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 $521 million primarily due to higher sales volumes of $710 million, including from legacy PDC assets, and higher realizations of $380 million, partly offset by higher depreciation, depletion and amortization of $410 million and higher operating expenses of $100 million, mainly from higher production.

Net oil-equivalent production was up 353,000 barrels per day, or 29 percent. The increase was primarily due to the successful integration of PDC and record high production in the Permian Basin.

U.S. upstream earnings increased by $815 million primarily due to higher sales volumes of $1.7 billion, including from legacy PDC assets, and higher realizations of $260 million, partially offset by higher depreciation, depletion and amortization of $890 million and higher operating expenses of $190 million, mainly from higher production.

Net oil-equivalent production was up 380,000 barrels per day, or 32 percent. The increase was primarily due to the acquisition of PDC and growth in the Permian and DJ Basins.

International upstream earnings decreased by $987 million primarily due to the absence of prior year favorable tax effects of $490 million, lower sales volumes of $310 million and lower natural gas realizations of $140 million, partly offset by higher liquids realizations of $270 million. Foreign currency effects had an unfavorable impact on earnings of $247 million between periods.

Net oil-equivalent production was down 20,000 barrels per day, or 1 percent. The decrease was primarily due to downtime in Australia and exit from Myanmar, partly offset by higher production in Canada, mainly due to the absence of wildfire related shutdowns.

International earnings decreased by $1.2 billion primarily due to lower gas realizations of $840 million, lower sales volumes of $430 million and unfavorable swing in tax effects of $350 million, partly offset by higher liquids realizations of $420 million. Foreign currency effects had an unfavorable impact on earnings of $169 million between periods.

Net oil-equivalent production was down 29,000 barrels per day, or 2 percent. The decrease was primarily due to planned downtime in Nigeria and exit from Myanmar.

Downstream

U.S. downstream earnings decreased by $801 million primarily due to lower margins on refined product sales of $610 million and higher operating expenses of $180 million.

Refinery crude unit inputs, including crude oil and other inputs, was down 85,000 barrels per day, or 9 percent, primarily due to downtime at the El Segundo, California refinery.

Refined product sales were up 32,000 barrels per day, or 2 percent, compared to the year-ago period.

U.S. downstream earnings decreased by $1.3 billion primarily due to lower margins on refined product sales of $1.0 billion and higher operating expenses of $380 million.

Refinery crude unit inputs were down 69,000 barrels per day, or 7 percent, primarily due to downtime at the El Segundo, California and Pascagoula, Mississippi refineries.

Refined product sales were up 14,000 barrels per day, or 1 percent, compared to the year-ago period.

International downstream earnings decreased by $109 million primarily due to lower margins on refined product sales of $80 million. Foreign currency effects had an unfavorable impact on earnings of $5 million between periods.

Refinery crude unit inputs, including crude oil and other inputs, was up 16,000 barrels per day, or 3 percent, primarily due to lower turnaround activity at the GS Caltex affiliate in South Korea.

Refined product sales were up 32,000 barrels per day, or 2 percent, compared to the year-ago period.

International downstream earnings decreased by $602 million primarily due to lower margins on refined product sales of $600 million. Foreign currency effects had a favorable impact on earnings of $33 million between periods.

Refinery crude unit inputs were up 14,000 barrels per day, or 2 percent, primarily due to lower turnaround activity at the GS Caltex affiliate in South Korea.

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

All Other

Net charges increased by $200 million primarily due to unfavorable tax items and lower interest income.

Net charges increased by $334 million primarily due to lower interest income and unfavorable tax items.

Consolidated Statement of Income

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

Sales and other operating revenues for the second quarter increased mainly due to higher U.S. crude oil sales volumes and crude oil prices, partially offset by lower natural gas prices. Sales and other operating revenues for the six-month period were relatively flat as higher U.S. crude oil and natural gas sales volumes and crude oil prices were mostly offset by lower natural gas and refined product prices.

Income from equity affiliates in the second quarter was relatively unchanged compared to last year. Income from equity affiliates in the six-month period decreased mainly due to lower downstream-related earnings from GS Caltex in South Korea and upstream-related earnings from Angola LNG, partially offset by higher downstream-related earnings from CPChem.

Other income for the second quarter decreased mainly due to lower interest income and an unfavorable swing in foreign currency effects, partially offset by higher income from Venezuela non-equity investments. Other income for the six-month period increased mainly due to higher income from Venezuela non-equity investments and a favorable swing in foreign currency effects, partially offset by lower interest income.

Purchased crude oil and products increased for the second quarter primarily due to higher refined product purchases and higher crude and refined product prices, partially offset by lower refinery crude unit inputs. Purchased crude oil and products were relatively unchanged for the six-month period as higher crude oil prices and higher refined product purchases were mostly offset by lower refinery crude unit inputs and lower natural gas purchases and prices.

