||||||||
| Australia | 441 | 455 | 42 | 45 | 2,392 | 2,460 | |||||||||||||||||||||||
| Total Australia | 441 | 455 | 42 | 45 | 2,392 | 2,460 | |||||||||||||||||||||||
| Europe | |||||||||||||||||||||||||||||
Denmark4 | — | 5 | — | 3 | — | 11 | |||||||||||||||||||||||
United Kingdom4 | 14 | 62 | 13 | 44 | 5 | 108 | |||||||||||||||||||||||
| Total Europe | 14 | 67 | 13 | 47 | 5 | 119 | |||||||||||||||||||||||
| Total Consolidated Companies | 2,636 | 2,586 | 1,537 | 1,509 | 6,595 | 6,459 | |||||||||||||||||||||||
Affiliates3,6 | 447 | 472 | 331 | 356 | 695 | 698 | |||||||||||||||||||||||
Total Including Affiliates7 | 3,083 | 3,058 | 1,868 | 1,865 | 7,290 | 7,157 | |||||||||||||||||||||||
1 Oil-equivalent conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil. | |||||||||||||||||||||||||||||
2 Includes production associated with the acquisition of Noble commencing October 2020. | |||||||||||||||||||||||||||||
3 Includes synthetic oil: Canada, net | 54 | 53 | 54 | 53 | — | — | |||||||||||||||||||||||
| Venezuela, net | — | 3 | — | 3 | — | — | |||||||||||||||||||||||
4 Chevron sold its interest in various upstream producing assets in 2019 and 2020. | |||||||||||||||||||||||||||||
5 Located between Saudi Arabia and Kuwait. Production was shut-in in May 2015; resumed in July 2020. | |||||||||||||||||||||||||||||
6 Volumes represent Chevron’s share of production by affiliates, including Tengizchevroil in Kazakhstan; Petroboscan and Petropiar in Venezuela through June 30, 2020; and Angola LNG in Angola. | |||||||||||||||||||||||||||||
7 Volumes include natural gas consumed in operations of 603 million and 638 million cubic feet per day in 2020 and 2019, respectively. Total “as sold” natural gas volumes were 6,687 million and 6,519 million cubic feet per day for 2020 and 2019, respectively. | |||||||||||||||||||||||||||||
6
| Components of Oil-Equivalent | |||||||||||||||
| Oil-Equivalent | Liquids | Natural Gas | |||||||||||||
| Thousands of barrels per day (MBPD) | (MBPD)1 | (MBPD) | (MMCFPD) | ||||||||||||
| Millions of cubic feet per day (MMCFPD) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||
| United States | 929 | 791 | 724 | 618 | 1,225 | 1,034 | |||||||||
| Other Americas | |||||||||||||||
| Argentina | 27 | 24 | 23 | 20 | 25 | 24 | |||||||||
| Brazil | 8 | 11 | 8 | 10 | 2 | 4 | |||||||||
Canada2 | 135 | 116 | 119 | 103 | 95 | 79 | |||||||||
| Colombia | 11 | 14 | — | — | 64 | 82 | |||||||||
| Total Other Americas | 181 | 165 | 150 | 133 | 186 | 189 | |||||||||
| Africa | |||||||||||||||
| Angola | 95 | 108 | 86 | 98 | 52 | 59 | |||||||||
Democratic Republic of the Congo3 | — | 1 | — | 1 | — | — | |||||||||
| Nigeria | 209 | 239 | 173 | 200 | 215 | 233 | |||||||||
| Republic of Congo | 52 | 52 | 49 | 49 | 13 | 14 | |||||||||
| Total Africa | 356 | 400 | 308 | 348 | 280 | 306 | |||||||||
| Asia | |||||||||||||||
| Azerbaijan | 20 | 20 | 18 | 18 | 10 | 10 | |||||||||
| Bangladesh | 110 | 112 | 4 | 4 | 638 | 648 | |||||||||
| China | 31 | 29 | 16 | 16 | 93 | 84 | |||||||||
| Indonesia | 109 | 132 | 101 | 113 | 52 | 113 | |||||||||
| Kazakhstan | 49 | 46 | 28 | 27 | 129 | 120 | |||||||||
| Myanmar | 15 | 16 | — | — | 93 | 98 | |||||||||
Partitioned Zone4 | — | — | — | — | — | — | |||||||||
| Philippines | 26 | 26 | 3 | 3 | 136 | 138 | |||||||||
| Thailand | 238 | 236 | 65 | 66 | 1,038 | 1,022 | |||||||||
| Total Asia | 598 | 617 | 235 | 247 | 2,189 | 2,233 | |||||||||
| Australia/Oceania | |||||||||||||||
| Australia | 455 | 426 | 45 | 42 | 2,460 | 2,304 | |||||||||
| Total Australia/Oceania | 455 | 426 | 45 | 42 | 2,460 | 2,304 | |||||||||
| Europe | |||||||||||||||
Denmark5 | 5 | 19 | 3 | 12 | 11 | 45 | |||||||||
| United Kingdom | 62 | 65 | 44 | 43 | 108 | 133 | |||||||||
| Total Europe | 67 | 84 | 47 | 55 | 119 | 178 | |||||||||
| Total Consolidated Companies | 2,586 | 2,483 | 1,509 | 1,443 | 6,459 | 6,244 | |||||||||
Affiliates2,6 | 472 | 447 | 356 | 339 | 698 | 645 | |||||||||
Total Including Affiliates7 | 3,058 | 2,930 | 1,865 | 1,782 | 7,157 | 6,889 | |||||||||
1 Oil-equivalent conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil. | |||||||||||||||
2 Includes synthetic oil: Canada, net | 53 | 53 | 53 | 53 | — | — | |||||||||
| Venezuelan affiliate, net | 3 | 24 | 3 | 24 | — | — | |||||||||
3 Chevron sold its interest in a concession in the Democratic Republic of Congo in April 2018. | |||||||||||||||
4 Located between Saudi Arabia and Kuwait. Production has been shut-in since May 2015. | |||||||||||||||
5 Chevron sold its 12 percent nonoperated working interest in the Danish Underground Consortium in April 2019. | |||||||||||||||
6 Volumes represent Chevron’s share of production by affiliates, including Tengizchevroil in Kazakhstan; Petroboscan and Petropiar in Venezuela; and Angola LNG in Angola. | |||||||||||||||
7 Volumes include natural gas consumed in operations of 638 million and 619 million cubic feet per day in 2019 and 2018, respectively. Total “as sold” natural gas volumes were 6,519 million and 6,270 million cubic feet per day for 2019 and 2018, respectively. | |||||||||||||||
Production Outlook
The company estimates its average worldwide oil-equivalent production in 20202021 will grow up to 3 percent compared to 2019,2020, assuming a Brent crude oil price of $60$50 per barrel and excluding the impact of anticipated 20202021 asset sales. This estimate is subject to many factors and uncertainties, as described beginning on page 30.33. Refer to the “Review of Ongoing Exploration and Production Activities in Key Areas,” beginning on page 8,9, for a discussion of the company’s major crude oil and natural gas development projects.
Average Sales Prices and Production Costs per Unit of Production
Refer to Table IV on page 95102 for the company’s average sales price per barrel of liquids (including crude oil, condensate and natural gas liquids) and per thousand cubic feet of natural gas produced, and the average production cost per oil-equivalent barrel for 2020, 2019 2018 and 2017.2018.
Gross and Net Productive Wells
The following table summarizes gross and net productive wells at year-end 20192020 for the company and its affiliates:
| At December 31, 2020 | |||||||||||||||||||||||
Productive Oil Wells1 | Productive Gas Wells1 | ||||||||||||||||||||||
| Gross | Net | Gross | Net | ||||||||||||||||||||
| United States | 42,933 | 31,380 | 2,859 | 2,322 | |||||||||||||||||||
| Other Americas | 1,077 | 687 | 216 | 135 | |||||||||||||||||||
| Africa | 1,732 | 679 | 50 | 19 | |||||||||||||||||||
| Asia | 14,210 | 12,492 | 3,179 | 1,732 | |||||||||||||||||||
| Australia | 533 | 299 | 101 | 25 | |||||||||||||||||||
| Europe | 29 | 6 | — | — | |||||||||||||||||||
| Total Consolidated Companies | 60,514 | 45,543 | 6,405 | 4,233 | |||||||||||||||||||
Affiliates2 | 1,675 | 601 | — | — | |||||||||||||||||||
| Total Including Affiliates | 62,189 | 46,144 | 6,405 | 4,233 | |||||||||||||||||||
| Multiple completion wells included above | 619 | 340 | 148 | 117 | |||||||||||||||||||
1 Gross wells represent the total number of wells in which Chevron has an ownership interest. Net wells represent the sum of Chevron’s ownership interest in gross wells. | |||||||||||||||||||||||
2 Includes gross 1,452 and net 490 productive oil wells for interests accounted for by the non-equity method. | |||||||||||||||||||||||
| At December 31, 2019 | |||||||||||
| Productive Oil Wells* | Productive Gas Wells* | ||||||||||
| Gross | Net | Gross | Net | ||||||||
| United States | 39,282 | 28,179 | 2,727 | 1,978 | |||||||
| Other Americas | 1,070 | 651 | 190 | 117 | |||||||
| Africa | 1,713 | 664 | 27 | 11 | |||||||
| Asia | 14,450 | 12,522 | 3,577 | 2,012 | |||||||
| Australia/Oceania | 540 | 303 | 103 | 27 | |||||||
| Europe | 27 | 5 | — | — | |||||||
| Total Consolidated Companies | 57,082 | 42,324 | 6,624 | 4,145 | |||||||
| Affiliates | 1,643 | 588 | — | — | |||||||
| Total Including Affiliates | 58,725 | 42,912 | 6,624 | 4,145 | |||||||
| Multiple completion wells included above | 629 | 352 | 147 | 116 | |||||||
| * Gross wells represent the total number of wells in which Chevron has an ownership interest. Net wells represent the sum of Chevron’s ownership interest in gross wells. | |||||||||||
Acreage
At December 31, 2019,2020, the company owned or had under lease or similar agreements undeveloped and developed crude oil and natural gas properties throughout the world. The geographical distribution of the company’s acreage is shown in the following table:
Undeveloped2 | Developed | Developed and Undeveloped | ||||||||||||||||||||||||||||||||||||
Thousands of acres1 | Gross | Net | Gross | Net | Gross | Net | ||||||||||||||||||||||||||||||||
| United States | 4,120 | 3,561 | 4,670 | 3,317 | 8,790 | 6,878 | ||||||||||||||||||||||||||||||||
| Other Americas | 19,418 | 10,592 | 1,169 | 252 | 20,587 | 10,844 | ||||||||||||||||||||||||||||||||
| Africa | 7,393 | 4,829 | 2,522 | 1,051 | 9,915 | 5,880 | ||||||||||||||||||||||||||||||||
| Asia | 18,742 | 7,692 | 1,914 | 1,041 | 20,656 | 8,733 | ||||||||||||||||||||||||||||||||
| Australia | 10,370 | 6,471 | 2,061 | 812 | 12,431 | 7,283 | ||||||||||||||||||||||||||||||||
| Total Consolidated Companies | 60,043 | 33,145 | 12,336 | 6,473 | 72,379 | 39,618 | ||||||||||||||||||||||||||||||||
Affiliates3 | 702 | 290 | 102 | 46 | 804 | 336 | ||||||||||||||||||||||||||||||||
| Total Including Affiliates | 60,745 | 33,435 | 12,438 | 6,519 | 73,183 | 39,954 | ||||||||||||||||||||||||||||||||
1 Gross acres represent the total number of acres in which Chevron has an ownership interest. Net acres represent the sum of Chevron’s ownership interest in gross acres. | ||||||||||||||||||||||||||||||||||||||
2 The gross undeveloped acres that will expire in 2021, 2022 and 2023 if production is not established by certain required dates are 2,415, 5,404 and 3,199, respectively. | ||||||||||||||||||||||||||||||||||||||
3 Includes gross 405 and net 141 undeveloped and gross 19 and net 5 developed acreage for interests accounted for by the non-equity method. | ||||||||||||||||||||||||||||||||||||||
Undeveloped2 | Developed | Developed and Undeveloped | ||||||||||||||||
Thousands of acres1 | Gross | Net | Gross | Net | Gross | Net | ||||||||||||
| United States | 3,665 | 3,214 | 4,149 | 2,886 | 7,814 | 6,100 | ||||||||||||
| Other Americas | 17,004 | 10,543 | 1,219 | 284 | 18,223 | 10,827 | ||||||||||||
| Africa | 3,717 | 1,443 | 2,238 | 933 | 5,955 | 2,376 | ||||||||||||
| Asia | 19,165 | 7,992 | 1,678 | 924 | 20,843 | 8,916 | ||||||||||||
| Australia/Oceania | 10,882 | 5,697 | 2,061 | 812 | 12,943 | 6,509 | ||||||||||||
| Total Consolidated Companies | 54,433 | 28,889 | 11,345 | 5,839 | 65,778 | 34,728 | ||||||||||||
| Affiliates | 497 | 219 | 307 | 117 | 804 | 336 | ||||||||||||
| Total Including Affiliates | 54,930 | 29,108 | 11,652 | 5,956 | 66,582 | 35,064 | ||||||||||||
1 Gross acres represent the total number of acres in which Chevron has an ownership interest. Net acres represent the sum of Chevron’s ownership interest in gross acres. | ||||||||||||||||||
2 The gross undeveloped acres that will expire in 2020, 2021 and 2022 if production is not established by certain required dates are 1,136, 2,644 and 4,180, respectively. | ||||||||||||||||||
Delivery Commitments
The company sells crude oil and natural gas from its producing operations under a variety of contractual obligations. Most contracts generally commit the company to sell quantities based on production from specified properties, but some natural gas sales contracts specify delivery of fixed and determinable quantities, as discussed below.
In the United States, the company is contractually committed to deliver 9511,136 billion cubic feet of natural gas to third parties from 20202021 through 2022.2023. The company believes it can satisfy these contracts through a combination of equity
7
production from the company’s proved developed U.S. reserves and third-party purchases. These commitments are primarily based on contracts with indexed pricing terms.
Outside the United States, the company is contractually committed to deliver a total of 2,3772,800 billion cubic feet of natural gas to third parties from 20202021 through 20222023 from operations in Australia Colombia, Indonesia and the Philippines. TheseIsrael. The Australia sales contracts contain variable pricing formulas that are generally referenced toreference the prevailing market price for crude oil, natural gas or other petroleum products at the time of delivery. The Israel sales contracts contain formulas that generally reflect an initial base price subject to price indexation, Brent-linked or other, over the life of the contract and have a contractual floor. The company believes it can satisfy these contracts from quantities available from production of the company’s proved developed reserves in these countries.
Development Activities
Refer to Table I on page 9299 for details associated with the company’s development expenditures and costs of proved property acquisitions for 2020, 2019 2018 and 2017.2018.
