The Governments Paid Before the OwnersThin moat

Chevron (CVX) — moat facet

Chevron paid $7.3 billion of income tax to earn $12.3 billion in 2025, and its host governments set the terms of every foreign barrel.

The counterparties that take the most from Chevron each year are governments. In 2025 Chevron's income tax expense was $7,258 million against net income of $12,299 million1; in 2024 it was $9,757 million2. Every barrel produced abroad is produced under a concession or contract whose terms the host can revisit.

Concession or contract expiry2033Tengizchevroil2038Karachaganak2038Tamar2044Leviathan2046Partitioned ZoneChevron Form 10-K FY2025
The largest foreign asset has the earliest date.

The concessions have dates. Tengizchevroil's runs to 2033, Karachaganak's production sharing agreement to 2038, Tamar's concession to 2038, Leviathan's to 2044 and the Partitioned Zone's to 20463. Each is a customer relationship in reverse: the state sells Chevron the right to produce and sets the price in tax and royalty.

Venezuela shows the extreme case. Chevron's Venezuelan interests have been recorded as non-equity investments since 2020, "where income is only recognized when cash is received, and production and reserves are not included"4, and as of the end of 2025 "no proved reserves are recognized"5. Chevron is paid when it is paid.

The risk factors add the tax that arrives when prices rise: governments "including California and Australia, have announced, proposed, or implemented windfall profit taxes"6.

Venezuela's contracts run long: Petropiar to 2047 and Petroindependencia, in which Chevron holds 35.8 percent, to 20507. Long terms on paper have not produced recognised reserves.

Income tax against net income is the ratio to watch, about 59 percent in 20258. A rising share in a year of high prices would show the host governments taking the upside they granted.

Moat trajectory: Holding steady

Concessions dated 2033-2046; windfall-tax risk named.

The number that tests this moat
Reported
Income tax expense
$7,258M (2025) against $9,757M (2024)

The state's share of each year; rising faster than earnings in a price spike would mean hosts are taking the upside.

