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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-00368
Chevron Corporation
(Exact name of registrant as specified in its charter)
6001 Bollinger Canyon Road
Delaware 94-0890210 San Ramon, California 94583-2324
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (925) 842-1000
NONE
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, par value $.75 per share CVX New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes          No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes          No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes         No  

There were 1,867,323,448 shares of the Company’s common stock outstanding on September 30, 2020.


TABLE OF CONTENTS
 
  Page No.
2
FINANCIAL INFORMATION
3
4
5
6
7
8
OTHER INFORMATION
Item 5.
1

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This quarterly report on Form 10-Q of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management's current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words or phrases such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “positions,” “pursues,” “may,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on schedule,” “on track,” “is slated,” “goals,” “objectives,” “strategies,” “opportunities,” “poised,” “potential” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices and demand for our products, and production curtailments due to market conditions; crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries; public health crises, such as pandemics (including coronavirus (COVID-19)) and epidemics, and any related government policies and actions; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic and political conditions; changing refining, marketing and chemicals margins; the company’s ability to realize anticipated cost savings, expenditure reductions and efficiencies associated with enterprise transformation initiatives; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of the company’s suppliers, vendors, partners and equity affiliates, particularly during extended periods of low prices for crude oil and natural gas during the COVID-19 pandemic; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond the company’s control; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant operational, investment or product changes required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures to limit or reduce greenhouse gas emissions; the potential liability resulting from pending or future litigation; the company’s ability to successfully integrate the operations of Chevron and Noble Energy and achieve the anticipated benefits from the acquisition of Noble Energy; the company’s future acquisitions or dispositions of assets or shares or the delay or failure of such transactions to close based on required closing conditions; the potential for gains and losses from asset dispositions or impairments; government mandated sales, divestitures, recapitalizations, industry-specific taxes, tariffs, sanctions, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; material reductions in corporate liquidity and access to debt markets; the receipt of required Board authorizations to pay future dividends; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; the company’s ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and the factors set forth under the heading “Risk Factors” on pages 18 through 21 of the company’s 2019 Annual Report on Form 10-K, on pages 41 to 42 of this report and in subsequent filings with the U.S. Securities and Exchange Commission. Other unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements.
2

PART I.
FINANCIAL INFORMATION
 
Item 1.Consolidated Financial Statements
CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
 
  Three Months Ended
September 30
Nine Months Ended
September 30
  2020 2019 2020 2019
  (Millions of dollars, except per-share amounts)
Revenues and Other Income
Sales and other operating revenues $ 23,997  $ 34,779  $ 69,628  $ 105,291 
Income (loss) from equity affiliates 510  1,172  (1,040) 3,430 
Other income (loss) (56) 165  858  1,445 
Total Revenues and Other Income 24,451  36,116  69,446  110,166 
Costs and Other Deductions
Purchased crude oil and products 13,448  19,882  37,101  60,420 
Operating expenses 4,604  5,325  15,425  15,398 
Selling, general and administrative expenses 832  954  3,084  3,014 
Exploration expenses 117  168  1,170  498 
Depreciation, depletion and amortization 4,017  4,361  15,022  12,789 
Taxes other than on income 1,091  1,059  3,223  3,167 
Interest and debt expense 164  197  498  620 
Other components of net periodic benefit costs 222  121  419  319 
Total Costs and Other Deductions 24,495  32,067  75,942  96,225 
Income (Loss) Before Income Tax Expense (44) 4,049  (6,496) 13,941 
Income Tax Expense (Benefit) 165  1,469  (1,591) 4,429 
Net Income (Loss) (209) 2,580  (4,905) 9,512 
Less: Net income (loss) attributable to noncontrolling interests (2) —  (27) (22)
Net Income (Loss) Attributable to Chevron Corporation $ (207) $ 2,580  $ (4,878) $ 9,534 
Per Share of Common Stock
Net Income (Loss) Attributable to Chevron Corporation
- Basic $ (0.12) $ 1.38  $ (2.63) $ 5.06 
- Diluted $ (0.12) $ 1.36  $ (2.63) $ 5.02 
Weighted Average Number of Shares Outstanding (000s)
- Basic 1,853,533  1,880,607  1,856,363  1,885,931 
- Diluted 1,853,533  1,893,928  1,856,363  1,899,193 
See accompanying notes to consolidated financial statements.

3


CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
September 30
Nine Months Ended
September 30
  2020 2019 2020 2019
(Millions of dollars)
Net Income (Loss) $ (209) $ 2,580  $ (4,905) $ 9,512 
Currency translation adjustment 17  (33) 5  (32)
Unrealized holding gain (loss) on securities
Net gain (loss) arising during period (1) (5)
Derivatives
Net derivatives loss on hedge transactions   —    (1)
Reclassification to net income of net realized gain   —    — 
Income taxes on derivatives transactions    
Total    
Defined benefit plans
Actuarial gain (loss)
Amortization to net income of net actuarial loss and settlements 293  150  628  400 
Actuarial gain (loss) arising during period   —    (4)
Prior service credits (cost)
Amortization to net income of net prior service costs and curtailments (5) (4) (13) (11)
Prior service (costs) credits arising during period   —   
Defined benefit plans sponsored by equity affiliates - benefit (cost) 5  14 
Income (taxes) benefit on defined benefit plans (66) (33) (146) (91)
Total 227  116  483  303 
Other Comprehensive Gain (Loss), Net of Tax 243  88  483  275 
Comprehensive Income (Loss) 34  2,668  (4,422) 9,787 
Comprehensive loss (income) attributable to noncontrolling interests 2  —  27  22 
Comprehensive Income (Loss) Attributable to Chevron Corporation $ 36  $ 2,668  $ (4,395) $ 9,809 
See accompanying notes to consolidated financial statements.

4


CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
At September 30,
2020
At December 31,
2019
(Millions of dollars)
Assets
Cash and cash equivalents $ 6,866  $ 5,686 
Marketable securities 28  63 
Accounts and notes receivable, net 9,722  13,325 
Inventories:
Crude oil and petroleum products 3,588  3,722 
Chemicals 409  492 
Materials, supplies and other 1,684  1,634 
Total inventories 5,681  5,848 
Prepaid expenses and other current assets 2,506  3,407 
Total Current Assets 24,803  28,329 
Long-term receivables, net 780  1,511 
Investments and advances 37,655  38,688 
Properties, plant and equipment, at cost 325,131  326,722 
Less: Accumulated depreciation, depletion and amortization 182,748  176,228 
Properties, plant and equipment, net 142,383  150,494 
Deferred charges and other assets 11,227  10,532 
Goodwill 4,416  4,463 
Assets held for sale 1,799  3,411 
Total Assets $ 223,063  $ 237,428 
Liabilities and Equity
Short-term debt
$ 530  $ 3,282 
Accounts payable 9,537  14,103 
Accrued liabilities 7,944  6,589 
Federal and other taxes on income 788  1,554 
Other taxes payable 865  1,002 
Total Current Liabilities 19,664  26,530 
Long-term debt 34,280  23,691 
Deferred credits and other noncurrent obligations 19,267  20,445 
Noncurrent deferred income taxes 10,625  13,688 
Noncurrent employee benefit plans 7,189  7,866 
Total Liabilities*
$ 91,025  $ 92,220 
Preferred stock (authorized 100,000,000 shares; $1.00 par value; none issued)
  — 
Common stock (authorized 6,000,000,000 shares, $0.75 par value; 2,442,676,580 shares issued at September 30, 2020 and December 31, 2019)
1,832  1,832 
Capital in excess of par value 17,318  17,265 
Retained earnings 163,509  174,945 
Accumulated other comprehensive losses (4,507) (4,990)
Deferred compensation and benefit plan trust (240) (240)
Treasury stock, at cost (575,353,132 and 560,508,479 shares at September 30, 2020 and December 31, 2019, respectively)
(46,138) (44,599)
Total Chevron Corporation Stockholders’ Equity 131,774  144,213 
Noncontrolling interests 264  995 
Total Equity 132,038  145,208 
Total Liabilities and Equity $ 223,063  $ 237,428 
___________________________
* Refer to Note 13, Other Contingencies and Commitments beginning on page 16.
See accompanying notes to consolidated financial statements.

