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

First Quarter 2022 Compared with First Quarter 2021

Key Financial Results

Earnings by Business Segment
Three Months Ended March 31
20222021
(Millions of dollars)
Upstream
United States$3,238$941
International3,6961,409
Total Upstream6,9342,350
Downstream
United States486(130)
International(155)135
Total Downstream3315
Total Segment Earnings7,2652,355
All Other(1,006)(978)
Net Income (Loss) Attributable to Chevron Corporation (1) (2)$6,259$1,377
(1) Includes foreign currency effects.$(218)$(2)
(2) Income (loss) net of tax; also referred to as “earnings” in the discussions that follow.

Net income attributable to Chevron Corporation for first quarter 2022 was $6.26 billion ($3.22 per share — diluted), compared with $1.38 billion ($0.72 per share — diluted) in the first quarter of 2021.

Upstream earnings in first quarter 2022 were $6.93 billion compared with $2.35 billion in the corresponding 2021 period. The increase was mainly due to higher realizations, partially offset by unfavorable foreign currency effects.

Downstream earnings in first quarter 2022 were $331 million compared with $5 million in the corresponding 2021 period. The increase was mainly due to higher margins on refined product sales and higher earnings from the 50 percent-owned Chevron Phillips Chemical Company.

Refer to pages 26 through 27 for additional discussion of results by business segment and “All Other” activities for the first quarter 2022 versus the same period in 2021.

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, Israel, Kazakhstan, Kurdistan Region of Iraq, 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. Periods of sustained lower commodity prices could result in the impairment or write-off of specific assets in future periods and cause the company to adjust operating expenses, including employee reductions, and capital and exploratory expenditures, along with other measures intended to improve financial performance.

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  • 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.

Governments, companies, communities, and other stakeholders are increasingly supporting efforts to address climate change, recognizing that individuals and society benefit from access to affordable, reliable, and ever-cleaner energy. International initiatives and national, regional and state legislation and regulations that aim to directly or indirectly reduce GHG emissions are in various stages of adoption and implementation. These policies, some of which support the global net zero emissions ambitions of the Paris Agreement, can change the amount of energy consumed, the rate of energy-demand growth, the energy mix, and the relative economics of one fuel versus another. Implementation of these policies can be dependent on, and can affect the pace of, technological advancements, the granting of necessary permits by governing authorities, the availability of cost-effective, verifiable carbon credits, the availability of suppliers that can meet sustainability and other standards, evolving regulatory requirements affecting ESG standards or other disclosures, and evolving standards for tracking and reporting on emissions and emission reductions and removals. Beyond the legislative and regulatory landscape, ever changing customer and consumer behavior can also influence energy demand by affecting preferences and use of the company’s products or competitors’ products, now and in the future.

Chevron supports the Paris Agreement’s global approach to governments addressing climate change and is committed to taking actions to help lower the carbon intensity of its operations while continuing to meet the need for energy that supports society. Chevron integrates climate change-related issues and the regulatory and other responses to these issues into its strategy and planning, capital investment reviews, and risk management tools and processes, where it believes they are applicable. They are also factored into the company’s long-range supply, demand, and energy price forecasts. These forecasts reflect estimates of long-range effects from climate change-related policy actions, such as renewable fuel penetration and energy efficiency standards, and demand response to oil and natural gas prices. 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 capture and storage, is difficult to predict with certainty and is expected to vary depending on the actual laws and regulations enacted or customer and consumer preference in a jurisdiction, the company’s activities in it, and market conditions.

Although the future is uncertain, many published outlooks conclude that fossil fuels will remain a significant part of an energy system that increasingly incorporates lower carbon sources of supply. 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. The company will continue to maintain flexibility in its portfolio to be responsive to changes in policy, technology, and customer preferences. Chevron aims to grow its traditional oil and gas business, 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. The company’s traditional oil and gas business may increase or decrease depending upon regulatory or market forces, among other factors.

Chevron's previously disclosed 2050 net zero upstream aspiration, carbon intensity targets and planned lower-carbon capital spend through 2028 can be found on pages 32 through 34 of the company’s 2021 Annual Report on Form 10-K.

Refer to the “Cautionary Statements Relevant to Forward-Looking Information” on page 2 and to “Risk Factors” on pages 20 through 25 of the company’s 2021 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 Income Taxes 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.