The following table summarizes the company’s net interest in productive and dry development wells completed in each of the past three years, and the status of the company’s development wells drilling at December 31, 2019.2020. A “development well” is a well drilled within the known area of a crude oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
| Wells Drilling* | Net Wells Completed | Wells Drilling1 | Net Wells Completed | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| at 12/31/19 | 2019 | 2018 | 2017 | at 12/31/20 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross | Net | Prod. | Dry | Prod. | Dry | Prod. | Dry | Gross | Net | Prod. | Dry | Prod. | Dry | Prod. | Dry | |||||||||||||||||||||||||||||||||||||||||||
| United States | 186 | 135 | 682 | 1 | 509 | 1 | 435 | 4 | United States | 190 | 149 | 539 | 2 | 682 | 1 | 509 | 1 | |||||||||||||||||||||||||||||||||||||||||
| Other Americas | 16 | 11 | 36 | — | 43 | — | 40 | — | Other Americas | 12 | 9 | 27 | — | 36 | — | 43 | — | |||||||||||||||||||||||||||||||||||||||||
| Africa | 12 | 1 | 26 | — | 8 | — | 34 | — | Africa | 1 | — | 5 | — | 26 | — | 8 | — | |||||||||||||||||||||||||||||||||||||||||
| Asia | 9 | 3 | 181 | 2 | 289 | 5 | 246 | 2 | Asia | 23 | 8 | 94 | 2 | 181 | 2 | 289 | 5 | |||||||||||||||||||||||||||||||||||||||||
| Australia/Oceania | — | — | — | — | 1 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Australia | Australia | — | — | — | — | — | — | 1 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | 1 | — | 1 | — | 2 | — | 4 | — | Europe | — | — | 1 | — | 1 | — | 2 | — | |||||||||||||||||||||||||||||||||||||||||
| Total Consolidated Companies | 224 | 150 | 926 | 3 | 852 | 6 | 759 | 6 | Total Consolidated Companies | 226 | 166 | 666 | 4 | 926 | 3 | 852 | 6 | |||||||||||||||||||||||||||||||||||||||||
| Affiliates | 35 | 15 | 43 | — | 39 | — | 36 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Affiliates2 | Affiliates2 | 22 | 8 | 13 | — | 43 | — | 39 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Including Affiliates | 259 | 165 | 969 | 3 | 891 | 6 | 795 | 6 | Total Including Affiliates | 248 | 174 | 679 | 4 | 969 | 3 | 891 | 6 | |||||||||||||||||||||||||||||||||||||||||
| * Gross wells represent the total number of wells in which Chevron has an ownership interest. Net wells represent the sum of Chevron’s ownership interest in gross wells. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 Gross wells represent the total number of wells in which Chevron has an ownership interest. Net wells represent the sum of Chevron’s ownership interest in gross wells. | 1 Gross wells represent the total number of wells in which Chevron has an ownership interest. Net wells represent the sum of Chevron’s ownership interest in gross wells. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 Includes gross 19 and net 6 wells drilling for interests accounted for by the non-equity method. | 2 Includes gross 19 and net 6 wells drilling for interests accounted for by the non-equity method. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exploration Activities
Refer to Table I on page 9299 for detail on the company’s exploration expenditures and costs of unproved property acquisitions for 2020, 2019 2018 and 2017.2018.
The following table summarizes the company’s net interests in productive and dry exploratory wells completed in each of the last three years, and the number of exploratory wells drilling at December 31, 2019.2020. “Exploratory wells” are wells drilled to find and produce crude oil or natural gas in unknown areas and include delineation and appraisal wells, which are wells drilled to find a new reservoir in a field previously found to be productive of crude oil or natural gas in another reservoir or to extend a known reservoir.
| Wells Drilling* | Net Wells Completed | |||||||||||||||||||||||||||||||||||||
| at 12/31/20 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||
| Gross | Net | Prod. | Dry | Prod. | Dry | Prod. | Dry | |||||||||||||||||||||||||||||||
| United States | 1 | — | 4 | 1 | 10 | 2 | 13 | 2 | ||||||||||||||||||||||||||||||
| Other Americas | — | — | 2 | 2 | — | — | 1 | 1 | ||||||||||||||||||||||||||||||
| Africa | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Asia | — | — | — | — | — | — | 1 | — | ||||||||||||||||||||||||||||||
| Australia | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Europe | — | — | — | — | — | — | — | 1 | ||||||||||||||||||||||||||||||
| Total Consolidated Companies | 1 | — | 6 | 3 | 10 | 2 | 15 | 4 | ||||||||||||||||||||||||||||||
| Affiliates | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Total Including Affiliates | 1 | — | 6 | 3 | 10 | 2 | 15 | 4 | ||||||||||||||||||||||||||||||
| * Gross wells represent the total number of wells in which Chevron has an ownership interest. Net wells represent the sum of Chevron’s ownership interest in gross wells. | ||||||||||||||||||||||||||||||||||||||
8
| Wells Drilling* | Net Wells Completed | |||||||||||||||||||||||
| at 12/31/19 | 2019 | 2018 | 2017 | |||||||||||||||||||||
| Gross | Net | Prod. | Dry | Prod. | Dry | Prod. | Dry | |||||||||||||||||
| United States | 3 | 1 | 10 | 2 | 13 | 2 | 7 | 1 | ||||||||||||||||
| Other Americas | 2 | 2 | — | — | 1 | 1 | — | — | ||||||||||||||||
| Africa | — | — | — | — | — | — | — | — | ||||||||||||||||
| Asia | — | — | — | — | 1 | — | — | — | ||||||||||||||||
| Australia/Oceania | 1 | — | — | — | — | — | — | — | ||||||||||||||||
| Europe | — | — | — | — | — | 1 | — | 1 | ||||||||||||||||
| Total Consolidated Companies | 6 | 3 | 10 | 2 | 15 | 4 | 7 | 2 | ||||||||||||||||
| Affiliates | — | — | — | — | — | — | — | — | ||||||||||||||||
| Total Including Affiliates | 6 | 3 | 10 | 2 | 15 | 4 | 7 | 2 | ||||||||||||||||
| * Gross wells represent the total number of wells in which Chevron has an ownership interest. Net wells represent the sum of Chevron’s ownership interest in gross wells. | ||||||||||||||||||||||||
Review of Ongoing Exploration and Production Activities in Key Areas
Chevron has exploration and production activities in many of the world’s major hydrocarbon basins. Chevron’s 20192020 key upstream activities, some of which are also discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations, beginning on page 32,37, are presented below. The comments include references to “total production” and “net production,” which are defined under “Production” in Exhibit 99.1 on page E-7.
The discussion that follows references the status of proved reserves recognition for significant long-lead-time projects not on production as well as for projects recently placed on production. Reserves are not discussed for exploration activities or recent discoveries that have not advanced to a project stage, or for mature areas of production that do not have individual projects requiring significant levels of capital or exploratory investment.
United States
Upstream activities in the United States are primarily located in the midcontinent region,Texas, New Mexico, California, Colorado and the Gulf of Mexico, California andMexico. Acreage for the Appalachian Basin.United States can be found in the table on page 7. Net daily oil-equivalent production in the United States during 2019 averaged 929,000 barrels.can be found in the table on page 6.
With the acquisition of Noble in October 2020, Chevron increased its position in the Permian Basin and acquired acreage in Colorado and Wyoming.
The company’s activitiesacreage in the midcontinent region are primarily in New Mexico and Texas. During 2019, net daily production in these areas averaged 259,000 barrels of crude oil, 835 million cubic feet of natural gas and 120,000 barrels of natural gas liquids (NGLs).
In 2020, Chevron was one of the largest crude oil producers in California. Construction was completed in April 2020 on a new 29-megawatt solar farm to supply power to the Lost Hills Field. In October 2020, Chevron announced participation in a carbon capture trial in California with start-up expected in 2022.
In Colorado, development in the CentralDenver-Julesburg (DJ) Basin Platform of the Permian Basin.includes Wells Ranch and Mustang areas. Chevron’s integrated development plan provides an opportunity to efficiently produce these resources.
In July 2019, Chevron entered into a renewable wind power purchase agreement designed to cost-effectively power a portion of its Permian Basin operations.Wyoming, the company has acreage in the Powder River and Green River Basins.
During 2019,2020, net daily production in the Gulf of Mexico averaged 200,000175,000 barrels of crude oil, 11296 million cubic feet of natural gas and 12,00011,000 barrels of NGLs. Chevron is engaged in various operated and nonoperated exploration, development and production activities in the deepwater Gulf of Mexico. Chevron also holds nonoperated interests in several shelf fields.
The deepwater Jack and St. Malo fields are being jointly developed with a host floating production unit located between the two fields. Chevron has a 50 percent interest in the Jack Field and a 51 percent interest in the St. Malo Field. Both fields are company operated. The company has a 40.6 percent interest in the production host facility, which is designed to accommodate production from the Jack/St. Malo development and third-party tiebacks. Total daily production from the Jack and St. Malo fields in 2019 averaged 135,000 barrels of liquids (68,000 net) and 22 million cubic feet of natural gas (11 million net). Additional development opportunities for the Jack and St. Malo fields progressed in 2019.2020. Stage 3 development drilling continued with the final well expected to be completed in first-halfMay 2020. Proved reserves have been recognized for this phase. Two additional wells were added to the Jack Field in 2019, with one commencing production. The St. Malo Stage 4 waterflood project reached a final investment decision in August 2019. The project includes two new production wells, three injector wells, and topsides water injection equipment.equipment at the St. Malo field. First injection is expected in 2023. The Stage 4 multiphase subsea pump project also reached a final investment decisionreplaces the single-phase subsea pumps in May 2019. The initial recognition of provedboth the Jack and St. Malo fields. Progress during 2020 included beginning pump module installation. Proved reserves occurred in 2019have been recognized for the multiphase subsea pump project. The Jack and St. Malo fields have an estimated production life of 30 years.
The company has a 15.6 percent nonoperated working interest in the deepwater Mad Dog Field. In 2019, net daily production averaged 9,000 barrels of liquids and 1 million cubic feet of natural gas. Project execution continued in 20192020 on the Mad Dog 2 Project. This phase of the plan is the development of the southwestern extension of the Mad Dog Field, including a new floating production platform with a design capacity of 140,000 barrels of crude oil per day. Drilling and fabricationconstruction of the floating production unit are progressing as planned, and first oil is expected in 2021.2022. Proved reserves have been recognized for the Mad Dog 2 Project.
9
Chevron has a 60 percent-owned and operated interest in the Big Foot Project, located in the deepwater Walker Ridge area. In 2019, net daily production averaged 11,000 barrels of crude oil and 2 million cubic feet of natural gas. Development drilling activities continued in 2019are ongoing, with onethe third production well coming online and onein September 2020. An additional well is expected to come online by the end of 2020.in third quarter 2021. The project has an estimated production life of 35 years.
Chevron holds a 25 percent nonoperated working interest in the Stampede Field, which is located in the Green Canyon area. In 2019, total daily production averaged 28,000 barrels of liquids (7,000 net) and 6 million cubic feet of natural gas (2 million net). The second and third injection wells were completed and brought online in 2019. Production ramp-up is expected to continue,continued in 2020, with the completion of the final producing well expectedcompleted in first-halfMarch 2020. The field has an estimated production life of 30 years.
Chevron has owned and operated interests of 62.9 to 75.4 percent in the unit areas containing the Anchor Field. Stage 1 of the Anchor development consists of a seven-well subsea development and a semi-submersible floating production unit. A final investment decision was reached in December 2019. The planned facility has a design capacity of 75,000 barrels of crude oil and 28 million cubic feet of natural gas per day. The initial recognitionDevelopment work continued in 2020 with construction of the drillship, acquisition of seismic data, detailed engineering, equipment procurement and commencement of fabrication for the production facilities. At the end of 2020, no proved reserves occurred in 2019were recognized for this project.
Chevron has a 60 percent-owned and operated interest in the Ballymore Field located in the Mississippi Canyon area and a 40 percent nonoperated working interest in the Whale discovery located in the Perdido area. TwoAfter successful appraisal wells were completed in 2019 atprograms on the Ballymore Field. Atproject, Chevron is planning to enter front-end engineering design (FEED) in second quarter 2021. FEED activities on the Whale discovery, a second appraisal well was completedproject continued in April 2019. Front-end engineering design activities were initiated for this project2020, with final investment decision expected in August 2019.second-half 2021. At the end of 2019,2020, proved reserves had not been recognized for these projects.
During 2019 and early 2020, the company participated in fourtwo exploration wells and threeone appraisal wellswell in the deepwater Gulf of Mexico. In April 2019, a significant crude oil discovery was announced inFebruary 2020, the Blacktip prospect where the company holds a 20 percent nonoperated working interest. In October 2019, an oil discovery was announcedfirst well in the Esox prospect, within the Mississippi Canyon block 726, where Chevron holds a 21.4 percent nonoperated working interest. The well is expected to beinterest, was tied into the Tubular Bells production facility in first quarter 2020.facility.
In 2019,March 2020, Chevron added 24 leases to the deepwater portfolio through two gulf-wide15 blocks in a U.S. Gulf of Mexico lease sales. sale. Chevron subsequently added eight blocks resulting from a November 2020 U.S. Gulf of Mexico lease sale.
The company also added 25 additional leases through multiple asset swaps.
Other Americas
“Other Americas” includes Argentina, Brazil, Canada, Colombia, Mexico, Suriname and Venezuela. Acreage for "Other Americas" can be found in the table on page 7. Net daily oil-equivalent production from these countries averaged 216,000 barrels during 2019.can be found in the table on page 6.
Canada Upstream interests in Canada are concentrated in Alberta British Columbia and the offshore Atlantic region.region of Newfoundland and Labrador. The company also has discovered resource interests in the Beaufort Sea region of the Northwest Territories. Net daily oil-equivalent production during 2019 averaged 135,000 barrels, composed of 66,000 barrels of liquids, 95 million cubic feet of natural gasTerritories and 53,000 barrels of synthetic oil from oil sands.British Columbia.
The company holds a 20 percent nonoperated working interest in the Athabasca Oil Sands Project (AOSP) in Alberta. Oil sands are mined from both the Muskeg River and the Jackpine mines, and bitumen is extracted from the oil sands and upgraded
into synthetic oil. Carbon dioxide emissions from the upgrader are reduced by the Quest carbon capture and storage facilities. In 2019, net daily synthetic oil production averaged 53,000 barrels.
Chevron holds a 26.9 percent nonoperated working interest in the Hibernia Field and a 23.7 percent nonoperated working interest in the unitized Hibernia Southern Extension areas offshore Atlantic Canada. The company holds a 29.6 percent nonoperated working interest in the heavy oil Hebron Field, also offshore Atlantic Canada, which has an expected economic life of condensate30 years.
Chevron holds a 50 percent-owned and natural gas liquidsoperated interest in Flemish Pass Basin Block EL 1138. The company also holds a 25 percent nonoperated working interest in blocks EL 1145, EL 1146 and 79 million cubic feet of natural gas.EL 1148 and a 40 percent nonoperated working interest in EL 1149.
Chevron holds a 50 percent-owned and operated interest in the Kitimat LNG and Pacific Trail Pipeline projects and a 50 percent-owned and operated interest in the Liard and Horn River shale gas basins in British Columbia. In December 2019, the company wrote off its investments and announced plansEfforts are underway to not move forward with the Kitimat LNG and Pacific Trail Pipelineevaluate strategic alternatives for these projects.
10
Mexico The company owns and operates a 33.3 percent interest in Block 3 in the Perdido area of the Gulf of Mexico covering 139,000 net acres. Initial overall block seismic reprocessing activities concluded in December 2019.Mexico. Seismic interpretation is commencingprogressed in early 2020. Chevron also holds a 37.5 percent-owned and operated interest in Block 22 where reprocessing of 3-D seismic data continued in the deepwater Cuenca Salina area of the Gulf of Mexico covering 267,000 net acres. In October 2019, Chevron farmed into2020. The company also holds a 40 percent nonoperated interest in Blocks 20, 21 and 23 in the Cuenca Salina area in the deepwater Gulf of Mexico. Drilling has commenced onTwo exploration wells were drilled in the first half of two wells planned in 2020. These three blocks cover approximately 589,000 net acres.
Argentina Chevron holds a 50 percent nonoperated interest in the Loma Campana and Narambuena concessions in the Vaca Muerta Shale covering 73,000 net acres. InShale. Evaluation of the nonoperated Narambuena Block continued in 2020, including a four-well appraisal program which achieved first oil in November 2019,2020. Chevron increased its ownedhas a 90 percent-owned and operated interest from 85with a four-year exploratory concession in Loma del Molle Norte Block.
In April 2020, drilling and completion activity was halted due to 100 percent in the El Trapial Field covering 111,000 net acres with both conventional production and Vaca Muerta Shale potential. Net daily oil-equivalent production in 2019 averaged 27,000 barrels, composed of 23,000 barrels of crude oil and 25 million cubic feet of natural gas.
Chevron also owns and operates a 100 percent interest in the El Trapial Field with both conventional production and Vaca Muerta Shale potential. The company utilizes waterflood operations to mitigate declines at the operated El Trapial Field and continues to evaluate the potential of the Vaca Muerta Shale. The eight-well drilling program completed in third quarter 2020, and first oil was achieved in October 2020. Chevron drilled two horizontal wellsexpects to complete the appraisal program in 2019.second quarter 2021. The El Trapial concession expires in 2032.