5


CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30
  2020 2019
(Millions of dollars)
Operating Activities
Net Income (Loss) $ (4,905) $ 9,512 
Adjustments
Depreciation, depletion and amortization 15,022  12,789 
Dry hole expense 848  137 
Distributions more (less) than income from equity affiliates 2,249  (1,897)
Net before-tax losses (gains) on asset retirements and sales (625) (106)
Net foreign currency effects 190  54 
Deferred income tax provision (3,180) 986 
Net decrease (increase) in operating working capital (21) 1,126 
Decrease (increase) in long-term receivables 84  426 
Net decrease (increase) in other deferred charges (145) (144)
Cash contributions to employee pension plans (895) (1,204)
Other (283) (22)
Net Cash Provided by Operating Activities 8,339  21,657 
Investing Activities
Capital expenditures (6,855) (9,906)
Proceeds and deposits related to asset sales and returns of investment 1,979  1,088 
Net maturities of (investments in) time deposits   950 
Net sales (purchases) of marketable securities 35 
Net repayment (borrowing) of loans by equity affiliates (1,434) (970)
Net Cash Used for Investing Activities (6,275) (8,836)
Financing Activities
Net borrowings (repayments) of short-term obligations (606) 1,973 
Proceeds from issuances of long-term debt 12,237  — 
Repayments of long-term debt and other financing obligations (3,941) (3,868)
Cash dividends - common stock (7,186) (6,731)
Distributions to noncontrolling interests (10) (16)
Net sales (purchases) of treasury shares (1,545) (1,845)
Net Cash Provided by (Used for) Financing Activities (1,051) (10,487)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
(133)
Net Change in Cash, Cash Equivalents and Restricted Cash 880  2,339 
Cash, Cash Equivalents and Restricted Cash at January 1 6,911  10,481 
Cash, Cash Equivalents and Restricted Cash at September 30 $ 7,791  $ 12,820 
See accompanying notes to consolidated financial statements.

6


CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)
(Millions of dollars) Accumulated Treasury Chevron Corp. Non-
    Common Retained Other Comp. Stock Stockholders’ Controlling Total
Three Months Ended September 30
     Stock(1)
Earnings Income (Loss) (at cost) Equity Interests Equity
Balance at June 30, 2019 $ 18,776  $ 183,442  $ (3,357) $ (42,466) $ 156,395  $ 1,056  $ 157,451 
Treasury stock transactions 51  —  —  —  51  —  51 
Net income (loss) —  2,580  —  —  2,580  —  2,580 
Cash dividends —  (2,237) —  —  (2,237) (8) (2,245)
Stock dividends —  (1) —  —  (1) —  (1)
Other comprehensive income —  —  88  —  88  —  88 
Purchases of treasury shares —  —  —  (1,250) (1,250) —  (1,250)
Issuances of treasury shares —  —  —  216  216  —  216 
Other changes, net —  (1) —  —  (1)
Balance at September 30, 2019 $ 18,827  $ 183,783  $ (3,269) $ (43,500) $ 155,841  $ 1,051  $ 156,892 
Balance at June 30, 2020 $ 18,889  $ 166,122  $ (4,750) $ (46,143) $ 134,118  $ 268  $ 134,386 
Treasury stock transactions 21  —  —  —  21  —  21 
Net income (loss) —  (207) —  —  (207) (2) (209)
Cash dividends —  (2,390) —  —  (2,390) —  (2,390)
Stock dividends —  (1) —  —  (1) —  (1)
Other comprehensive income —  —  243  —  243  —  243 
Purchases of treasury shares —  —  —  —  —  —  — 
Issuances of treasury shares —  —  —  — 
Other changes, net —  (15) —  —  (15) (2) (17)
Balance at September 30, 2020 $ 18,910  $ 163,509  $ (4,507) $ (46,138) $ 131,774  $ 264  $ 132,038 
Nine Months Ended September 30
Balance at December 31, 2018 $ 18,704  $ 180,987  $ (3,544) $ (41,593) $ 154,554  $ 1,088  $ 155,642 
Treasury stock transactions 123  —  —  —  123  —  123 
Net income (loss) —  9,534  —  —  9,534  (22) 9,512 
Cash dividends —  (6,731) —  —  (6,731) (16) (6,747)
Stock dividends —  (2) —  —  (2) —  (2)
Other comprehensive income —  —  275  —  275  —  275 
Purchases of treasury shares —  —  —  (2,789) (2,789) —  (2,789)
Issuances of treasury shares —  —  —  882  882  —  882 
Other changes, net —  (5) —  —  (5) (4)
Balance at September 30, 2019 $ 18,827  $ 183,783  $ (3,269) $ (43,500) $ 155,841  $ 1,051  $ 156,892 
Balance at December 31, 2019 $ 18,857  $ 174,945  $ (4,990) $ (44,599) $ 144,213  $ 995  $ 145,208 
Treasury stock transactions 53  —  —  —  53  —  53 
Net income (loss) —  (4,878) —  —  (4,878) (27) (4,905)
Cash dividends —  (7,186) —  —  (7,186) (10) (7,196)
Stock dividends —  (2) —  —  (2) —  (2)
Other comprehensive income —  —  483  —  483  —  483 
Purchases of treasury shares —  —  —  (1,751) (1,751) —  (1,751)
Issuances of treasury shares —  —  —  212  212  —  212 
Other changes, net —  630  —  —  630  (694) (64)
Balance at September 30, 2020 $ 18,910  $ 163,509  $ (4,507) $ (46,138) $ 131,774  $ 264  $ 132,038 
(Number of Shares) Common Stock - 2020 Common Stock - 2019
Three Months Ended September 30
Issued(2)
Treasury Outstanding
Issued(2)
Treasury Outstanding
Balance at June 30 2,442,676,580  (575,408,748) 1,867,267,832  2,442,676,580  (544,258,109) 1,898,418,471 
Purchases —  (2,220) (2,220) —  (10,302,969) (10,302,969)
Issuances —  57,836  57,836  —  2,756,686  2,756,686 
Balance at September 30 2,442,676,580  (575,353,132) 1,867,323,448  2,442,676,580  (551,804,392) 1,890,872,188 
Nine Months Ended September 30
Balance at December 31 2,442,676,580  (560,508,479) 1,882,168,101  2,442,676,580  (539,838,890) 1,902,837,690 
Purchases —  (17,503,545) (17,503,545) —  (23,342,737) (23,342,737)
Issuances —  2,658,892  2,658,892  —  11,377,235  11,377,235 
Balance at September 30 2,442,676,580  (575,353,132) 1,867,323,448  2,442,676,580  (551,804,392) 1,890,872,188 
_________________________________________________
(1)Beginning and ending balances for all periods include capital in excess of par, common stock issued at par for $1,832, and $(240) associated with Chevron’s Benefit Plan Trust. Changes reflect capital in excess of par.
(2)Beginning and ending total issued share balances include 14,168,000 shares associated with Chevron’s Benefit Plan Trust for all periods.
See accompanying notes to consolidated financial statements.

