⚠ Seven Point Eight Years on the ShelfModerate threat

Chevron (CVX) — threat to the moat

At 7.8 years of reserves and a five-year replacement ratio of 91 percent, Chevron has to keep buying oil companies to stay the same size.

Chevron's own risk factors put the problem in one sentence: "The company is in an extractive business; therefore, if it is not successful in replacing the crude oil and natural gas it produces" the business will decline1. Proved reserves of 10,591 million barrels against 2025 production of about 1,359 million barrels give a reserve life of about 7.8 years2.

Reserve replacement ratio (%)158One year, 202591Five years95Ten yearsChevron Form 10-K FY2025 and FY2025 earnings release
The one-year figure is the acquisition; the long ones are the drill bit.

Reserve life is not a deadline; reserves are added every year as fields are developed. But it sets how much of each year's cash has to go back into the ground. Chevron plans organic capital spending of $18 billion to $19 billion in 20263, and that is before any acquisition.

The recent record shows how the gap has been closed. Chevron bought Noble in 20204, PDC in 2023 for $6,520 million5 and Hess in 20256. Three purchases in six years are the sign of a company whose own drilling does not quite replace what it sells.

Buying reserves also changes the share count. The Noble purchase issued about 58 million shares, about 3 percent7; PDC about 41 million, about two percent8; and Hess 301.25 million, about 15 percent9. Each refill of the shelf has been paid for partly by existing owners.

The five-year reserve replacement ratio, 91 percent at the end of 202510, is the figure that decides this. If it stays below 100 percent, the next acquisition is not a choice but a requirement.

References
  1. ReportedChevron's own risk factors put the problem in one sentence: "The company is in an extractive business; therefore, if it is not successful in replacing the crude oil and natural gas it produces" the business will decline.
    Chevron Form 10-K for fiscal 2025 - Item 1A risk factors and Note 16 litigation and environmental matters. — FY2025 · publ. 24 February 2026 · source ↗
  2. Moat Explorer calcProved reserves of 10,591 million barrels against 2025 production of about 1,359 million barrels give a reserve life of about 7.8 years.
    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 - segment earnings, returns and per-unit economics. — 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.
  3. ReportedChevron plans organic capital spending of $18 billion to $19 billion in 2026, and that is before any acquisition.
    Chevron Form 10-K for fiscal 2025 - liquidity and capital resources: debt, ratings, capital spending, dividends and share repurchases. — FY2025 · publ. 24 February 2026 · source ↗
  4. ReportedChevron bought Noble in 2020, PDC in 2023 for $6,520 million and Hess in 2025.
    Chevron Form 10-K for fiscal 2020 - the Noble Energy acquisition, the 2020 loss and the Venezuela impairment. — FY2020 · publ. February 2021 · source ↗
  5. ReportedChevron bought Noble in 2020, PDC in 2023 for $6,520 million and Hess in 2025.
    Chevron Form 10-K for fiscal 2023 - the PDC acquisition, the announced Hess value, 2023 impairments and the San Ramon headquarters. — FY2023 · publ. February 2024 · source ↗
  6. ReportedChevron bought Noble in 2020, PDC in 2023 for $6,520 million and Hess in 2025.
    Chevron Form 10-K for fiscal 2025 - Note 29 and property tables: the Hess acquisition and property, plant and equipment. — FY2025 · publ. 24 February 2026 · source ↗
  7. ReportedThe Noble purchase issued about 58 million shares, about 3 percent; PDC about 41 million, about two percent; and Hess 301.25 million, about 15 percent.
    Chevron Form 10-K for fiscal 2020 - the Noble Energy acquisition, the 2020 loss and the Venezuela impairment. — FY2020 · publ. February 2021 · source ↗
  8. ReportedThe Noble purchase issued about 58 million shares, about 3 percent; PDC about 41 million, about two percent; and Hess 301.25 million, about 15 percent.
    Chevron Form 10-K for fiscal 2023 - the PDC acquisition, the announced Hess value, 2023 impairments and the San Ramon headquarters. — FY2023 · publ. February 2024 · source ↗
  9. ReportedThe Noble purchase issued about 58 million shares, about 3 percent; PDC about 41 million, about two percent; and Hess 301.25 million, about 15 percent.
    Chevron Form 10-K for fiscal 2025 - Note 29 and property tables: the Hess acquisition and property, plant and equipment. — FY2025 · publ. 24 February 2026 · source ↗
  10. ReportedThe five-year reserve replacement ratio, 91 percent at the end of 2025, is the figure that decides this.
    Chevron Form 10-K for fiscal 2025 - Items 1 and 2: upstream operations, reserves, concessions and employees. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 25, 2026