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 first quarter 2020. While commodity prices and demand have largely recovered, jet fuel demand is still not back to pre-pandemic levels. Chevron’s operations have continued with a combination of on-site and at-home work, while monitoring local vaccine and transmission rates. In refining, utilization rates are approaching pre-pandemic levels. There continues to be uncertainty around the extent to which the COVID-19 pandemic may impact our future results, which could be material.

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 civil unrest, political uncertainty or military conflicts such as the ongoing conflict in Ukraine. 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.

Caspian Pipeline Consortium (CPC), an equity affiliate, operates a 935-mile crude oil export pipeline from the Tengiz Field in Kazakhstan to tanker-loading facilities at Novorossiysk on the Russian coast of the Black Sea, providing the main export route for crude oil production from both Tengizchevroil (TCO) and Karachaganak. On March 21, 2022, two of the three offshore loading moorings at the CPC marine terminal were damaged in a weather-related incident. As a result, production at TCO was curtailed to approximately 70 percent of capacity beginning March 25, 2022. Repairs have been completed for one of the two damaged offshore loading moorings, and as of April 23, TCO production facilities returned to normal rates. This incident did not have a material impact on the company's results of operations or consolidated financial position.

Governments have imposed and may impose additional sanctions and other trade laws and regulations that could lead to disruption in our ability to produce, transport and/or export crude in the region surrounding Russia and could have an adverse effect on the company’s financial position. The financial impacts of currently imposed sanctions are not material for the company; however, it remains uncertain how long these conditions may last or how severe they may become.

The company is actively managing its schedule of work, contracting, procurement, and supply chain activities to assure supply of goods and services and effectively manage costs in support of its operations. Supply chain disruptions continue to limit the availability and deliverability of some inputs throughout the industry. Third party costs 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 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 have risen over the last 12 months. Inflationary pressures have accelerated in the first quarter of 2022, as regional and global commodity prices have risen in response to the conflict in Ukraine. A resurgence of COVID-19 lockdowns in Asia may extend existing supply chain disruptions and order backlogs. As U.S. drilling activity increases, additional upward market pressure is expected for oil and gas industry inputs (such as rigs and well services). International drilling was down marginally in the first quarter of 2022, as a lower number of land rigs in Europe were partially offset by a higher number of onshore and offshore rigs in other regions. The pace of the economic growth 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.

cvx-20220331_g1.jpg

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 $71 per barrel for the full-year 2021. During the first quarter of 2022, Brent averaged $102 per barrel and ended April at about $108. The WTI price averaged $68 per barrel for the full-year 2021. During the first quarter of 2022, WTI averaged $95 per barrel and ended April at about $105. The majority of the company’s equity crude production is priced based on the Brent and WTI benchmarks. Crude prices have increased in the first quarter of 2022 driven by geopolitical issues, continued supply management by OPEC+ and demand recovery due to easing of COVID-19 restrictions. (See page 30 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 $4.53 per thousand cubic feet (MCF) for the first three months of 2022, compared with $3.47 during the first three months of 2021. At the end of April 2022, the Henry Hub spot price was $6.79 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 $8.87 per MCF during the first three months of 2022, compared with $4.72 per MCF in the same period last year. (See page 30 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 three months of 2022 averaged 3.06 million barrels per day, a decrease of 2 percent from the first three months of 2021. During the first quarter of 2022, the company's net oil-equivalent production increased by 10 percent in the United States and decreased by 8 percent outside the United States, relative to the first three months of 2021. About 27 percent of the company’s net oil-equivalent production in the first three months of 2022 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 26 for additional discussion of the company’s upstream business.

Downstream Earnings for the downstream segment are closely tied to margins on the refining, manufacturing and marketing of products that include gasoline, diesel, jet fuel, lubricants, fuel oil, fuel and lubricant additives, petrochemicals and renewable fuels. Industry margins are sometimes volatile and can be affected by the global and regional supply-and-demand balance for refined products and petrochemicals, and by changes in the price of crude oil, other refinery and petrochemical feedstocks, and natural gas. Industry margins can also be influenced by inventory levels, geopolitical events, costs of materials and services, refinery or chemical plant capacity utilization, maintenance programs, and disruptions at refineries or chemical plants resulting from unplanned outages due to severe weather, fires or other operational events.