7


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. General
Basis of Presentation The accompanying consolidated financial statements of Chevron Corporation and its subsidiaries (together, Chevron or the company) have not been audited by an independent registered public accounting firm. In the opinion of the company’s management, the interim data includes all adjustments necessary for a fair statement of the results for the interim periods. These adjustments were of a normal recurring nature. The results for the three- and nine-month periods ended September 30, 2020, are not necessarily indicative of future financial results. The term “earnings” is defined as net income attributable to Chevron.
Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the company’s 2019 Annual Report on Form 10-K.
Impact of the Coronavirus Disease 2019 (COVID-19) Pandemic The outbreak of COVID-19 and decreases in commodity prices resulting from oversupply, government-imposed travel restrictions and other constraints on economic activity have caused a significant decrease in the demand for our products and has created disruptions and volatility in the global marketplace beginning late in the first quarter 2020, which negatively affected our results of operations and cash flows. These conditions persisted throughout the third quarter and continue to negatively affect our results of operations and cash flows. While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results are likely to continue to be challenged in future quarters. Due to the changing environment, there continues to be uncertainty and unpredictability around the extent to which the COVID-19 pandemic will impact our results, which could be material.
Note 2. Changes in Accumulated Other Comprehensive Losses
The change in Accumulated Other Comprehensive Losses (AOCL) presented on the Consolidated Balance Sheet and the impact of significant amounts reclassified from AOCL on information presented in the Consolidated Statement of Income for the nine months ended September 30, 2020 and 2019 are reflected in the table below.
Changes in Accumulated Other Comprehensive Income (Loss) by Component(1)
(Millions of dollars)
Currency Translation Adjustment Unrealized Holding Gains (Losses) on Securities Derivatives Defined Benefit Plans Total
Balance at December 31, 2018 $ (124) $ (10) $ (2) $ (3,408) $ (3,544)
Components of Other Comprehensive Income (Loss):
Before Reclassifications
(32) (27)
Reclassifications
—  —  —  302  302 
Net Other Comprehensive Income (Loss)
(32) 303  275 
Balance at September 30, 2019 $ (156) $ (8) $   $ (3,105) $ (3,269)
Balance at December 31, 2019 $ (142) $ (8) $   $ (4,840) $ (4,990)
Components of Other Comprehensive Income (Loss):
Before Reclassifications
(5) — 
Reclassifications(2)
—  —  —  474  474 
Net Other Comprehensive Income (Loss)
(5) —  483  483 
Balance at September 30, 2020 $ (137) $ (13) $   $ (4,357) $ (4,507)
_______________________________

