2013 Chevron Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
CYAN MAGENTA YELLOW BLACK PMS PMS 425 425 PMSPMS 2935 2935 PMS 2935 CHEVRON CORPORATION 2013 Annual Report 2013 ANNUAL REPORT Chevron Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 USA www.chevron.com 10% Recycled 100% Recyclable © 2014 Chevron Corporation. All rights reserved. 912-0971 Back Cover Front Cover CVX_2013AR_BCxFC_v2.1_022614PRO.indd 1 2/27/14 12:11 PM Contents 2 Letter to Stockholders 8 Glossary of Energy and Financial Terms 8 1 Chevron History 4 Chevron Financial Highlights 9 Financial Review 82 Board of Directors 5 Chevron Operating Highlights 6 6 Five-Year Financial Summary 83 Corporate Officers 6 Chevron at a Glance 6 7 Five-Year Operating Summary 84 Stockholder and Investor Information On the cover: In mid-November 2013 the floating production unit for the Jack/St. Malo development began its journey from the fabrication yard in Ingleside, Texas, to its mooring location in the Walker Ridge area of the deepwater U.S. Gulf of Mexico. Installation was completed, and first oil is expected in late 2014. This page: The Angola liquefied natural gas (LNG) plant, located in Soyo, made its first shipment in the second quarter of 2013. It is the world’s first LNG plant supplied by natural gas that is a byproduct of crude oil production. Angola LNG is one of the largest energy projects on the African continent. Momentum continues to build as Chevron undertakes some of the world’s largest and most complex energy projects. We expect the company’s upstream projects to grow our crude oil and natural gas production into the next decade. At the same time, our downstream projects are focused on delivering competitive returns and targeted growth. The long-term investments we are making will contribute to the world’s need for reliable and affordable energy and will help ensure that we deliver sustained value to our stockholders, employees, business partners and the communities where we operate. The online version of this report contains additional information about our company, as well as videos of our various projects. We invite you to visit our website at: Chevron.com/AnnualReport2013. Chevron Corporation 2013 Annual Report 1 CYAN MAGENTA YELLOW BLACK To Our Stockholders Chevron delivered solid financial and operating results in 2013 while advancing our industry-leading queue of major capital projects. Our sound financial performance was reflected in net income of $21.4 billion on sales and other operating revenues of $220 billion. We achieved a competitive 13.5 percent return on capital employed. And for the 26th consecutive year, we increased our annual dividend payout to stockholders. Our total stockholder returns of just under 15 percent over the past five- and 10-year periods continue to lead our peer group. Throughout 2013 our major businesses generated strong operating results. In the upstream, we ranked No. 1 in earnings per barrel relative to our peers for the fourth continuous year. We began production at the Angola liquefied natural gas (LNG) plant and achieved first oil from the Papa-Terra project offshore Brazil. In 2013 we also advanced our two world-class LNG projects in Western Australia. Construction at Gorgon is approximately 75 percent complete, and construction at Wheatstone is approximately 25 percent complete. Over the next four years we anticipate 15 project startups with a Chevron investment of more than $1 billion each, including two key deepwater projects in the U.S. Gulf of Mexico — Jack/St. Malo and Big Foot, which are expected to come online in 2014 and 2015, respectively. We continued to add resources to our portfolio through both exploration and targeted acquisitions in 2013. The success rate of our exploration wells was nearly 59 percent, and we added crude oil and natural gas resources through discoveries in 10 countries. We grew our portfolio of opportunities with a new operating interest in the Kurdistan Region of Iraq, new acreage in the Bight Basin offshore South Australia, and finalized agreements to pursue unconventional resources in Argentina as well as assume full operatorship of the Kitimat LNG plant and Pacific Trail Pipeline in Canada. We also successfully completed the first phase of our Duvernay Shale program in Canada. We added approximately 800 million barrels of net oil-equivalent proved reserves, replacing almost 85 percent of production in 2013. The company’s three-year average reserve replacement ratio is 123 percent of net oil-equivalent production. CVX_AR2013_v10.1_021614.indd 2 2/27/14 11:06 AM In downstream and chemicals, Despite statistically strong safety and invest in programs to create we continued to benefit from the performance, we are not yet incident- measurable and lasting value. Our investments we have made in free. In 2013 we undertook extensive business and social investments our refining system and from our actions to enhance process safety to boost local economies by creating competitive position in additives, prevent serious incidents. Chevron is jobs, improving livelihoods and