2019 annual2019 report Chevron Corporation 2019 Annual Report rising to the challenge For 140 years, the people of Chevron have been solving the most complex energy challenges against the backdrop of ever-changing expectations. This legacy informs our approach to everything we do — from high ethical standards and a passion for operational excellence to strict capital discipline and transparent risk management. And it drives our enduring pursuit to be the leader in the future of energy, known for delivering responsible and sustainable results. Across our Upstream, Downstream and Midstream businesses, this mindset pushes us to invest in cutting-edge technologies, strive for new innovations and develop the next generation of problem-solvers. Over our entire history, we have strived to meet the ever-evolving expectations of our stakeholders, while delivering the affordable, reliable, ever-cleaner energy that enables human progress. The right way. The responsible way. The Chevron Way. On the cover: An employee at Chevron’s Pascagoula, Mississippi, refinery uses a HoloLens® augmented reality headset to transmit what she is seeing in the field to a remote expert, enabling real-time collaboration across the globe. Through our partnership with Microsoft, Chevron is an early adopter of the HoloLens technology, and our input is informing future model design. HoloLens technology enables Chevron to improve efficiency, minimize downtime and reduce travel costs. A digital version of this report is available at www.chevron.com/annualreport2019 HoloLens is a federally registered trademark of Microsoft Corporation. table of contents II letter to stockholders X board of directors and corporate officers 27 financial review VI winning in any environment XII chevron by the numbers 91 five-year financial summary VII our sources of competitive advantage XIV chevron stock performance 104 our history VIII lead director: one-on-one XV financial and operating highlights 105 glossary of energy and financial terms IX process safety XVI strategies 106 stockholder and investor information Since beginning operation in 1963, the Pascagoula Refinery has grown to be Chevron’s largest U.S. refinery and one of the top petroleum refineries in the United States. $298 3,312 350,000 million employed barrels direct local total employees and contractors per day of economic impact working at the refinery operable capacity Photo: The Pascagoula Refinery is the largest Chevron-operated refinery. With an operable capacity of 350,000 barrels per day, it supplies fuels and specialty products such as premium base oil. Much of the 3,000-acre property is home to native U.S. Gulf Coast wildlife, and the refinery goes beyond local environmental requirements to protect its wetland and forest habitats. to our stockholders our purpose Affordable, reliable energy serves a vital human need. It has driven the greatest advancements in living standards in human history, and it enables modern life today. We are proud to play a role in providing the energy that makes human progress possible. This starts with our people. At Chevron, we believe our greatest resource is not the resource in the ground — but rather the inspiration, creativity and ingenuity of our people. Today, we are working to meet one of humanity’s greatest opportunities: delivering the affordable, reliable, ever-cleaner energy a growing world requires to meet its essential needs, while also achieving its environmental goals. Rising to this challenge requires us to perform at the highest level and inspires us to strengthen a culture where we continually raise performance standards. As I write this letter, the world is facing extraordinary events, with volatile markets and an evolving global pandemic. While we cannot predict the future, we can do what we do best: provide the energy that society depends upon. Chevron is well prepared to meet this challenge. Our unwavering commitment to the health and safety of our workforce, operating reliably, and capital and cost discipline are core principles that will serve us well as we work to meet the vital energy needs of the world. Chevron Corporation 2019 Annual Report II 107595_CVX_AR2019_v18.1Pro.indd 2 3/19/20 6:28 PM to our stockholders our results In 2019, we faced an environment defined by volatile energy To counter slowing demand and surging U.S. supply, OPEC and markets. Global economic growth slowed to its lowest pace Russia adopted a more proactive oil market management role. since 2008 amid stagnant manufacturing and trade tensions. In natural gas markets, warmer weather and slower economic Heightened political uncertainty included tighter U.S. sanctions activity tempered demand, while supply continued to grow at on Iran and Venezuela and unrest in the Middle East. a healthy pace through rising U.S. production and the ongoing build-out of new liquefied natural gas (LNG) capacity. Our results reflect balance, consistency and discipline across all our businesses. In 2019, we led our peer group on several key metrics as we: delivered increased our dividend payout 15.2% 6.2% Total Stockholder Returns (TSR) marking the 32nd consecutive in 2019 and 8.5% over the past decade — year of increased per-share both leading the peer group dividend payouts increased share repurchases to a run-rate of $5 billion per year generated more than lowered our net debt ratio to $27 billion 12.8%2 in cash flow from operations and further strengthening returned $13 billion to shareholders1 the company’s balance sheet Our Upstream business delivered record production even as We enhanced our U.S. Gulf Coast value chain by purchasing the we streamlined our operational and geographic footprint. We Pasadena Refinery, allowing us to process Permian crude. We produced 3.06 million oil-equivalent barrels per day in 2019, signed an agreement to acquire terminals and service stations up more than 4 percent from 2018. We also embarked on in Australia. To position us for the energy transition, we are changes to define the next evolution of this segment, enhancing also testing electric vehicle chargers at stations, increasing our ability to compete in any price environment by driving the availability of renewable diesel and developing renewable efficiencies, evolving our portfolio and optimizing the value natural gas facilities. chain. Production increases in 2019 were driven by Permian Basin growth, the ramp up of the Wheatstone LNG project Our Midstream business expanded market access for our and other major capital projects. This growth was partially growing Permian production by increasing pipeline capacity offset by base decline and the impact of asset sales, primarily and adding offshore terminal access to open new export in Denmark and the United Kingdom. opportunities. Chevron Shipping added five new tankers to our fleet that feature technological advancements that In Downstream & Chemicals, we strengthened our position in significantly reduce emissions. Our Pipeline and Power team key markets. Chevron Phillips Chemical Company announced pursued opportunities to reduce energy consumption, cut agreements with Qatar Petroleum to jointly develop new emissions and increase renewables in support of our business. petrochemical plants. 1 Includes $9 billion in dividends and $4 billion in share repurchases 2 See page 41 for additional information Chevron Corporation 2019 Annual Report III 107595_CVX_AR2019_v18.1Pro.indd 3 3/19/20 6:28 PM our commitment We are proud of these results. But what was good before simply isn’t good enough anymore. Expectations are rising from all stakeholders — and responding to these expectations is a responsibility we take seriously and a challenge we embrace wholeheartedly. Our ability to continue to create value for our stakeholders relies on maintaining financial, operational and cultural strength — and we are committed to building on that strength. The 2020 capital and exploratory program supports investments in our world- class Permian Basin position, Tengizchevroil in Kazakhstan and deepwater opportunities in the Gulf of Mexico. We elected not to pursue a major acquisition at a price that would have eroded shareholder value and have announced plans to reduce funding to gas-related assets, including Appalachia Shale and Kitimat LNG. Our disciplined approach to capital prioritizes investment in our future lower risk, higher return projects that we expect to generate We are fortunate to live at a time when the human condition cash flow within a few short years. Our flexible capital has never been better and prospects for the future have never program, coupled with our industry-leading balance sheet been brighter. We know the world faces challenges. But we and low dividend breakeven price, ensure that we continue also know, from experience, the path to surmounting any to have the cash-generating capacity to be a leader in challenge: pursuit of innovation, commitment to partnership, shareholder distributions. trust in markets and belief in the power of human energy. health, environment This is why we view our commitment to shareholders and stake- and safety holders not only in financial terms but also in human terms. written safe-work practices are a An investment in Chevron is an investment that drives human core part of our comprehensive progress, lifts millions out of poverty and makes modern safety program life possible. It is an investment that values operating with integrity, getting results the right way and striving for We are committed to a culture of operational