Brazil In March 2019, Chevron sold its 51.7 percent interest in the Frade concession and its 50 percent interest in Block CE-M715. In February 2020, the company initiated the process to sell its 37.5 percent nonoperated interest in the Papa-Terra oil field. Net daily oil equivalent production in 2019 averaged 8,000 barrels, composed of 8,000 barrels of crude oil and 2 million cubic feet of natural gas.
Chevron holds between 30 to 45 percent of both operated and nonoperated interests in 11 blocks within the Campos and Santos basins. In October 2019, the companyOne exploration well was a successful bidder in five deepwater blocks. The contracts for these blocks were executed in February 2020. The acquisition increased Chevron’s acreage to eleven blocks in the Brazil pre-salt trend. Seismic data acquisition and environmental studies have been initiated with two exploration wells anticipated to be drilled in 2020.
Colombia In November 2019,April 2020, the company signed an agreement to sellcompleted the sale of its interests in the offshore Chuchupa and onshore Ballena natural gas fieldsfields. Chevron holds a 40 percent-owned and expects to close this saleoperated working interest in first-halfthe offshore Colombia-3 and Guajira Offshore-3 Blocks. Exploration activities continued in 2020. Net daily production in 2019 averaged 64 million cubic feet of natural gas.
Suriname Chevron holds a 33.3 percent and anonoperated working interest in deepwater Block 42. Exploration activities continued in 2020. Chevron, along with the operator, relinquished its 50 percent nonoperated working interest in deepwater Blocks 42 andBlock 45 offshore Suriname, respectively. The deepwater blocks cover a combined area of approximately 1.1 million net acres.in September 2020.
Venezuela Chevron holds nonoperatedChevron’s interests in affiliate companies in Venezuela. Chevron's production activities in Venezuela are located in western Venezuela and the Orinoco Belt. Net daily oil-equivalent production during 2019 averaged 35,000 barrels, composedAt the end of 34,000 barrels of crude oil and 7 million cubic feet of natural gas.2020, no proved reserves were recognized for these interests.
Chevron has a 30 percent interest in the Petropiar, affiliate thatwhich operates the heavy oil Huyapari Field. The production and upgrading project is located in the Orinoco BeltField under an agreement expiring in 2033. Petropiar drilled 69 development wells in 2019. Chevron also holds a 39.2 percent interest in the Petroboscan, affiliate thatwhich operates the Boscan Field in western Venezuela and a 25.2 percent interest in the Petroindependiente, affiliate thatwhich operates the LL-652 Field in Lake Maracaibo,
both of which are under agreements expiring in 2026. Petroboscan drilled 26 development wells in 2019. For additional information on the company’s activities in Venezuela, refer to Note 22Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 88pages 31 through 38 under the heading “Other Contingencies.”upstream.
Africa
In Africa, the company is engaged in upstream activities in Angola, Egypt, Nigeria and the Republic of Congo.Congo, Cameroon, Equatorial Guinea, and Nigeria. Acreage for Africa can be found in the table on page 7. Net daily oil-equivalent production from these countries averaged 412,000 barrels during 2019.can be found in the table on page 6.
Angola The company operates and holds a 39.2 percent interest in Block 0, a concession adjacent to the Cabinda coastline, and a 31 percent operated interest in a production-sharing contract (PSC) for deepwater Block 14. The Block 0 concession extends through 2030. DevelopmentThe Sanha Lean Gas Connection Project (SLGC) reached final investment decision in January 2021. SLGC is a new platform that ties the existing complex to new connecting pipelines for gathering and production rights forexporting gas from Blocks 0 and 14 to Angola LNG. In October 2020, the producing fieldsAngolan government approved combining all development areas in Block 14, expire beginning in 2023. The majority ofproviding enhanced fiscal terms and extending the production is held in leases that expire between 2027 and 2031. During 2019, net daily production averaged 97,000 barrels of liquids and 324 million cubic feet of natural gas.
Chevron has a 36.4 percent interest in Angola LNG Limited, which operates an onshore natural gas liquefaction plant in Soyo, Angola. The plant has the capacity to process 1.1 billion cubic feet of natural gas per day. This is the world’s first LNG plant supplied with associated gas, where the natural gas is a byproduct of crude oil production. Feedstock for the
11
plant originates from multiple fields and operators. Total daily productionDuring 2020, work continued toward developing non-associated gas in 2019 averaged 746 million cubic feet of natural gas (272 million net) and 30,000 barrels of liquids (11,000 net).offshore Angola, which is expected to supply the Angola LNG plant.
Angola-Republic of Congo Joint Development Area Chevron operates and holds a 31.3 percent interest in the Lianzi Unitization Zone, located in an area shared equally by Angola and the Republic of Congo. Production fromThe expiration for Lianzi is reflected in the totals for Angola and the Republic of Congo.2031.
Republic of Congo Chevron has a 31.5 percent nonoperated working interest in the offshore Haute Mer permit areas (Nkossa, Nsoko and Moho-Bilondo). The permits for Nkossa, Nsoko and Moho-Bilondo expire in 2027, 2034 and 2030, respectively. Average net daily production
Cameroon Chevron owns and operates the YoYo Block in 2019 was 49,000 barrels of liquids. In June 2019, the company relinquished its 20.4 percent nonoperated workingDouala Basin. Preliminary development plans include a possible joint development between YoYo and Yolanda Field in Equatorial Guinea.
Equatorial Guinea Chevron has a 38 percent-owned and operated interest in the Haute Mer B permit area.
Nigeria Chevron operates and holds a 40 percent interest in eight concessions in the onshore and near-offshore regions of the Niger Delta. In 2019, infill drilling programs continued in the Niger Delta. The company also holds acreage positions in three operated and six nonoperated deepwater blocks, with working interests ranging from 20 to 100 percent. The company’s net daily oil-equivalent production for 2019 in Nigeria averaged 209,000 barrels, composed of 168,000 barrels of crude oil, 215 million cubic feet of natural gas and 5,000 barrels of LPG.
Chevron is the operator of the Escravos Gas Plant (EGP) with a total processing capacity of 680 million cubic feet per day of natural gas and LPG and condensate export capacity of 58,000 barrels per day. The company is also the operator of the 33,000-barrel-per-day Escravos Gas to Liquids facility. In addition, the company holds a 36.7 percent interest in the West African Gas Pipeline Company Limited affiliate, which supplies Nigerian natural gas to customers in Benin, GhanaTogo and Togo.
Chevron operates and holds a 67.3 percent interest in the Agbami Field, located in deepwater Oil Mining Lease (OML) 127 and OML 128. Infill drilling continued in 2019 to offset field decline. Additionally, Chevron holds a 30 percent nonoperated working interest in the Usan Field in OML 138. The leases that contain the Usan and Agbami Fields expire in 2023 and 2024, respectively.
Also, in the deepwater area, the Aparo Field in OML 132 and OML 140 and the third-party-owned OML 118 Bonga SW Field in OML 118 share a common geologic structure and are planned to be developed jointly. Chevron holds a 16.6 percent nonoperated working interest in the unitized area. The development plan involves subsea wells tied back to a floating production, storage and offloading vessel. Work continues to progress towardstoward a final investment decision. At the end of 2019,2020, no proved reserves were recognized for this project.
In deepwater exploration, Chevron operates and holds a 55 percent interest in the deepwater Nsiko discoveries in OML 140. Chevron also holds a 30 percent nonoperated working interest in OML 138, which includes the Usan Field and several satellite discoveries, and a 27 percent interest in adjacent licenses OML 139 and OML 154. The company planscontinues to continue evaluatingwork with the operator to evaluate development options for the multiple discoveries in the Usan area, including the Owowo Field, which straddles OML 139 and OML 154.
In 2019,December 2020, the company initiated the processsigned an agreement to evaluate a possible divestment ofdivest its 40 percent operated interest in OML 86 and OML 88.
Middle East
In the Middle East, the company is engaged in upstream activities in Cyprus, Egypt, Israel, the Kurdistan Region of Iraq and the Partitioned Zone located between Saudi Arabia and Kuwait. Quantitative data for Egypt can be found within the Africa geography throughout this document. Quantitative data for Cyprus, Israel, the Kurdistan Region of Iraq and the Partitioned Zone can be found within the Asia geography throughout this document.
Cyprus The company holds a 35 percent-owned and operated interest in Aphrodite gas field in Block 12. Chevron operates the field with the Government of Cyprus and has a license that expires in 2044.
Egypt During 2020, Chevron acquired four oil and gas exploration blocks with a 90 percent-owned and operated interest. The acquired blocks are Block 1 in the Red Sea, North Sidi Barrani in Block 2, and North El Dabaa and the Nargis blocks in the Mediterranean Sea. The company also acquired a 27 percent nonoperated working interest in the North Cleopatra and North Marina blocks also in the Mediterranean Sea.
12
Israel Chevron holds a 39.7 percent-owned and operated interest in the Leviathan Field, which operates under a concession that expires in 2044. During 2020, Chevron continued to ramp up production and progress its efforts to monetize discovered resources at Leviathan Field. The company also holds a 25 percent-owned and operated interest in the Tamar gas field. Progress continues on the Tamar SW development, which consists of one well tied back to Tamar. The current term of the lease for this field expires in 2038.
Kurdistan Region of Iraq The company operates and holds a 50 percent interest in the Sarta PSC, which expires in 2047, and a 40 percent interest in the Qara Dagh PSC, which expires in October 2021. First oil was achieved from the Sarta Stage 1A project in November 2020. At the end of 2020, proved reserves have been recognized for this project. Chevron will operate the Sarta block through 2021 and plans to transfer operatorship thereafter provided certain milestones are achieved.
Partitioned Zone Chevron holds a concession to oper ate the Kingdom of Saudi Arabia’s 50 percent interest in the hydrocarbon resources in the onshore area of the Partitioned Zone between Saudi Arabia and Kuwait. The concession expires in 2046. Production restart was achieved in July 2020, and the company expects production to ramp up to full capacity levels in 2021.
Asia
In Asia, the company is engaged in upstream activities in Azerbaijan,Kazakhstan, Russia, Bangladesh, Myanmar, Thailand, China Indonesia, Kazakhstan, the Kurdistan Region of Iraq, Myanmar, the Partitioned Zone located between Saudi Arabia and Kuwait, the Philippines, Russia and Thailand. During 2019, net daily oil-equivalent production averaged 979,000 barrels in this region.
Kazakhstan Chevron has a 50 percent interest in the Tengizchevroil (TCO) affiliate and an 18 percent nonoperated working interest in the Karachaganak Field. Net daily oil-equivalent production in 2019 averaged 430,000 barrels, composed of 339,000 barrels of liquids and 548 million cubic feet of natural gas.
TCO is developing the Tengiz and Korolev crude oil fields in western Kazakhstan under a concession agreement that expires in 2033. Net daily production in 2019 from these fields averaged 290,000 barrels of crude oil, 419 million cubic feet of natural gas and 21,000 barrels of NGLs. All of TCO’s 20192020 crude oil production was exported through the Caspian Pipeline Consortium (CPC) pipeline.
The Future Growth Project and Wellhead Pressure Management Project (FGP/WPMP) at Tengiz is managed as a single integrated project. The FGP is designed to increase total daily production by about 260,000 barrels of crude oil and to expand the utilization of sour gas injection technology proven in existing operations to increase ultimate recovery from the reservoir. The WPMP is designed to maintain production levels in existing plants as reservoir pressure declines. During 2019,The project advanced in 2020 with overall progress at approximately 81 percent at year-end 2020. TCO continued construction on the pipe rackFGP/WPMP including completion of all fabrication and sealift activities and installing key modules and foundations at the gas turbine generators were installed, and fabrication in three of the four yards was completed. All initial production wells have been drilled and completed.3rd Generation Plant. The WPMP portion is expected to start up in late 2022, with the remaining facilities expected to come online in mid-2023. COVID-19 impacts on project schedules and cost estimates are unknown at this time due to the uncertain timeline for remobilizing all personnel and safely sustaining activity levels. Proved reserves have been recognized for the FGP/WPMP.
The Karachaganak Field is located in northwest Kazakhstan, and operations are conducted under a PSC that expires in 2038. During 2019, net daily production averaged 28,000 barrels of liquids and 129 million cubic feet of natural gas. Most of the exported liquids were transported through the CPC pipeline during 2019. Work continues to identify the optimal scope for the future expansion of the field.2020. Karachaganak Expansion Project Stage 1A reached final investment decision in December 2020. At the end of 2019,2020, proved reserves had not been recognized for future expansion.
Kazakhstan/Russia Chevron has a 15 percent interest in the CPC. In May 2019, CPC shareholders announced a final investment decisionProgress continued on athe debottlenecking project, which is expected to further increase capacity. During 2019,2020, CPC transported an average of 1.41.3 million barrels of crude oil per day, composed of 1.21.1 million barrels per day from Kazakhstan and 160,0000.2 million barrels per day from Russia.
Bangladesh Chevron operates and holds a 100 percent interest in Block 12 (Bibiyana Field) and Blocks 13 and 14 (Jalalabad and Moulavi Bazar fields). The rights to produce from Jalalabad expire in 2030, from Moulavi Bazar in 2033 and from Bibiyana in 2034. Net daily oil-equivalent production in 2019 averaged 110,000 barrels, composed of 638 million cubic feet of natural gas and 4,000 barrels of condensate.
Myanmar Chevron has a 28.3 percent nonoperated working interest in a PSC for the production of natural gas from the Yadana, Badamyar and Sein fields, within Blocks M5 and M6, in the Andaman Sea. The PSC expires in 2028. The company also has a 28.3 percent nonoperated working interest in a pipeline company that transports natural gas to the Myanmar-Thailand border for delivery to power plants in Thailand. Net daily natural gas production in 2019 averaged 93 million cubic feet.
Thailand Chevron holds operated interests in the Pattani Basin, located in the Gulf of Thailand, with ownership ranging from 35 percent to 80 percent. Concessions for producing areas within this basin expire between 2022 and 2035. Chevron
13
also has a 16 percent nonoperated working interest in the Arthit Field located in the Malay Basin. Concessions for the
producing areas within this basin expire between 2036 and 2040. Net daily oil-equivalent production in 2019 averaged 238,000 barrels, composed of 65,000 barrels of crude oil and condensate and 1.0 billion cubic feet of natural gas.
Chevron also has a 35 percent-owned and operated interest in the Ubon Project in Block 12/27, development plans are being evaluated and are expected to include multiple wellhead platforms and infield pipelines to deliver production to a Central Processing Platform with a floating, production, storage and offloading vessel for oil export.27. In late 2020, project studies were suspended pending an improved investment climate. At the end of 2019,2020, proved reserves had not been recognized for this project.
Chevron holds between 30 and 80 percent operated and nonoperated working interests in the Thailand-Cambodia overlapping claims area that are inactive, pending resolution of border issues between Thailand and Cambodia.
China Chevron has nonoperated working interests in several areas in China. The company’s net daily production in 2019 averaged 16,000 barrels of crude oil and 93 million cubic feet of natural gas.
The company also has nonoperated working interests of 32.7 percent in Block 16/19 in the Pearl River Mouth Basin, 24.5 percent in the Qinhuangdao (QHD) 32-6 Block, and 16.2 percent in Block 11/19 in the Bohai Bay. The PSCs for these producing assets expire between 2022 and 2028.
Philippines The company signed an agreement in October 2019 to sellclosed the sale of its 45 percent nonoperated working interest in the offshore Malampaya natural gas field. The sale is expected to closefield in first-halfMarch 2020. Net daily oil-equivalent production in 2019 averaged 26,000 barrels, composed of 136 million cubic feet of natural gas and 3,000 barrels of condensate.
Indonesia Chevron has working interests through various PSCs in Indonesia. In Sumatra, the company holds a 100 percent-owned and operated interest in the Rokan PSC, which expires in August 2021. The company operates and holds a 62 percent interest in two PSCs in the Kutei Basin (Rapak and Ganal), located offshore eastern Kalimantan. Additionally, in offshore eastern Kalimantan, the company operates a 72 percent interest in the Makassar Strait.Strait PSC. The PSCs for offshore eastern Kalimantan expire in 2027 and 2028. Net daily oil-equivalent production in 2019 averaged 109,000 barrels, composed of 101,000 barrels of liquids and 52 million cubic feet of natural gas.
