from the Permian Basin in the United States and from our major capital projects in Australia helped meet growing global demand in 2017 and supported our aim of being a reliable supplier of the affordable energy the world needs in order to prosper. 

During the downturn in commodity prices that began in 2014, we adjusted to challenging conditions, and in 2017, we delivered on our commitments to generate winning performance in any price environment. A key objective for 2017 was to become cash neutral – balance cash coming in and cash going out – in an environment of lower commodity prices. Full-year cash flow from operations was $20.5 billion, and we were cash balanced without asset sales. This momentum continues as we move into 2018. 

In 2017, we improved returns by further reducing expenses and by generating increased revenues as we brought projects on line. At the same time, our capital spending continued to shift toward shorter-cycle, high-return investments in unconventional oil and gas. 

We continued to unlock value from our industry-leading portfolio of opportunities, including legacy positions in Australia, Kazakhstan and the Permian Basin. We captured the benefits of being an integrated energy company with strong earnings, cash flow and returns from our Downstream & Chemicals business. 

Our full-year 2017 net income was $9.2 billion, up $9.7 billion from a loss in 2016. Our sales and other operating revenue was $134.7 billion, up $24.5 billion from 2016. We achieved a 5.0 percent return on capital employed. 

Chevron’s first financial priority is maintaining and growing the dividend when we can sustainably support the increase with cash flow and earnings. In 2017, our annual per-share dividend payout increased for the 30th consecutive year. We also strengthened our balance sheet – our year-end debt ratio was 20.7 percent, down from 24.1 percent at year-end 2016. 

Our performance reflected the actions we took to ensure our competitiveness in any operating environment. Our priorities were to complete and start up projects under construction, reduce capital spending and operating expenses, selectively sell assets, and operate safely and reliably. 

In 2017, we met those priorities. We finished construction of key major capital projects. We reduced capital spending to $18.8 billion from $22.4 billion in 2016. Since 2013, we’ve reduced our capital spending from a peak of $41.9 billion. We also lowered operating expenses by $1.1 billion from 2016. We met our 2016–2017 target for asset sales, receiving total proceeds of $8 billion. And our steadfast commitment to eliminate high-consequence incidents continued. 

In 2017, our Upstream business reported worldwide net production of 2.7 million oil-equivalent barrels per day, up more than 5 percent from 2016. We added approximately 1.54 billion barrels of net oil-equivalent proved reserves, replacing approximately 155 percent of production. In Australia, we continued to ramp up LNG production by bringing on line Gorgon Train 3 and Wheatstone Train 1. We ramped up production at Gorgon Trains 1 and 2 and at Jack/St. Malo in the U.S. Gulf of Mexico. The Hebron Project, our nonoperated joint