Other factors affecting profitability for downstream operations include the reliability and efficiency of the company’s refining, marketing and petrochemical assets, the effectiveness of its crude oil and product supply functions, and the volatility of tanker-charter rates for the company’s shipping operations, which are driven by the industry’s demand for crude oil and product tankers. Other factors beyond the company’s control include the general level of inflation and energy costs to operate the company’s refining, marketing and petrochemical assets, and changes in tax, environmental, and other applicable laws and regulations.

The company’s most significant marketing areas are the West Coast and Gulf Coast of the United States and Asia Pacific. Chevron operates or has significant ownership interests in refineries in each of these areas. Additionally, the company has a small but growing presence in renewable fuels.

Refer to the “Results of Operations” section beginning on page 27 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:

  • Argentina – Received a concession for the development of unconventional hydrocarbon resources in the east area of the El Trapial field for a 35-year period.

  • Singapore - Launched the Caltex Carbon Offset Program, the first voluntary carbon offset program for the company's Caltex® service stations in Singapore.

  • United States – Announced a pilot with Project Canary to independently certify operational and environmental performance in the company’s North American upstream region, aimed at enhancing our ability to demonstrate transparency in how we are lowering methane emissions in operations.

  • United States – Announced an agreement with Iwatani Corporation of America to co-develop and construct 30 hydrogen fueling sites in California by 2026.

  • United States – Announced an investment in Carbon Clean, a global leader in cost-effective industrial carbon capture.

  • United States – Announced an agreement to acquire Renewable Energy Group, Inc., a founder and leading innovator of the renewable fuels industry.

  • United States – Announced an agreement with Restore the Earth Foundation, Inc. on a carbon offsets reforestation project of up to 8,800 acres in Louisiana.

  • United States – Closed the previously announced transaction with Bunge North America, Inc. to create a joint venture aimed at developing renewable fuel feedstocks.

  • United States – Closed the previously announced agreement with Neste Corporation to acquire its Group III base oil business and NEXBASETM brand.

  • United States – Announced an agreement to join the Global Centre for Maritime Decarbonisation with the aim to help support efforts to develop potentially scalable lower carbon technologies.

  • United States – Completed the sale of the company’s interest in the Eagle Ford Shale in Texas.

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

Three Months Ended March 31
20222021
(Millions of dollars)
U.S. Upstream Earnings$3,238$941

U.S. upstream reported earnings of $3.24 billion in first quarter 2022, compared with $941 million from a year earlier. The increase was primarily due to higher realizations of $2.09 billion and higher sales volumes of $220 million.

The average realization per barrel for U.S. crude oil and natural gas liquids in first quarter 2022 was $77, compared with $48 a year earlier. The average natural gas realization in first quarter 2022 was $4.10 per thousand cubic feet, compared with $2.15 in the 2021 period.

Net oil-equivalent production of 1.18 million barrels per day in first quarter 2022 was up 109,000 barrels per day, or 10 percent, from a year earlier. The increase was due to net production increases in the Permian Basin and the absence of impacts from winter storm Uri. The net liquids component of oil-equivalent production of 880,000 barrels per day in first quarter 2022 was up 10 percent from the corresponding 2021 period. Net natural gas production increased 11 percent to 1.83 billion cubic feet per day in first quarter 2022 from the 2021 comparative period.

Three Months Ended March 31
20222021
(Millions of dollars)
International Upstream Earnings*$3,696$1,409
* Includes foreign currency effects$(144)$(52)

International upstream operations earned $3.70 billion in first quarter 2022, compared with $1.41 billion a year ago. The increase in earnings was primarily due to higher realizations of $2.49 billion, partially offset by lower sales volumes of $350 million. Foreign currency effects had an unfavorable impact on earnings of $92 million between periods.

The average sales price for crude oil and natural gas liquids in first quarter 2022 was $93 per barrel, up from $56 a year earlier. The average sales price of natural gas was $8.87 per thousand cubic feet in the first quarter, up from $4.72 in last year’s first quarter.