Chevron has concluded that the Indonesia Deepwater Development held by the Kutei Basin PSCs does not compete in its portfolio and is evaluating strategic alternatives for the company’s 62 percent-owned and operated interest.
United Kingdom
Net oil equivalent production for the United Kingdom can be found in the onshore area of the Partitioned Zone between Saudi Arabia and Kuwait. The concession expires in 2039. Production has been shut in since May 2015 as result of difficulties securing work and equipment permits and a dispute between Saudi Arabia and Kuwait. In December 2019, the governments of Saudi Arabia and Kuwait signed a memorandum of understanding to resolve the dispute and allow production to restart in the Partitioned Zone. In mid-February 2020, pre-startup activities commenced. The company expects production to ramp up to pre-shut-in levels within one to two years.
Chevron holds a 19.4 percent nonoperated working interest in the Clair Field, located west of the Shetland Islands. The Clair Ridge Project is the second development phase of the Clair Field, with a design capacity of 120,000 barrels of crude oil and
100 million cubic feet of natural gas per day. Production continues to ramp up with three newThree additional wells addedwere completed in 2019.2020. The Clair Field has an estimated production life extending untilbeyond 2050.
Chevron is Australia's largest producer of LNG. During 2019, netAcreage can be found in the table on page 7. Net daily oil-equivalent production averaged 455,000 barrels.can be found in the table on page 6.
Chevron holds a 47.3 percent-owned and operated interest in the Gorgon Project, which includes the development of the Gorgon and Jansz-Io fields. The project includes a carbon dioxide sequestration facility, which achieved start-up in August 2019. The company commenced drilling 11 new wells forsystem reached a full injection rate by first quarter 2020. Progress on the Gorgon Stage 2 during 2019. The Gorgon Stage 2 project continued in 2020 with the completion of drilling of 11 subsea wells and is expected to be completed in 2022. Total daily production in 2019 averaged 16,000 barrels of condensate (8,000 barrels net) and 2.3 billion cubic feet of natural gas (1.1 billion net). The project's estimated economic life exceeds 40 years.
Chevron holds an 80.2 percent interest in the offshore licenses and a 64.1 percent-owned and operated interest in the LNG facilities associated with the Wheatstone Project. The project includes the development of the Wheatstone and Iago fields, a two-train, 8.9 million-metric-ton-per-year LNG facility, and a domestic gas plant. The onshore facilities are located at
14
Ashburton North on the coast of Western Australia. The total production capacity for the Wheatstone and Iago fields and nearby third-party fields is expected to be approximately 1.6 billion cubic feet of natural gas and 30,000 barrels of condensate per day. Total daily production averaged 22,000 barrels of condensate (18,000 net) and 1.2 billion cubic feet of natural gas (943 million net) in 2019. The project’s estimated economic life exceeds 30 years.
Chevron has a 16.7 percent nonoperated working interest in the NWS Venture in Western Australia.
In June 2020, Chevron holds 50 percent-owned and operated interests in four exploration permitsannounced the decision to market its share in the northern Carnarvon Basin. Chevron continuedNWS Venture with the data room opening in September 2020.
The company continues to evaluate exploration potential inand appraisal activity across the Carnarvon Basin during 2019. Thein which it holds more than 6.6 million net acres. During 2020, the company holdsrelinquished nonoperated working interests ranging from 24.8 percent to 50 percent in three exploration blocksit held in the Browse Basin. Relinquishment of Chevron’s offshore blocks in the Bight Basin was finalized in April 2019.
Chevron has a 100 percent-ownedowns and operated interest inoperates the Clio, Acme and Acme West fields. The company is collaborating with other Carnarvon Basin participants to assess the opportunitypossibility of developing Clio and Acme being developed through shared utilization of existing infrastructure.
Sales of Natural Gas and Natural Gas Liquids
The company sells natural gas and natural gas liquids (NGLs)NGLs from its producing operations under a variety of contractual arrangements. In addition, the company also makes third-party purchases and sales of natural gas and NGLs in connection with its supply and trading activities.
During 2019,2020, U.S. and international sales of natural gas averaged 4.03.9 billion and 5.95.6 billion cubic feet per day, respectively, which includes the company’s share of equity affiliates’ sales. Outside the United States, substantially all of the natural gas sales from the company’s producing interests are from operations in Angola, Argentina, Australia, Bangladesh, Canada, Colombia, Kazakhstan, Indonesia, Israel, Myanmar, Nigeria the Philippines, Thailand and the United Kingdom.Thailand.
U.S. and international sales of NGLs averaged 231,000233,000 and 106,000120,000 barrels per day, respectively, in 2019.2020.
Refer to “Selected Operating Data,” on page 3741 in Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further information on the company’s sales volumes of natural gas and natural gas liquids. Refer also to
Downstream
Refining Operations
At the end of 2019,2020, the company had a refining network capable of processing 1.7 millionprocessing 1.8 million barrels of crude oil per day. Operable capacity at December 31, 2019,2020, and daily refinery inputs for 20172018 through 20192020 for the company and affiliate refineries are summarized in the table below.on the next page.
Average crude oil distillation capacity utilization was 76 percent in 2020 and 90 percent in 2019 and 93 percent in 2018.2019. At the U.S. refineries, crude oil distillation capacity utilization averaged 73 percent in 2020, compared with 91 percent in 2019, compared with 97 percent in 2018.2019. Chevron processes both imported and domestic crude oil in its U.S. refining operations. Imported crude oil accounted for about 6559 percent and 7065 percent of Chevron’s U.S. refinery inputs in 20192020 and 2018,2019, respectively.
In the United States, the company continued work on projects to improve refinery flexibility and reliability. At the RichmondEl Segundo Refinery in California, enhancements are underway to enable production on the new hydrogen plant reached full operational capacity in January 2019.of renewable fuels including diesel, jet and gasoline from bio-feedstocks. At the refinery in Salt Lake City, Utah, construction continued on the alkylation retrofit project with more than 100 modules installed. Project start-up is expected in first-halfsecond quarter 2021.
Outside the United States, the company has three large refineries in South Korea, Singapore and Thailand. The Singapore Refining Company (SRC), a 50 percent-owned joint venture, has a total capacity of 290,000 barrels of crude per day and manufactures a wide range of petroleum products. RecentRefinery upgrades have enabled SRC to produce higher-quality gasoline that meets stricter emission standards. The 50 percent-owned, GS Caltex (GSC) operated, Yeosu Refinery in South Korea remains one of the world’s largest refineries with a total crude capacity of 800,000 barrels per day. In February 2019, a final investment decision was reached2020, progress continued on the olefins mixed-feed cracker and associated polyethylene unit with first production planned forexpected second-half 2021. The company’s 60.6 percent-owned refinery in Map Ta Phut, Thailand, continues to supply high-quality petroleum products through the Caltex brand into regional markets.
| Petroleum Refineries: Locations, Capacities and Inputs | ||||||||||||
| Capacities and inputs in thousands of barrels per day | December 31, 2019 | Refinery Inputs | ||||||||||
| Locations | Number | Operable Capacity | 2019 | 2018 | 2017 | |||||||
| Pascagoula | Mississippi | 1 | 350 | 358 | 332 | 349 | ||||||
| El Segundo | California | 1 | 276 | 241 | 273 | 251 | ||||||
| Richmond | California | 1 | 257 | 236 | 249 | 248 | ||||||
Pasadena1 | Texas | 1 | 106 | 58 | — | — | ||||||
| Salt Lake City | Utah | 1 | 55 | 54 | 51 | 53 | ||||||
| Total Consolidated Companies — United States | 5 | 1,044 | 947 | 905 | 901 | |||||||
| Map Ta Phut | Thailand | 1 | 166 | 134 | 160 | 152 | ||||||
Cape Town2 | South Africa | — | — | — | 49 | 68 | ||||||
Burnaby, B.C.3 | Canada | — | — | — | — | 40 | ||||||
| Total Consolidated Companies — International | 1 | 166 | 134 | 209 | 260 | |||||||
| Affiliates | Various Locations | 3 | 538 | 483 | 494 | 500 | ||||||
| Total Including Affiliates — International | 4 | 704 | 617 | 703 | 760 | |||||||
| Total Including Affiliates — Worldwide | 9 | 1,748 | 1,564 | 1,608 | 1,661 | |||||||
15
| Petroleum Refineries: Locations, Capacities and Inputs | |||||||||||||||||||||||
| Capacities and inputs in thousands of barrels per day | December 31, 2020 | Refinery Inputs | |||||||||||||||||||||
| Locations | Number | Operable Capacity | 2020 | 2019 | 2018 | ||||||||||||||||||
| Pascagoula | Mississippi | 1 | 369 | 305 | 358 | 332 | |||||||||||||||||
| El Segundo | California | 1 | 290 | 176 | 241 | 273 | |||||||||||||||||
| Richmond | California | 1 | 257 | 198 | 236 | 249 | |||||||||||||||||
Pasadena1 | Texas | 1 | 110 | 69 | 58 | — | |||||||||||||||||
| Salt Lake City | Utah | 1 | 58 | 45 | 54 | 51 | |||||||||||||||||
| Total Consolidated Companies — United States | 5 | 1,084 | 793 | 947 | 905 | ||||||||||||||||||
| Map Ta Phut | Thailand | 1 | 175 | 143 | 134 | 160 | |||||||||||||||||
Cape Town2 | South Africa | — | — | — | — | 49 | |||||||||||||||||
| Total Consolidated Companies — International | 1 | 175 | 143 | 134 | 209 | ||||||||||||||||||
| Affiliates | Various Locations3 | 2 | 545 | 441 | 483 | 494 | |||||||||||||||||
| Total Including Affiliates — International | 3 | 720 | 584 | 617 | 703 | ||||||||||||||||||
| Total Including Affiliates — Worldwide | 8 | 1,804 | 1,377 | 1,564 | 1,608 | ||||||||||||||||||
1
Marketing Operations
The company markets petroleum products under the principal brands of “Chevron,” “Texaco” and “Caltex” throughout many parts of the world. The following table identifies the company’s and its affiliates’ refined products sales volumes, excluding intercompany sales, for the three years ended December 31, 2019.2020.
| Refined Products Sales Volumes | Refined Products Sales Volumes | Refined Products Sales Volumes | |||||||||||||||||||
| Thousands of barrels per day | 2019 | 2018 | 2017 | Thousands of barrels per day | 2020 | 2019 | 2018 | ||||||||||||||
| United States | United States | ||||||||||||||||||||
| Gasoline | 667 | 627 | 625 | Gasoline | 581 | 667 | 627 | ||||||||||||||
| Jet Fuel | 256 | 255 | 242 | Jet Fuel | 139 | 256 | 255 | ||||||||||||||
| Diesel/Gas Oil | 191 | 188 | 179 | Diesel/Gas Oil | 167 | 191 | 188 | ||||||||||||||
| Residual Fuel Oil | 42 | 48 | 48 | Residual Fuel Oil | 33 | 42 | 48 | ||||||||||||||
Other Petroleum Products1 | 94 | 100 | 103 | Other Petroleum Products1 | 83 | 94 | 100 | ||||||||||||||
| Total United States | 1,250 | 1,218 | 1,197 | Total United States | 1,003 | 1,250 | 1,218 | ||||||||||||||
International2 | International2 | ||||||||||||||||||||
| Gasoline | 289 | 336 | 365 | Gasoline | 264 | 289 | 336 | ||||||||||||||
| Jet Fuel | 238 | 276 | 274 | Jet Fuel | 143 | 238 | 276 | ||||||||||||||
| Diesel/Gas Oil | 427 | 446 | 490 | Diesel/Gas Oil | 438 | 427 | 446 | ||||||||||||||
| Residual Fuel Oil | 167 | 177 | 162 | Residual Fuel Oil | 184 | 167 | 177 | ||||||||||||||
Other Petroleum Products1 | 206 | 202 | 202 | Other Petroleum Products1 | 192 | 206 | 202 | ||||||||||||||
| Total International | 1,327 | 1,437 | 1,493 | Total International | 1,221 | 1,327 | 1,437 | ||||||||||||||
Total Worldwide2 | 2,577 | 2,655 | 2,690 | Total Worldwide2 | 2,224 | 2,577 | 2,655 | ||||||||||||||
1 Principally naphtha, lubricants, asphalt and coke. | 1 Principally naphtha, lubricants, asphalt and coke. | 1 Principally naphtha, lubricants, asphalt and coke. | |||||||||||||||||||
2 Includes share of affiliates’ sales: | 379 | 373 | 366 | 2 Includes share of affiliates’ sales: | 348 | 379 | 373 | ||||||||||||||
In the United States, the company markets under the Chevron and Texaco brands. At year-end 2019,2020, the company supplied directly or through retailers and marketers to approximately 7,900 Chevron-8,000 Chevron- and Texaco- branded service stations, primarily in the southern and western states. Approximately 310 of these outlets are company-owned or -leased stations.
Outside the United States, Chevron supplied directly or through retailers and marketers approximately 5,1005,600 branded service stations, including affiliates. The company markets in Latin America using the Texaco brand. In 2019,2020, Chevron continued to grow in northwestern Mexico, expanding to nearly 200230 branded stations in northwestern Mexico at the end of the year. The company also operates through affiliates under various brand names. In the Asia-Pacific region and the Middle East, the company uses the Caltex brand. In South Korea, the company operates through its 50 percent-owned affiliate, GSC.
In December 2019,June 2020, the company signed an agreement to acquireacquired a network of terminals and service stations in Australia which is expected to closealigning with Chevron's value chain optimization in second-half 2020, pending regulatory approval.the Asia-Pacific region.
Chevron markets commercial aviation fuel at approximately 70to 69 airports worldwide. The company also markets an extensive line of lubricant and coolant products under the product names Havoline, Delo, Ursa, Meropa, Rando, Clarity and Taro in the United States and worldwide under the three brands: Chevron, Texaco and Caltex.
Chemicals Operations
Chevron Oronite Company develops, manufactures and markets performance additives for lubricating oils and fuels and conducts research and development for additive component and blended packages. At the end of 2019,2020, the company manufactured, blended or conducted research atat 10 locationslocations around the world. Construction progressedwas completed in 20192020 on a lubricant additive blending and shipping plant in Ningbo, China. Commercial production is anticipated to begin in the second quarter 2021.
Chevron owns a 50 percent interest in its Chevron Phillips Chemical Company LLC (CPChem) affiliate.. CPChem produces olefins, polyolefins and alpha olefins and is a supplier of aromatics and polyethylene pipe, in addition to participating in the specialty chemical and specialty plastics markets. At the end of 2019,2020, CPChem owned or had joint-venture interests in 28 manufacturing facilities and two research and development centers around the world.
Chevron also maintains a role in the petrochemical business through the operations of GSC, the company’s 50 percent-owned affiliate. GSC manufactures aromatics, including benzene, toluene and xylene. These base chemicals are used to produce a range of products, including adhesives, plastics and textile fibers. GSC also produces polypropylene, which is used to make automotive and home appliance parts, food packaging, laboratory equipment and textiles.
Transportation
Pipelines Chevron owns and operates a network of crude oil, natural gas and product pipelines and other infrastructure assets in the United States. In addition, Chevron operates pipelines for its 50 percent-owned CPChem affiliate. The company also has direct and indirect interests in other U.S. and international pipelines.
As a result of the Noble acquisition, Chevron acquired a majority interest in Noble Midstream Partners LP (Noble Midstream). Noble Midstream is primarily focused in the DJ Basin in Colorado and Delaware Basin in Texas providing services to Chevron and third-party customers. In February 2021, Chevron announced a non-binding offer to acquire all of the outstanding common units of Noble Midstream Partners LP not already owned by Chevron or any of its affiliates.
Refer to pages 1112 through 13 in the Upstream section for information on the West African Gas Pipeline, the Baku-Tbilisi- Ceyhan Pipeline and the Caspian Pipeline Consortium.
Shipping The company’s marine fleet includes both U.S. and foreign flagged vessels. The operated fleet consists of conventional crude tankers, product carriers and LNG carriers. These vessels transport crude oil, LNG, refined products and feedstock in support of the company’s global upstream and downstream businesses.
