⚠ Write-Downs in Four Years of TenModerate threat

Chevron (CVX) — threat to the moat

Chevron has written down Appalachia, Big Foot, Venezuela and California within a decade, and Hess is now the largest asset that could be next.

Long-lived assets are only as valuable as the price assumptions behind them, and Chevron's have been cut several times in a decade. American upstream lost $4,055 million in 2015 and $2,054 million in 20161. In 2019 Chevron took $8.17 billion in impairment charges primarily associated with Appalachia shale and Big Foot2. In 2020 it fully impaired its Venezuelan investments in Petropiar and Petroboscan3 and lost $5,543 million for the year4. In 2023 it impaired California assets due to continuing regulatory challenges in the state5.

United States upstream earnings in loss years ($M)-4,0552015-2,0542016-5,0942019-1,6082020Chevron Forms 10-K FY2016, FY2019 and FY2022
Four loss years in the American upstream since 2015.

Each write-down was an admission that something bought or built was worth less than its cost. Taken together they are the reason Chevron's return on capital averaged about 6.6 percent from 2015 to 20256, below any reasonable cost of capital.

The latest purchase is the largest. Hess was booked at about $48 billion with no goodwill7, so any future disappointment in Guyana or the Bakken will appear as an impairment of property rather than of goodwill.

The write-downs show in the earnings history. Net income was $4,587 million in 2015, a loss of $497 million in 2016, $2,924 million in 2019 and a loss of $5,543 million in 20208910, against $35,465 million in 202211. Two of the weak years were loss years; two more carried impairments.

An impairment charge on the Hess properties would be the sign to look for. Its absence through a period of $60 oil would be the first evidence that this acquisition was priced better than the last ones.

References
  1. ReportedAmerican upstream lost $4,055 million in 2015 and $2,054 million in 2016.
    Chevron Form 10-K for fiscal 2016 - segment earnings for 2014-2016 and return on capital employed. — FY2016 · publ. February 2017 · source ↗
  2. ReportedIn 2019 Chevron took $8.17 billion in impairment charges primarily associated with Appalachia shale and Big Foot.
    Chevron Form 10-K for fiscal 2019 - segment sales and earnings for 2017-2019, the 2019 impairments, excise taxes and return on capital employed. — FY2019 · publ. February 2020 · source ↗
  3. ReportedIn 2020 it fully impaired its Venezuelan investments in Petropiar and Petroboscan and lost $5,543 million for the year.
    Chevron Form 10-K for fiscal 2020 - the Noble Energy acquisition, the 2020 loss and the Venezuela impairment. — FY2020 · publ. February 2021 · source ↗
  4. ReportedIn 2020 it fully impaired its Venezuelan investments in Petropiar and Petroboscan and lost $5,543 million for the year.
    Chevron Form 10-K for fiscal 2020 - the Noble Energy acquisition, the 2020 loss and the Venezuela impairment. — FY2020 · publ. February 2021 · source ↗
  5. ReportedIn 2023 it impaired California assets due to continuing regulatory challenges in the state.
    Chevron Form 10-K for fiscal 2023 - the PDC acquisition, the announced Hess value, 2023 impairments and the San Ramon headquarters. — FY2023 · publ. February 2024 · source ↗
  6. Moat Explorer calcTaken together they are the reason Chevron's return on capital averaged about 6.6 percent from 2015 to 2025, below any reasonable cost of capital.
    Moat Explorer calculation from Chevron's reported figures ($ 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.
  7. ReportedHess was booked at about $48 billion with no goodwill, so any future disappointment in Guyana or the Bakken will appear as an impairment of property rather than of goodwill.
    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 ↗
  8. ReportedNet income was $4,587 million in 2015, a loss of $497 million in 2016, $2,924 million in 2019 and a loss of $5,543 million in 2020, against $35,465 million in 2022.
    Chevron Form 10-K for fiscal 2020 - the Noble Energy acquisition, the 2020 loss and the Venezuela impairment. — FY2020 · publ. February 2021 · source ↗
  9. ReportedNet income was $4,587 million in 2015, a loss of $497 million in 2016, $2,924 million in 2019 and a loss of $5,543 million in 2020, against $35,465 million in 2022.
    Chevron Form 10-K for fiscal 2019 - segment sales and earnings for 2017-2019, the 2019 impairments, excise taxes and return on capital employed. — FY2019 · publ. February 2020 · source ↗
  10. ReportedNet income was $4,587 million in 2015, a loss of $497 million in 2016, $2,924 million in 2019 and a loss of $5,543 million in 2020, against $35,465 million in 2022.
    Chevron Form 10-K for fiscal 2016 - segment earnings for 2014-2016 and return on capital employed. — FY2016 · publ. February 2017 · source ↗
  11. ReportedNet income was $4,587 million in 2015, a loss of $497 million in 2016, $2,924 million in 2019 and a loss of $5,543 million in 2020, against $35,465 million in 2022.
    Chevron Form 10-K for fiscal 2022 - segment sales and earnings for 2020-2022 and return on capital employed. — FY2022 · publ. February 2023 · source ↗
Sources
Generated September 25, 2026