Net oil-equivalent production of 1.88 million barrels per day in first quarter 2022 was down 170,000 barrels per day from first quarter 2021. The decrease was primarily due to normal field declines, the absence of production following expiration of the Rokan concession in Indonesia and unfavorable entitlement effects due to higher prices, partially offset by the absence of curtailments. The net liquids component of oil-equivalent production decreased 16 percent to 856,000 barrels per day in first quarter 2022, while net natural gas production of 6.12 billion cubic feet per day was largely unchanged compared to last year's first quarter.

Downstream

Three Months Ended March 31
20222021
(Millions of dollars)
U.S. Downstream Earnings$486$(130)

U.S. downstream reported earnings of $486 million in first quarter 2022, compared with a loss of $130 million a year earlier. The increase was mainly due to higher margins on refined product sales of $500 million and higher earnings from the 50 percent-owned Chevron Phillips Chemical Company of $190 million.

Refinery crude oil input in first quarter 2022 increased 4 percent to 915,000 barrels per day. The increase was due to the company's increased refinery runs in response to higher demand.

Refined product sales in first quarter 2022 were up 16 percent to 1.22 million barrels per day from the corresponding 2021 period. The increase was mainly due to higher gasoline and jet fuel demand as travel restrictions associated with the COVID-19 pandemic continue to ease.

Three Months Ended March 31
20222021
(Millions of dollars)
International Downstream Earnings*$(155)$135
* Includes foreign currency effects$23$59

International downstream reported a loss of $155 million in first quarter 2022, compared with earnings of $135 million a year earlier. The decrease in earnings was mainly due to higher operating expenses of $170 million, lower margins on refined product sales of $140 million, and an unfavorable swing in foreign currency effects of $36 million between periods.

Refinery crude oil input of 619,000 barrels per day in first quarter 2022 increased 15 percent from the year-ago period due to higher demand.

Total refined product sales of 1.33 million barrels per day in first quarter 2022 increased 5 percent from the year-ago period, mainly due to higher demand for gasoline and jet fuel as restrictions from the pandemic continue to ease.

All Other

Three Months Ended March 31
20222021
(Millions of dollars)
Earnings/(Charges)*$(1,006)$(978)
* Includes foreign currency effects$(97)$(9)

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 first quarter 2022 were $1.01 billion, compared to $978 million a year earlier. The increase in net charges between periods was mainly due to an unfavorable swing of $88 million in foreign currency effects and higher employee benefit costs, partially offset by lower pension expenses.

Consolidated Statement of Income

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

Three Months Ended March 31
20222021
(Millions of dollars)
Sales and other operating revenues$52,314$31,076

Sales and other operating revenues increased $21.2 billion for the first quarter mainly due to higher refined product, crude oil and natural gas prices and higher refined product sales volumes.

Three Months Ended March 31
20222021
(Millions of dollars)
Income from equity affiliates$2,085$911

Income from equity affiliates in the first quarter increased mainly due to higher upstream-related earnings from TCO in Kazakhstan and Angola LNG and higher downstream-related earnings from CPChem, partially offset by lower earnings from GS Caltex in South Korea.

Three Months Ended March 31
20222021
(Millions of dollars)
Other income (loss)$(26)$42

Other income for the first quarter decreased due to an unfavorable swing in foreign currency effects, partially offset by higher gains on asset sales.

Three Months Ended March 31
20222021
(Millions of dollars)
Purchased crude oil and products$32,649$17,568

Purchased crude oil and products increased $15.1 billion for the first quarter primarily due to higher crude oil, natural gas and refined product prices and higher refined product volumes.

Three Months Ended March 31
20222021
(Millions of dollars)
Operating, selling, general and administrative expenses$6,605$5,957

Operating, selling, general and administrative expenses in the first quarter increased $648 million primarily due to higher employee benefit expenses, transportation expenses, and services and fees mainly associated with refinery shutdowns, partially offset by lower legal reserves.

Three Months Ended March 31
20222021
(Millions of dollars)
Exploration expenses$209$86

Exploration expenses in the first quarter increased primarily due to higher charges for well write-offs.

Three Months Ended March 31
20222021
(Millions of dollars)
Depreciation, depletion and amortization$3,654$4,286

Depreciation, depletion and amortization expenses for the first quarter decreased primarily due to lower rates and lower production.