Operating, selling, general and administrative expenses in the second quarter increased mainly due to higher employee expenses and higher refinery shutdown costs. The increase in Operating, selling, general and administrative expenses for the six-month period primarily resulted from higher employee expenses, higher refinery shutdown costs and higher transportation costs.

Exploration expenses for the second quarter andsix-month period increased primarily due to higher charges for well write-offs.

Depreciation, depletion and amortization expenses for the second quarterandsix-month period increased primarily due to higher production volumes mainly from the PDC acquisition and higher rates.

Taxes other than on income for the second quarter andsix-month period increased primarily due to higher property and excise taxes.

Interest and debt expenses for thesecond quarterand six-month period were relatively unchanged compared to last year.

Other components of net periodic benefit costs for the second quarter and six-month period were relatively unchanged compared to last year.

The company’s income tax expense increased in the second quarter 2024 by $764 million while total income before tax decreased $801 million, primarily due to the absence of prior period favorable tax items and current period unfavorable tax items.

U.S. income before tax decreased from $2.9 billion in second quarter 2023 to $2.5 billion in second quarter 2024. This $412 million decrease in income was primarily driven by lower downstream margins, higher upstream depreciation, depletion and amortization and higher operating expenses, partially offset by higher upstream sales volumes and realizations. The company’s U.S. income tax expense increased by $38 million between year-over-year periods, from $650 million in 2023 to $688 million in 2024.

International income before tax decreased from $5.0 billion in second quarter 2023 to $4.6 billion in second quarter 2024. This $389 million decrease in income was primarily driven by lower upstream sales volumes. The company’s international income tax expense increased $726 million between year-over-year periods, from $1.2 billion in 2023 to $1.9 billion in 2024, primarily due to the absence of prior period favorable tax items and current period unfavorable tax items.

The company’s income tax expense increased in the first six months of 2024 by $221 million while total income before income tax decreased $2.4 billion, primarily due to the absence of prior period favorable tax items and current period unfavorable tax items.

U.S. income before income tax decreased between the six-month periods, from $6.0 billion in 2023 to $5.1 billion in 2024. This $884 million decrease in income was primarily driven by lower downstream margins, higher depreciation, depletion and amortization and higher operating expenses, 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 $77 million between the six-month periods, from $1.4 billion in 2023 to $1.3 billion in 2024.

International income before income tax decreased for the six-month period, from $11.4 billion in 2023 to $9.9 billion in 2024. This $1.5 billion decrease in income was primarily due to lower downstream margins along with lower upstream realizations and sales volumes. International income tax expense increased $298 million between year-over-year periods, from $3.4 billion in 2023 to to $3.7 billion in 2024, primarily due to the absence of prior period favorable tax items and current period unfavorable tax items.

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 $4.0 billion at June 30, 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 six months of 2024 was $13.1 billion, compared with $13.5 billion in the year-ago period. Capital expenditures totaled $8.1 billion in the first six months of 2024, up $1.3 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 $218 million in the first six months of 2024, compared to $324 million in the year-ago period. Cash provided by financing activities includes proceeds from shares issued for stock option exercises of $158 million in the first six months of 2024, compared with $181 million in the year-ago period.

Dividends The company paid dividends of $6.0 billion to common stockholders during the first six months of 2024. In July 2024, the company declared a quarterly dividend of $1.63 per common share, payable in September 2024.

Debt and Finance Lease Liabilities Chevron’s total debt and finance lease liabilities were $23.2 billion at June 30, 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 June 30, 2024, was $3.4 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 $9.8 billion at June 30, 2024, and $5.1 billion at December 31, 2023. Of these amounts, $8.1 billion was reclassified to long-term at June 30, 2024, and $4.5 billion was reclassified to long-term at December 31, 2023. At June 30, 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 June 30, 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 June 30, 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 has repurchased 109.2 million shares for $17.2 billion under the 2023 Program, including 19.0 million shares repurchased for $3.0 billion in second quarter 2024. Chevron expects share repurchases in the third quarter 2024 to be between $4.0-$4.75 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 June 30, 2024 and $972 million at December 31, 2023. Included within noncontrolling interests is $177 million at June 30, 2024 and $166 million at December 31, 2023 of redeemable noncontrolling interest.

Financial Ratios and Metrics

(1) At June 30, 2024, the book value of inventory was lower than replacement cost.

(2) Net Debt Ratio for June 30, 2024 is calculated as short-term debt of $1.7 billion plus long-term debt of $21.4 billion (together, “total debt”) less cash and cash equivalents of $4.0 billion as a percentage of total debt less cash and cash equivalents and marketable securities, plus Chevron Corporation Stockholders’ Equity of $159.2 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. Second quarter 2024 capex was $209 million higher than second quarter 2023 and year-to-date 2024 capex was $1,260 million higher than the year-ago 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. Second quarter 2024 affiliate capex was $350 million lower than second quarter 2023 and year-to-date 2024 affiliate capex was $596 million lower than the year-ago 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 12 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.”