(1)All amounts are net of tax.
(2)Refer to Note 9, Employee Benefits for reclassified components totaling $615 million that are included in employee benefit costs for the nine months ended September 30, 2020. Related income taxes for the same period, totaling $141 million, are reflected in “Income Tax Expense” on the Consolidated Statement of Income. All other reclassified amounts were insignificant.
8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3. Information Relating to the Consolidated Statement of Cash Flows
Nine Months Ended
September 30
2020 2019
(Millions of dollars)
Distributions more (less) than income from equity affiliates includes the following:
Distributions from equity affiliates $ 1,209  $ 1,533 
(Income) loss from equity affiliates 1,040  (3,430)
Distributions more (less) than income from equity affiliates $ 2,249  $ (1,897)
Net decrease (increase) in operating working capital was composed of the following:
Decrease (increase) in accounts and notes receivable $ 3,601  $ 2,254 
Decrease (increase) in inventories 201  (20)
Decrease (increase) in prepaid expenses and other current assets 632  (286)
Increase (decrease) in accounts payable and accrued liabilities (3,609) (981)
Increase (decrease) in income and other taxes payable (846) 159 
Net decrease (increase) in operating working capital $ (21) $ 1,126 
Net cash provided by operating activities includes the following cash payments:
Interest on debt (net of capitalized interest) $ 384  $ 579 
Income taxes 2,527  3,516 
Proceeds and deposits related to asset sales and returns of investment consisted of the following gross amounts:
Proceeds and deposits related to asset sales $ 1,912  $ 1,021 
Returns of investment from equity affiliates 67  67 
Proceeds and deposits related to asset sales and returns of investment $ 1,979  $ 1,088 
Net maturities of (investments in) time deposits consisted of the following gross amounts:
Investments in time deposits $   $ — 
Maturities of time deposits   950 
Net maturities of (investments in) time deposits $   $ 950 
Net sales (purchases) of marketable securities consisted of the following gross amounts:
Marketable securities purchased $ (2) $ (1)
Marketable securities sold 37 
Net sales (purchases) of marketable securities $ 35  $
Net repayment (borrowing) of loans by equity affiliates consisted of the following gross amounts:
Borrowing of loans by equity affiliates $ (3,925) $ (1,050)
Repayment of loans by equity affiliates 2,491  80 
Net repayment (borrowing) of loans by equity affiliates $ (1,434) $ (970)
Net borrowings (repayments) of short-term obligations consisted of the following gross and net amounts:
Proceeds from issuances of short-term obligations $ 8,863  $ 1,821 
Repayments of short-term obligations (7,479) (570)
Net borrowings (repayments) of short-term obligations with three months or less maturity (1,990) 722 
Net borrowings (repayments) of short-term obligations $ (606) $ 1,973 
Net sales (purchases) of treasury shares consists of the following gross and net amounts:
Shares issued for share-based compensation plans $ 206  $ 944 
Shares purchased under share repurchase and deferred compensation plans (1,751) (2,789)
Net sales (purchases) of treasury shares $ (1,545) $ (1,845)
The Consolidated Statement of Cash Flows excludes changes to the Consolidated Balance Sheet that did not affect cash.
The “Other” line in the Operating Activities section includes changes in postretirement benefits obligations and other long-term liabilities.
9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The company paid dividends of $1.29 per share of common stock in third quarter 2020 and $3.87 per share in the first nine months of 2020. This compares to dividends of $1.19 and $3.57 per share paid in the corresponding year-ago periods.
The major components of “Capital expenditures” and the reconciliation of this amount to the reported capital and exploratory expenditures, including equity affiliates, are presented in the following table:
Nine Months Ended
September 30
2020 2019
(Millions of dollars)
Additions to properties, plant and equipment
$ 6,576  $ 9,713 
Additions to investments 86  69 
Current-year dry hole expenditures 226  111 
Payments for other assets and liabilities, net (33) 13 
Capital expenditures 6,855  9,906 
Expensed exploration expenditures 322  361 
Assets acquired through finance lease obligations and other financing obligations 49  146 
Payments for other assets and liabilities, net 33  (13)
Capital and exploratory expenditures, excluding equity affiliates 7,259  10,400 
Company’s share of expenditures by equity affiliates 3,063  4,578 
Capital and exploratory expenditures, including equity affiliates $ 10,322  $ 14,978 
The table below quantifies the beginning and ending balances of restricted cash and restricted cash equivalents in the Consolidated Balance Sheet:
At September 30 At December 31
2020 2019 2019 2018
(Millions of dollars)
Cash and Cash Equivalents $ 6,866  $ 11,697  $ 5,686  $ 9,342 
Restricted cash included in “Prepaid expenses and other current assets” 169  370  452  341 
Restricted cash included in “Deferred charges and other assets” 756  753  773  798 
Total Cash, Cash Equivalents and Restricted Cash $ 7,791  $ 12,820  $ 6,911  $ 10,481 
Additional information related to “Restricted Cash” is included on page 19 in Note 14 under the heading “Restricted Cash.”
Note 4. New Accounting Standards
Financial Instruments - Credit Losses (Topic 326) Effective January 1, 2020, Chevron adopted Accounting Standards Update (ASU) 2016-13 and its related amendments. For additional information on the company’s expected credit losses, refer to Note 17 on page 21.
Note 5. Summarized Financial Data — Tengizchevroil LLP
Chevron has a 50 percent equity ownership interest in Tengizchevroil LLP (TCO). Summarized financial information for 100 percent of TCO is presented in the following table:
Nine Months Ended
September 30
  2020 2019
  (Millions of dollars)
Sales and other operating revenues
$ 6,757  $ 11,991 
Costs and other deductions
4,655  5,971 
Net income attributable to TCO
$ 1,483  $ 4,230 
Note 6. Summarized Financial Data — Chevron Phillips Chemical Company LLC
Chevron has a 50 percent equity ownership interest in Chevron Phillips Chemical Company LLC (CPChem). Summarized financial information for 100 percent of CPChem is presented in the table on the next page:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Nine Months Ended
September 30
  2020 2019
  (Millions of dollars)
Sales and other operating revenues
$ 6,093  $ 7,209 
 Costs and other deductions 5,179  5,992 
Net income attributable to CPChem
$ 877  $ 1,464 
Note 7. Summarized Financial Data — Chevron U.S.A. Inc.
Chevron U.S.A. Inc. (CUSA) is a major subsidiary of Chevron Corporation. CUSA and its subsidiaries manage and operate most of Chevron’s U.S. businesses. Assets include those related to the exploration and production of crude oil, natural gas and natural gas liquids and those associated with refining, marketing, and supply and distribution of products derived from petroleum, excluding most of the regulated pipeline operations of Chevron. CUSA also holds the company’s investment in the Chevron Phillips Chemical Company LLC joint venture, which is accounted for using the equity method.
The summarized financial information for CUSA and its consolidated subsidiaries is as follows:
Nine Months Ended
September 30
2020 2019
(Millions of dollars)
Sales and other operating revenues
$ 50,360  $ 82,073 
Costs and other deductions
54,221  79,794 
Net income (loss) attributable to CUSA
$ (2,203) $ 2,149 
At September 30,
2020
At December 31,
2019
  (Millions of dollars)
Current assets
$ 9,523  $ 13,059 
Other assets
49,582  50,796 
Current liabilities
12,062  18,291 
Other liabilities
14,415  12,565 
Total CUSA net equity
$ 32,628  $ 32,999 
Memo: Total debt
$ 7,132  $ 3,222 
Note 8. Operating Segments and Geographic Data
Although each subsidiary of Chevron is responsible for its own affairs, Chevron Corporation manages its investments in these subsidiaries and their affiliates. The investments are grouped into two business segments, Upstream and Downstream, representing the company’s “reportable segments” and “operating segments.” Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transporting crude oil by major international oil export pipelines; processing, transporting, storage and marketing of natural gas; and a gas-to-liquids plant. Downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil and refined products; transporting of crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. “All Other” activities of the company include worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.
The company’s segments are managed by “segment managers” who report to the “chief operating decision maker” (CODM). The segments represent components of the company that engage in activities (a) from which revenues are earned and expenses are incurred; (b) whose operating results are regularly reviewed by the CODM, which makes decisions about resources to be allocated to the segments and assesses their performance; and (c) for which discrete financial information is available.
The company’s primary country of operation is the United States of America, its country of domicile. Other components of the company’s operations are reported as “International” (outside the United States).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Segment Earnings The company evaluates the performance of its operating segments on an after-tax basis, without considering the effects of debt financing interest expense or investment interest income, both of which are managed by the company on a worldwide basis. Corporate administrative costs and assets are not allocated to the operating segments. However, operating segments are billed for the direct use of corporate services. Nonbillable costs remain at the corporate level in “All Other.” Earnings by major operating area for the three- and nine-month periods ended September 30, 2020 and 2019, are presented in the following table:
Three Months Ended
September 30
Nine Months Ended
September 30
2020 2019 2020 2019
Segment Earnings (Millions of dollars) (Millions of dollars)
Upstream
United States $ 116  $ 727  $ (1,709) $ 2,371 
International 119  1,977  (1,225) 6,939 
Total Upstream 235  2,704  (2,934) 9,310 
Downstream
United States 141  389  (397) 1,071 
International 151  439  782  738 
Total Downstream 292  828  385  1,809 
Total Segment Earnings 527  3,532  (2,549) 11,119 
All Other
Interest expense (153) (187) (471) (591)
Interest income 7  48  43  142 
Other (588) (813) (1,901) (1,136)
Net Income Attributable to Chevron Corporation $ (207) $ 2,580  $ (4,878) $ 9,534 
Segment Assets Segment assets do not include intercompany investments or intercompany receivables. “All Other” assets consist primarily of worldwide cash, cash equivalents, time deposits and marketable securities; real estate; information systems; technology companies; and assets of the corporate administrative functions. Segment assets at September 30, 2020, and December 31, 2019, are as follows: 
At September 30,
2020
At December 31,
2019
Segment Assets (Millions of dollars)
Upstream
United States $ 33,574  $ 35,926 
International 135,540  145,648 
Goodwill 4,416  4,463 
Total Upstream 173,530  186,037 
Downstream
United States 23,335  25,197 
International 16,056  16,955 
Total Downstream 39,391  42,152 
Total Segment Assets 212,921  228,189 
All Other
United States 4,515  3,475 
International 5,627  5,764 
Total All Other 10,142  9,239 
Total Assets — United States 61,424  64,598 
Total Assets — International 157,223  168,367 
Goodwill 4,416  4,463 
Total Assets $ 223,063  $ 237,428 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Segment Sales and Other Operating Revenues Segment sales and other operating revenues, including internal transfers, for the three- and nine-month periods ended September 30, 2020 and 2019, are presented in the following table. Products are transferred between operating segments at internal product values that approximate market prices. Revenues for the upstream segment are derived primarily from the production and sale of crude oil and natural gas, as well as the sale of third-party production of natural gas. Revenues for the downstream segment are derived from the refining and marketing of petroleum products such as gasoline, jet fuel, gas oils, lubricants, residual fuel oils and other products derived from crude oil. This segment also generates revenues from the manufacture and sale of fuel and lubricant additives and the transportation and trading of refined products and crude oil. “All Other” activities include revenues from insurance operations, real estate activities and technology companies.
Three Months Ended
September 30
Nine Months Ended
September 30
2020 2019 2020 2019
Sales and Other Operating Revenues (Millions of dollars) (Millions of dollars)
Upstream
United States $ 3,367  $ 5,602  $ 10,377  $ 17,411 
International 5,911  8,607  19,478  26,953 
Subtotal 9,278  14,209  29,855  44,364 
Intersegment Elimination — United States (1,916) (3,686) (6,148) (11,070)
Intersegment Elimination — International (1,661) (3,015) (5,223) (9,411)
Total Upstream 5,701  7,508  18,484  23,883 
Downstream
United States 8,147  14,224  24,568  41,467 
International 10,649  14,230  29,341  43,438 
Subtotal 18,796  28,454  53,909  84,905 
Intersegment Elimination — United States (307) (1,017) (1,899) (3,006)
Intersegment Elimination — International (230) (227) (1,001) (678)
Total Downstream 18,259  27,210  51,009  81,221 
All Other
United States 208  270  645  763 
International 3  11  12 
Subtotal 211  275  656  775 
Intersegment Elimination — United States (171) (209) (510) (576)
Intersegment Elimination — International (3) (5) (11) (12)
Total All Other 37  61  135  187 
Sales and Other Operating Revenues
United States 11,722  20,096  35,590  59,641 
International 16,563  22,842  48,830  70,403 
Subtotal 28,285  42,938  84,420  130,044 
Intersegment Elimination — United States (2,394) (4,912) (8,557) (14,652)
Intersegment Elimination — International (1,894) (3,247) (6,235) (10,101)
Total Sales and Other Operating Revenues $ 23,997  $ 34,779  $ 69,628  $ 105,291 
Note 9. Employee Benefits
Chevron has defined benefit pension plans for many employees. The company typically prefunds defined benefit plans as required by local regulations or in certain situations where prefunding provides economic advantages. In the United States, all qualified plans are subject to the Employee Retirement Income Security Act minimum funding standard. The company does not typically fund U.S. nonqualified pension plans that are not subject to funding requirements under laws and regulations because contributions to these pension plans may be less economic and investment returns may be less attractive than the company’s other investment alternatives.
The company also sponsors other postretirement employee benefit (OPEB) plans that provide medical and dental benefits, as well as life insurance for some active and qualifying retired employees. The plans are
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