Other Businesses
Chevron’s information technology organization integrates computing, telecommunications, data management, cybersecurity and network technology to provide a digital infrastructure to enable Chevron’s global operations and business processes.
Chevron’s Technology Ventures (CTV) unit identifies and integrates externally developed technologies and new business solutions with the potential to enhance the way Chevron produces and delivers affordable, reliable, and ever-cleaner energy. CTV has more than two decades of venture investing, with eight funds that have supported more than 100 startups and worked with more than 200 co-investors. In 2019,addition to the company’s own managed funds, Chevron continued its involvement inalso makes
17
investments indirectly through the following funds: the Oil and Gas Climate Initiative (OGCI), Climate Investments fund targets the decarbonization of oil and gas, industry and commercial transportation; Emerald Ventures targets energy, water, industrial IT and advanced materials; and the HX Venture fund targets Houston, Texas high-growth start-ups.
Chevron continued its participation as a member of OGCI, a global collaboration focused on the industry’s efforts to take actions to accelerate and participate in the energy transition.a lower carbon future. In 2020, OGCI committed to a Global Gas Flaring Explorer web platform and set a target for OGCI members seek to lower carbon footprints of energy, industry, and transportation value chains. This includes work to reduce methane emissions, reduce the carbon intensity of upstream oil and gas emissions, and facilitate large-scale commercial investment in carbon capture, use and storage. OGCI Climate Investments is a $1 billion-plus investment fund set up by the OGCI member companies. OGCI Climate Investments focuses on three objectives: reducing methane emissions during the production, delivery and usage of oil and gas; reducing carbon dioxide emissions by increasing energy efficiency in power, industry and transport; and recycling and storing carbon dioxide produced during power generation or industrial processes by using it in products or storing it. As a member of OGCI, Chevron has committed to contribute $100 million to this fund.intensity.
Some of the investments the company makes in the areas described above are in new or unproven technologies and business processes, and ultimate technical or commercial successes are not certain. Refer to Note 25 on page 8995 for a summary of the company’s research and development expenses.
Environmental Protection The company designs, operates and maintains its facilities to avoid potential spills or leaks and to minimize the impact of those that may occur. Chevron requires its facilities and operations to have operating standards and processes and emergency response plans that address significant risks identified through site-specific risk and impact assessments. Chevron also requires that sufficient resources be available to execute these plans. In the unlikely event that a major spill or leak occurs, Chevron also maintains a Worldwide Emergency Response Team comprised of employees who are trained in various aspects of emergency response, including post-incident remediation.
To complement the company’s capabilities, Chevron maintains active membership in international oil spill response cooperatives, including the Marine Spill Response Corporation, which operates in U.S. territorial waters, and Oil Spill Response, Ltd., which operates globally. The company is a founding member of the Marine Well Containment Company, whose primary mission is to expediently deploy containment equipment and systems to capture and contain crude oil in the unlikely event of a future loss of control of a deepwater well in the Gulf of Mexico. In addition, the company is a member of
the Subsea Well Response Project, which has the objective to further develop the industry’s capability to contain and shut in subsea well control incidents in different regions of the world.
The company is committed to improving energy efficiency in its day-to-day operations and is required to comply with the greenhouse gas-related laws and regulations to which it is subject. Refer to Item 1A. Risk Factors on pages 18 through 2123 for further discussion of greenhouse gas regulation and climate change and the associated risks to Chevron’s business.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 4449 for additional information on environmental matters and their impact on Chevron, and on the company’s 20192020 environmental expenditures. Refer to page 4449 and Note 2222 beginning on page 8792 for a discussion of environmental remediation provisions and year-end reserves.
Item 1A. Risk Factors
Chevron is a global energy company and its operating and financial results are subject to a variety of risks inherent in the global oil, gas, and petrochemical businesses. Many of these risks are not within the company’s control and could materially impact the company’s results of operations and financial condition.
BUSINESS, OPERATIONAL AND ACQUISITION-RELATED RISK FACTORS
Impacts of the COVID-19 pandemic have resulted in a significant decrease in demand for Chevron’s products and caused a precipitous drop in commodity prices that has had, and may continue to have, an adverse and potentially material adverse effect on Chevron’s financial and operating results.
As of the date of this Annual Report on Form 10-K, the economic, business, and oil and gas industry impacts from the COVID-19 pandemic and the disruption to capital markets have continued to be far reaching. Crude oil prices, the single largest variable that affects the company’s results of operations, fell to historic lows, even briefly going negative, due to a combination of a severely reduced demand for crude oil, gasoline, jet fuel, diesel fuel, and other refined products resulting from government-mandated travel restrictions and the curtailment of economic activity resulting from the COVID-19 pandemic. As a result, a market imbalance has existed and may continue to exist, with oil supplies exceeding current and expected near-term demand. Although OPEC members and other countries have agreed to cut global oil supply, the commitments and actions to date have not matched the significant decrease in global demand, which has resulted in increased inventory levels in refineries, pipelines and storage facilities in prior periods and which may drive increased inventory levels in future periods.
18
Extended periods of low prices for crude oil are expected to have a material adverse effect on the company’s results of operations, financial condition and liquidity. Among other things, the company’s earnings, cash flows, and capital and exploratory expenditure programs may be negatively affected, as would its production volumes and proved reserves. As a result, the value of the company’s assets may also become impaired in future periods, as we saw in 2020.
The company’s operations and workforce are being impacted by the COVID-19 pandemic, causing certain operations to be curtailed to various degrees. At 50 percent-owned Tengizchevroil in Kazakhstan, COVID-19 infections have led to the demobilization of a significant portion of the workforce, adversely impacting the construction pace for completion of the FGP/WPMP project. Although infection levels in Kazakhstan improved in the third quarter 2020, allowing remobilization of the FGP/WPMP construction workforce to commence, a resurgence of infections prevented the final five percent of the planned workforce from returning to work in the fourth quarter 2020, slowing progress on the project. The ultimate effects of COVID-19 on FGP/WPMP construction remain uncertain and cannot be predicted at this time. In particular, we are currently unable to predict whether COVID-19 will have a material adverse impact on our ability to complete FGP/WPMP on schedule or within the current cost estimate for the project.
As a result of decreased demand for its products, the company made cuts to its upstream capital and exploratory expenditure program for 2020, which are expected to negatively impact future production, have led to and could lead to further negative revisions of reserves and could also lead to the further impairment of assets. Production curtailments, such as those due to the reductions imposed by OPEC+ nations in Kazakhstan, Nigeria and Angola, and other production curtailment actions taken by operators of assets for which the company has non-operated interests or due to market conditions, have exacerbated and may continue to further exacerbate these negative impacts in future periods. Within downstream, the company reduced its capital spending program and is also deferring certain discretionary maintenance activities while maintaining expenditures for asset integrity and reliability. The company has reduced the utilization rates of its refineries in response to reduced demand for its products, particularly greatly reduced demand for jet fuel due to the COVID-19 impact on travel and the aviation industry.
The company’s suppliers are also being impacted by the COVID-19 pandemic and access to materials, supplies, and contract labor has been strained. In certain cases, the company has received notices invoking force majeure provisions in supplier contracts. This strain on the financial health of the company’s suppliers could put further pressure on the company’s financial results and may negatively impact supply assurance and supplier performance. In-country conditions, including potential future waves of the COVID-19 virus in countries that appear to have reduced their infection rates, could impact logistics and material movement and remain a risk to business continuity.
In light of the significant uncertainty around the duration and extent of the impact of the COVID-19 pandemic, management is currently unable to develop with any level of confidence estimates and assumptions that may have a material impact on the company’s consolidated financial statements and financial or operational performance in any given period. In addition, the unprecedented nature of such market conditions could cause current management estimates and assumptions to be challenged in hindsight.
There continues to be uncertainty and unpredictability about the impact of the COVID-19 pandemic on our financial and operating results in future periods. The extent to which the COVID-19 pandemic adversely impacts our future financial and operating results, and for what duration and magnitude, depends on several factors that are continuing to evolve, are difficult to predict and, in many instances, are beyond the company's control. Such factors include the duration and scope of the pandemic, including any resurgences of the pandemic, and the impact on our workforce and operations; the negative impact of the pandemic on the economy and economic activity, including travel restrictions and prolonged low demand for our products; the ability of our affiliates, suppliers and partners to successfully navigate the impacts of the pandemic; the actions taken by governments, businesses and individuals in response to the pandemic; the actions of OPEC and other countries that otherwise impact supply and demand and correspondingly, commodity prices; the extent and duration of recovery of economies and demand for our products after the pandemic subsides; and Chevron’s ability to keep its cost model in line with changing demand for our products.
The impact of the COVID-19 pandemic is evolving, and the continuation or a resurgence of the pandemic could precipitate or aggravate the other risk factors identified in this Form 10-K, which in turn could further materially and adversely affect our business, financial condition, liquidity, results of operations and profitability, including in ways not currently known or considered by us to present significant risks.
Chevron is exposed to the effects of changing commodity prices Chevron is primarily in a commodities business that has a history of price volatility. The single largest variable that affects the company’s results of operations is the price of crude
19
oil, which can be influenced by general economic conditions, industry production and inventory levels, technology advancements, production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries (OPEC) or other producers, weather-related damage and disruptions due to other natural or human causes beyond our control (including without limitation due to the COVID-19 pandemic), competing fuel prices, and geopolitical risks. Chevron evaluates the risk of changing commodity prices as a core part of its business planning process. An investment in the company carries significant exposure to fluctuations in global crude oil prices.
Extended periods of low prices for crude oil can have a material adverse impact on the company’s results of operations, financial condition and liquidity. Among other things, the company’s upstream earnings, cash flows, and capital and exploratory expenditure programs could be negatively affected, as could its production and proved reserves. Upstream assets may also become impaired. Downstream earnings could be negatively affected because they depend upon the supply and demand for refined products and the associated margins on refined product sales. A significant or sustained decline in liquidity could adversely affect the company’s credit ratings, potentially increase financing costs and reduce access to capital markets. The company may be unable to realize anticipated cost savings, expenditure reductions and asset sales that are intended to compensate for such downturns. In some cases, liabilities associated with divested assets may return to the company when an acquirer of those assets subsequently declares bankruptcy. In addition, extended periods of low commodity prices can have a material adverse impact on the results of operations, financial condition and liquidity of the company’s suppliers, vendors, partners and equity affiliates upon which the company’s own results of operations and financial condition depends.
The scope of Chevron’s business will decline if the company does not successfully develop resources The company is in an extractive business; therefore, if it is not successful in replacing the crude oil and natural gas it produces with good prospects for future organic opportunities or through acquisitions, the company’s business will decline. Creating and maintaining an inventory of projects depends on many factors, including obtaining and renewing rights to explore, develop and produce hydrocarbons; drilling success; reservoir optimization; ability to bring long-lead-time, capital-intensive projects to completion on budget and on schedule; and efficient and profitable operation of mature properties.
The company’s operations could be disrupted by natural or human causes beyond its control Chevron operates in both urban areas and remote and sometimes inhospitable regions. The company’s operations are therefore subject to disruption from natural or human causes beyond its control, including physical risks from hurricanes, severe storms, floods, andheat waves, other forms of severe weather, wildfires, ambient temperature increases, sea level rise, war, accidents, civil unrest, political events, fires, earthquakes, system failures, cyber threats, terrorist acts and epidemic or pandemic diseases such as the coronavirus,COVID-19 pandemic, any of which could result in suspension of operations or harm to people or the natural environment.
Chevron’s risk management systems are designed to assess potential physical and other risks to its operations and assets and to plan for their resiliency. While capital investment reviews and decisions incorporate potential ranges of physical risks such as storm severity and frequency, sea level rise, air and water temperature, precipitation, fresh water access, wind speed, and earthquake severity, among other factors, it is difficult to predict with certainty the timing, frequency or severity of such events, any of which could have a material adverse effect on the company's results of operations or financial condition.
Cyberattacks targeting Chevron’s process control networks or other digital infrastructure could have a material adverse impact on the company’s business and results of operations There are numerous and evolving risks to Chevron’s cybersecurity and privacy from cyber threat actors, including criminal hackers, state-sponsored intrusions, industrial espionage and employee malfeasance. These cyber threat actors, whether internal or external to Chevron, are becoming more sophisticated and coordinated in their attempts to access the company’s information technology (IT) systems and data, including the IT systems of cloud providers and other third parties with whom the company conducts business. Although Chevron devotes significant resources to prevent unwanted intrusions and to protect its systems and data, whether such data is housed internally or by external third parties, the company has experienced and will continue to experience cyber incidents of varying degrees in the conduct of its business. Cyber threat actors could compromise the company’s process control networks or other critical systems and infrastructure, resulting in disruptions to its business operations, injury to people, harm to the environment or its assets, disruptions in access to its financial reporting systems, or loss, misuse or corruption of its critical data and proprietary information, including without limitation its intellectual property and business information and that of its employees, customers, partners and other third parties. Any of the foregoing can be exacerbated by a delay or failure to detect a cyber incident or the full extent of such incident. Further, the company has exposure to cyber incidents and the negative impacts of such incidents related to its critical data and proprietary information housed on third-party IT
20
systems, including the cloud. Additionally, authorized third-party IT systems or software can be compromised and used to gain access or introduce malware to Chevron's IT systems duringthat can materially impact the normal coursecompany’s business. Regardless of business. The company has limited control and visibility over such third-party IT systems. Cyberthe precise method or form, cyber events could result in significant financial losses, legal or regulatory violations, reputational harm, and legal liability and could ultimately have a material adverse effect on the company’s business and results of operations.
The company’s operations have inherent risks and hazards that require significant and continuous oversight Chevron’s results depend on its ability to identify and mitigate the risks and hazards inherent to operating in the crude oil and natural gas industry. The company seeks to minimize these operational risks by carefully designing and building its facilities and conducting its operations in a safe and reliable manner. However, failure to manage these risks effectively could impair our ability to operate and result in unexpected incidents, including releases, explosions or mechanical failures resulting in personal injury, loss of life, environmental damage, loss of revenues, legal liability and/or disruption to operations. Chevron has implemented and maintains a system of corporate policies, processes and systems, behaviors and compliance mechanisms to manage safety, health, environmental, reliability and efficiency risks; to verify compliance with applicable laws and policies; and to respond to and learn from unexpected incidents. In certain situations where Chevron is not the operator, the company may have limited influence and control over third parties, which may limit its ability to manage and control such risks.
The company does not insure against all potential losses, which could result in significant financial exposure The company does not have commercial insurance or third-party indemnities to fully cover all operational risks or potential liability in the event of a significant incident or series of incidents causing catastrophic loss. As a result, the company is, to a substantial extent, self-insured for such events. The company relies on existing liquidity, financial resources and borrowing capacity to meet short-term obligations that would arise from such an event or series of events. The occurrence of a significant incident or unforeseen liability for which the company is self-insured, not fully insured or for which insurance recovery is significantly delayed could have a material adverse effect on the company’s results of operations or financial condition.
The Noble acquisition may cause our financial results to differ from our expectations or the expectations of the investment community, we may not achieve the anticipated benefits of the acquisition, and the acquisition may disrupt our current plans or operations.
The success of the Noble acquisition, which closed in October 2020, will depend, in part, on Chevron’s ability to realize the anticipated benefits of the acquisition, including the anticipated annual run-rate operating and other cost synergies and accretion to return on capital employed, free cash flow and earnings per share. Failure to realize anticipated synergies in the expected timeframe, operational challenges, the diversion of management’s attention from ongoing business concerns, and unforeseen expenses associated with the acquisition may have an adverse impact on our financial results.
One of our subsidiaries acts as the general partner of a publicly traded master limited partnership, Noble Midstream Partners LP, which may involve a potential legal liability.
One of our subsidiaries acts as the general partner of Noble Midstream, a publicly traded master limited partnership. Our control of the general partner of Noble Midstream may increase the possibility that we could be subject to claims of breach of duties owed to Noble Midstream, including claims of conflict of interest. Any liability resulting from such claims could have a material adverse effect on our future business, financial condition, results of operations and cash flows.
