during the year, by approximately $9.0 billion.

      Interest Coverage Ratio – income before income tax expense, plus interest and debt expense and amortization of capitalized interest, less net income attributable to noncontrolling interests, divided by before-tax interest costs. This ratio indicates the company’s ability to pay interest on outstanding debt. The company’s interest coverage ratio in 2011 was higher than 2010 and 2009 due to higher before-tax income.

     Debt Ratio – total debt as a percentage of total debt plus Chevron Corporation Stockholders’ Equity, which indicates the company’s leverage. The decrease between 2011 and 2010 was due to lower debt and a higher Chevron Corporation stockholders’ equity balance. The decrease between 2010 and 2009 was due to a higher Chevron Corporation stockholders’ equity balance.

 

Guarantees, Off-Balance-Sheet Arrangements and Contractual Obligations, and Other Contingencies

     The company’s guarantee of approximately $600 million is associated with certain payments under a terminal use agreement entered into by a company affiliate. The terminal commenced operations in third quarter 2011. Over the approximate 16-year term of the guarantee, the maximum guarantee amount will be reduced over time as certain fees are paid by the affiliate. There are numerous cross-indemnity agreements with the affiliate and the other partners to permit recovery of amounts paid under the guarantee. Chevron has recorded no liability for its obligation under this guarantee.

     Indemnifications Information related to indemnifications is included on page FS-56 in Note 24 to the Consolidated Financial Statements under the heading “Indemnifications.”

     Long-Term Unconditional Purchase Obligations and Commitments, Including Throughput and Take-or-Pay Agreements The company and its subsidiaries have certain other contingent liabilities with respect to long-term unconditional purchase obligations and commitments, including throughput and take-or-pay agreements, some of which relate to suppliers’ financing arrangements. The agreements typically provide goods and services, such as pipeline and storage capacity, drilling rigs, utilities, and petroleum products, to be used or sold in the ordinary course of the company’s business. The aggregate approximate amounts of required payments under these various commitments are: 2012 – $6.0 billion; 2013 – $4.0 billion; 2014 – $3.9 billion; 2015 – $3.2 billion; 2016 – $1.9 billion; 2017 and after – $7.4 billion. A portion of these commitments may ultimately be shared with project partners. Total payments under the agreements were approximately $6.6 billion in 2011, $6.5 billion in 2010 and $8.1 billion in 2009.

Financial and Derivative Instruments

The market risk associated with the company’s portfolio of financial and derivative instruments is discussed below. The estimates of financial exposure to market risk do not represent the company’s projection of future market changes. The actual impact of future market changes could differ materially due to factors discussed elsewhere in this report, including those set forth under the heading “Risk Factors” in Part I, Item