unfunded, and the company and the retirees share the costs. For the company’s main U.S. medical plan, the increase to the pre-Medicare company contribution for retiree medical coverage is limited to no more than 4 percent each year. Certain life insurance benefits are paid by the company.
The components of net periodic benefit costs for 2020 and 2019 are as follows:
  Three Months Ended
September 30
Nine Months Ended
September 30
  2020 2019 2020 2019
(Millions of dollars) (Millions of dollars)
Pension Benefits
United States
Service cost $ 124  $ 101  $ 373  $ 304 
Interest cost 89  100  265  298 
Expected return on plan assets (163) (141) (488) (423)
Amortization of prior service costs (credits)   —  1 
Amortization of actuarial losses (gains) 96  60  288  179 
Settlement losses 184  87  304  207 
Total United States 330  207  743  566 
International
Service cost 33  34  97  105 
Interest cost 44  49  131  153 
Expected return on plan assets (52) (56) (155) (171)
Amortization of prior service costs (credits) 2  7 
Amortization of actuarial losses (gains) 12  33  15 
Settlement losses   —   
Total International 39  34  113  112 
Net Periodic Pension Benefit Costs $ 369  $ 241  $ 856  $ 678 
Other Benefits*
Service cost $ 9  $ $ 28  $ 27 
Interest cost 18  24  53  72 
Amortization of prior service costs (credits) (7) (7) (21) (21)
Amortization of actuarial losses (gains) 1  (1) 3  (2)
Net Periodic Other Benefit Costs $ 21  $ 25  $ 63  $ 76 
_ ___________________________________
* Includes costs for U.S. and international OPEB plans. Obligations for plans outside the United States are not significant relative to the company’s total OPEB obligation.
Through September 30, 2020, a total of $895 million was contributed to employee pension plans (including $726 million to the U.S. plans). Contribution amounts are dependent upon plan investment returns, changes in pension obligations, regulatory requirements and other economic factors. Additional funding may ultimately be required if investment returns are insufficient to offset increases in plan obligations.
During the first nine months of 2020, the company contributed $120 million to its OPEB plans. The company anticipates contributing approximately $54 million during the remainder of 2020.
Note 10. Assets Held For Sale
At September 30, 2020, the company classified $1.80 billion of net properties, plant and equipment as “Assets held for sale” on the Consolidated Balance Sheet. These assets are associated with upstream operations that are anticipated to be sold in the next 12 months. The revenues and earnings contributions of these assets in 2019 and the first nine months of 2020 were not material.
Note 11. Income Taxes
The income tax expense decreased between quarterly periods from $1.47 billion in 2019 to $165 million in 2020. The company's income before income tax expense decreased $4.09 billion from $4.05 billion in 2019 to a loss of $44 million in 2020, primarily due to the decrease in crude prices and production. The company’s effective tax rate changed between quarterly periods from 36 percent in 2019 to negative 375 percent in 2020.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The change in the effective tax rate is primarily due to the one-time tax charge in an international location and the consequence of the mix effect resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions.
The income tax expense decreased between the nine-month periods from a charge of $4.43 billion in 2019 to a benefit of $1.59 billion in 2020. This decrease is a direct result of the company’s income before income tax expense decreasing $20.44 billion, from $13.94 billion in 2019 to a loss of $6.50 billion in 2020. The decrease in income is primarily due to the reduction in prices and production, impairments and other corporate charges. The company’s effective tax rate changed between nine-month periods from 32 percent in 2019 to 24 percent in 2020. The reduction in the effective tax rate is primarily due to the consequence of the mix effect resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions and is also due to the impact of tax benefits for releasing the reserve on an uncertain tax position, valuation allowance release and a tax rate change.
Tax positions for Chevron and its subsidiaries and affiliates are subject to income tax audits by many tax jurisdictions throughout the world. For the company’s major tax jurisdictions, examinations of tax returns for certain prior tax years had not been completed as of September 30, 2020. For these jurisdictions, the latest years for which income tax examinations had been finalized were as follows: United States — 2013, Nigeria — 2007, Australia — 2009 and Kazakhstan — 2012.
The company engages in ongoing discussions with tax authorities regarding the resolution of tax matters in the various jurisdictions. Both the outcomes for these tax matters and the timing of resolution and/or closure of the tax audits are highly uncertain. However, it is reasonably possible that developments regarding tax matters in certain tax jurisdictions may result in significant increases or decreases in the company’s total unrecognized tax benefits within the next 12 months. Given the number of years that still remain subject to examination and the number of matters being examined in the various tax jurisdictions, the company is unable to estimate the range of possible adjustments to the balance of unrecognized tax benefits.
Note 12. Litigation
MTBE
Chevron and many other companies in the petroleum industry have used methyl tertiary butyl ether (MTBE) as a gasoline additive. Chevron is a party to six pending lawsuits and claims, the majority of which involve numerous other petroleum marketers and refiners. Resolution of these lawsuits and claims may ultimately require the company to correct or ameliorate the alleged effects on the environment of prior release of MTBE by the company or other parties. Additional lawsuits and claims related to the use of MTBE, including personal-injury claims, may be filed in the future. The company’s ultimate exposure related to pending lawsuits and claims is not determinable. The company no longer uses MTBE in the manufacture of gasoline in the United States.
Ecuador
Texaco Petroleum Company (Texpet), a subsidiary of Texaco Inc., was a minority member of an oil production consortium in Ecuador from 1967 until 1992, with state-owned Petroecuador as the majority partner. Upon termination of the consortium, and following a third-party environmental audit, Ecuador and the consortium parties entered into a settlement agreement specifying Texpet’s environmental remediation obligations. After Texpet completed a three-year remediation program, Ecuador certified that the remediation was properly conducted and released Texpet and its related corporate entities from environmental liability.
In May 2003, plaintiffs alleging environmental harm from the consortium’s activities filed a civil lawsuit against Chevron in the Superior Court for the province of Nueva Loja in Lago Agrio, Ecuador. Chevron defended itself on multiple grounds, including that the lawsuit was barred by the settlement and releases from Ecuador and that the evidence confirmed Texpet’s remediation was properly conducted and any remaining environmental impacts were due to Petroecuador’s failure to remediate its own majority share of the concession area and to Petroecuador’s conduct as sole owner of expanded operations in the area since 1992. In February 2011, the Ecuadorian provincial court entered a judgment against Chevron for approximately $9.5 billion plus additional punitive damages. In January 2012, an appellate panel affirmed the judgment and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ordered that Chevron pay an additional 0.10% in attorneys’ fees. In November 2013, Ecuador’s National Court of Justice ratified the judgment but nullified the punitive damage assessment, resulting in a judgment of $9.5 billion. Ecuador’s highest Constitutional Court rejected Chevron’s final appeal in July 2018.
In February 2011, Chevron filed a civil lawsuit against the Lago Agrio plaintiffs and several of their lawyers and supporters in the U.S. District Court for the Southern District of New York, asserting violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and state law. After a trial, the New York court ruled in favor of Chevron, finding that the Ecuadorian judgment had been procured through fraud, bribery, and corruption, and prohibiting the RICO defendants from seeking to enforce the Ecuadorian judgment in the United States or profiting from their illegal acts. The U.S. Court of Appeals for the Second Circuit unanimously affirmed, and the U.S. Supreme Court denied certiorari in June 2017, rendering final the New York judgment in favor of Chevron.
The Lago Agrio plaintiffs’ lawyers sought to have the Ecuadorian judgment recognized and enforced in Canada, Brazil, and Argentina. All of those recognition and enforcement actions have been finally resolved in Chevron’s favor. In Canada, following dismissal of Chevron Canada Limited from the action, the Ontario Superior Court ordered a final dismissal of the action against Chevron Corporation in July 2019 by consent of the parties. In Brazil and Argentina, after public prosecutors in each country recommended rejection of the plaintiffs’ action on grounds including that the Ecuadorian judgment was procured through fraud and corruption, Brazil’s Superior Court of Justice dismissed and the Supreme Court of Argentina affirmed dismissal by the lower court of the actions on jurisdictional grounds in rulings that became final in June 2018 and July 2020, respectively.
Chevron and Texpet filed an arbitration claim against Ecuador in September 2009 before an arbitral tribunal administered by the Permanent Court of Arbitration in The Hague, under the United States-Ecuador Bilateral Investment Treaty. In September 2013, the Tribunal issued a first partial award holding that, although the settlement and release agreements between Ecuador and Texpet did not preclude individual claims for personal harm, they did release Texpet and Chevron from public environmental claims. In August 2018, the Tribunal issued a second partial award holding that the Ecuadorian judgment was based on public claims that Ecuador had settled and released and that it was procured through fraud, bribery, and corruption. According to the Tribunal, the Ecuadorian judgment “violates international public policy” and “should not be recognized or enforced by the courts of other States.” The Tribunal ordered Ecuador to take immediate steps to remove the status of enforceability from the Ecuadorian judgment and to compensate Chevron for any injuries resulting from the judgment. The third and final phase of the arbitration, to determine the amount of compensation Ecuador owes to Chevron, is ongoing. The District Court of The Hague denied a request by Ecuador to set aside the Arbitration Tribunal’s first partial award, and the Appeals Court and Supreme Court of the Netherlands upheld that denial. On September 16, 2020, the District Court of The Hague denied Ecuador’s request to set aside the Tribunal’s second partial award, holding that the award was well reasoned and complied with applicable law and public policy, and properly sought to “remov[e] the consequences of a fraudulent judgment that was rendered by a corrupt judge.” The District Court further recorded that it now is “common ground” between Ecuador and Chevron that the Ecuadorian judgment is fraudulent.
Managements Assessment The ultimate outcome of the foregoing matters, including any financial effect on Chevron, remains uncertain. Chevron continues to believe that the Ecuadorian judgment is illegitimate and unenforceable and that it does not provide any basis upon which an estimate of a reasonably possible loss or range of loss can be made.
Note 13. Other Contingencies and Commitments
Income Taxes The company calculates its income tax expense and liabilities quarterly. These liabilities generally are subject to audit and are not finalized with the individual taxing authorities until several years after the end of the annual period for which income taxes have been calculated. Refer to Note 11 beginning on page 14 for a discussion of the periods for which tax returns have been audited for the company’s major tax jurisdictions.
Settlement of open tax years, as well as other tax issues in countries where the company conducts its businesses, are not expected to have a material effect on the consolidated financial position or liquidity of the
16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