LEGAL, REGULATORY AND ESG-RELATED RISK FACTORS
Chevron’s business subjects the company to liability risks from litigation or government action The company produces, transports, refines and markets potentially hazardous materials, and it purchases, handles and disposes of other potentially hazardous materials in the course of its business. Chevron's operations also produce byproducts, which may be considered pollutants. Often these operations are conducted through joint ventures over which the company may have limited influence and control. Any of these activities could result in liability or significant delays in operations arising from private litigation or government action. For example, liability or delays could result from an accidental, unlawful discharge or from new conclusions about the effects of the company’s operations on human health or the environment. In addition, to the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to the company’s causation of or contribution to the asserted damage, or to other mitigating factors.
For information concerning some of the litigation in which the company is involved, see Note 14 to the Consolidated Financial Statements, beginning on page 72.78.
21
Political instability and significant changes in the legal and regulatory environment could harm Chevron’s business The company’s operations, particularly exploration and production, can be affected by changing economic, regulatory and political environments in the various countries in which it operates. As has occurred in the past, actions could be taken by governments to increase public ownership of the company’s partially or wholly owned businesses, to force contract renegotiations, or to impose additional taxes or royalties. In certain locations, governments have proposed or imposed
restrictions on the company’s operations, trade, currency exchange controls, burdensome taxes, and public disclosure requirements that might harm the company’s competitiveness or relations with other governments or third parties. In other countries, political conditions have existed that may threaten the safety of employees and the company’s continued presence in those countries, and internal unrest, acts of violence or strained relations between a government and the company or other governments may adversely affect the company’s operations. Those developments have, at times, significantly affected the company’s operations and results and are carefully considered by management when evaluating the level of current and future activity in such countries. Further, Chevron is required to comply with U.S. sanctions and other trade laws and regulations which, depending upon their scope, could adversely impact the company's operations in certain countries. For example, with respect to our operations in Venezuela as discussed in Note 22 to the Consolidated Financial Statements, “Other Contingencies and Commitments - Other Contingencies,” future events could result in the environment in Venezuela becoming more challenged, which could lead to increased business disruption and volatility in the associated financial results. In addition, litigation or 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, such as those related to the use of hydraulic fracturing or bans on drilling, or any law or regulation that impacts the demand for our products, could adversely affect the company’s current or anticipated future operations and profitability.
International agreements and national, regional, and state legislation and regulatory measures that aim to limit or reduce GHG emissions are currently in various stages of implementation. For example, the Paris Agreement went into effect in November 2016, and a number of countries are studying and may adopt additional policies to meet their Paris Agreement goals. In some jurisdictions, the company is already subject to currently implemented programs such as the U.S. Renewable Fuel Standard program, the European Union Emissions Trading System, and the California cap-and-trade program and related low carbon fuel standard obligations. Other jurisdictions are considering adopting or are in the process of implementing laws or regulations to directly regulate GHG emissions through similar or other mechanisms such as, for example, via a carbon tax (e.g., Singapore and Canada) or via a cap-and-trade program (e.g., California, Mexico and China). Many governments are providing tax advantages and other incentives to promote the use of alternative energy sources or lower-carbon technologies. The landscape continues to be in a state of constant re-assessment and legal challenge with respect to these laws, regulations, and regulations,other actions, making it difficult to predict with certainty the ultimate impact they will have on the company in the aggregate.
GHG emissions-related lawslegislation, regulations, and related regulationsgovernment actions and the effects of operating in a potentially carbon-constrained environment may result in increased and substantial capital, compliance, operating, and maintenance costs and could, among other things, reduce demand for hydrocarbons and the company’s hydrocarbon-based products,products; make the company’s products more expensive,expensive; adversely affect the economic feasibility of the company’s resources,resources; and adversely affect the company’s sales volumes, revenues, and margins. GHG emissions (e.g., carbon dioxide and methane) that could be regulated include, among others, those associated with the company’s exploration and production of hydrocarbons such as crude oil and natural gas;hydrocarbons; the upgrading of production from oil sands into synthetic oil; power generation; the conversion of crude oil and natural gas into refined hydrocarbon products; the processing, liquefaction, and regasification of natural gas; the transportation of crude oil, natural gas, and related productsproducts; and consumers’ or customers’ use of the company’s hydrocarbon products. Indirect regulation of GHG emissions could include bans or restrictions on technologies that use the company’s hydrocarbon products. Many of these activities, such as consumers’ and customers’ use of the company’s products and substitute products, as well as actions taken by the company’s competitors in response to such lawslegislation and regulations, are beyond the company’s control.
22
Consideration of GHGclimate change-related 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-relatedclimate change-related policy actions and demand response to oil and natural gas prices. Additionally, the company assesses carbon pricing risks by considering carbon costs in these forecasts. The actual level of expenditure required to comply with new or potential climate change-related laws and regulations and amount of additional investments in new or
existing technology or facilities, such as carbon dioxide injection, is difficult to predict with certainty and is expected to vary depending on the actual laws and regulations enacted in a jurisdiction, the company’s activities in it, and market conditions.
The ultimate effect of international agreements andagreements; national, regional, and state legislation and regulatory measuresregulation; and government actions related to limit GHG emissions and climate change on the company’s financial performance, and the timing of these effects, will depend on a number of factors. Such factors include, among others, the sectors covered, the GHG emissions reductions required, the extent to which Chevron would be entitled to receive emission allowance allocations or would need to purchase compliance instruments on the open market or through auctions, the price and availability of emission allowances and credits and the extent to which the company is able to recover the costs incurred through the pricing of the company’s products in the competitive marketplace. Further, the ultimate impact of GHG emissions-relatedemissions and climate change-related agreements, legislation, regulation, and measuresgovernment actions on the company’s financial performance is highly uncertain because the company is unable to predict with certainty, for a multitude of individual jurisdictions, the outcome of political decision-making processes and the variables and tradeoffs that inevitably occur in connection with such processes.
Increasing attention to environmental, social, and governance (ESG) matters may impact our business Increasing attention to climate change, increasing societal expectations on companies to address climate change, and potential consumer and customer use of substitutes to Chevron’s products may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets. Increasing attention to climate change, for example, may result in demand shifts for our hydrocarbon products and additional governmental investigations and private litigation against the company.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Also, some stakeholders, including but not limited to sovereign wealth, pension, and endowment funds, have been promoting divestment of fossil fuel equities and urging lenders to limit funding to companies engaged in the extraction of fossil fuel reserves. Unfavorable ESG ratings and investment community divestment initiatives may lead to increased negative investor sentiment toward Chevron and our industry and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.
GENERAL RISK FACTORS
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 preparing the company’s periodic reports under the Securities Exchange Act of 1934, including its financial statements, Chevron’s management is required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. Areas requiring significant estimates and assumptions by management include impairments to property, plant and equipment;equipment and investments in affiliates; estimates of crude oil and natural gas recoverable reserves; accruals for estimated liabilities, including litigation reserves; and measurement of benefit obligations for pension and other postretirement benefit plans. Changes in estimates or assumptions or the information underlying the assumptions, such as changes in the company’s business plans, general market conditions or changes in commodity prices, could affect reported amounts of assets, liabilities or expenses.
23
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The location and character of the company’s crude oil and natural gas properties and its refining, marketing, transportation and chemicals facilities are described beginning on page 3 under Item 1. Business. Information required by Subpart 1200 of Regulation S-K (“Disclosure by Registrants Engaged in Oil and Gas Producing Activities”) is also contained in Item 1 and in Tables I through VII on pages 9299 through 103. 111. Note 16, “Properties, Plant and Equipment,” to the company’s financial statements is on page 77.82.
Item 3. Legal Proceedings
Governmental Proceedings The following is a description of legal proceedings that the company has determined to disclose for this reporting period that involve governmental authorities as a party and certainthe company reasonably believes would result in $1.0 million or more of monetary sanctions, exclusive of interest and costs, under federal, state and local laws that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment.
As previously disclosed, the refinery in Pasadena, Texas acquired by Chevron on May 1, 2019 (Pasadena Refining System, Inc. and PRSI Trading LLC) has multiple outstanding Notices of Violation (NOVs) that were issued by the Texas
Commission on Environmental Quality related to air emissions at the refinery. The Pasadena refinery is currently negotiating a resolution of the NOVs with the Texas Attorney General. Resolution of the alleged violations may result in the payment of a civil penalty of $100,000 or more.
As previously disclosed, the California Department of Conservation, California Geologic Energy Management Division (CalGEM) (previously known as the Division of Oil, Gas and Geothermal Resources) promulgated revised rules pursuant to the Underground Injection Control program that took effect April 1, 2019. Subsequent to that date, CalGEM issued NOVs and two orders to Chevron related to seeps that occurred in the Cymric Oil Field in Kern County, California. An October 2, 2019, CalGEM order seeks a civil penalty of approximately $2.7 million. Chevron has filed an appeal of this order. Other state agencies may become engagedChevron is currently in this matter as well.discussions with CalGEM to explore a global settlement to resolve the Order and all past and present seeps in the Cymric Field, which would increase the amount of penalty paid.
Noble Energy Mediterranean Ltd. (Noble Mediterranean) received a notice of intent (NOI) from Israel’s Ministry of Environmental Protection (MOEP) in April 2020 alleging breaches of the Leviathan facility’s effluent discharge permit for discharges that occurred primarily before startup of the Leviathan facility and seeking an administrative monetary sanction of 10.8 million New Israeli Shekels (NIS) (approximately 4.3 million NIS net to Noble Mediterranean’s 39.66 percent interest in the Leviathan facility), pursuant to Israel’s Prevention of Sea Pollution from Land-Based Sources Law. Upon consideration of Noble Mediterranean’s response to the NOI, the MOEP rescinded certain violations alleged in the NOI and reduced the penalty to 3.8 million NIS (approximately $1.2 million gross and $465,000 net to Noble Mediterranean’s 39.66 percent interest), which was paid on December 11, 2020.
In January 2021, the United States Department of Justice and the United States Environmental Protection Agency notified Noble Energy, Inc., Noble Midstream Partners LP and Noble Midstream Services, LLC of potential penalties for alleged Clean Water Act violations at two facilities in Weld County, Colorado relating to a 2014 flood event and requirements for a Spill Prevention and Countermeasures Plan and Facility Response Plan. The parties are negotiating a resolution of these issues with the agencies. Resolution of this matterthese alleged violations may result in the payment of a civil penaltiespenalty of $100,000$1,000,000 or more.
Other Proceedings Information related to other legal proceedings is included beginning on page 7278 in Note 14 to the Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
Not applicable.
Information about our Executive Officers
Information relating to the company’s executive officers is included under “Information about our Executive Officers” in Part III, Item 10, “Directors, Executive Officers and Corporate Governance” on page 24,27, and is incorporated herein by reference.
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The company’s common stock is listed on the New York Stock Exchange (trading symbol: CVX). As of February 10, 2020,2021, stockholders of record numbered approximately 118,000.114,000. There are no restrictions on the company’s ability to pay dividends. The information on Chevron’s dividends are contained in the Quarterly Results tabulations on page 48.54.
Chevron Corporation Issuer Purchases of Equity Securities for Quarter Ended December 31, 20192020
| Total Number | Average | Total Number of Shares | Approximate Dollar Values of Shares that | |||||||||||
| of Shares | Price Paid | Purchased as Part of Publicly | May Yet be Purchased Under the Program | |||||||||||
| Period | Purchased 1,2 | per Share | Announced Program | (Billions of dollars) 2 | ||||||||||
| October. 1 – October. 31, 2020 | 30,243 | $72.65 | — | $19.5 | ||||||||||
| November 1 – November 30, 2020 | 9,850 | $71.15 | — | $19.5 | ||||||||||
| December 1 –December 31, 2020 | 33,819 | $80.89 | — | $19.5 | ||||||||||
| Total October 1 – December 31, 2020 | 73,912 | $76.22 | — | |||||||||||
| Total Number | Average | Total Number of Shares | Approximate Dollar Values of Shares that | |
| of Shares | Price Paid | Purchased as Part of Publicly | May Yet be Purchased Under the Program | |
| Period | Purchased 1,2 | per Share | Announced Program | (Billions of dollars) 2 |
| Oct. 1 – Oct. 31, 2019 | 3,997,504 | $115.73 | 3,997,500 | $22.1 |
| Nov. 1 – Nov. 30, 2019 | 3,334,204 | $119.48 | 3,334,204 | $21.7 |
| Dec. 1 – Dec. 31, 2019 | 3,280,855 | $118.57 | 3,280,855 | $21.3 |
| Total Oct. 1 – Dec. 31, 2019 | 10,612,563 | $117.78 | 10,612,559 | |
2Refer to “Liquidity and Capital Resources” on page 42 for additional detail regarding the company's authorized stock repurchase program. |
Item 6. Selected Financial Data
The selected financial data for years 20152016 through 20192020 are presented on page 91.98.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The index to Management’s Discussion and Analysis of Financial Condition and Results of Operations, Consolidated Financial Statements and Supplementary Data is presented on page 27.30.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The company’s discussion of interest rate, foreign currency and commodity price market risk is contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations — “Financial and Derivative Instrument Market Risk,” beginning on page 4247 and in Note 8 to the Consolidated Financial Statements, “Financial and Derivative Instruments,” beginning on page 66.72.
Item 8. Financial Statements and Supplementary Data
The index to Management’s Discussion and Analysis, Consolidated Financial Statements and Supplementary Data is presented on page 27.30.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures The company’s management has evaluated, with the participation of the Chief Executive Officer and the Chief Financial Officer, the effectiveness of the company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of the end of the period covered by this report. Based on this evaluation, management concluded that the company’s disclosure controls and procedures were effective as of December 31, 2019.2020.
(b) 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, 2019.2020.
25
The company excluded Noble from our assessment of internal control over financial reporting as of December 31, 2020 because it was acquired by the company in a business combination during 2020. Total assets and total revenues of Noble, a wholly-owned subsidiary, represent eight percent and one percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2020.
The effectiveness of the company’s internal control over financial reporting as of December 31, 2019,2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report included herein.
(c) Changes in Internal Control Over Financial Reporting During the quarter ended December 31, 2019,2020, there were no changes in the company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.
Item 9B. Other Information
None.
26
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information about our Executive Officers at February 21, 202025, 2021
Members of the Corporation’s Executive Committee are the Executive Officers of the Corporation:
| Name | Age | Current and Prior Positions (up to five years) | Primary Areas of Responsibility | ||||||||
| Michael K. Wirth | Chairman of the Board and Chief Executive Officer (since Feb 2018) Vice Chairman of the Board (Feb 2017 - Jan 2018) and Executive Vice President, Midstream and Development (Jan 2016 - Jan 2018) Executive Vice President, Downstream (Mar 2006 - Dec 2015) | Chairman of the Board and Chief Executive Officer | |||||||||
| Joseph C. Geagea | 61 | Executive Vice President, Technology, Projects and Services (since Jun 2015) Senior Vice President, Technology, Projects and Services (Jan 2014 - Jun 2015) | Capital Projects; Procurement; Information Technology and Digital; Asset Performance; Health, Safety and Environment; Real Estate Services | ||||||||
| James W. Johnson | Executive Vice President, Upstream (since Jun 2015) Senior Vice President, Upstream (Jan 2014 - Jun 2015) | Worldwide Exploration and Production Activities | |||||||||
| Mark A. Nelson | Executive Vice President, Downstream (since Mar 2019) Vice President, Midstream, Strategy and Policy (Feb 2018 - Feb 2019) Vice President, Strategic Planning (Apr 2016 - Jan 2018) President, International Products (Jun 2010 - Mar 2016) | Worldwide Manufacturing, Marketing and Lubricants; Chemicals | |||||||||
Vice President and Chief Financial Officer (since Apr 2019) Executive Vice President, Executive Vice President, Vice President, Gas and Midstream (Jan 2014 - | |||||||||||
| Rhonda J. Morris | 55 | Vice President and Chief Human Resources Officer (since Feb 2019) Vice President, Human Resources (Oct 2016 - Jan 2019) Vice President, Downstream Human Resources (Sep 2012 - Sep 2016) | Human Resources; Diversity and Inclusion | ||||||||
| Colin E. Parfitt | Vice President, Midstream (since Mar 2019) President, Supply and Trading (Jun 2013 - Feb 2019) | Supply and Trading Activities; Shipping; Pipeline; Power and Energy Management | |||||||||
| R. Hewitt Pate | Vice President and General Counsel (since Aug 2009) | Law, Governance and Compliance | |||||||||
The information about directors required by Item 401(a), (d), (e) and (f) of Regulation S-K and contained under the heading “Election of Directors” in the Notice of the 20202021 Annual Meeting of Stockholders and 20202021 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Exchange Act in connection with the company’s 20202021 Annual Meeting (the 20202021 Proxy Statement), is incorporated by reference into this Annual Report on Form 10-K.
