Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Third Quarter 2021 Compared with Third Quarter 2020

And Nine Months 2021 Compared with Nine Months 2020

Key Financial Results


Earnings by Business Segment
	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)				(Millions of dollars)
Upstream
United States	$	1,962	$	116	$	4,349	$	(1,709)
International	3,173		119		6,314		(1,225)
Total Upstream	5,135		235		10,663		(2,934)
Downstream
United States	1,083		141		1,729		(397)
International	227		151		425		782
Total Downstream	1,310		292		2,154		385
Total Segment Earnings	6,445		527		12,817		(2,549)
All Other	(334)		(734)		(2,247)		(2,329)
Net Income (Loss) Attributable to Chevron Corporation (1) (2)	$	6,111	$	(207)	$	10,570	$	(4,878)

(1) Includes foreign currency effects.	$	305	$	(188)	$	346	$	(111)
(2) Income (loss) net of tax; also referred to as “earnings” in the discussions that follow.

Net income attributable to Chevron Corporation for third quarter 2021 was $6.11 billion ($3.19 per share — diluted), compared with a loss of $207 million ($(0.12) per share — diluted) in the corresponding 2020 period. The net income attributable to Chevron Corporation for the first nine months of 2021 was $10.57 billion ($5.51 per share — diluted), compared with a loss of $4.88 billion ($(2.63) per share — diluted) in the first nine months of 2020.

Upstream reported earnings of $5.14 billion in third quarter 2021 compared with $235 million in the corresponding 2020 period. The quarterly increase was primarily due to higher realizations and higher sales volumes. Earnings for the first nine months of 2021 were $10.66 billion compared with a loss of $2.93 billion a year earlier. The increase was primarily due to higher realizations, the absence of second quarter 2020 impairments and write-offs, and higher sales volumes partially offset by the absence of 2020 favorable tax items and lower gains from asset sales.

Downstream reported earnings of $1.31 billion in third quarter 2021 compared with $292 million in the corresponding 2020 period primarily due to higher margins on refined product sales, higher equity earnings from 50 percent-owned Chevron Phillips Chemical Company LLC (CPChem), and higher sales volumes. Earnings for the first nine months of 2021 were $2.15 billion compared with $385 million in the corresponding 2020 period. The increase was primarily due to higher equity earnings from 50 percent-owned CPChem, higher sales volumes and lower operating expenses.

Refer to pages 27 through 29 for additional discussion of results by business segment and “All Other” activities for the third quarter and first nine months 2021 versus the same periods in 2020.

Business Environment and Outlook

Chevron Corporation* is a global energy company with substantial business activities in the following countries: Angola, Argentina, Australia, Bangladesh, Brazil, Canada, China, 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.

_____________________

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 generally owned 50 percent or less. 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.

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. 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.

The company will continue to develop oil and gas resources to meet customers’ demand for energy. At the same time, Chevron believes that the future of energy is lower carbon. As such, the company will continue to maintain flexibility in its portfolio to be responsive to changes in policy, technology, and customer preferences. The company’s strategy seeks to combine a high-return, low-growth, lower carbon-intensity traditional oil and gas business with faster-growing, profitable, lower carbon new energy businesses that leverage the company’s strengths. Chevron aims to lower the carbon intensity of its operations and grow lower carbon businesses in renewable fuels, hydrogen, carbon capture and offsets. To grow its lower carbon businesses, Chevron plans to target sectors of the economy where emissions are harder to abate or that cannot be easily electrified, while leveraging the company’s capabilities, assets and customer relationships.

In March 2021, the company announced its 2028 Upstream production greenhouse gas (GHG) intensity targets and its anticipated spending, as disclosed in the company’s Form 10-Q for the quarter ended March 31, 2021. In October 2021, the company announced its aspiration to achieve net zero for Upstream production Scope 1 and 2 GHG emissions on an equity basis by 2050. The company believes accomplishing this aspiration depends on, among other things, partnerships with multiple stakeholders, continuing progress on commercially viable technology, government policy, successful negotiations for carbon capture and storage and nature-based projects, availability of cost-effective, verifiable offsets in the global market, and granting of necessary permits by governing authorities. The company also introduced a portfolio carbon intensity (PCI) metric, which is a measure of the carbon intensity across the full value chain of Chevron’s entire business. This metric encompasses the company’s Upstream and Downstream business and includes Scope 1 (direct emissions), Scope 2 (indirect emissions from imported electricity and steam), and certain Scope 3 (primarily emissions from use of sold products). The company’s PCI target is 71 grams (g) carbon dioxide equivalent (CO2e) per megajoules (MJ) by 2028, a greater than five percent reduction from 2016.