Source: Chevron Form 10-K, FY2025 ↗
References
  1. ReportedIn 2025 Chevron's income tax expense was $7,258 million against net income of $12,299 million; in 2024 it was $9,757 million.
    Chevron Form 10-K for fiscal 2025 - Item 7 MD&A: earnings by segment, return on capital employed and financial ratios. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedIn 2025 Chevron's income tax expense was $7,258 million against net income of $12,299 million; in 2024 it was $9,757 million.
    Chevron Form 10-K for fiscal 2025 - Item 7 MD&A: earnings by segment, return on capital employed and financial ratios. — FY2025 · publ. 24 February 2026 · source ↗
  3. ReportedTengizchevroil's runs to 2033, Karachaganak's production sharing agreement to 2038, Tamar's concession to 2038, Leviathan's to 2044 and the Partitioned Zone's to 2046.
    Chevron Form 10-K for fiscal 2025 - Note 15 equity affiliates: Tengizchevroil, Chevron Phillips Chemical, GS Caltex and others. — FY2025 · publ. 24 February 2026 · source ↗
  4. ReportedChevron's Venezuelan interests have been recorded as non-equity investments since 2020, "where income is only recognized when cash is received, and production and reserves are not included", and as of the end of 2025 "no proved reserves are recognized".
    Chevron Form 10-Q for the quarter ended 30 June 2026 - share repurchases, the Middle East conflict, Venezuela, OPEC+ exposure and litigation. — Q2 2026 · publ. 6 August 2026 · source ↗
  5. ReportedChevron's Venezuelan interests have been recorded as non-equity investments since 2020, "where income is only recognized when cash is received, and production and reserves are not included", and as of the end of 2025 "no proved reserves are recognized".
    Chevron Form 10-K for fiscal 2025 - Items 1 and 2: upstream operations, reserves, concessions and employees. — FY2025 · publ. 24 February 2026 · source ↗
  6. ReportedThe risk factors add the tax that arrives when prices rise: governments "including California and Australia, have announced, proposed, or implemented windfall profit taxes".
    Chevron Form 10-K for fiscal 2025 - Item 1A risk factors and Note 16 litigation and environmental matters. — FY2025 · publ. 24 February 2026 · source ↗
  7. ReportedVenezuela's contracts run long: Petropiar to 2047 and Petroindependencia, in which Chevron holds 35.8 percent, to 2050.
    Chevron Form 10-K for fiscal 2025 - Items 1 and 2: upstream operations, reserves, concessions and employees. — FY2025 · publ. 24 February 2026 · source ↗
  8. Moat Explorer calcIncome tax against net income is the ratio to watch, about 59 percent in 2025.
    Moat Explorer calculation from Chevron's reported figures ($ millions unless stated). Segment mix 2025: external sales upstream US 19,608, upstream international 33,844, downstream US 65,331, downstream international 65,545, All Other 104, total 184,432; upstream 19,608 + 33,844 = 53,452, 53,452 / 184,432 = 29.0%; downstream 65,331 + 65,545 = 130,876, 130,876 / 184,432 = 71.0%; upstream US 19,608 / 184,432 = 10.6%; upstream international 33,844 / 184,432 = 18.4%; downstream US 65,331 / 184,432 = 35.4%; downstream international 65,545 / 184,432 = 35.5%. Upstream share of external sales 2015 (4,117 + 15,587) / 129,925 = 15.2%. Intersegment: upstream US 25,910 / 45,518 = 56.9%. Segment earnings 2025: upstream 12,822, downstream 3,022, sum 15,844; downstream 3,022 / 15,844 = 19.1%; upstream 12,822 / 15,844 = 80.9%. Downstream assets 55,243 / 324,012 = 17.0%. Change 2024 to 2025: upstream 12,822 - 18,602 = -5,780; downstream 3,022 - 1,727 = +1,295; 1,295 / 5,780 = 22.4%; Brent 81 - 69 = 12, 5,780 / 12 = about 480 per $1. 2022 upstream 12,621 + 17,663 = 30,284; downstream 5,394 + 2,761 = 8,155. Margins 2025 on sales before eliminations: upstream US 5,815 / 45,518 = 12.8%; upstream international 7,007 / 42,861 = 16.3%; downstream US 1,375 / 72,485 = 1.9%; downstream international 1,647 / 69,925 = 2.4%. Earnings over year-end segment assets: upstream 12,822 / 256,975 = 5.0%; upstream US 5,815 / 84,559 = 6.9%; upstream international 7,007 / 168,200 = 4.2%; downstream 3,022 / 55,243 = 5.5%; downstream US 1,375 / 33,745 = 4.1%; downstream international 1,647 / 21,146 = 7.8%. US downstream 531 / 3,904 - 1 = -86.4%. CPChem 352 / 8,985 = 3.9%; 352 / 903 - 1 = -61.0%. TCO revenue 21,986 / 18,872 - 1 = 16.5%; TCO net income 2,496 / 5,779 - 1 = -56.8%. Hess net income 193 / 48,000 = 0.4%. ROCE 2015-2025: 2.5, -0.1, 5.0, 8.2, 2.0, -2.8, 9.4, 20.3, 11.9, 10.1, 6.6; sum 73.1 / 11 = 6.6% average; years at or above 8%: 2018, 2021, 2022, 2023, 2024 = 5 of 11. Production: Permian 1,000 / US 1,858 = 54%; 1,000 / 3,723 = 27%; Australia 472 / 3,723 = 12.7%; Q2 2026 4,070 / 3,396 - 1 = 19.8%; 4,070 / 3,120 - 1 = 30.4%. Guyana 30% x 1.7 million gross = 510 thousand. Gas: 0.91 x 6 = 5.46 per barrel of oil equivalent; 5.46 / 70.80 = 7.7%; 1.8 billion cubic feet / 6,000 = 300 thousand boe a day. Reserves: 3,723 x 365 = 1,359 million boe a year; 10,591 / 1,359 = 7.8 years. California refining 290 + 257 = 547 of 1,099 = 49.8%. Largest holders 8.56 + 7.50 + 7.00 + 6.70 = 29.76%. Balance sheet and returns: net debt 34,461 / 17,756 = 1.94, up 94%; dividends per share 6.84 / 4.28 - 1 = 59.8%; 6.84 / 6.63 = 1.03; returns 27.1 / 12.3 = 2.2 times; free cash flow 16.6 - 12.751 = 3.8 bn; buyback authorisation 75 - 44 = 31 bn; Q2 2026 buyback 3.0 bn / 16.2 million = $185 a share; shares 1,980 / 1,755 - 1 = 12.8%, 1,980 - 1,755 = 225 million; employees 43,039 / 45,600 - 1 = -5.6%; operating and SG&A 33,444 / 29,240 - 1 = 14.4%, 33,444 - 29,240 = 4,204; DD&A 20,132 / 17,282 - 1 = 16.5%, +2,850; income tax 7,258 / 12,299 = 59.0%. Valuation: trailing sales 184,432 - 90,476 + 114,755 = 208,711; trailing net income 12,299 - 5,990 + 14,282 = 20,591; 403.40 / 20.591 = 19.6 times; 403.40 / 12.299 = 32.8 times; implied forward earnings 403.40 / 12.77 = 31.6 bn, 31.6 / 12.3 = 2.6 times; trailing EPS approximately 20,591 / 1,970 = 10.45. Swings: timing 2.9 + 1.4 = 4.3 bn; international downstream 1,013 + 2,457 = 3,470. Further: California inputs 261 + 253 = 514, 514 / 1,038 = 49.5%; GS Caltex 58 / 4,403 = 1.3%, 437 / 4,403 = 9.9%; equity affiliate income 3,000 / 5,131 - 1 = -41.5%; affiliate production 538 / 3,723 = 14.5%; Hess share of 2025 production increase 261 / 385 = 67.8%; enterprise value less market value 431.95 - 403.40 = 28.55 bn; capital employed 232,934 / 177,698 - 1 = 31.1%; total assets 324,012 - 256,938 = 67,074; Hess issuance 15% / 6% = 2.5 years, 15% / 3% = 5 years; external sales 2015 downstream US 48,420 + 4,426 = 52,846, downstream international 54,296 + 2,933 = 57,229; 2020 downstream US 32,589 - 2,150 = 30,439 - balance sheet, capital returns, costs and valuation. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Chevron's Forms 10-K, 10-Q, earnings releases, proxy statement and market data; operands shown in the source line.
Sources
Generated September 25, 2026