company and, in the opinion of management, adequate provision has been made for income taxes for all years under examination or subject to future examination.
Guarantees The company and its subsidiaries have certain contingent liabilities with respect to guarantees, direct or indirect, of debt of affiliated companies or third parties. Under the terms of the guarantee arrangements, the company would generally be required to perform should the affiliated company or third party fail to fulfill its obligations under the arrangements. In some cases, the guarantee arrangements may have recourse provisions that would enable the company to recover any payments made under the terms of the guarantees from assets provided as collateral.
Indemnifications In the acquisition of Unocal, the company assumed certain indemnities relating to contingent environmental liabilities associated with assets that were sold in 1997. The acquirer of those assets shared in certain environmental remediation costs up to a maximum obligation of $200 million, which had been reached at December 31, 2009. Under the indemnification agreement, after reaching the $200 million obligation, Chevron is solely responsible until April 2022, when the indemnification expires. The environmental conditions or events that are subject to these indemnities must have arisen prior to the sale of the assets in 1997.
Although the company has provided for known obligations under this indemnity that are probable and reasonably estimable, the amount of additional future costs may be material to results of operations in the period in which they are recognized. The company does not expect these costs will have a material effect on its consolidated financial position or liquidity.
Off-Balance-Sheet Obligations The company and its subsidiaries have certain contingent liabilities with respect to long-term unconditional purchase obligations and commitments, including throughput and take-or-pay agreements, some of which may relate to suppliers’ financing arrangements. The agreements typically provide goods and services, such as pipeline and storage capacity, utilities, and petroleum products, to be used or sold in the ordinary course of the company’s business.
Environmental The company is subject to loss contingencies pursuant to laws, regulations, private claims and legal proceedings related to environmental matters that are subject to legal settlements or that in the future may require the company to take action to correct or ameliorate the effects on the environment of prior release of chemicals or petroleum substances, including MTBE, by the company or other parties. Such contingencies may exist for various sites, including, but not limited to, federal Superfund sites and analogous sites under state laws, refineries, crude oil fields, service stations, terminals, land development areas, and mining activities, whether operating, closed or divested. These future costs are not fully determinable due to factors such as the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions that may be required, the determination of the company’s liability in proportion to other responsible parties, and the extent to which such costs are recoverable from third parties.
Although the company has provided for known environmental obligations that are probable and reasonably estimable, the amount of additional future costs may be material to results of operations in the period in which they are recognized. The company does not expect these costs will have a material effect on its consolidated financial position or liquidity. Also, the company does not believe its obligations to make such expenditures have had, or will have, any significant impact on the company’s competitive position relative to other U.S. or international petroleum or chemical companies.
Other Contingencies Governmental and other entities in California and other jurisdictions have filed legal proceedings against fossil fuel producing companies, including Chevron, purporting to seek legal and equitable relief to address alleged impacts of climate change. Further such proceedings are likely to be filed by other parties. The unprecedented legal theories set forth in these proceedings entail the possibility of damages liability and injunctions, including without limitation injunctions against the production of all fossil fuels, that, while we believe remote, could have a material adverse effect on the Company’s results of operations and financial condition. Management believes that these proceedings are legally and factually meritless and detract from constructive efforts to address the important policy issues presented by climate change, and will vigorously defend against such proceedings.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Seven coastal parishes and the State of Louisiana have filed 43 separate lawsuits in Louisiana against numerous oil and gas companies seeking damages for coastal erosion in or near oil fields located within Louisiana’s coastal zone under Louisiana’s State and Local Coastal Resources Management Act (SLCRMA). Chevron entities are defendants in 39 of these cases. The lawsuits allege that the defendants’ historical operations were conducted without necessary permits or failed to comply with permits obtained and seek damages and other relief, including the costs of restoring coastal wetlands allegedly impacted by oil field operations. Plaintiffs’ SLCRMA theories are unprecedented; thus, there remains significant uncertainty about the scope of the claims and alleged damages and any potential effects on the company’s results of operations and financial condition. Management believes that the claims lack legal and factual merit and will continue to vigorously defend against such proceedings.
Chevron receives claims from and submits claims to customers; trading partners; joint venture partners; U.S. federal, state and local regulatory bodies; governments; contractors; insurers; suppliers; and individuals. The amounts of these claims, individually and in the aggregate, may be significant and take lengthy periods to resolve, and may result in gains or losses in future periods.
The company and its affiliates also continue to review and analyze their operations and may close, decommission, sell, exchange, acquire or restructure assets to achieve operational or strategic benefits and to improve competitiveness and profitability. These activities, individually or together, may result in significant gains or losses in future periods.
Note 14. Fair Value Measurements
The three levels of the fair value hierarchy of inputs the company uses to measure the fair value of an asset or liability are described as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. For the company, Level 1 inputs include exchange-traded futures contracts for which the parties are willing to transact at the exchange-quoted price and marketable securities that are actively traded.
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly. For the company, Level 2 inputs include quoted prices for similar assets or liabilities, prices obtained through third-party broker quotes and prices that can be corroborated with other observable inputs for substantially the complete term of a contract.
Level 3: Unobservable inputs. The company does not use Level 3 inputs for any of its recurring fair value measurements. Level 3 inputs may be required for the determination of fair value associated with certain nonrecurring measurements of nonfinancial assets and liabilities.
The fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 30, 2020, and December 31, 2019, is as follows:
Assets and Liabilities Measured at Fair Value on a Recurring Basis
(Millions of dollars)
  At September 30, 2020 At December 31, 2019
  Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Marketable Securities $ 28  $ 28  $   $   $ 63  $ 63  $ —  $ — 
Derivatives 104  55  49    11  10  — 
Total Assets at Fair Value
$ 132  $ 83  $ 49  $   $ 74  $ 64  $ 10  $ — 
Derivatives 8  5  3    74  26  48  — 
Total Liabilities at Fair Value
$ 8  $ 5  $ 3  $   $ 74  $ 26  $ 48  $ — 
Marketable Securities The company calculates fair value for its marketable securities based on quoted market prices for identical assets. The fair values reflect the cash that would have been received if the instruments were sold at September 30, 2020.
Derivatives The company records its derivative instruments — other than any commodity derivative contracts that are designated as normal purchase and normal sale — on the Consolidated Balance Sheet at fair value, with the offsetting amount to the Consolidated Statement of Income. Derivatives classified as Level 1 include
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