In September 2021, the company increased its planned capital spend to approximately $10 billion through 2028 to advance its lower carbon strategy, which includes approximately $2 billion to lower the carbon intensity of its operations, and approximately $8 billion for lower carbon investments in renewable fuels, hydrogen and carbon capture and offsets.

Response to Market Conditions and COVID-19 The outbreak of COVID-19 caused a significant decrease in demand for our products and created disruptions and volatility in the global marketplace beginning late in the first quarter 2020. While commodity prices and demand have largely recovered, jet fuel demand is still not back to pre-pandemic levels.

During the third quarter of 2021, the availability of vaccines around the world improved and business activity increased. Nevertheless, some countries face a resurgence of the virus and its variants that could impact demand for our products, workforce availability, logistics and materials movement and pose a risk to our business. We continue to take precautionary measures to reduce the risk of exposure to and spread of the COVID-19 virus in our operations through screening, testing and, when appropriate, quarantining personnel upon arrival to our operated facilities.

Despite the challenges posed by the pandemic, progress continues on the Future Growth Project / Wellhead Pressure Management Project (FGP/WPMP) at TCO. Staffing has returned to targeted levels and at the end of October 2021, 85 percent of the TCO workforce on-site was fully vaccinated. COVID-19 testing and isolation protocols remain in place to minimize the spread of the virus.

Demand for some refined products, primarily jet fuel, has continued to be below pre-COVID-19 levels as a result of travel restrictions and other constraints implemented in many countries to combat the spread of

COVID-19. Chevron continued to take steps to maximize diesel and motor gasoline production, given the decline in jet fuel demand, to align with the global recovery. Chevron’s total refined product sales were up approximately 13 percent year-over-year in the third quarter 2021, but were down approximately 3 percent from the same period in 2019, primarily due to lower jet fuel sales. Refining crude utilization was approximately 80 percent in the third quarter 2021.

Refer to the “Cautionary Statements Relevant to Forward-Looking Information” on page 2 and to “Risk Factors” on pages 18 through 23 of the company’s 2020 Annual Report on Form 10-K for a discussion of some of the inherent risks that could materially impact the company’s results of operations or financial condition.

The effective tax rate for the company can change substantially during periods of significant earnings volatility. This is due to the mix effects that are impacted by both the absolute level of earnings or losses and whether they arise in higher or lower tax rate jurisdictions. As a result, a decline or increase in the effective income tax rate in one period may not be indicative of expected results in future periods. Additional information related to the company’s effective income tax rate is included in Note 10 to the Consolidated Financial Statements.

The company continually evaluates opportunities to dispose of assets that are not expected to provide sufficient long-term value and to acquire assets or operations complementary to its asset base to help augment the company’s financial performance and value growth. Asset dispositions and restructurings may result in significant gains or losses in future periods.

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 OPEC+ countries, 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, environmental and other applicable laws and regulations.

The company is actively managing its schedule of work, contracting, procurement, and supply chain activities to effectively manage costs and ensure supply chain resiliency and continuity in support of operational goals. Third party costs for capital, exploration, and operating expenses can be subject to external factors beyond the company’s control including, but not limited to: global and local supply chain or distribution issues, the general level of inflation, tariffs or other taxes imposed on goods or services, and market based prices charged by the industry’s material and service providers. Chevron utilizes contracts with various pricing mechanisms, so there may be a lag before the company’s costs reflect the changes in market trends.

Prices for goods and services in various sectors have risen over the last 12 months. Some factors behind this trend include expectations of the timing and strength of the economic recovery, order backlogs and supply chain issues in shipping and trucking. Not all markets (industries or regions) have experienced the same price increases. As U.S. and international drilling activity continues to accelerate, continued upward market pressure is expected for oil and gas industry inputs (such as rigs, well services, etc.). Cost increases are likely

to be correlated with rising rig counts by region. The pace of the economic recovery and shifting spending patterns may lead to more cross-industry competition for resources, which could impact the cost of certain non-oil and gas industry goods and services.

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. During the third quarter 2021, Brent averaged $74 per barrel and ended October at about $84. The WTI price averaged $39 per barrel for the full-year 2020. During the third quarter 2021, WTI averaged $71 per barrel and ended October at about $84. The majority of the company’s equity crude production is priced based on the Brent and WTI benchmarks. Crude prices have increased in the third quarter of 2021 driven by continued supply management by OPEC+ and demand recovery due to easing of COVID-19 restrictions. (See page 33 for the company’s average U.S. and international crude oil sales prices).

