01—Abstract
Summary
Summary of the 10-K filed February 21, 2020. Cited figures are marked; the original filing is the authoritative source.
Chevron Corporation's 2019 Form 10-K details a challenging year marked by lower commodity prices and significant impairment charges, particularly in the U.S. Upstream segment, which reported a substantial loss.
Despite these headwinds, the company maintained a strong operational focus, with worldwide oil-equivalent production increasing slightly due to growth in shale and tight properties, notably in the Permian Basin. The Downstream segment demonstrated resilience, though margins were lower compared to the previous year.
Chevron continued to invest heavily in capital expenditures, with a significant portion directed towards upstream activities, including major projects in Kazakhstan and the Permian Basin. The company also highlighted its commitment to shareholder returns through consistent dividend increases and ongoing share repurchases, supported by a solid balance sheet and strong credit ratings.
02—Key points
Key Highlights
- Chevron reported a net loss of $5.09 billion in its U.S. upstream segment for 2019, primarily due to $8.17 billion in impairment charges related to Appalachia shale and Big Foot assets.
- Worldwide oil-equivalent production averaged 3.058 million barrels per day in 2019, an increase of over 4% from 2018, driven by shale and tight properties and the Wheatstone project in Australia.
- The company's Brent crude oil average realization was $64 per barrel in 2019, down from $71 in 2018, while WTI crude oil averaged $57 per barrel, down from $65.
- U.S. downstream earnings decreased to $1.56 billion in 2019 from $2.10 billion in 2018, mainly due to lower refined product margins and equity earnings from CPChem.
- International downstream earnings also saw a decline, from $1.70 billion in 2018 to $922 million in 2019, impacted by lower margins and the absence of asset sale gains from the prior year.
- Chevron paid dividends totaling $9.0 billion in 2019 and repurchased $4 billion of its common stock, while expecting to repurchase $5 billion in 2020.
- Total capital and exploratory expenditures for 2019 were $21.0 billion, with 85% allocated to upstream activities, including significant investments in Kazakhstan and the Permian Basin.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 21, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $139.87B$158.90B | −12.0% |
| Cost of Revenue | $80.11B$94.58B | −15.3% |
| Gross Profit | $59.75B$64.32B | −7.1% |
| R&D Expenses | $500.00M$453.00M | +10.4% |
| SG&A Expenses | $4.14B$3.84B | +7.9% |
| Operating Expenses | $140.98B$145.76B | −3.3% |
| Interest Expense | $798.00M$748.00M | +6.7% |
| Net Income | $2.92B$14.82B | −80.3% |
| EPS (Basic) | $1.55$7.81 | −80.2% |
| EPS (Diluted) | $1.54$7.74 | −80.1% |
| Shares Outstanding (Basic) | 1.88B1.90B | −0.8% |
| Shares Outstanding (Diluted) | 1.90B1.91B | −1.0% |
05—Questions
Frequently Asked Questions
What were the primary drivers for Chevron's financial performance in 2019?
Chevron's 2019 financial performance was significantly impacted by lower commodity prices for crude oil and natural gas compared to 2018. Additionally, the company recorded substantial impairment charges, primarily in its U.S. upstream assets, which negatively affected net income. While the downstream segment remained profitable, margins were tighter than in the prior year.
How did Chevron's production volumes change in 2019?
Chevron's worldwide oil-equivalent production increased by over 4% in 2019 to an average of 3.058 million barrels per day. This growth was primarily driven by increased production from its shale and tight properties in the U.S. Permian Basin and contributions from the Wheatstone project in Australia. Production increases were partially offset by normal field declines.
What is Chevron's outlook for capital expenditures and production in 2020?
Chevron estimated its average worldwide oil-equivalent production in 2020 would grow up to 3% compared to 2019, assuming a Brent crude oil price of $60 per barrel and excluding asset sales. The company planned organic capital and exploratory expenditures of $20 billion for 2020, with approximately 84% budgeted for exploration and production activities, including significant investments in the Permian Basin and major projects like the Tengiz Field development in Kazakhstan.
What is Chevron's strategy regarding shareholder returns?
Chevron demonstrated a continued commitment to shareholder returns in 2019. The company increased its annual dividend for the 32nd consecutive year and repurchased $4 billion of its common stock. Management indicated plans to repurchase $5 billion of common stock in 2020, signaling a consistent focus on returning capital to shareholders.
06—Continue