Three Months Ended March 31
20222021
(Millions of dollars)
Taxes other than on income$2,002$1,420

Taxes other than on income increased for the first quarter mainly due to higher regulatory expenses, taxes on production and excise taxes.

Three Months Ended March 31
20222021
(Millions of dollars)
Interest and debt expense$136$198

Interest and debt expenses for the first quarter decreased mainly due to lower debt balances.

Three Months Ended March 31
20222021
(Millions of dollars)
Other components of net periodic benefit costs$64$337

Other components of net periodic benefit costs for the first quarter decreased due to lower pension settlement costs as fewer lump-sum pension distributions were made in the current quarter.

Three Months Ended March 31
20222021
(Millions of dollars)
Income tax expense/(benefit)$2,777$779

The increase in income tax expense for the first quarter 2022 of $2.00 billion is consistent with the increase in total income before tax for the company of $6.88 billion.

U.S. income before tax increased from a loss of $103 million in first quarter 2021 to income of $3.73 billion in first quarter 2022. This $3.83 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 $866 million between year-over-year periods, from $34 million in 2021 to $900 million in 2022.

International income before tax increased from $2.28 billion in first quarter 2021 to $5.32 billion in first quarter 2022. This $3.04 billion increase in income was primarily driven by higher realizations. The increase in income primarily drove the $1.14 billion increase in international income tax expense between year-over-year periods, from $745 million in 2021 to $1.88 billion in 2022.

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:

Selected Operating Data (1) (2)
Three Months Ended March 31
20222021
U.S. Upstream
Net crude oil and natural gas liquids production (MBPD)880802
Net natural gas production (MMCFPD)(3)1,8281,643
Net oil-equivalent production (MBOEPD)1,1841,075
Sales of natural gas (MMCFPD)4,4613,911
Sales of natural gas liquids (MBPD)269169
Revenue from net production
Liquids ($/Bbl)$76.60$47.70
Natural gas ($/MCF)$4.10$2.15
International Upstream
Net crude oil and natural gas liquids production (MBPD)(4)8561,024
Net natural gas production (MMCFPD)(3)6,1196,127
Net oil-equivalent production (MBOEPD)(4)1,8762,046
Sales of natural gas (MMCFPD)4,8755,430
Sales of natural gas liquids (MBPD)9776
Revenue from liftings
Liquids ($/Bbl)$93.31$55.62
Natural gas ($/MCF)$8.87$4.72
U.S. and International Upstream
Total net oil-equivalent production (MBOEPD)(4)3,0603,121
U.S. Downstream
Gasoline sales (MBPD)(5)644608
Other refined product sales (MBPD)573442
Total refined product sales (MBPD)1,2171,050
Sales of natural gas liquids (MBPD)3129
Refinery input (MBPD)915881
International Downstream
Gasoline sales (MBPD)(5)281257
Other refined product sales (MBPD)693670
Share of affiliate sales (MBPD)353340
Total refined product sales (MBPD)1,3271,267
Sales of natural gas liquids (MBPD)12076
Refinery input (MBPD)619536
(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 States5745
International551558
(4) Includes net production of synthetic oil:
Canada3960
(5) Includes branded and unbranded gasoline.

Liquidity and Capital Resources

Cash, cash equivalents and marketable securities totaled $11.7 billion at March 31, 2022 and $5.7 billion at year-end 2021. Cash provided by operating activities in the first three months of 2022 was $8.1 billion, compared with $4.2 billion in the year-ago period. Cash provided by financing activities includes proceeds from shares issued for stock option exercises of $4.6 billion and $273 million for first quarter 2022 and 2021, respectively. Future cash proceeds from options exercises are expected to be lower than those for first quarter 2022. Cash capital and exploratory expenditures totaled $2.0 billion in the first three months of 2022, up $206 million from the year-ago period. Proceeds and deposits related to asset sales and returns of investment totaled $747 million and $536 million, respectively, in the first three months of 2022, compared to $147 million and $11 million, respectively, in the year-ago period.

Dividends The company paid dividends of $2.7 billion to common stockholders during the first three months of 2022. In April 2022, the company declared a quarterly dividend of $1.42 per common share, payable in June 2022.