In contrast to price movements in the global market for crude oil, price changes for natural gas are more closely aligned with seasonal supply/demand and infrastructure conditions in local markets. In the United States, prices at Henry Hub averaged $3.52 per thousand cubic feet (MCF) for the first nine months of 2021, compared with $1.88 during the first nine months of 2020. At the end of October 2021, the Henry Hub spot price was $5.62 per MCF.

Outside the United States, price changes for natural gas depend on a wide range of supply, demand and regulatory circumstances. The company’s long-term contract prices for liquefied natural gas (LNG) are typically linked to crude oil prices. Most of the equity LNG offtake from the operated Australian LNG assets is committed under binding long-term contracts, with some sold in the Asian spot LNG market. International natural gas realizations averaged $5.30 per MCF during the first nine months of 2021, compared with $4.71 per MCF in the same period last year. (See page 33 for the company’s average natural gas sales prices for the U.S. and international regions.)

The company’s worldwide net oil-equivalent production in the first nine months of 2021 averaged 3.09 million barrels per day, a 2 percent increase from the first nine months of 2020. About 26 percent of the company’s net oil-equivalent production in the first nine months of 2021 occurred in OPEC+ member countries of Angola, Equatorial Guinea, Kazakhstan, Nigeria, the Partitioned Zone between Saudi Arabia and Kuwait and Republic of Congo.

Refer to the “Results of Operations” section on page 27 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’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, environmental, and other applicable laws and regulations.

The company’s most significant marketing areas are the West Coast and Gulf Coast of the United States and Asia Pacific. Chevron operates or has significant ownership interests in refineries in each of these areas.

Refer to the “Results of Operations” section beginning on page 28 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

Noteworthy operating developments in recent months included the following:

Finland – Announced an agreement to acquire Neste Oyj’s Group III base oil business, including its related sales and marketing business, and brand NEXBASETM.
United States – Invested in several lower-carbon technologies, including Raven SR Inc. (modular waste-to-green hydrogen and renewable synthetic fuel facilities), Sapphire Technologies (waste energy recovery systems), Hydrogenious LOHC Technologies (liquid organic hydrogen carriers), gr3n SA (plastics recycling technology) and Malta Inc. (thermal energy storage).
United States – Announced the second expansion of its joint venture, Brightmark RNG Holdings LLC, to own projects across the United States to produce and market dairy biomethane, a renewable natural gas.
United States – Announced a memorandum of understanding of a proposed 50/50 joint venture with Bunge North America, Inc., to help meet the demand for renewable fuels and to develop lower carbon intensity feedstocks.
United States – Announced a memorandum of understanding with Delta Air Lines and Google to track sustainable aviation fuel test batch emissions data using cloud-based technology.
United States – Announced a collaboration agreement with Caterpillar Inc. to develop hydrogen demonstration projects in transportation and stationary power applications, including prime power.
United States – Announced a letter of intent with Gevo, Inc. to jointly invest in building and operating one or more new facilities that process inedible corn to produce sustainable aviation fuel.
United States – Announced agreement on a framework to acquire an equity interest in ACES Delta, LLC that owns the Advanced Clean Energy Storage project. This project aims to produce, store and transport green hydrogen at utility scale.
United States – Acquired an equity interest in American Natural Gas LLC and its network of 60 compressed natural gas stations across the United States to grow its renewable natural gas value chain.
United States – Announced a framework with Enterprise Product Partners L.P. to study and evaluate opportunities for carbon dioxide capture, utilization, and storage from their respective business operations in the U.S. Midcontinent and Gulf Coast.

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, beginning on page 11, for a discussion of the company’s “reportable segments,” as defined under the accounting standards for segment reporting.)

Upstream


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
U.S. Upstream Earnings	$	1,962	$	116	$	4,349	$	(1,709)

U.S. upstream reported earnings of $1.96 billion in third quarter 2021, compared with $116 million from a year earlier. The increase was primarily due to higher crude oil realizations of $1.28 billion and higher sales volumes of $490 million. Gains on assets sales of $200 million during the quarter also contributed to the improvement between periods.

U.S. upstream reported earnings of $4.35 billion for the first nine months of 2021, compared with a loss of $1.71 billion from a year earlier. The increase was due to higher crude oil realizations of $3.47 billion, the absence of 2020 impairments and write-offs of $1.19 billion and higher crude oil sales volumes of $1.04 billion.