The information required by Item 406 of Regulation S-K and contained under the heading “Corporate Governance — Business Conduct and Ethics Code” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
The information required by Item 407(d)(4) and (5) of Regulation S-K and contained under the heading “Corporate Governance — Board Committees” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required by Item 402 of Regulation S-K and contained under the headings “Executive Compensation,” “CEO Pay Ratio” and “Director Compensation” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
The information required by Item 407(e)(4) of Regulation S-K and contained under the heading “Corporate Governance — Board Committees” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
The information required by Item 407(e)(5) of Regulation S-K and contained under the heading “Corporate Governance — Management Compensation Committee Report” in the 20202021 Proxy Statement is incorporated herein by reference into this Annual Report on Form 10-K. Pursuant to the rules and regulations of the SEC under the Exchange Act, the information under such caption incorporated by reference from the 20202021 Proxy Statement shall not be deemed to be “soliciting material,” or to be “filed” with the Commission, or subject to Regulation 14A or 14C or the liabilities of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 403 of Regulation S-K and contained under the heading “Stock Ownership Information — Security Ownership of Certain Beneficial Owners and Management” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
The information required by Item 201(d) of Regulation S-K and contained under the heading “Equity Compensation Plan Information” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 404 of Regulation S-K and contained under the heading “Corporate Governance — Related Person Transactions” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
The information required by Item 407(a) of Regulation S-K and contained under the heading “Corporate Governance — Director Independence” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
Item 14. Principal Accounting Fees and Services
The information required by Item 9(e) of Schedule 14A and contained under the heading “Board Proposal to Ratify PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for 2020”2021” in the 20202021 Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.
THIS PAGE INTENTIONALLY LEFT BLANK
29
Financial Table of Contents
Guarantees and Other Contingencies | |||||||||
30
Management's Discussion and Analysis of Financial Condition and Results of Operations
Key Financial Results
| Millions of dollars, except per-share amounts | 2019 | 2018 | 2017 | Millions of dollars, except per-share amounts | 2020 | 2019 | 2018 | |||||||||||||||||||||
| Net Income (Loss) Attributable to Chevron Corporation | $ | 2,924 | $ | 14,824 | $ | 9,195 | Net Income (Loss) Attributable to Chevron Corporation | $ | (5,543) | $ | 2,924 | $ | 14,824 | |||||||||||||||
| Per Share Amounts: | Per Share Amounts: | |||||||||||||||||||||||||||
| Net Income (Loss) Attributable to Chevron Corporation | Net Income (Loss) Attributable to Chevron Corporation | |||||||||||||||||||||||||||
| – Basic | $ | 1.55 | $ | 7.81 | $ | 4.88 | – Basic | $ | (2.96) | $ | 1.55 | $ | 7.81 | |||||||||||||||
| – Diluted | $ | 1.54 | $ | 7.74 | $ | 4.85 | – Diluted | $ | (2.96) | $ | 1.54 | $ | 7.74 | |||||||||||||||
| Dividends | $ | 4.76 | $ | 4.48 | $ | 4.32 | Dividends | $ | 5.16 | $ | 4.76 | $ | 4.48 | |||||||||||||||
| Sales and Other Operating Revenues | $ | 139,865 | $ | 158,902 | $ | 134,674 | Sales and Other Operating Revenues | $ | 94,471 | $ | 139,865 | $ | 158,902 | |||||||||||||||
| Return on: | Return on: | |||||||||||||||||||||||||||
| Capital Employed | 2.0 | % | 8.2 | % | 5.0 | % | Capital Employed | (2.8) | % | 2.0 | % | 8.2 | % | |||||||||||||||
| Stockholders’ Equity | 2.0 | % | 9.8 | % | 6.3 | % | Stockholders’ Equity | (4.0) | % | 2.0 | % | 9.8 | % | |||||||||||||||
| Earnings by Major Operating Area | Earnings by Major Operating Area | Earnings by Major Operating Area | ||||||||||||||||||||||||||
| Millions of dollars | 2019 | 2018 | 2017 | Millions of dollars | 2020 | 2019 | 2018 | |||||||||||||||||||||
| Upstream | Upstream | |||||||||||||||||||||||||||
| United States | $ | (5,094 | ) | $ | 3,278 | $ | 3,640 | United States | $ | (1,608) | $ | (5,094) | $ | 3,278 | ||||||||||||||
| International | 7,670 | 10,038 | 4,510 | International | (825) | 7,670 | 10,038 | |||||||||||||||||||||
| Total Upstream | 2,576 | 13,316 | 8,150 | Total Upstream | (2,433) | 2,576 | 13,316 | |||||||||||||||||||||
| Downstream | Downstream | |||||||||||||||||||||||||||
| United States | 1,559 | 2,103 | 2,938 | United States | (571) | 1,559 | 2,103 | |||||||||||||||||||||
| International | 922 | 1,695 | 2,276 | International | 618 | 922 | 1,695 | |||||||||||||||||||||
| Total Downstream | 2,481 | 3,798 | 5,214 | Total Downstream | 47 | 2,481 | 3,798 | |||||||||||||||||||||
| All Other | (2,133 | ) | (2,290 | ) | (4,169 | ) | All Other | (3,157) | (2,133) | (2,290) | ||||||||||||||||||
Net Income (Loss) Attributable to Chevron Corporation1,2 | $ | 2,924 | $ | 14,824 | $ | 9,195 | Net Income (Loss) Attributable to Chevron Corporation1,2 | $ | (5,543) | $ | 2,924 | $ | 14,824 | |||||||||||||||
1 Includes foreign currency effects: | $ | (304 | ) | $ | 611 | $ | (446 | ) | 1 Includes foreign currency effects: | $ | (645) | $ | (304) | $ | 611 | |||||||||||||
2 Income net of tax, also referred to as “earnings” in the discussions that follow. | 2 Income net of tax, also referred to as “earnings” in the discussions that follow. | 2 Income net of tax, also referred to as “earnings” in the discussions that follow. | ||||||||||||||||||||||||||
Refer to the “Results of Operations” section beginning on page 3237 for a discussion of financial results by major operating area for the three years ended December 31, 2019.2020.
Business Environment and Outlook
Chevron is a global energy company with substantial business activities in the following countries: Angola, Argentina, Australia, Azerbaijan, Bangladesh, Brazil, Canada, China, Colombia,Egypt, Equatorial Guinea, Indonesia, Israel, Kazakhstan, Kurdistan Region of Iraq, Myanmar, 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 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. It is the company’s objective to deliver competitive results and stockholder value in any business environment. Periods of sustained lower 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 and exploratory expenditures, along with other measures intended to improve financial performance. Similarly, impairments or write-offs have occurred, and may occur in the future, as a result of managerial decisions not to progress certain projects in the company'scompany’s portfolio.
With ongoing global interest in addressing the risks of climate change, support for policies and advancements in lower carbon technologies is expected. In seeking to help advance a lower carbon future, Chevron is focused on lowering its carbon intensity cost efficiently, increasing renewables and offsets in support of its business, and investing in low-carbon technologies to enable commercial solutions.
Response to Market Conditions and COVID-19 During most of 2020, travel restrictions and other constraints on economic activity designed to limit the spread of the COVID-19 virus were implemented in many locations around the world. These constraints reduced demand for our products, and commodity prices fell, negatively impacting the company’s 2020 financial and operating results. While demand and commodity prices have shown signs of recovery, demand is not back to pre-pandemic levels, and financial results will likely continue to be challenged in future quarters. Due to the rapidly
31
Management's Discussion and Analysis of Financial Condition and Results of Operations
changing environment, there continues to be uncertainty and unpredictability around the extent to which the COVID-19 pandemic will impact our future results, which could be material.
Chevron entered this crisis well positioned with a strong balance sheet, flexible capital program and low cash flow breakeven price. To protect its long-term health and value, the company took swift action, adjusting the items it can control. The company lowered its capital expenditures 35 percent and lowered its operating expense, excluding non-recurring severance costs, by $1.4 billion compared to 2019. The company completed an enterprise-wide transformation that is expected to capture additional cost efficiencies. Additionally, the company suspended its stock repurchase program in March 2020. Taken together, these actions are consistent with our financial priorities: to protect the dividend, to prioritize capital spend that drives long-term value, and to maintain a strong balance sheet. The company expects to continue to have sufficient liquidity and access to both commercial paper and debt capital markets due to its strong balance sheet and investment grade credit ratings. Additionally, the company has access to nearly $10 billion in committed credit facilities.
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 both by 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. Note 15 provides the company’s effective income tax rate for the last three years.
Refer to the “Cautionary Statements Relevant to Forward-Looking Information” on page 2 and to “Risk Factors” in Part I, Item 1A, on pages 18 through 2123 for a discussion of some of the inherent risks that could materially impact the company’s results of operations or financial condition.
The company continually evaluates opportunities to dispose of assets that are not expected to provide sufficient long-term value or 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. The company’s
asset sale program for 2018 through 2020 is targetingtargeted before-tax proceeds of $5-10 billion. Proceeds related to assetFor the three year period ending December 31, 2020, assets sales were $2.0proceeds totaled $7.7 billion, in 2018 and $2.8 billion in 2019.the middle of the guidance range.
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.
Comments related to earnings trends for the company’s major business areas are 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 the Organization of Petroleum Exporting Countries (OPEC) or other producers, actions of regulators, weather-related damage and disruptions, competing fuel prices, natural and human causes beyond the company’s control such as the COVID-19 pandemic, 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 find or acquire and efficiently produce crude oil and natural gas, changes in fiscal terms of contracts, and changes in tax and other applicable laws and regulations.
The company continues tois actively managemanaging its schedule of work, contracting, procurement, and supply-chainsupply chain activities to effectively manage costs and ensure supply chain resiliency and continuity in support of operational goals. Price levelsThird party costs for capital, exploratory costs,exploration, and operating expenses associated with the production of crude oil and natural gas can be subject to external factors beyond the company’s control including, but not limited to: the general level of inflation, tariffs or other taxes imposed on goods or services, and commoditizedmarket based prices charged by the industry’s material and service providers. The spot markets for many services and materials fell as overall industry drilling activity in North America declined in 2019, particularly onshore. However, as industry activity contracts, financial pressure on suppliers has increased, which may limit further de-escalation and/or lead to consolidation across the supplier community impacting costs. The international and offshore rig markets are also showing some signs of weaknesses as activity has pulled back; however, pricing for some products and services remains resilient as many suppliers have reset expectations of higher industry spend and instead are looking to higher pricing and margins on a more limited scope of work. Chevron utilizes contracts with various pricing mechanisms, so there may be a delay in whenlag before the company’s costs reflect the changes in market trends.
The spot markets and some of the current cost indexes for many materials and services have stabilized. Crude oil and natural gas prices and demand have rebounded from lows of the early pandemic though demand still has not returned to pre-pandemic levels. Drilling activity in the U.S. has risen slowly but steadily through the end of the year. The timing and
32
Management's Discussion and Analysis of Financial Condition and Results of Operations
trajectory of any increase in the cost of materials and services going forward will depend on the extent of the oil and gas industry recovery. Correlated with these initial signs of industry recovery and cost stabilization was a noticeable improvement in the risk of default for key suppliers. To date, there have been no material impacts to operations due to supplier defaults. Chevron is actively monitoring and engaging key suppliers to mitigate any potential business impacts.
Capital and exploratory expenditures and operating expenses could also be affected by damage to production facilities caused by severe weather or civil unrest, delays in construction, or other factors.
The chart above 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 $42 per barrel for the full-year 2020, compared to $64 in 2019. As of mid-February 2021, the Brent price was $64 per barrel. The WTI price averaged $39 per barrel for the full-year 2020, compared to $57 in 2019. As of mid-February 2021, the WTI price was $60 per barrel. The majority of the company’s equity crude production is priced based on the Brent benchmark. The Brent price averaged $64 per barrel for the full-year 2019, compared to $71 in 2018. Brent
Crude prices increased through the first half of 2019 due to OPEC production cuts and U.S. sanctions on Iran and Venezuela. Prices then started to decline due to heightened concerns about a slowing macro economy and weakening oil demand growth amid trade tensions between the
growth, allowing prices to somewhat recover. The WTI price averaged $57company’s average realization for U.S. crude oil and natural gas liquids in 2020 was $31 per barrel, for the full-year 2019, compared to $65 in 2018. WTI traded at a discount to Brent throughoutdown 37 percent from 2019. Differentials to Brent have ranged between $4 to $10 in 2019, primarily due to pipeline infrastructure constraints which have restricted flows of inland crude to export outlets on the Gulf Coast. Variability in other factors impacting supply and demand of each benchmark crude also affect price differential. As of mid-February 2020, the WTI price was $52 per barrel.
Outside the United States, price changesprices for natural gas depend on a wide range of supply, demand and regulatory circumstances. Chevron sells natural gas into the domestic pipeline market in many locations. In some locations, Chevron has invested in long-term projects to produce and liquefy natural gas for transport by tanker to other markets. 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 the remainder to be sold in the Asian spot LNG market. The Asian spot market reflects the supply and demand for LNG in the Pacific Basin and is not directly linked to crude oil prices. International natural gas realizations averaged $4.59 per MCF during 2020, compared with $5.83 per MCF during 2019, compared with $6.29 per MCF during 2018.2019. (See page 3741 for the company’s average natural gas realizations for the U.S. and international regions.)
The company’s worldwide net oil-equivalent production in 20192020 averaged 3.0583.083 million barrels per day. About 1514 percent of the company’s net oil-equivalent production in 20192020 occurred in the OPEC-member countries of Angola, Equatorial Guinea, Nigeria, the Partitioned Zone between Saudi Arabia and Kuwait, Republic of Congo and Venezuela. OPEC quotas had no material effect on the company’s net crude oil production in 2019 or 2018.
The company estimates that net oil-equivalent production in 20202021 will grow up to 3 percent compared to 2019,2020, assuming a Brent crude oil price of $60$50 per barrel and excluding the impact of anticipated 20202021 asset sales. This estimate is subject to many factors and uncertainties, including quotas or other actions that may be imposed by OPEC; tariffs and trade sanctions;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; 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
33
Management's Discussion and Analysis of Financial Condition and Results of Operations
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.projects, but these too are under pressure in the current market environment.
In the Partitioned Zone between Saudi Arabia and Kuwait, production was shut-in beginning in May 2015 as a result of difficulties in securing work and equipment permits. Net oil-equivalent production in the Partitioned Zone in 2014 was 81,000 barrels per day. During 2015, net oil-equivalent production averaged 28,000 barrels per day.2015. In December 2019, the governments of Saudi Arabia and Kuwait signed a memorandum of understanding to resolve the dispute and allow production to restart in the Partitioned Zone. In mid-February 2020, pre-startup activities commenced.commenced, and production resumed in July 2020. The financial effects from the loss of production in 2019 and first half 2020 were not significant and are not expected to be significantsignificant. During the fourth quarter 2020, oil equivalent production in 2020.the Partitioned Zone averaged 40 thousand barrels per day.
Chevron has interests in Venezuelan crude oil production assets, including those operated by independent equity affiliates.Petropiar, Petroboscan and Petroindependiente. While the operating environment in Venezuela has been deteriorating for some time, the equity affiliatesPetropiar, Petroboscan, and Petroindependiente have continued to operateconducted activities consistent with the authorization provided pursuant to general licenses issued by the United States government. It remains uncertain whenDuring the second quarter 2020, the company completed its evaluation of the carrying value of its Venezuelan investments in line with its accounting policies and concluded that given the current operating environment and overall outlook, which created significant uncertainties regarding the recovery of the company’s investment, an other than temporary loss of value had occurred, which resulted in Venezuela will stabilize, buta full impairment of its investment in the country totaling $2.6 billion and change in accounting treatment from equity method to non-equity method of accounting. As a result, the company also removed approximately 160 million barrels of proved reserves and stopped reporting production in the country effective July 2020. The company remains committed to its personnelpeople, assets and operations in Venezuela.
 |
Net proved reserves for consolidated companies and affiliated companies totaled 11.411.1 billion barrels of oil-equivalent at year-end 2019,2020, a decrease of 53 percent from year-end 2018.2019. The reserve replacement ratio in 20192020 was 4474 percent. The 5 and 10 year reserve replacement ratios were 10699 percent and 101106 percent, respectively. Refer to Table V beginning on page 96103 for a tabulation of the company’s proved net oil and gas reserves by geographic area, at the beginning of 20172018 and each year-end from 20172018 through 2019,2020, and an accompanying discussion of major changes to proved reserves by geographic area for the three-year period ending December 31, 2019.2020.
