Sec 10 K Report Analysis for Chevron Corporation

This means that the company takes part in activities such as exploration and production of hydrocarbons, refining, marketing and transporting, manufacturing and selling of chemicals. It also engages in generating power. The company’s upstream operations include oil and gas exploration as well as the production of oil and gas. It also produces various commodities in its downstream operations. Products from Chevron’s Upstream Operations The firm engages in its upstream activities in other regions identified as “Other Americas. In 2017, Chevron has a refining network capable of refining approximately 1,700,000 barrels of crude oil on a daily basis. In the US, Chevron has continued working on projects to enhance reliability and flexibility in oil refineries. Outside the US in countries such as Singapore, Chevron owns 50% of the Singapore Refining Company (SRC) which takes part in constructing gasoline cleaning fuel facilities and cogeneration plants.

As part of its marketing operations, Chevron sells petroleum commodities under various brand names such as Caltex, Chevron, and Texaco across the world. In terms of chemical operations, Chevron focuses on development, manufacturing, and marketing of additives used to lubricating oils and fuels. 21% and 3. 00% in 2017 and 2015 respectively, but -0. 34% in 2016. Its gross profit margin, operating profit margin, and net profit margin increased between 2016 and 2017. However, the three elements of return on sales decreased between 2015 and 2016. 89 billion, decrease in natural gas realization by a value of $600 million, low gains on the company’s asset sales by a value of $450 million, and an increase in the value of tax commodities by $330 million. Further, the foreign currency impacts had an undesirable impact on the international upstream earnings by a value of $603 million between the periods of 2016 and 2015.

There are various elements from Chevron’s US downstream operations. In 2017, the US downstream activities contributed $2. 94 billion which was an increase from the earnings in 2016 valued at $1. Based on these illustrations, it is evident that earnings from the US downstream operations were higher in 2015 but decreased in 2016. Also, the earnings from US downstream operations were lower in 2016 but higher in 2017. Chevron’s earnings from the international downstream were $2. 28 billion in 2017. This was $0. The decline can also be explained by a decrease in refined commodity sales valued at $1. 14 billion in 2016. The decline can also be described in terms of negative impact from the foreign currency effects valued at $72 million between the years 2016 and 2015. Trends in Chevron’s Sales and other operating revenues (in millions) There is an increase in sales and other operating revenues from $110,215 in 2016 to $134,674 in 2017.

This rise is associated with an increase in refined products, higher prices for crude oil, increased production of crude oil, and high volumes of natural gas. 1 billion before tax, respectively. The interest income decreased from $145 million in 2016 to $107 million in 2017. The interest income also increased from $119 million in 2015 to $145 million in 2016. These varying figures are based on the different values for foreign currency effects in the three years. Trends in Chevron’s Total revenues and other income (in millions) From a general perspective, it is noticeable that total revenues increase from the year 2015 to 2017. In this perspective, the cost management issues influence the set of approaches and strategies when controlling and improving an organization’s activities and processes. Most of the company’s costs of adhering to the formulated rules and regulations associated with its products and activities are incorporated in its normal costs of doing business.

However, this technique prevents the company from predicting with certainty the values of extra investments in new or previous technologies or structures. It also prevents the company from forecasting with certainty the values of increasing operating costs to be encountered in the future for the purpose of preventing, controlling, reducing, or eliminating environmental hazards to the atmosphere. The company has from time to time incurred expenses for corrective activities at different owned facilities and third-party-owned water disposal sites utilized by the firm. The external factors are such as levels of inflation, prices of commodity, and prices charged by the energy industry’s service and material providers. These can inappropriately be influenced by the variations of the sector’s demand- and supply situations for the services and materials.

Precisely, the increase in total costs and other deductions in 2017 can be associated with cost inflation in the industry in the most onshore regions such as North America. Exploratory costs, capital expenses, and operating costs are unexpectedly influenced by destruction of production facilities triggered by hostile weather, unsuitable political climate, and delays in construction and production. Chevron’s inventory through LIFO method There are various ways in which Chevron describes its inventory. Brief SWOT Analysis for Chevron Strengths • The company has a strong brand value in the oil and gas sector in the U. S and across the world. • The organization has a suitable integration in how it produces, refines, and sells its products, • It serves in a huge geographical region in the entire world.

Weaknesses • The company has been involved in various legal issues because of violating the U. S. It carries out appropriate planning to assess the risk of fluctuating commodity prices. It also develops necessary resources aimed at dealing with the possibility of decline. It designs its risk management approaches to evaluate possible physical and other risks which influence its activities. This is through capital investment reviews and decisions which encompass storm severity during shipping, wind speed, earthquake extent and other risks and uncertainties. It also insures its employees to deal with potential employee injuries. 728 barrels. Out of this production, 17% of the production was from Venezuela, Nigeria, and Angola. It is expected that in 2018, the production will grow from between 4 to 7 percent. Shifts based on Global Factors Chevron’s management explains various increases and declines in the expected performance.

Further, it also offers different reasons for shifts in the expected outcomes. The pricing decisions in Chevron are greatly determined by the forces of demand and supply. The company faces stiff competition from wholly integrated, major petroleum corporations, in addition to independent marketing, refining, chemical, and transportation firms (Chevron Corporation SEC 10-K, 2018 p. This competition influences how Chevron sells or acquires various products and services in the domestic and international markets. Estimation and Cost Issues of Contingencies and Liabilities The company’s contingencies and liabilities can be estimated. For instance, during the financial year 2017, the company incurred a decrease in income tax benefit from $1,729 million in 2016 to $1,681 million in 2017. The other contingencies it incurs are claims obtained from clients, trading partners, the United States federal authorities, and local regulatory authorities.

It is difficult to estimate the other contingencies. Nevertheless, they can lead to losses or gains for the corporation in future. Chevron’s CSR and Sustainability Policies Chevron’s management discloses information about its corporate social responsibility (CSR) and sustainability policies. By following the policy of “Affordable energy”, Chevron aims at enhancing both economic growth and prosperity of its various stakeholders. Further, the organization demands that operations and facilities should have the required operating standards and processes to have emergency response plans. The firm is also focused on enhancing energy effectiveness in its daily activities (Chevron Corporation SEC 10-K, 2018 p. To ensure that it avoids releasing hazardous wastes into the environment, Chevron complies with the greenhouse-gas related rules. Since Chevron has various inherent risks and hazards which need continuous oversight, it incurs different costs of remediation.