The average realization per barrel for U.S. crude oil and natural gas liquids in third quarter 2021 was $58, compared with $31 a year earlier. The average realization per barrel for U.S. crude oil and natural gas liquids in the first nine months of 2021 was $53, compared with $30 a year earlier. The average natural gas realization in third quarter 2021 was $3.25 per thousand cubic feet, compared with $0.89 in the 2020 period. The average natural gas realization in the first nine months of 2021 was $2.53 per thousand cubic feet, compared with $0.77 in the comparable 2020 period.

Net oil-equivalent production of 1.13 million barrels per day in third quarter 2021 was up 145,000 barrels per day, or 15 percent, from a year earlier. The increase was due to an additional 224,000 barrels per day of production from the Noble Energy acquisition, partially offset by a 69,000 barrels per day decrease related to the Appalachian asset sale. Net oil-equivalent production of 1.11 million barrels per day in the first nine months of 2021 was up 101,000 barrels per day, or 10 percent, from a year earlier. The increase was due to an additional 220,000 barrels per day of production from the Noble Energy acquisition, partially offset by a 68,000 barrels per day decrease related to the Appalachian asset sale and lower production in the base business.

The net liquids component of oil-equivalent production of 842,000 barrels per day in third quarter 2021 was up 15 percent from the corresponding 2020 period. The net liquids component of oil-equivalent production of 834,000 barrels per day in the 2021 nine-month period was up 10 percent from the 2020 period. Net natural gas production increased 13 percent to 1.71 billion cubic feet per day in third quarter 2021 from the 2020 comparative period. Net natural gas production was 1.68 billion cubic feet per day in the first nine months of 2021, an increase of 11 percent from the 2020 period.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
International Upstream Earnings*	$	3,173	$	119	$	6,314	$	(1,225)

* Includes foreign currency effects	$	285	$	(107)	$	311	$	99

International upstream reported earnings of $3.17 billion in third quarter 2021, compared with $119 million a year ago. The increase in earnings was primarily due to higher realizations of $2.48 billion and higher sales volumes of $370 million. Foreign currency effects had a favorable impact on earnings of $392 million between periods.

International upstream reported earnings of $6.31 billion in the first nine months of 2021 compared with a loss of $1.23 billion a year earlier. The increase was primarily due to higher realizations of $4.82 billion, along with the absence of second quarter 2020 impairments and write-offs of $3.59 billion and severance charges of $290 million, partially offset by the absence of favorable 2020 tax impacts of $820 million and asset sales gains of $550 million. Foreign currency effects had a favorable impact on earnings of $212 million between periods.

The average realization per barrel of crude oil and natural gas liquids in third quarter 2021 was $68, compared with $39 a year earlier. The average realization per barrel of crude oil and natural gas liquids in the first nine months of 2021 was $62, compared with $35 a year earlier. The average natural gas realization in third quarter 2021 was $6.28 per thousand cubic feet, compared with $3.89 in the 2020 period. The average natural gas realization in the first nine months of 2021 was $5.30 per thousand cubic feet, compared with $4.71 in the 2020 period.

International net oil-equivalent production of 1.91 million barrels per day in third quarter 2021 increased 55,000 barrels per day from the corresponding 2020 period. Higher production was driven by 158,000 barrels per day from the Noble Energy acquisition and lower production curtailments, which were partially offset by unfavorable entitlement effects, normal field declines, and operational impacts mainly from the planned turnaround at Tengizchevroil. International net oil-equivalent production of 1.98 million barrels per day in the first nine months of 2021 was down 26,000 barrels per day, or 1 percent, from a year earlier. The decrease is due to unfavorable entitlement effects, normal field declines and operational impacts, partially offset by 148,000 barrels per day associated with the Noble Energy acquisition.

The net liquids component of oil-equivalent production of 915,000 barrels per day in third quarter 2021 decreased 6 percent from the 2020 period. The net liquids component of oil-equivalent production of 976,000 barrels per day in the first nine months of 2021 decreased 9 percent from the 2020 period. Net natural gas production of 5.95 billion cubic feet per day in third quarter 2021 increased 13 percent from the 2020 period. Net natural gas production of 6.02 billion cubic feet per day in the first nine months of 2021 increased 7 percent from the 2020 period.

Downstream


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
U.S. Downstream Earnings	$	1,083	$	141	$	1,729	$	(397)

U.S. downstream reported earnings of $1.08 billion in third quarter 2021, compared with $141 million a year earlier. The increase was mainly due to higher margins on refined product sales of $550 million, higher earnings from the 50 percent-owned Chevron Phillips Chemical Company of $330 million, and higher sales volumes of $110 million.

U.S. downstream reported earnings of $1.73 billion for the first nine months of 2021 compared with a loss of $397 million a year earlier. The increase was primarily due to higher earnings from 50 percent-owned CPChem of $820 million, higher margins on refined product sales of $770 million, and higher sales volumes of $390 million.