Response to Market Conditions and COVID-19: UpstreamTravel restrictions and other constraints on global economic activity in 2020 in response to COVID-19 caused a significant decrease in demand for oil and gas. This led to lower price realizations across all commodities. While critical asset integrity and reliability activities progressed throughout the year,
34
Management's Discussion and Analysis of Financial Condition and Results of Operations
locations with high COVID-19 infection rates deferred non-essential work and demobilized non-essential personnel to reduce the COVID-19 exposure risk to our workforce.
Despite the challenges posed by the pandemic, progress continues on the FGP/WPMP project at Tengiz. In the second quarter the project construction workforce was demobilized to 20 percent of planned levels, which slowed the overall construction pace. In the third quarter, the rate of infections in Kazakhstan slowed, allowing remobilization of the FGP/WPMP construction workforce to begin. In the fourth quarter, staffing levels at FGP/WPMP returned to 95 percent of desired fourth quarter remobilization levels, however a worldwide resurgence of infections prevented the remaining 5 percent of the workforce from returning to work and slowed progress on the project. Extended rotations, COVID testing and isolation protocols are in place to minimize the spread of the virus. Given the uncertain timeline for remobilizing all personnel and safely sustaining activity levels, it is too early to provide meaningful information regarding impacts on project cost and schedule.
Facility maintenance turnarounds are being adjusted and, in certain cases, deferred into 2021. In some cases, turnarounds have been extended in duration and/or reduced in scope in response to the pandemic. As a result of the reduction in capital expenditures, new production is expected to be lower in the near term as drilling and completion activities are scaled back, most notably in the Permian Basin, Gulf of Mexico, and Argentina. Exploration activities and projects not yet in execution phase have been deferred, which may impact production in future years.
Production levels were curtailed in 2020 largely because of reductions imposed by OPEC+ nations in Kazakhstan, Nigeria and Angola. In the fourth quarter, OPEC+ curtailments eased slightly relative to the third quarter. Production has also been curtailed due to market conditions, most notably in Thailand. Additionally, operators of assets where the company has non-operated interests also curtailed production. Production curtailments of approximately 106 thousand barrels of oil equivalent per day were recorded in 2020. In the first quarter of 2021, we expect curtailments to be approximately 40 thousand barrels of oil equivalent per day, predominately related to OPEC+ restrictions.
Decreased capital expenditures, lower activity levels, delays in future development timing, and lower commodity prices have resulted in reductions to Chevron’s proved reserve quantities for 2020. For more information on reserves, refer to Table V beginning on page 103.
As some countries face a resurgence of the virus, regulatory and in-country conditions could impact logistics and material movement and pose a risk to business continuity. We are taking precautionary measures to reduce the risk of exposure to and spread of the COVID-19 virus through screening, testing and, when appropriate, quarantining workforce and visitors upon arrival to our operated facilities.
Refer to the “Results of Operations” section on pages 32 through 3437 and 38 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, and petrochemicals. 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’sindustry��s demand for crude oil and product tankers. Other factors beyond the company’s control include the general level of inflation and energy costs to operate the company’s refining, marketing and petrochemical assets and changes in tax laws and regulations.
The company’s most significant marketing areas are the West Coast and Gulf Coast of the United States and Asia. Chevron operates or has significant ownership interests in refineries in each of these areas.
Response to Market Conditions and COVID-19: Downstream Beginning in March 2020 and continuing into the first quarter 2021, demand for refined products (primarily jet fuel and motor gasoline) has been below prior year levels as a result of travel restrictions and other constraints on economic activity implemented in many countries to combat the spread of the COVID-19 virus. Product prices also fell sharply, and although economic activity has somewhat rebounded from lows experienced in April, refining margins continued to be at or near historic lows due to lower demand and pressure from
35
Management's Discussion and Analysis of Financial Condition and Results of Operations
a global oil product surplus. Chevron continued to take steps to maximize diesel production, given the decline in jet fuel and motor gasoline demand, to fuel transportation that keeps global supply chains moving. The company is actively monitoring supply and demand dynamics as every region is experiencing different recovery trends. The company is adjusting the schedule for planned maintenance activity across its refining network and idling certain processing units to adjust for lower demand, reduce costs, manage inventories and, most importantly, protect the safety of employees and contractors.
As of mid-February 2021, Chevron’s refining crude utilization was approximately 80 to 85 percent and sales were down year-over-year approximately 50 percent for jet fuel, approximately 5 percent for motor gasoline, while diesel sales were relatively flat. It is unclear how long these conditions will persist, but the company will continue to take actions necessary to protect the health and well-being of people, the environment and its operations as conditions evolve. Refer to the “Results of Operations” section on pages 32 through 34page 38 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.
Operating Developments
Key operating developments and other events during 20192020 and early 20202021 included the following:
Upstream
Azerbaijan Signed an agreement to sellCompleted the company’ssale of the company's interest in the Azeri-Chirag-Gunashli fields and Baku-Tbilisi-Ceyhan pipeline.
United States Completed the acquisition of a refinery in Pasadena, Texas.Noble Energy, Inc.
United StatesCompleted the sale of the Appalachia natural gas business.
Downstream
Australia Signed an agreement to acquire a networkCompleted the acquisition of terminals and service stations.
Other
United StatesChevron’s joint venture, CalBioGas LLC, successfully achieved first renewable natural gas production from dairy farms in California and marketed it as an alternative fuel for heavy-duty trucks and buses.
United StatesAnnounced the formation of a joint venture with Brightmark LLC to produce and market renewable natural gas.
United StatesAnnounced an investment in Zap Energy Inc., a start-up company developing a next-generation modular nuclear reactor.
United StatesAnnounced an investment in Blue Planet Systems Corporation, a startup that manufactures and develops carbonate aggregates and carbon capture technology intended to reduce the carbon intensity of industrial operations.
United StatesAnnounced an agreement with Algonquin Power & Utilities Corp. seeking to co-develop renewable power projects that will provide electricity to strategic assets across Chevron’s global portfolio. Under the four-year agreement, Chevron plans to generate more than 500 megawatts of its energy demand from renewable sources.
United StatesAnnounced a non-binding offer in February 2021 to acquire the outstanding common units of Noble Midstream Partners LP not already owned by Chevron.
Common Stock Dividends The 20192020 annual dividend was $4.76$5.16 per share, making 20192020 the 32nd33rd consecutive year that the company increased its annual per share dividend payout. In January 2020,2021, the company’s Board of Directors approveddeclared a $0.10 per share increase in the quarterly dividend toof $1.29 per share, payable in March 2020, representing an increase of 8.4 percent.share.
Common Stock Repurchase Program The company purchased $4$1.75 billion of its common stock in 20192020 under its stock repurchase programs. The company currently expects tostock repurchase $5 billion of its common stockprogram was suspended in March 2020.
36
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 12, beginning on page 68,74, 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” on pages 2831 through 32.36. Refer to the “Selected Operating Data” table on page 3741 for a three-year comparison of production volumes, refined product sales volumes, and refinery inputs. A discussion of variances between 20182019 and 20172018 can be found in the “Results of Operations” section on pages 3233 through 34 of the company’s 20182019 Annual Report on Form 10-K filed with the SEC on February 22, 2019.2020.
 |
U.S. Upstream
| Millions of dollars | 2020 | 2019 | 2018 | |||||||||||||||||
| Earnings (Loss) | $ | (1,608) | $ | (5,094) | $ | 3,278 | ||||||||||||||
| Millions of dollars | 2019 | 2018 | 2017 | |||||||||
| Earnings | $ | (5,094 | ) | $ | 3,278 | $ | 3,640 | |||||
U.S. upstream recordedreported a loss of $1.61 billion in 2020, compared with a loss of $5.09 billion in 2019, compared with earnings of $3.28 billion in 2018.2019. The decrease in earningssmaller loss was largely due to $8.17 billion inthe absence of fourth quarter 2019 impairment charges of $8.17 billion, primarily associated with Appalachia shale and Big Foot, partially offset by the absence of 2018 write-offs and impairments of $660 million, largely due to the Tigris Project in the Gulf of Mexico. Also contributing to the decrease was lower crude oil realizations of $3.36 billion and natural gas pricessecond quarter 2020 impairments and write-offs of $1.72 billion, higher operating expenses of $260 million and the absence of several 2018 asset sale gains totaling $220 million, partially offset by higher crude oil and natural gas production of $1.33$1.20 billion.
The company’s average realization for U.S. crude oil and natural gas liquids in 20192020 was $48.54$30.53 per barrel compared with $58.17$48.54 in 2018.2019. The average natural gas realization was $1.09$0.98 per thousand cubic feet in 2019,2020, compared with $1.86$1.09 in 2018.2019.
Net oil-equivalent production in 20192020 averaged 929,0001.06 million barrels per day, up 1714 percent from 2018. The production increase was largely due to2019. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico.58,000 barrels per day of production from the Noble acquisition were partially offset by normal field declines.
The net liquids component of oil-equivalent production for 20192020 averaged 724,000790,000 barrels per day, up 179 percent from 2018.2019. Net natural gas production averaged 1.231.61 billion cubic feet per day in 2019,2020, up 1831 percent from 2018.2019.
International Upstream
| Millions of dollars | 2019 | 2018 | 2017 | Millions of dollars | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
Earnings* | $ | 7,670 | $ | 10,038 | $ | 4,510 | ||||||||||||||||||||||||||
Earnings (Loss)* | Earnings (Loss)* | $ | (825) | $ | 7,670 | $ | 10,038 | |||||||||||||||||||||||||
*Includes foreign currency effects: | $ | (323 | ) | $ | 545 | $ | (456 | ) | *Includes foreign currency effects: | $ | (285) | $ | (323) | $ | 545 | |||||||||||||||||
International upstream reported a loss of $825 million in 2020, compared with earnings wereof $7.67 billion in 2019, compared with $10.04 billion in 2018. Lower2019. The decrease was primarily due to lower crude oil and natural gas realizations of $1.4$4.6 billion and $830 million, respectively, were partially offset by lower depreciation and tax expenses of $560 million and $280 million, respectively. There were also a number of special items that largely offset each other in 2019 and 2018. Included in 2019 earnings were items totaling $800 million for write-offs and impairment charges of $2.2 billion associated with Kitimat LNG and other gas projects partially offset by a gain of $1.2 billion, on the sale of the U.K. Central North Sea assets and a benefit of $180 million related to a reduction in the corporate income tax rate in Alberta, Canada. Offsetting these items were the absence of 2018 special items of $920 million associated with impairments, write-offs, a receivable write-down and a contractual settlement. Foreign currency effects had an unfavorable impact on earnings of $868 million between periods.
37
Management's Discussion and Analysis of Financial Condition and Results of Operations
The company’s average realization for international crude oil and natural gas liquids in 20192020 was $58.14$36.07 per barrel compared with $64.25$58.14 in 2018.2019. The average natural gas realization was $5.83$4.59 per thousand cubic feet in 20192020 compared with $6.29$5.83 in 2018.2019.
International net oil-equivalent production was 2.132.03 million barrels per day in 2019, essentially unchanged2020, down 5 percent from 2018. Production increases from Wheatstone2019. The decrease was due to production curtailments associated with OPEC+ restrictions and major capital projects weremarket conditions, and asset sale related decreases of 94,000 barrels per day, partially offset by normal field declineshigher production entitlement effects and volumes associated with the impact of asset sales in 2019.Noble acquisition.
The net liquids component of international oil-equivalent production was 1.141.08 million barrels per day in 2019,2020, down 26 percent from 2018.2019. International net natural gas production of 5.935.68 billion cubic feet per day in 2019 increased 12020 decreased 4 percent from 2018.2019.
U.S. Downstream
| Millions of dollars | 2019 | 2018 | 2017 | Millions of dollars | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
| Earnings | $ | 1,559 | $ | 2,103 | $ | 2,938 | ||||||||||||||||||||||||||
| Earnings (Loss) | Earnings (Loss) | $ | (571) | $ | 1,559 | $ | 2,103 | |||||||||||||||||||||||||
U.S. downstream earnedreported a loss of $571 million in 2020, compared with earnings of $1.56 billion in 2019, compared with $2.10 billion in 2018.2019. The decrease was primarily due to lower margins on refined product sales of $300 million,$1.08 billion and lower sales volumes of $1.00 billion. Lower equity earnings from the 50 percent-owned CPChem of $140$220 million and higher depreciation expensealso contributed to the decrease. These were partially offset by lower operating expenses of $100 million following first production at the new hydrogen plant at the Richmond refinery.$220 million.
Total refined product sales of 1.251.00 million barrels per day in 20192020 were up 3down 20 percent from 2018.2019, mainly due to lower jet fuel, gasoline, and diesel demand associated with the COVID-19 pandemic.
International Downstream
| Millions of dollars | 2019 | 2018 | 2017 | Millions of dollars | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
Earnings* | $ | 922 | $ | 1,695 | $ | 2,276 | Earnings* | $ | 618 | $ | 922 | $ | 1,695 | |||||||||||||||||||
*Includes foreign currency effects: | $ | 17 | $ | 71 | $ | (90 | ) | *Includes foreign currency effects: | $ | (152) | $ | 17 | $ | 71 | ||||||||||||||||||
International downstream earned $618 million in 2020, compared with $922 million in 2019, compared with $1.70 billion in 2018.2019. The decrease in earnings was largely due to lower margins on refined product sales of $570 million, lower gains on asset sales of $300$160 million, primarily due to the absence of the 2018 gainsresulting from the southern Africa asset sale, partially offset by favorableunfavorable inventory effects. Unfavorable tax items of $100$110 million also contributed to the decrease. Partially offsetting the decrease in earnings were lower operating expenses of $130 million. Foreign currency effects had an unfavorable impact on earnings of $54$169 million between periods.
Total refined product sales of 1.331.22 million barrels per day in 20192020 were down 8 percent from 2018, primarily2019, mainly due to lower jet fuel demand associated with the sale of the southern Africa refining and marketing business in third quarter 2018.COVID-19 pandemic.
All Other
| Millions of dollars | 2019 | 2018 | 2017 | Millions of dollars | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
Net charges* | $ | (2,133 | ) | $ | (2,290 | ) | $ | (4,169 | ) | Net charges* | $ | (3,157) | $ | (2,133) | $ | (2,290) | ||||||||||||||||
*Includes foreign currency effects: | $ | 2 | $ | (5 | ) | $ | 100 | *Includes foreign currency effects: | $ | (208) | $ | 2 | $ | (5) | ||||||||||||||||||
All Other consists of worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, and technology companies.
Net charges in 2019 decreased $157 million2020 increased $1.02 billion from 2018.2019. The change between periods was mainly due to receiptthe absence of the second quarter 2019 Anadarko merger termination fee, higher pension expenses, severance and Noble acquisition costs, partially offset by higherthe absence of a prior year tax charge and favorable tax items. Foreign currency effects decreasedincreased net charges by $7$210 million between periods.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Statement of Income
Comparative amounts for certain income statement categories are shown below. A discussion of variances between 20182019 and 20172018 can be found in the “Consolidated Statement of Income” section on pages 34 through 36 of the company’s 20182019 Annual Report on Form 10-K.
| Millions of dollars | 2019 | 2018 | 2017 | Millions of dollars | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
| Sales and other operating revenues | $ | 139,865 | $ | 158,902 | $ | 134,674 | Sales and other operating revenues | $ | 94,471 | $ | 139,865 | $ | 158,902 | |||||||||||||||||||