Debt and Finance Lease Liabilities Chevron’s total debt and finance lease liabilities were $29.3 billion at March 31, 2022, down from $31.4 billion at December 31, 2021 as the company repaid notes that matured during the period. In mid-April 2022, the company initiated a make-whole call on two bonds that were scheduled to mature in 2023 and total $3.0 billion. The transaction is expected to close in the second quarter of 2022 and will not materially impact net income.

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 March 31, 2022 was zero. 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 $6.0 billion at March 31, 2022, and $8.0 billion at December 31, 2021. Of these amounts, $5.7 billion was reclassified to long-term at the end of March 31, 2022. At December 31, 2021, $7.8 billion was reclassified to long-term. At March 31, 2022, 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, 2022, the company had $10.075 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 (LIBOR), or Secured Overnight Financing Rate (SOFR) when LIBOR has permanently or indefinitely ceased or is no longer representative, 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, 2022. 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 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.

Three Months Ended March 31, 2022Year Ended December 31, 2021
(Millions of dollars) (unaudited)
Sales and other operating revenues$28,581$88,038
Sales and other operating revenues - related party11,52128,499
Total costs and other deductions29,32286,369
Total costs and other deductions - related party9,63428,277
Net income (loss)$5,032$5,515
At March 31, 2022At December 31, 2021
(Millions of dollars) (unaudited)
Current assets$22,822$15,567
Current assets - related party14,53912,227
Other assets48,58348,461
Current liabilities23,38322,554
Current liabilities - related party77,87879,778
Other liabilities33,13732,825
Total net equity (deficit)$(48,454)$(58,902)

Common Stock Repurchase Program The Board of Directors authorized a new stock repurchase program in 2019 with a maximum dollar limit of $25 billion and no set term limits. As of March 31, 2022, the company had purchased 70.4 million shares for $8.1 billion, resulting in $16.9 billion remaining under the authorized program. In the first quarter of 2022, the company repurchased 8.9 million shares for $1.25 billion. The company currently expects to repurchase $2.5 billion of its common stock during the second quarter of 2022.

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 $881 million at March 31, 2022 and $873 million at December 31, 2021. Included within noncontrolling interests is $135 million at March 31, 2022 and December 31, 2021 of redeemable noncontrolling interest.

Financial Ratios and Metrics

At March 31, 2022At December 31, 2021
Current Ratio (1)1.41.3
Debt Ratio16.7%18.4%
Net Debt Ratio (2)10.8%15.6%

(1) At March 31, 2022, the book value of inventory was lower than replacement cost.

(2) Net Debt Ratio for March 31, 2022 is calculated as short-term debt of $0.3 billion plus long-term debt of $29.0 billion (together, “total debt”) less cash and cash equivalents of $11.7 billion and marketable securities of $33 million as a percentage of total debt less cash and cash equivalents and marketable securities, plus Chevron Corporation Stockholders’ Equity of $146.2 billion. For the December 31, 2021 calculation, please refer to page 47 of Chevron’s 2021 Annual Report on Form 10-K.

Three Months Ended March 31
20222021
(Millions of dollars)
Net cash provided by operating activities$8,055$4,196
Less: Capital expenditures(1,960)(1,746)
Free Cash Flow$6,095$2,450

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

Capital and Exploratory Expenditures Total expenditures, including the company’s share of spending by affiliates, were $2.8 billion in the first three months of 2022, compared with $2.5 billion in the corresponding 2021 period. The amounts included the company’s share of affiliates’ expenditures of $725 million and $678 million in the 2022 and 2021 periods, respectively, which did not require cash outlays by the company. Expenditures for upstream projects in the first three months of 2022 were $2.4 billion, representing 88 percent of the company wide total.

Capital and Exploratory Expenditures by Major Operating Area
Three Months Ended March 31
20222021
(Millions of dollars)
United States
Upstream$1,300$1,049
Downstream246242
All Other4252
Total United States1,5881,343
International
Upstream1,1181,059
Downstream5098
All Other14
Total International1,1691,161
Worldwide$2,757$2,504

2022 capital spending and announced acquisitions, including $600 million for Bunge North America, Inc. and $3.15 billion for Renewable Energy Group, Inc., are expected to be more than 50 percent higher than 2021 capital expenditures of $11.7 billion.

Contingencies and Significant Litigation

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

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.”

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