Refinery crude oil input in third quarter 2021 increased 9 percent to 895,000 barrels per day and for the first nine months of 2021, crude oil input increased 15 percent to 911,000 barrels per day from the corresponding 2020 period. The increase for both comparative periods was due to the company's increased refinery runs in response to higher demand and the improved refining margin environment.

Refined product sales in third quarter 2021 were up 18 percent to 1.19 million barrels per day and for the first nine months of 2021, refined product sales were up 14 percent to 1.13 million barrels per days from the corresponding 2020 period. The increase for both comparative periods was mainly due to higher gasoline, jet fuel and diesel demand as travel restrictions associated with the COVID-19 pandemic continue to ease.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
International Downstream Earnings*	$	227	$	151	$	425	$	782

* Includes foreign currency effects	$	123	$	(49)	$	183	$	(12)

International downstream reported earnings of $227 million in third quarter 2021, compared with $151 million a year earlier. The increase in earnings was largely due to favorable foreign currency effects of $172 million between periods, partially offset by higher operating expenses of $90 million that were mostly related to transportation.

International downstream reported earnings of $425 million for the first nine months of 2021, compared with $782 million a year earlier. The decrease in earnings was largely due to lower margins on refined product sales of $700 million, partially offset by favorable tax items of $60 million and lower operating expenses of $60 million. Foreign currency effects had a favorable impact on earnings of $195 million between periods.

Refinery crude oil input of 584,000 barrels per day in third quarter 2021 increased 2 percent from the year-ago period. For the first nine months of 2021, crude oil input was 567,000 barrels per day, down 5 percent from the year-ago period.

Total refined product sales of 1.39 million barrels per day in third quarter 2021 were up 8 percent from the year-ago period, mainly due to higher gasoline and jet fuel demand. Total refined product sales for the first nine months of 2021 of 1.31 million barrels per day were up 8 percent from the year-ago period, mainly due to the end of second quarter 2020 acquisition of Puma Energy (Australia) Holdings Pty Ltd. and higher diesel and gasoline demand, partially offset by lower jet fuel.

All Other


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Earnings/(Charges)*	$	(334)	$	(734)	$	(2,247)	$	(2,329)

* Includes foreign currency effects	$	(103)	$	(32)	$	(148)	$	(198)

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 third quarter 2021 were $334 million, compared to $734 million a year earlier. The decrease in net charges between periods was mainly due to favorable tax items and lower corporate charges. Foreign currency effects increased net charges by $71 million between periods.

Net charges for the first nine months of 2021 were $2.25 billion, compared with $2.33 billion a year earlier. The change between periods was mainly due to lower corporate charges, the absence of second quarter 2020 severance charges and favorable tax items, partially offset by higher employee benefit and pension settlement costs. Foreign currency effects decreased net charges by $50 million between periods.

Consolidated Statement of Income

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


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Sales and other operating revenues	$	42,552	$	23,997	$	109,745	$	69,628

Sales and other operating revenues increased $18.6 billion for the third quarter and $40.1 billion for the nine-month period mainly due to higher refined product, crude oil and natural gas prices and sales volumes.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Income from equity affiliates	$	1,647	$	510	$	4,000	$	(1,040)

Income from equity affiliates in the third quarter and nine-month period increased mainly due to higher upstream-related earnings from TCO in Kazakhstan and Angola LNG and higher downstream-related earnings from CPChem and GS Caltex in South Korea. Results for the nine-month period also improved due to the absence of the full impairment of Petropiar and Petroboscan in Venezuela in 2020.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Other income (loss)	$	511	$	(56)	$	591	$	858

Other income for the third quarter increased due to a favorable swing in foreign currency effects and higher gains on asset sales, partially offset by lower non-operating revenue. Other income for the nine-month period decreased due to lower gains on asset sales and lower non-operating revenue, partially offset by a favorable swing in foreign currency effects.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Purchased crude oil and products	$	23,834	$	13,448	$	62,031	$	37,101

Purchased crude oil and products increased $10.4 billion for the third quarter and $24.9 billion for the nine-month period primarily due to higher crude oil, natural gas and refined product prices and higher refined product volumes.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Operating, selling, general and administrative expenses	$	6,010	$	5,436	$	17,962	$	18,509

Operating, selling, general and administrative expenses in the third quarter increased $574 million primarily due to higher services and fees, transportation expenses and materials and supplies. Operating, selling, general and administrative expenses decreased $547 million in the nine-month period primarily due to lower employee expenses associated with the absence of 2020 severance accruals.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Exploration expenses	$	158	$	117	$	357	$	1,170

