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 2025 Compared with First Quarter 2024

Key Financial Results


Earnings by Business Segment
	Three Months Ended March 31
	2025		2024
	(Millions of dollars)
Upstream
United States	$	1,858	$	2,075
International	1,900		3,164
Total Upstream	3,758		5,239
Downstream
United States	103		453
International	222		330
Total Downstream	325		783
Total Segment Earnings	4,083		6,022
All Other	(583)		(521)
Net Income (Loss) Attributable to Chevron Corporation (1) (2)	$	3,500	$	5,501

(1) Includes foreign currency effects.	$	(138)	$	85
(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 2025 was $3.5 billion ($2.00 per share — diluted), compared with $5.5 billion ($2.97 per share — diluted) in first quarter 2024.

Upstream earnings in first quarter 2025 were $3.8 billion compared with $5.2 billion in the corresponding 2024 period. The decrease was mainly due to lower liftings, lower affiliate earnings at TCO, lower realizations, and unfavorable swings in tax items and foreign exchange effects.

Downstream earnings in first quarter 2025 were $325 million compared with $783 million in the corresponding 2024 period. The decrease was mainly due to lower margins on refined product sales and a legal reserve.

Refer to “Results of Operations” for additional discussion of results by business segment and “All Other” activities for the first quarter of 2025 versus the same period in 2024.

Business Environment and Outlook

Chevron Corporation3 is a global energy company with direct and indirect subsidiaries and affiliates that conduct substantial business activities in the following countries: Angola, Argentina, Australia, Bangladesh, Brazil, Canada, China, Egypt, Equatorial Guinea, Israel, Kazakhstan, Mexico, Nigeria, the Partitioned Zone between Saudi Arabia and Kuwait, the Philippines, Singapore, South Korea, Thailand, the United Kingdom, the United States, and Venezuela.

The company’s objective is to safely 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

3 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 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 expenditures, along with other measures intended to improve financial performance.

Some governments, companies, communities and other stakeholders are supporting efforts to address climate change. International initiatives and national, regional and state legislation and regulations that aim to directly or indirectly reduce GHG emissions are in various stages of design, adoption and implementation. These policies and programs, 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 jurisdiction-specific policies and programs can be dependent on, and can affect the pace of, technological advancements; the granting of necessary permits by governing authorities; the availability and acceptability of cost-effective, verifiable carbon credits; the availability of suppliers that can meet our sustainability-related standards; evolving regulatory or other requirements affecting ESG standards or disclosures and evolving standards and regulations for tracking, reporting, marketing and advertising relating to emissions and emissions reductions and removals.

Significant uncertainty remains as to the pace and extent to which the transition to a lower carbon future will progress, which is dependent, in part, on further advancements and changes in policy, technology, and customer and consumer preferences. The level of expenditure required to comply with new or potential climate change-related laws and regulations and the amount of additional investments needed 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, available technology options, customer and consumer preferences, the company’s activities 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 for many years to come.

Chevron supports the Paris Agreement’s global approach to governments addressing climate change and continues to take actions to help lower the carbon intensity of its operations while continuing to meet the demand for energy. Chevron believes that broad, market-based mechanisms are the most efficient approach to addressing GHG emissions reductions. 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 electric vehicle and renewable fuel penetration, energy efficiency standards and demand response to oil and natural gas prices.

The company will continue to develop oil and gas resources to meet customers’ and consumers’ 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 and consumer preferences. Chevron aims to grow its oil and gas business, lower the carbon intensity of its operations and grow new businesses in renewable fuels, carbon capture and offsets, hydrogen, power generation for data centers, and emerging technologies. To grow its new 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, partnerships and customer relationships. The company’s oil and gas business may increase or decrease depending upon market, economic, legislative and regulatory forces, among other factors.

Chevron’s previously disclosed 2050 net zero upstream aspiration, GHG intensity targets and planned lower-carbon capital spend through 2028 can be found on pages 36 through 37 of the company’s 2024 Annual Report on Form 10-K.

Chevron regularly evaluates its aspirations, targets and goals and expects to change or eliminate some of its aspirations, targets and goals for various reasons, including market conditions; its strategy or portfolio; and

financial, operational, policy, reputational, legal and other factors. The company’s ability to achieve any aspiration, target or goal is subject to numerous risks and contingencies, many of which are outside of Chevron’s control. Examples of such risks and contingencies include:(1) sufficient and substantial advances in technology, including the continuing progress of commercially viable technologies and low- or non-carbon-based energy sources; (2) laws, governmental regulation, policies, and other enabling actions, including those regarding subsidies, tax and other incentives as well as the granting of necessary permits by governing authorities; (3) the availability and acceptability of cost-effective, verifiable carbon credits; (4) the availability of suppliers that can meet our sustainability-related standards; (5) evolving regulatory requirements, including changes to IPCC’s Global Warming Potentials and the U.S. EPA Greenhouse Gas Reporting Program, affecting ESG standards or disclosures; (6) evolving standards for tracking and reporting on emissions and emissions reductions and removals; (7) customers’ and consumers’ preferences and use of the company’s products or substitute products; (8) actions taken by the company’s competitors in response to legislation and regulations; and (9) successful negotiations for carbon capture and storage and nature-based solutions with customers, suppliers, partners and governments. Please refer to the risk factors regarding our strategy, aspirations, targets, and disclosures related to environmental, social, and governance matters included on pages 23 through 27 of the company’s 2024 Annual Report on Form 10-K.