futures, swaps and options contracts traded in active markets such as the New York Mercantile Exchange. Derivatives classified as Level 2 include swaps, options and forward contracts principally with financial institutions and other oil and gas companies, the fair values of which are obtained from third-party broker quotes, industry pricing services and exchanges. The company obtains multiple sources of pricing information for the Level 2 instruments. Since this pricing information is generated from observable market data, it has historically been very consistent. The company does not materially adjust this information.
Assets carried at fair value at September 30, 2020, and December 31, 2019, are as follows:
Cash and Cash Equivalents The company holds cash equivalents in U.S. and non-U.S. portfolios. The instruments classified as cash equivalents are primarily bank time deposits with maturities of 90 days or less, and money market funds. “Cash and cash equivalents” had carrying/fair values of $6.9 billion and $5.7 billion at September 30, 2020, and December 31, 2019, respectively. The fair values of cash and cash equivalents are classified as Level 1 and reflect the cash that would have been received if the instruments were settled at September 30, 2020.
Restricted Cash had a carrying/fair value of $925 million and $1.2 billion at September 30, 2020 and December 31, 2019, respectively. At September 30, 2020, restricted cash is classified as Level 1 and includes restricted funds related to certain upstream decommissioning activities, other corporate and tax items, which are reported in “Prepaid expenses and other current assets” and “Deferred charges and other assets” on the Consolidated Balance Sheet.
Long-Term Debt had a net carrying value, excluding amounts reclassified from short-term debt and finance lease obligations, of $24.2 billion and $13.7 billion at September 30, 2020, and December 31, 2019, respectively. The fair value of long-term debt for the company was $25.7 billion and $14.3 billion at September 30, 2020 and December 31, 2019, respectively. Long-term debt primarily includes corporate issued bonds, classified as Level 1 and are $24.6 billion for the period. The fair value of other long-term debt classified as Level 2 is $1.1 billion.
The carrying values of other short-term financial assets and liabilities on the Consolidated Balance Sheet approximate their fair values. Fair value remeasurements of other financial instruments at September 30, 2020, and December 31, 2019, were not material.
The fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis at September 30, 2020, is as follows:
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
(Millions of dollars)
  At September 30, 2020
Before-Tax Loss
  Three Months Ended Nine Months Ended
Total Level 1 Level 2 Level 3
Properties, plant and equipment, net (held and used) $ —  $ —  $ —  $ —  $ —  $ 2,551 
Properties, plant and equipment, net (held for sale) 22  —  22  —  17  183 
Investments and advances —  —  —  —  —  2,550 
Total Assets at Fair Value
$ 22  $   $ 22  $   $ 17  $ 5,284 
Properties, plant and equipment Through September 2020, the company reported impairments for certain upstream properties primarily due to downward revisions to its oil and gas price outlook. The impact of these impairments is included in “Depreciation, depletion, and amortization” on the Consolidated Statement of Income. The company did not have any individually material impairments of long-lived assets measured at fair value on a nonrecurring basis to report in third quarter 2020.
Investments and advances Through September 2020, the company fully impaired its investments in the Petropiar and Petroboscan affiliates in Venezuela. The impact of these impairments is included in “Income (loss) from equity affiliates” on the Consolidated Statement of Income. The company did not have any
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