petrochemicals and lubricants. In deeply committed to our goal of zero supporting local businesses. Beyond 2013 we ranked No. 2 in earnings incidents and achieving world-class direct business investment and per barrel relative to our peer group. performance in all measures of safety. taxes, over the past eight years we And we neared completion on the contributed almost $1.5 billion to construction of our Pascagoula Base Meeting the world’s long-term local communities through social Oil Plant, which will position us as the demand for energy requires significant investments that foster economic world’s leading supplier of premium investment. We enter 2014 with a growth, with a significant focus on base oil when it starts up in 2014. capital and exploratory budget of health, education and economic We also reached final investment $39.8 billion. This reflects the development programs. You can decision on Chevron Phillips Chemical company’s confidence in our find more information in our 2013 Company’s (CPChem) U.S. Gulf Coast unparalleled queue of projects that Corporate Responsibility Report. ethylene cracker and derivatives unit. will help us deliver valuable growth. These projects allow CPChem to take Chevron’s capital investments enable The men and women of Chevron advantage of the growth in U.S. shale us to grow our production while are committed to our vision of being gas and associated ethane. continuing to deliver industry-leading the global energy company most admired for its people, partnership and performance. We remain focused on finding and producing the Overall, our long-term production growth outlook is affordable, reliable energy that drives compelling, and we are investing today in projects that global economic growth and human prosperity. And due to our unparalleled will deliver production, cash flow and earnings growth project portfolio and proven business to the end of the decade. strategies, I am confident that we are strongly positioned to contribute to these aspirations, as well as create enduring value for our stockholders. Delivering results the right way is a performance. We anticipate that responsibility that our company takes 2014 will be the peak year for spending Thank you for investing in Chevron. seriously. Our Operational Excellence on our Australian LNG projects as we Management System guides us as we move them closer to first production. seek to achieve increasingly higher Overall, our long-term production levels of safety, operational and growth outlook is compelling, and we environmental performance. This are investing today in projects that focus helped us deliver our lowest will deliver production, cash flow and number on record of serious process earnings growth to the end of the safety-related loss-of-containment decade. John S. Watson events and liquid spills. In 2013 we Chairman of the Board and continued to be a leader in personal Chevron’s business success is deeply Chief Executive Officer safety as measured by injuries linked to society’s progress. We partner February 21, 2014 requiring time away from work. with governments, nongovernmental organizations and communities to build beneficial and enduring relationships, manage the impacts of our operations, Chevron Corporation 2013 Annual Report 3 Chevron Financial Highlights Millions of dollars, except per-share amounts 2013 2012 % Change Net income attributable to Chevron Corporation $ 21,423 $ 26,179 (18.2) % Sales and other operating revenues $ 220,156 $ 230,590 (4.5) % Noncontrolling interests income $ 174 $ 157 10.8 % Interest expense (after tax) $ — $ — 0.0 % Capital and exploratory expenditures* $ 41,877 $ 34,229 22.3 % Total assets at year-end $ 253,753 $ 232,982 8.9 % Total debt and capital lease obligations at year-end $ 20,431 $ 12,192 67.6 % Noncontrolling interests $ 1,314 $ 1,308 0.5 % Chevron Corporation stockholders’ equity at year-end $ 149,113 $ 136,524 9.2 % Cash provided by operating activities $ 35,002 $ 38,812 (9.8) % Common shares outstanding at year-end (Thousands) 1,899,435 1,932,530 (1.7) % Per-share data Net income attributable to Chevron Corporation — diluted $ 11.09 $ 13.32 (16.7) % Cash dividends $ 3.90 $ 3.51 11.1 % Chevron Corporation stockholders’ equity $ 78.50 $ 70.65 11.1 % Common stock price at year-end $ 124.91 $ 108.14 15.5 % Total debt to total debt-plus-equity ratio 12.1% 8.2% Return on average Chevron Corporation stockholders’ equity 15.0% 20.3% Return on capital employed (ROCE) 13.5% 18.7% *Includes equity in affiliates Net Income Attributable Chevron Year-End to Chevron Corporation Annual Cash Dividends Common Stock Price Return on Capital Employed Billions of dollars Dollars per share Dollars per share Percent 30.0 4.25 150 30 $3.90 25.0 $124.91 3.40 120 24 $21.4 20.0 2.55 90 18 15.0 13.5% 1.70 60 12 10.0 0.85 30 6 5.0 0.0 0.00 0 0 0910 11 12 13 09 10 11 12 13 100911 12 13 100911 12 13 The decrease in 2013 was due to The company’s annual dividend The company’s stock price rose Chevron’s return on capital lower earnings in upstream and increased for the 26th consecutive 15.5 percent in 2013.