CHEVRON CORP

Results of Operations

Business Segments 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.” (Refer to Note 7 Operating Segments and Geographic Data for a discussion of the company’s “reportable segments,” as defined under the accounting standards for segment reporting.)

Upstream

U.S. upstream earnings increased by $294 million primarily due to higher sales volumes of $990 million, including from legacy PDC assets, partly offset by higher depreciation, depletion and amortization of $490 million mainly from higher production, and lower realizations, primarily natural gas, of $120 million.

Net oil-equivalent production was up 406,000 barrels per day, or 35 percent. The increase was primarily due to the acquisition of PDC and net production increases in the Permian and DJ Basins.

International upstream earnings decreased by $216 million primarily due to lower natural gas realizations of $730 million, partly offset by favorable tax impacts of $190 million, including the absence of first quarter 2023 tax charges related to the energy levy in the United Kingdom, and higher liquid realizations of $160 million. Foreign currency effects had a favorable impact on earnings of $78 million between periods.

Net oil-equivalent production was down 39,000 barrels per day, or 2 percent. The decrease was primarily due to a planned turnaround in Nigeria and normal field declines, partly offset by stronger operational performance at Tengizchevroil.

Downstream

U.S. downstream earnings decreased by $524 million primarily due to lower margins on refined product sales of $380 million and higher operating expenses of $210 million mainly from planned shutdowns.

Refinery crude unit inputs, including crude oil and other inputs, was down 53,000 barrels per day, or 6 percent, primarily due to a planned shutdown at the Pascagoula, Mississippi refinery.

Refined product sales were flat compared to the year-ago period.

International downstream earnings decreased by $493 million primarily due to lower margins on refined product sales of $530 million. Foreign currency effects had a favorable impact on earnings of $38 million between periods.

Refinery crude unit inputs, including crude oil and other inputs, was up 11,000 barrels per day, or 2 percent, while refined product sales were down 30,000 barrels per day, or 2 percent.

All Other

Net charges increased by $134 million primarily due to lower interest income and higher employee benefit costs.

Consolidated Statement of Income

Explanations of variations between periods for selected income statement categories are provided below:

Sales and other operating revenues decreased for the first quarter mainly due to lower natural gas and refined product prices, partially offset by higher U.S. crude and natural gas sales volumes.

Income from equity affiliates in the first quarter decreased mainly due to lower upstream-related earnings from Angola LNG and lower downstream-related earnings from GS Caltex in South Korea.

Other income for the first quarter increased mainly due to a favorable swing in foreign currency effects, higher income from Venezuela non-equity investments and higher gains on asset sales, partially offset by lower interest income.

Purchased crude oil and products decreased for the first quarter primarily due to lower natural gas prices and lower refinery crude unit inputs.

Operating, selling, general and administrative expenses in the first quarter increased mainly due to higher employee benefit expenses and higher transportation costs.

Exploration expenses for the first quarter decreased primarily due to lower charges for well write-offs.

Depreciation, depletion and amortization expenses for the first quarter increased primarily due to higher production volumes from the PDC acquisition.

Taxes other than on income for the first quarter increased primarily due to higher property taxes.

Interest and debt expenses for thefirst quarter were relatively unchanged compared to last year.

Other components of net periodic benefit costs for the first quarter were relatively unchanged compared to last year.

The company’s decrease in income tax expense for the first three months of 2024 of $543 million was primarily due to the decrease in the total income before income tax in 2024 of $1.6 billion.

U.S. income before income tax decreased between the three-month periods, from $3.1 billion in 2023 to $2.6 billion in 2024. This decrease in income was primarily driven by lower downstream margins and higher upstream depreciation, depletion, and amortization, partially offset by higher upstream sales volumes. The decrease in income had a direct impact on the company’s U.S. income tax resulting in a decrease in income tax expense of $115 million between the three-month periods, from $739 million in 2023 to $624 million in 2024.

International income before income tax decreased for the three-month period, from $6.4 billion in 2023 to $5.3 billion in 2024. This decrease in income was primarily due to lower natural gas realizations and lower downstream margins. The decrease in income primarily drove the $428 million decrease in international income tax expense between year-over-year periods, from $2.2 billion in 2023 to to $1.7 billion in 2024.

