Chevron 2015 Annual Report Download - page 12

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
Key Financial Results
Millions of dollars, except per-share amounts 2015 2014 2013
Net Income Attributable to Chevron Corporation $ 4,587 $ 19,241 $ 21,423
Per Share Amounts:
Net Income Attributable to Chevron Corporation
– Basic $ 2.46 $ 10.21 $ 11.18
– Diluted $ 2.45 $ 10.14 $ 11.09
Dividends $ 4.28 $ 4.21 $ 3.90
Sales and Other Operating Revenues $ 129,925 $ 200,494 $ 220,156
Return on:
Capital Employed 2.5% 10.9% 13.5%
Stockholders’ Equity 3.0% 12.7% 15.0%
Earnings by Major Operating Area
Millions of dollars 2015 2014 2013
Upstream
United States $ (4,055) $ 3,327 $ 4,044
International 2,094 13,566 16,765
Total Upstream (1,961) 16,893 20,809
Downstream
United States 3,182 2,637 787
International 4,419 1,699 1,450
Total Downstream 7,601 4,336 2,237
All Other (1,053) (1,988) (1,623)
Net Income Attributable to Chevron Corporation1,2 $ 4,587 $ 19,241 $ 21,423
1Includes foreign currency effects: $ 769 $ 487 $ 474
2Income net of tax, also referred to as “earnings” in the discussions that follow.
Refer to the “Results of Operations” section beginning on page 14 for a discussion of financial results by major operating
area for the three years ended December 31, 2015.
Business Environment and Outlook
Chevron is a global energy company with substantial business activities in the following countries: Angola, Argentina,
Australia, Azerbaijan, Bangladesh, Brazil, Canada, China, Colombia, Democratic Republic of the Congo, Denmark, Indonesia,
Kazakhstan, Myanmar, Nigeria, the Partitioned Zone between Saudi Arabia and Kuwait, the Philippines, Republic of Congo,
Singapore, South Africa, South Korea, Thailand, Trinidad and Tobago, the United Kingdom, the United States, and Venezuela.
Earnings of the company depend mostly on the profitability of its upstream business segment. The biggest factor affecting
the results of operations for the upstream segment is the price of crude oil. The price of crude oil has fallen significantly
since mid-year 2014, reflecting persistently high global crude oil inventories and production. The downturn in the price of
crude oil has impacted, and, depending upon its duration, will continue to significantly impact the company’s results of
operations, cash flows, leverage, capital and exploratory investment program and production outlook. The company is
responding with reductions in operating expenses, including employee reductions, reductions in capital and exploratory
expenditures in 2016 and future periods, and increased asset sales. The company anticipates that crude oil prices will increase
in the future, as continued growth in demand and a slowing in supply growth should bring global markets into balance;
however, the timing of any such increase is unknown. In the company’s downstream business, crude oil is the largest cost
component of refined products.
Refer to the “Cautionary Statement Relevant to Forward-Looking Information” on page 9 and to “Risk Factors” in Part I,
Item 1A, on pages 21 through 23 of the company’s 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 company continually evaluates opportunities to dispose of assets that are not expected to provide sufficient long-term value
or to acquire assets or operations complementary to its asset base to help augment the company’s financial performance and
growth. Refer to the “Results of Operations” section beginning on page 14 for discussions of net gains on asset sales during
2015. Asset dispositions and restructurings may also occur in future periods and could result in significant gains or losses.
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.
10 Chevron Corporation 2015 Annual Report