2018



to our stockholders 

This year marks Chevron’s 140th anniversary — a milestone that prompts reflection on our history and admiration for the extraordinary women and men who have built a lasting company based on the belief that energy is vital to human progress. 

This purpose is even clearer now than it was in 1879. Today, Chevron touches the lives of billions of people across the globe, delivering affordable, reliable, ever-cleaner energy that offers access to the necessities of modern life, drives economic and social development, and creates the promise for a better future. 

We feel proud and privileged to fulfill this responsibility, to invest in the communities where we operate, and to generate sustained value for our stockholders, customers and employees. 

Our strong performance in 2018 enabled us to deliver on all of our financial priorities — growing the dividend, funding a disciplined capital program, strengthening the balance sheet and returning surplus cash to stockholders. 

For the 31st consecutive year, Chevron increased the annual per-share dividend payout. We returned an additional $1.75 billion of cash to stockholders through stock repurchases. In addition, we further strengthened the balance sheet, reducing our debt ratio to 18 percent. 

This performance reflects momentum across all our operating segments. 

Our Upstream business reported a highest-ever worldwide net production of more than 2.9 million oil-equivalent barrels per day, up more than 7 percent from 2017 and 12 percent from 2016. Production increases were driven by Permian Basin growth, startups in the Gulf of Mexico and Australia, continued ramp-up of liquified natural gas (LNG) operations in Australia, and a high level of reliability at Tengizchevroil in Kazakhstan. 

We added approximately 1.46 billion barrels of net oil-equivalent proved reserves, replacing 136 percent of production. Our five-year reserve replacement ratio is 117 percent. 

Chevron increased development drilling in the Permian Basin, and we expect continued strong production growth in the Permian over the next several years. We also acquired new exploration acreage, including six blocks in Brazil and 31 blocks in the Gulf of Mexico. Construction continued on the Future Growth Project and Wellhead Pressure Management Project in Kazakhstan, including first module delivery and installation. 

In Downstream & Chemicals, we commissioned a new hydrogen plant as part of the Richmond Refinery Modernization Project. In our Oronite additives business, we broke ground on our blending and shipping project in Ningbo, China. Chevron Phillips Chemical Company commissioned its world-scale ethane cracker at the Cedar Bayou facility as part of the U.S. Gulf Coast Petrochemicals Project. We also expanded our new retail marketing network in Mexico, with 135 stations opened as of year-end 2018. 

Our Midstream business delivered the first LNG cargo from the Gorgon project to the new LNG receiving terminal in Zhoushan, China, an important achievement that will help China meet its goal of increasing natural gas in its overall energy mix. In the Permian Basin, Chevron strategically secured pipeline