Additional information related to the company’s effective income tax rate is included in Note 10 Income Taxes to the Consolidated Financial Statements.

Selected Operating Data

The following table presents a comparison of selected operating data:

Liquidity and Capital Resources

Cash, cash equivalents and marketable securities totaled $6.3 billion at March 31, 2024, and $8.2 billion at year-end 2023. The company holds its cash with a diverse group of major financial institutions and has processes and safeguards in place to manage its cash balances and mitigate the risk of loss. Cash provided by operating activities in the first three months of 2024 was $6.8 billion, compared with $7.2 billion in the year-ago period. Capital expenditures totaled $4.1 billion in the first three months of 2024, up $1.1 billion from the year-ago period largely due to higher investments in upstream, including post-acquisition spend on legacy PDC assets. Proceeds and deposits related to asset sales and returns of investment totaled $104 million in the first three months of 2024, compared to $219 million in the year-ago period. Cash provided by financing activities includes proceeds from shares issued for stock option exercises of $87 million in the first three months of 2024, compared with $146 million in the year-ago period.

Dividends The company paid dividends of $3.0 billion to common stockholders during the first three months of 2024. In April 2024, the company declared a quarterly dividend of $1.63 per common share, payable in June 2024.

Debt and Finance Lease Liabilities Chevron’s total debt and finance lease liabilities were $21.8 billion at March 31, 2024, up from $20.8 billion at December 31, 2023, as the company issued commercial paper and retired a bond that matured during the period.

The company’s primary source for working capital needs is its commercial paper program. The outstanding balance for the company’s commercial paper program at March 31, 2024, was $2.1 billion, and there was no commercial paper outstanding at December 31, 2023. The company’s debt and finance lease liabilities due within one year, consisting primarily of the current portion of long-term debt and redeemable long-term obligations, totaled $5.9 billion at March 31, 2024, and $5.1 billion at December 31, 2023. Of these amounts, $5.6 billion was reclassified to long-term at March 31, 2024, and $4.5 billion was reclassified to long-term at December 31, 2023. At March 31, 2024, settlement of these obligations was not expected to require the use of working capital within one year, as the company had the intent and the ability, as evidenced by committed credit facilities, to refinance them on a long-term basis.

At March 31, 2024, the company had $8.1 billion in 364-day committed credit facilities with various major banks that enable the refinancing of short-term obligations on a long-term basis. The credit facilities allow the company to convert any amounts outstanding into a term loan for a period of up to one year. This supports commercial paper borrowing and can also be used for general corporate purposes. The company’s practice has been to continually replace expiring commitments with new commitments on substantially the same terms, maintaining levels management believes appropriate. Any borrowings under the facilities would be unsecured indebtedness at interest rates based on the Secured Overnight Financing Rate (SOFR), or an average of base lending rates published by specified banks and on terms reflecting the company’s strong credit rating. No borrowings were outstanding under these facilities at March 31, 2024.

The major debt rating agencies routinely evaluate the company’s debt, and the company’s cost of borrowing can increase or decrease depending on these debt ratings. The company has outstanding bonds issued by Chevron Corporation, CUSA, Texaco Capital Inc. and Noble Energy, Inc. Most of these securities are the obligations of, or guaranteed by, Chevron Corporation and are rated AA- by Standard and Poor’s Corporation (S&P) and Aa2 by Moody’s Investors Service (Moody’s). The company’s U.S. commercial paper is rated A-1+ by S&P and P-1 by Moody’s. All of these ratings denote high-quality, investment-grade securities.

The company’s future debt level is dependent primarily on results of operations, cash that may be generated from asset dispositions, the capital program, lending commitments to affiliates, and shareholder distributions. Based on its high-quality debt ratings, the company believes that it has substantial borrowing capacity to meet unanticipated cash requirements. During extended periods of low prices for crude oil and natural gas and narrow margins for refined products and commodity chemicals, the company has the flexibility to modify capital spending plans, discontinue or curtail the stock repurchase program, sell assets, and increase borrowings to continue paying the common stock dividend. The company remains committed to retaining high-quality debt ratings.