Income Taxes 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.

In December 2021, the Organization for Economic Co-operation and Development (OECD) issued model rules for a new 15 percent global minimum tax (Pillar Two), and various jurisdictions in which the company operates enacted or are in the process of enacting Pillar Two legislation. Certain aspects of the tax under the Pillar Two framework were effective in 2024 in some jurisdictions and in 2025 (or later) in others. Although we do not currently expect that Pillar Two will have a material impact on our results of operations, we are continuing to evaluate the impact of legislative adoption by individual countries.

Supply Chain and Inflation Impacts The company is actively managing its contracting, procurement and supply chain activities to effectively manage costs and facilitate supply chain resiliency and continuity in support of the company’s operational goals. Third party costs for capital and operating expenses can be subject to external factors beyond the company’s control including, but not limited to: severe weather or civil unrest, delays in construction, global and local supply chain distribution issues, 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, which may result in a lag before the company’s costs reflect changes in market trends.

Trends in the costs of goods and services vary by spend category. Chevron has applied inflation mitigation strategies to temper labor market cost increases, including fixed price and index-based contracts. Lead times for key capital equipment remain long due to strong demand levels. Chevron has addressed equipment cost increases and long lead times by partnering with suppliers on demand planning, volume commitments, standardization, and scope optimization. The offshore market remains competitive for vessels and subsea equipment. In the United States, cost pressures for materials and standard onshore drilling and completion equipment continue to ease.

The U.S. announced the imposition of tariffs on imports from our trade partners and could modify or announce additional tariffs in future periods. Only a minor portion of the company’s total third-party spend is exposed to tariffs, and the financial impact is currently not expected to be material. The company is leveraging strategic partnerships with key suppliers to mitigate the impact of these tariffs. For example, the company has increased its procurement of domestically produced pipe, with capacity to increase it further. However, there is significant uncertainty as to the duration and magnitude of these and any future tariffs that may be imposed and, accordingly, as to the resultant impacts these tariffs could have on the company and its suppliers and the company’s future results of operations.

Acquisition and Disposition of Assets 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. The company is targeting $10-15 billion of asset sales over the five-year period ending in 2028. Asset dispositions and restructurings may result in significant gains or losses in future periods. In addition, some assets are sold along with their related liabilities, such as abandonment and decommissioning obligations. In certain instances, such transferred obligations have reverted, and may in the future revert, to the company and result in losses that could be significant. The company has recognized losses and could have additional significant obligations revert, primarily in the United States, but is not currently aware of any such obligations that are reasonably possible to be material. Refer to Note 12 Other Contingencies and Commi tments for additional information.

In October 2023, the company announced that it had entered into a definitive merger agreement with Hess Corporation (Hess). Refer to Note 18 Agreement to Acquire Hess Corporation for additional information.

Between January and March 2025, the company purchased 15,380,000 shares of Hess common stock at prevailing market prices in open market transactions. The number of shares purchased represents approximately 4.99 percent of the shares of Hess common stock outstanding as of January 31, 2025, as reported by Hess in its Annual Report on Form 10-K for the year ended December 31, 2024. These purchases reflect Chevron’s continuing confidence in the consummation of the pending acquisition of Hess.

Other Impacts 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 commodity prices and downstream margins. Management takes these developments into account in the conduct of daily operations and for business planning.

The company has announced plans to achieve $2-3 billion in structural cost reductions by the end of 2026. These cost savings will largely come from optimizing the portfolio, leveraging technology to enhance productivity, and changing how and where work is performed, including expanded use of global capability centers. In relation to these efforts, the Company recognized a restructuring charge in fourth quarter 2024, and expects additional charges in future periods, which could be significant.

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, natural gas and natural gas liquids (NGLs). These 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, 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 efficiently find, acquire and produce crude oil, natural gas and NGLs, changes in fiscal terms of contracts, the pace of energy transition, and changes in tax, environmental and other applicable laws and regulations.

The Wellhead Pressure Management Project (WPMP) at Tengizchevroil LLP (TCO) was fully operational at year-end 2024. In January 2025, TCO started oil production at its Future Growth Project (FGP) and by the end of first quarter, FGP had ramped up to its nameplate capacity. These project start-ups are expected to increase free cash flow for the company, but TCO’s net income will be negatively impacted due to higher depreciation, depletion and amortization.