Exploration expenses in the third quarter increased primarily due to higher charges for well write-offs. Exploration expenses in the nine-month period decreased primarily due to lower charges for well write-offs.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Depreciation, depletion and amortization	$	4,304	$	4,017	$	13,112	$	15,022

Depreciation, depletion and amortization expenses for the third quarter increased primarily due to higher production. Depreciation, depletion and amortization expenses for the nine-month period decreased primarily due to the absence of second quarter 2020 impairment charges, partially offset by higher rates and production.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Taxes other than on income	$	2,075	$	1,091	$	5,061	$	3,223

Taxes other than on income increased for the third quarter and nine-month period mainly due to higher regulatory expenses, taxes on production and excise taxes.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Interest and debt expense	$	174	$	164	$	557	$	498

Interest and debt expenses for the third quarter and the nine-month period increased mainly due to interest expense associated with debt acquired in the Noble Energy acquisition.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Other components of net periodic benefit costs	$	100	$	222	$	602	$	419

Other components of net periodic benefit costs for the third quarter decreased due to lower pension settlement costs as fewer lump-sum pension distributions were made in the current quarter. Other components of net periodic benefit costs for the nine-month period increased due to higher pension settlement costs as a large number of lump-sum pension distributions were made following last year's restructuring.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
Income tax expense/(benefit)	$	1,940	$	165	$	4,047	$	(1,591)

The increase in income tax expense for the third quarter 2021 of $1.78 billion is consistent with the increase in total income before tax for the company of $8.10 billion.

U.S. income before tax increased from a loss of $662 million in third quarter 2020 to income of $3.04 billion in third quarter 2021. This $3.70 billion increase in income was primarily driven by higher crude oil realizations, higher downstream margins and an increase in upstream sales volumes. The increase in income had a direct impact on the company’s U.S. income tax resulting in an increase to tax expense of $538 million between year-over-year periods, from a tax benefit of $183 million in 2020 to a charge of $355 million in 2021.

International income before tax increased from $618 million in third quarter 2020 to $5.02 billion in third quarter 2021. This $4.40 billion increase in income was primarily driven by higher realizations and higher upstream sales volumes. The increased income primarily drove the $1.24 billion increase in international income tax expense between year-over-year periods, from $348 million in 2020 to $1.59 billion in 2021.

The company's increase in income tax expense for the first nine months of 2021 of $5.64 billion was primarily due to the increase in the total before-tax income in 2021 of $21.15 billion.

U.S. income before tax increased between the nine-month periods, from a loss of $5.70 billion in 2020 to income of $4.62 billion in 2021. This increase in income was primarily driven by higher crude oil realizations, the absence of 2020 impairments and write-offs, increase in upstream sales volumes and higher downstream margins. The increase in income had a direct impact on the company’s U.S. income tax resulting in an increase in tax expense of $2.02 billion between the nine-month periods, from a benefit of $1.25 billion in 2020 to a charge of $770 million in 2021.

International income before tax increased for the nine-month periods, from a loss of $799 million in 2020 to income of $10.04 billion in 2021. This increase in income was primarily driven by higher realizations and the absence of 2020 impairments and write-offs, partially offset by the absence of 2020 asset sale gains and lower refined product sales margins. The increase in income and absence of various favorable international tax items primarily drove the $3.61 billion increase in international income tax expense between year-over-year periods, from a benefit of $337 million in 2020 to a charge of $3.28 billion in 2021.

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

Selected Operating Data

The following table presents a comparison of selected operating data:


Selected Operating Data (1) (2)
	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
U.S. Upstream
Net crude oil and natural gas liquids production (MBPD)	842		731		834		760
Net natural gas production (MMCFPD)(3)	1,708		1,507		1,677		1,511
Net oil-equivalent production (MBOEPD)	1,127		982		1,113		1,012
Sales of natural gas (MMCFPD)	4,076		3,776		3,922		4,000
Sales of natural gas liquids (MBPD)	188		205		181		203
Revenue from net production
Liquids ($/Bbl)	$	57.81	$	31.33	$	53.33	$	29.53
Natural gas ($/MCF)	$	3.25	$	0.89	$	2.53	$	0.77
International Upstream
Net crude oil and natural gas liquids production (MBPD)(4)	915		976		976		1,072
Net natural gas production (MMCFPD)(3)	5,952		5,257		6,023		5,609
Net oil-equivalent production (MBOEPD)(4)	1,907		1,852		1,980		2,006
Sales of natural gas (MMCFPD)	5,450		5,513		5,212		5,722
Sales of natural gas liquids (MBPD)	84		53		89		47
Revenue from liftings
Liquids ($/Bbl)	$	67.92	$	38.96	$	61.77	$	34.70
Natural gas ($/MCF)	$	6.28	$	3.89	$	5.30	$	4.71
U.S. and International Upstream
Total net oil-equivalent production (MBOEPD)(4)	3,034		2,834		3,093		3,018
U.S. Downstream
Gasoline sales (MBPD)(5)	671		603		652		577
Other refined product sales (MBPD)	517		401		481		420
Total refined product sales (MBPD)	1,188		1,004		1,133		997
Sales of natural gas liquids (MBPD)	23		25		27		25
Refinery input (MBPD)	895		820		911		789
International Downstream
Gasoline sales (MBPD)(5)	314		242		280		227
Other refined product sales (MBPD)	717		690		686		640
Share of affiliate sales (MBPD)	355		350		346		352
Total refined product sales (MBPD)	1,386		1,282		1,312		1,219
Sales of natural gas liquids (MBPD)	129		80		97		79
Refinery input (MBPD)	584		570		567		598
(1) Includes company share of equity affiliates.
(2) MBPD — thousands of barrels per day; MMCFPD — millions of cubic feet per day; Bbl — Barrel; MCF — thousands of cubic feet; oil-equivalent gas conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil; MBOEPD — thousands of barrels of oil-equivalent per day.
(3) Includes natural gas consumed in operations (MMCFPD):
United States	47		35		46		34
International	540		535		547		571
(4) Includes net production of synthetic oil:
Canada	51		35		55		52

(5) Includes branded and unbranded gasoline.

Liquidity and Capital Resources

Cash, cash equivalents and marketable securities totaled $6.0 billion at September 30, 2021 and $5.6 billion at year-end 2020. Cash provided by operating activities in the first nine months of 2021 was $19.7 billion, compared with $8.3 billion in the year-ago period. Cash capital and exploratory expenditures totaled $5.8 billion in the first nine months of 2021, down $1.5 billion from the year-ago period. Proceeds and deposits related to asset sales and returns of investment totaled $563 million and $23 million, respectively, in the first nine months of 2021, compared to $1.9 billion and $67 million, respectively, in the year-ago period.

Dividends The company paid dividends of $7.6 billion to common stockholders during the first nine months of 2021. In October 2021, the company declared a quarterly dividend of $1.34 per common share, payable in December 2021.

Debt and Finance Lease Liabilities Chevron’s total debt and finance lease liabilities were $37.3 billion at September 30, 2021, down from $44.3 billion at December 31, 2020, as the company repaid long-term notes that matured during the year, early retired long-term notes and the credit facility held by Noble Midstream Partners LP, and reduced borrowings under its commercial paper program. In October 2021, the company completed a tender offer, with the objective of lowering future interest expenses, and redeemed bonds with a book value of $3.4 billion; this resulted in a non-recurring after-tax loss on the extinguishment of debt of approximately $265 million, which will be reflected in fourth quarter 2021 results.

The company’s primary financing source for working capital needs is its commercial paper program. The outstanding balance for the company’s commercial paper program at September 30, 2021 was $2.0 billion. The company’s debt and finance lease liabilities due within one year, consisting primarily of commercial paper, redeemable long-term obligations and the current portion of long-term debt, totaled $8.5 billion at September 30, 2021, and $11.4 billion at December 31, 2020. Of these amounts, $8.2 billion was reclassified to long-term at the end of September 30, 2021. At December 31, 2020, $9.8 billion was reclassified to long-term. At September 30, 2021, 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 September 30, 2021, the company had $9.825 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. These facilities support 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 London Interbank Offered Rate 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 September 30, 2021. In addition, the company has an automatic shelf registration statement that expires in August 2023 for an unspecified amount of nonconvertible debt securities issued by Chevron Corporation or CUSA.

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 its 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.


	Nine Months Ended September 30, 2021		Year Ended December 31, 2020
	(Millions of dollars) (unaudited)
Sales and other operating revenues	$	62,544	$	49,636
Sales and other operating revenues - related party	20,094		17,044
Total costs and other deductions	61,170		57,575
Total costs and other deductions - related party	20,506		14,052
Net income (loss)	$	3,576	$	(1,610)


	At September 30, 2021		At December 31, 2020
	(Millions of dollars) (unaudited)
Current assets	$	14,013	$	9,196
Current assets - related party	11,352		5,719
Other assets	47,840		48,993
Current liabilities	22,397		20,965
Current liabilities - related party	70,565		55,273
Other liabilities	38,344		34,983
Total net equity (deficit)	$	(58,101)	$	(47,313)

Common Stock Repurchase Program On February 1, 2019, the company announced that the Board of Directors authorized a new stock repurchase program with a maximum dollar limit of $25 billion and no set term limits. As of September 30, 2021, the company had purchased 54.9 million shares for $6.1 billion, resulting in $18.9 billion remaining under the authorized program. After suspending the stock repurchase program on March 24, 2020 in response to market conditions, the company announced the resumption of the stock repurchase program on July 30, 2021 at an expected rate of $2-3 billion per year. In the third quarter 2021, the company repurchased 6.3 million shares for $625 million.