Summarized Financial Information for Guarantee of Securities of Subsidiaries CUSA issued bonds that are fully and unconditionally guaranteed on an unsecured basis by Chevron Corporation (together, the “Obligor Group”). The tables below contain summary financial information for Chevron Corporation, as Guarantor, excluding its consolidated subsidiaries, and CUSA, as the issuer, excluding its consolidated subsidiaries. The summary financial information of the Obligor Group is presented on a combined basis, and transactions between the combined entities have been eliminated. Financial information for non-guarantor entities has been excluded.

Common Stock Repurchase Program On January 25, 2023, the Board of Directors authorized the repurchase of the company’s shares of common stock in an aggregate amount of $75 billion (the “2023 Program”). The 2023 Program took effect on April 1, 2023, and does not have a fixed expiration date. In the aggregate, the company repurchased 90.2 million shares for $14.2 billion under the 2023 Program, including 19.7 million shares repurchased for $3.0 billion in first quarter 2024. In connection with the pending transaction with Hess Corporation (Hess), share repurchases will be restricted pursuant to SEC regulations. Chevron expects share repurchases in the second quarter 2024 to be between $2.5-3.0 billion.

Repurchases may be made from time to time in the open market, by block purchases, in privately negotiated transactions or in such other manner as determined by the company. The timing of the repurchases and the actual amount repurchased will depend on a variety of factors, including the market price of the company’s shares, general market and economic conditions, and other factors. The stock repurchase program and any forward guidance as to expected repurchases do not obligate the company to acquire any particular amount of common stock, and the program may be discontinued or resumed at any time.

Noncontrolling Interests The company had noncontrolling interests of $1.0 billion at March 31, 2024 and $972 million at December 31, 2023. Included within noncontrolling interests is $172 million at March 31, 2024 and $166 million at December 31, 2023 of redeemable noncontrolling interest.

Financial Ratios and Metrics

(1) At March 31, 2024, the book value of inventory was lower than replacement cost.

(2) Net Debt Ratio for March 31, 2024 is calculated as short-term debt of $282 million plus long-term debt of $21.6 billion (together, “total debt”) less cash and cash equivalents of $6.3 billion as a percentage of total debt less cash and cash equivalents and marketable securities, plus Chevron Corporation Stockholders’ Equity of $160.6 billion. For the December 31, 2023 calculation, please refer to page 51 of Chevron’s 2023 Annual Report on Form 10-K.

Pension Obligations Information related to pension plan contributions is included in Note 8 Employee Benefits to the Consolidated Financial Statements.

Capital Expenditures The company’s capital expenditures (capex) primarily includes additions to fixed assets or investments for the company’s consolidated subsidiaries and is disclosed in the Consolidated Statement of Cash Flows. Capex was $4.1 billion in the first three months of 2024, compared with $3.0 billion in the corresponding 2023 period due to higher investments in upstream, including post-acquisition spend on legacy PDC assets.

Affiliate Capital Expenditures The company’s affiliate capital expenditures (affiliate capex) primarily includes additions to fixed assets or investments in the equity affiliate’s financial statements and does not require cash outlays by the company. Affiliate capex was $623 million in the first three months of 2024, compared with $869 million in the corresponding 2023 period.

Contingencies and Significant Litigation

Climate Change Information related to climate change-related matters is included in Note 11 Litigation under the heading “Climate Change.”

Louisiana Information related to Louisiana coastal matters is included in Note 11 Litigation under the heading “Louisiana.”

Income Taxes Information related to income tax contingencies is included in Note 10 Income Taxes and in Note 12 Other Contingencies and Commitments under the heading “Income Taxes.”

Guarantees Information related to the company’s guarantees is included in Note 11 Other Contingencies and Commitments under the heading “Guarantees.”

Indemnifications Information related to indemnifications is included in Note 12 Other Contingencies and Commitments under the heading “Indemnifications.”

Long-Term Unconditional Purchase Obligations and Commitments, Including Throughput and Take-or-Pay Agreements Information related to the company’s long-term unconditional purchase obligations and commitments is included in Note 12 Other Contingencies and Commitments under the heading “Long-Term Unconditional Purchase Obligations and Commitments, Including Throughput and Take-or-Pay Agreements.”

Environmental Information related to environmental matters is included in Note 12 Other Contingencies and Commitments under the heading “Environmental.”

Other Contingencies Information related to the company’s other contingencies is included in Note 12 Other Contingencies and Commitments under the heading “Other Contingencies.”