material impairments of investments and advances measured at fair value on a nonrecurring basis to report in third quarter 2020.
Note 15. Financial and Derivative Instruments
The company’s derivative instruments principally include crude oil, natural gas and refined product futures, swaps, options, and forward contracts. None of the company’s derivative instruments are designated as hedging instruments, although certain of the company’s affiliates make such a designation. The company’s derivatives are not material to the company’s consolidated financial position, results of operations or liquidity. The company believes it has no material market or credit risks to its operations, financial position or liquidity as a result of its commodities and other derivatives activities.
The company uses derivative commodity instruments traded on the New York Mercantile Exchange and on electronic platforms of the Inter-Continental Exchange and Chicago Mercantile Exchange. In addition, the company enters into swap contracts and option contracts principally with major financial institutions and other oil and gas companies in the “over-the-counter” markets, which are governed by International Swaps and Derivatives Association agreements and other master netting arrangements.
Derivative instruments measured at fair value at September 30, 2020, and December 31, 2019, and their classification on the Consolidated Balance Sheet and Consolidated Statement of Income are as follows:
Consolidated Balance Sheet: Fair Value of Derivatives Not Designated as Hedging Instruments
(Millions of dollars)
Type of
Contract
Balance Sheet Classification At September 30,
2020
At December 31,
2019
Commodity Accounts and notes receivable, net $ 90  $ 11 
Commodity Long-term receivables, net 14  — 
Total Assets at Fair Value
$ 104  $ 11 
Commodity Accounts payable $ 3  $ 74 
Commodity Deferred credits and other noncurrent obligations 5  — 
Total Liabilities at Fair Value
$ 8  $ 74 
Consolidated Statement of Income: The Effect of Derivatives Not Designated as Hedging Instruments
(Millions of dollars)
Type of   Gain / (Loss)
Three Months Ended
September 30
Gain / (Loss)
Nine Months Ended
September 30
Contract Statement of Income Classification 2020 2019 2020 2019
Commodity Sales and other operating revenues $ 38  $ 55  $ 283  $ (189)
Commodity Purchased crude oil and products (7) (7) (31) (16)
Commodity Other income 6  —  3  (3)
$ 37  $ 48  $ 255  $ (208)
20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below represents gross and net derivative assets and liabilities subject to netting agreements on the Consolidated Balance Sheet at September 30, 2020, and December 31, 2019.
Consolidated Balance Sheet: The Effect of Netting Derivative Assets and Liabilities
(Millions of dollars)
  Gross Amount Recognized Gross Amounts Offset Net Amounts Presented  Gross Amounts Not Offset Net Amount
At September 30, 2020
Derivative Assets $ 1,044  $ 940  $ 104  $   $ 104 
Derivative Liabilities $ 948  $ 940  $ 8  $   $ 8 
At December 31, 2019
Derivative Assets $ 656  $ 645  $ 11  $ —  $ 11 
Derivative Liabilities $ 719  $ 645  $ 74  $ —  $ 74 
Derivative assets and liabilities are classified on the Consolidated Balance Sheet as accounts and notes receivable, long-term receivables, accounts payable, and deferred credits and other noncurrent obligations. Amounts not offset on the Consolidated Balance Sheet represent positions that do not meet all the conditions for “a right of offset.”
Note 16. Revenue
“Sales and other operating revenue” on the Consolidated Statement of Income primarily arise from contracts with customers. Related receivables are included in “Accounts and notes receivable, net” on the Consolidated Balance Sheet, net of the current expected credit losses. The net balance of these receivables was $6.3 billion and $9.2 billion at September 30, 2020, and December 31, 2019, respectively. Other items included in “Accounts and notes receivable, net” represent amounts due from partners for their share of joint venture operating and project costs and amounts due from others, primarily related to derivatives, leases, buy/sell arrangements and product exchanges, which are accounted for outside the scope of ASC 606.
Note 17. Financial Instruments - Credit Losses
Chevron adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses, and its related amendments at the effective date of January 1, 2020. The standard replaces the “incurred loss model” and requires an estimate of expected credit losses, measured over the contractual life of a financial instrument, that considers forecast of future economic conditions in addition to information about past events and current conditions. The cumulative-effect adjustment to the opening retained earnings at January 1, 2020 was a reduction of $25 million, representing a decrease to the net accounts and notes receivable balances shown on the company’s consolidated balance sheet on page 5. Chevron’s expected credit loss allowance balance was $666 million as of September 30, 2020 and $849 million as of December 31, 2019, with a majority of the allowance relating to non-trade receivable balances. A reduction in the allowance for non-trade receivables of $550 million was recorded in the second quarter as an agreement was reached with a government joint venture partner that resulted in the write-off of the associated receivable balances. Additionally, new allowances of $265 million were recorded in the second and third quarters associated with other than trade receivables.
The majority of the company’s receivable balance is concentrated in trade receivables, with a balance of $8.1 billion as of September 30, 2020, which reflects the company’s diversified sources of revenues and is dispersed across the company’s broad worldwide customer base. As a result, the company believes the concentration of credit risk is limited. The company routinely assesses the financial strength of its customers. When the financial strength of a customer is not considered sufficient, alternative risk mitigation measures may be deployed, including requiring pre-payments, letters of credit or other acceptable forms of collateral. Once credit is extended and a receivable balance exists, the company applies a quantitative calculation to current trade receivable balances that reflects credit risk predictive analysis, including probability of default and loss given default, which takes into consideration current and forward-looking market data as well as the company’s historical loss data. This statistical approach becomes the basis of the company’s expected credit loss allowance for current trade receivables with payment terms that are typically short-term in nature, with
21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

most due in less than 90 days. The company continues to monitor credit risk in response to the COVID-19 pandemic and the significant reduction in crude prices resulting from decreased demand associated with government-mandated travel restrictions.
Chevron's non-trade receivable balance was $3.1 billion as of September 30, 2020, which includes receivables from certain governments in their capacity as joint venture partners. Joint venture partner balances that are paid as per contract terms or not yet due are subject to the statistical analysis described above while past due balances are subject to additional qualitative management quarterly review. This management review includes review of reasonable and supportable repayment forecasts. Non-trade receivables also include employee and tax receivables that are deemed immaterial and low risk.
Equity affiliate loans are also considered non-trade and during the second quarter 2020 review, a $560 million allowance was recognized within “Investments and advances” on the Consolidated Balance Sheet.
Note 18. Accounting for Suspended Exploratory Wells
The capitalized cost of suspended wells at September 30, 2020, was $2.5 billion, a net decrease of $574 million from year-end 2019. The decrease was primarily due to well write-offs recorded in second quarter 2020. During the nine months ended September 30, 2020, $496 million of exploratory well costs previously capitalized for greater than one year at December 31, 2019, were charged to expense.
Note 19. Long-Term Debt
The company issued $8 billion and an additional $4 billion in aggregate principal amount of floating and fixed rate notes in May 2020 and August 2020, respectively, as detailed in the table below. In the first nine months of 2020, the company repaid $3.9 billion of bonds at maturity.
May 2020 issuance: Principal
(Millions of dollars)
Floating rate notes due 2023 $ 300 
1.141% notes due 2023
1,200 
1.554% notes due 2025
2,500 
1.995% notes due 2027
1,000 
2.236% notes due 2030
1,500 
2.978% notes due 2040
500 
3.078% notes due 2050
1,000 
Total Long-Term Debt Issued in May 2020 $ 8,000 
August 2020 issuance: Principal
(Millions of dollars)
Floating rate notes due 2022 $ 350 
0.333% notes due 2022
400 
Floating rate notes due 2023 500 
0.426% notes due 2023
500 
0.687% notes due 2025
750 
1.018% notes due 2027
750 
2.343% notes due 2050
750 
Total Long-Term Debt Issued in August 2020 $ 4,000 

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 20. Restructuring and Reorganization Costs
In third quarter 2020, the company recorded adjustments and additional charges for employee reduction programs related to enterprise-wide restructuring, which are expected to be substantially completed by the end of 2021. The following table summarizes the accrued severance liability, which is classified as current on the Consolidated Balance Sheet.
Amounts Before Tax
(Millions of dollars)
Balance at January 1, 2020 $
Accruals/Adjustments 1,018 
Payments (133)
Balance at September 30, 2020 $ 892 
Note 21. Acquisition of Noble Energy, Inc.
On October 5, 2020, the company acquired Noble Energy, Inc. (Noble), an independent oil and gas exploration and production company. Noble’s principal upstream operations are in North America, the Eastern Mediterranean and West Africa. Noble’s operations also include an integrated midstream business in North America.
The aggregate purchase price of Noble was $4.1 billion, with approximately 58 million shares of Chevron common stock issued as consideration in the transaction. As part of the transaction, the company assumed debt with a book value of $7.7 billion. The shares represented approximately 3 percent of shares of Chevron common stock outstanding immediately after the transaction closed on October 5, 2020.
The acquisition will be accounted for as a business combination under ASC 805, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair value. Provisional fair value measurement will be made in the fourth quarter 2020 for acquired assets and assumed liabilities, and adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date as information necessary to complete the analysis is obtained.
23

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Third Quarter 2020 Compared with Third Quarter 2019
And Nine Months 2020 Compared with Nine Months 2019
Key Financial Results
Earnings by Business Segment
  Three Months Ended
September 30
Nine Months Ended
September 30
  2020 2019 2020 2019
  (Millions of dollars) (Millions of dollars)
Upstream
United States $ 116  $ 727  $ (1,709) $ 2,371 
International 119  1,977  (1,225) 6,939 
Total Upstream 235  2,704  (2,934) 9,310 
Downstream
United States 141  389  (397) 1,071 
International