Chevron has interests in Venezuelan assets operated by independent affiliates. Chevron has been conducting limited activities in Venezuela consistent with the authorization provided pursuant to licenses issued by the

United States government. The financial results for Chevron’s business in Venezuela have been recorded as non-equity investments since 2020, where income is only recognized when cash is received, and production and reserves are not included in the company’s results. Crude oil liftings in Venezuela started in first quarter 2023, which have positively impacted the company’s results. In 2024, Venezuela contributed less than 3 percent of the company’s cash flow from operations. On March 4, 2025, Chevron received General License 41A requiring a wind-down of Chevron’s activities in Venezuela by April 3, 2025. This General License was subsequently superseded by General License 41B that extended the wind-down period to May 27, 2025. The company is winding down its activities in accordance with revised authorities provided by the U.S. government and resulting direction from the Venezuela government. Consistent with this, crude oil liftings by Chevron to the U.S. have recently been halted. The wind-down of activities, while uncertain, will have a negative impact on the company’s future results of operations.

Chevron maintains an equity interest in the Caspian Pipeline Consortium (CPC) that provides a primary export route for Tengiz field production in Kazakhstan. An adverse event or incident affecting CPC operations, which CPC has experienced from time to time, could have a negative impact on the Tengiz field and the company’s results of operations and financial position. The financial impacts of such risks remain uncertain.

Other governments (including Russia) have imposed and may impose additional sanctions and other trade laws, restrictions and regulations that could lead to disruption in our ability to produce, transport, and/or export crude in the region around Russia.

Chevron holds a 39.7 percent interest in the Leviathan field and a 25 percent interest in the Tamar field in Israel. Despite the ongoing conflict between Israel and various regional adversaries, the company continues to maintain safe and reliable operations while meeting its contractual commitments. The company continues to monitor the ongoing conflict in the region, and any future impacts on the company’s results of operations and financial condition remain uncertain.

549755813891

Source: Platts

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 $76 per barrel for the first three months of 2025, compared with $83 per barrel during the first three months of 2024, and ended April at about $63 per barrel. For every dollar change in Brent crude oil prices, the company’s annual after-tax earnings and cash flow sensitivity is approximately $450 million.

The WTI price averaged $71 per barrel for the first three months of 2025 compared to $77 per barrel in the first three months of 2024, and ended April at about $58 per barrel. The majority of the company’s equity crude production is priced based on the Brent benchmark.

The U.S. Henry Hub natural gas price averaged $4.25 per thousand cubic feet (MCF) for the first three months of 2025, compared with $2.50 per MCF during the first three months of 2024, and ended April at about $3.17 per MCF. See page 36 for the company’s U.S. and international average realizations for the first three months of 2025 and the same period last year.

After rising in early January, crude prices trended back down through the first quarter and have declined sharply in April as a result of concerns about slowing economic growth and a decision from OPEC+ to begin unwinding 2.2 million barrels per day of voluntary production cuts.

In contrast to price movements in the global market for crude oil, prices for natural gas are also impacted by regional supply and demand and infrastructure conditions in local markets. In the United States, cold weather and strong liquefied natural gas (LNG) exports drove the U.S. storage levels below the five-year average, leading to higher Henry Hub prices.

Outside the United States, prices for natural gas also depend on a wide range of supply, demand and regulatory circumstances. The company’s long-term contract prices for 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.

Production The company’s worldwide net oil-equivalent production in the first three months of 2025 averaged 3.35 million barrels per day, relatively flat from a year ago as the impacts of asset sales were mostly offset by growth at TCO, in the Permian Basin, and in the Gulf of America. About 23 percent of the company’s net oil-equivalent production in the first three months of 2025 occurred in the OPEC+ member countries of Equatorial Guinea, Kazakhstan, Nigeria, and the Partitioned Zone between Saudi Arabia and Kuwait.

Refer to the “Results of Operations” section on page 32 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.

Refer to the “Results of Operations” section beginning on page 33 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.

Refer to “Cautionary Statements Relevant to Forward-Looking Information” on page 2 and to “Risk Factors” on pages 20 through 27 of the company’s 2024 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.

Noteworthy Developments

Certain noteworthy developments in recent months included the following:

Argentina - Exercised option to participate in a pipeline project to export crude from the Vaca Muerta shale to a new export terminal.
United States - Acquired 4.99 percent of Hess common stock, reflecting continuing confidence in the consummation of the pending acquisition of Hess.
United States - Completed the sale of the company’s majority interest in the East Texas gas assets for cash and multi-year capital carry, while retaining an overriding royalty interest.
United States - Completed the sale of the company’s interest in certain non-operated midstream pipelines and facilities.
United States - Discovered oil at the non-operated Far South prospect in the deepwater Gulf of America.
United States - Started production from the Ballymore field in the Gulf of America, Chevron's first deepwater project in the Norphlet formation and the latest in a series of recent project startups.

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
	Unit (1)	2025		2024

U.S. Upstream
Earnings	$MM	$	1,858	$	2,075
Net Oil-Equivalent Production	MBOED	1,636		1,573
Liquids Production	MBD	1,159		1,130
Natural Gas Production	MMCFD	2,859		2,657
Liquids Realization	$/BBL	$	55.26	$	57.37
Natural Gas Realization	$/MCF	$	2.50	$	1.24

(1) MBD — thousands of barrels per day; MMCFD — millions of cubic feet per day; BBL — Barrel; MCF — thousands of cubic feet; MBOED — thousands of barrels of oil-equivalent per day.