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 does not obligate the company to acquire any particular amount of common stock, and it may be discontinued or resumed at any time.

Noncontrolling Interests The company had noncontrolling interests of $0.9 billion at September 30, 2021 and $1.0 billion at December 31, 2020. The decrease was primarily due to the acquisition of all of the publicly held common units representing limited partner interests in Noble Midstream Partners LP not already owned by Chevron and its affiliates. Included within noncontrolling interests is $131 million at September 30, 2021 and $120 million at December 31, 2020 of redeemable noncontrolling interest associated with Noble Midstream.

Financial Ratios and Metrics


	At September 30, 2021		At December 31, 2020
Current Ratio (1)	1.3		1.2
Debt Ratio	21.6	%	25.2	%
Net Debt Ratio (2)	18.7	%	22.7	%

(1) At September 30, 2021, the book value of inventory was lower than replacement cost.

(2) Net Debt Ratio for September 30, 2021 is calculated as short-term debt of $0.3 billion plus long-term debt of $37.1 billion (together, “total debt”) less cash and cash equivalents of $6.0 billion and marketable securities of $34 million as a percentage of total debt less cash and cash equivalents and marketable securities, plus Chevron Corporation Stockholders’ Equity of $135.9 billion. For the December 31, 2020 calculation, please refer to page 46 of Chevron’s 2020 Annual Report on Form 10-K.


	Nine Months Ended September 30
		2021		2020
	(Millions of dollars)
Net cash provided by operating activities		$	19,729	$	8,339
Less: Capital expenditures		(5,450)		(6,855)
Free Cash Flow		$	14,279	$	1,484

Pension Obligations Information related to pension plan contributions is included on page 14 in Note 8 to the Consolidated Financial Statements.

Capital and Exploratory Expenditures Total expenditures, including the company’s share of spending by affiliates, were $8.1 billion in the first nine months of 2021, compared with $10.3 billion in the corresponding 2020 period. The amounts included the company’s share of affiliates’ expenditures of $2.3 billion and $3.1 billion in the 2021 and 2020 periods, respectively, which did not require cash outlays by the company. Expenditures for upstream projects in the first nine months of 2021 were $6.7 billion, representing 84 percent of the company wide total. In October, the company updated its expectation for 2021 organic capital expenditure spending to $12-13 billion, down from the original estimate of $14 billion.


Capital and Exploratory Expenditures by Major Operating Area
	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(Millions of dollars)
United States
Upstream	$	1,135	$	904	$	3,258	$	3,932
Downstream	295		296		801		750
All Other	53		44		136		183
Total United States	1,483		1,244		4,195		4,865
International
Upstream	1,179		1,119		3,475		4,499
Downstream	105		228		377		949
All Other	3		1		13		9
Total International	1,287		1,348		3,865		5,457
Worldwide	$	2,770	$	2,592	$	8,060	$	10,322

Contingencies and Significant Litigation

MTBE Information related to methyl tertiary butyl ether (MTBE) matters is included on page 15 in Note 11 to the Consolidated Financial Statements under the heading “MTBE.”

Ecuador Information related to Ecuador matters is included beginning on page 15 in Note 11 to the Consolidated Financial Statements under the heading “Ecuador.”

Income Taxes Information related to income tax contingencies is included beginning on page 15 in Note 10 and page 16 in Note 12 to the Consolidated Financial Statements under the heading “Income Taxes.”

Guarantees Information related to the company’s guarantees is included on page 16 in Note 12 to the Consolidated Financial Statements under the heading “Guarantees.”

Indemnifications Information related to indemnifications is included on page 16 in Note 12 to the Consolidated Financial Statements 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 on page 17 in Note 12 to the Consolidated Financial Statements 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 on page 17 in Note 12 to the Consolidated Financial Statements under the heading “Environmental.”

Other Contingencies Information related to the company’s other contingencies is included on page 17 in Note 12 to the Consolidated Financial Statements under the heading “Other Contingencies.”

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