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Item 1A. Risk Factors

2026-02-24 compared with 2025-02-21 · 37 added, 55 removed, 150 unchanged (38% of the section changed)

As a global energy company, Chevron is subject to a variety of risks that could materially impact the company’s results of operations and financial condition.

As a global energy company, Chevron is subject to a variety of risks.

The following disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future.

References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.

BUSINESS AND OPERATIONAL RISK FACTORS

Chevron is exposed to the effects of changing commodity prices Chevron is primarily in a commodities business that has a history of price volatility.

The most significant factor that affects the company’s results of operations are the prices of crude oil, natural gas, and natural gas liquids, which can be influenced by general economic conditions and level of economic

growth, including low or negative growth;

industry production and inventory levels;

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the pace of energy transition;

customer and consumer preferences and the use of substitutes;

consumer preferences and the use of substitutes;

and governmental regulations, policies and other actions regarding the development of oil and gas reserves, as well as greenhouse gas emissions and climate change.

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An investment in the company carries significant exposure to fluctuations in global prices of crude oil, natural gas, and natural gas liquids.

Extended periods of low prices for crude oil, natural gas, and natural gas liquids can have a material adverse impact on the company’s results of operations, financial condition and liquidity.

Extended periods of low prices or demand for crude oil, natural gas, and natural gas liquids have had, and in the future can have, a material adverse impact on the company’s results of operations, financial condition and liquidity.

Among other things, the company’s upstream earnings, cash flows, and capital expenditure programs could be negatively affected, as could its production and proved reserves.

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A significant or sustained decline in liquidity could adversely affect the company’s credit ratings, potentially increase financing costs and reduce access to capital markets.

The company may be unable to realize anticipated cost savings, expenditure reductions and asset sales that are intended to compensate for such downturns, and such downturns may also slow the pace and scale at which we are able to invest in our business, including our Chevron New Energies organization.

In some cases, transferred liabilities, including for decommissioning of previously divested assets, have returned and may continue to return to the company when an acquirer of those assets subsequently defaults on the assumed transferred liabilities (e.g., bankruptcy).

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sea level rise;

war or other military conflicts such as the conflict in the Middle East and the military conflict between Russia and Ukraine;

war or other military conflicts such as the conflict between Russia and Ukraine and in the Middle East;

civil unrest;

political events;

political events such as current geopolitical tensions in Venezuela;

system failures;

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and other electronic security breaches.

The cyber risk landscape changes over time due to a variety of internal and external factors,

including during organizational changes, relocating work to international geographies, or other corporate transactions;

The cyber risk landscape changes over time due to a variety of internal and external factors, including during organizational changes, relocating work to international geographies, or other corporate transactions;

political tensions;

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or civil unrest.

Although Chevron devotes significant resources to prevent unwanted intrusions and to protect its systems and data, whether such data is housed internally or by external third parties, the company has experienced and will continue to experience cyber incidents of varying degrees in the conduct of its business.

Cyber threat actors could compromise the company’s operational technology networks or other critical systems and infrastructure, resulting in disruptions to its business operations, injury to people, harm to the environment or its assets, disruptions in access to its financial reporting systems, or loss, misuse or corruption of its critical data and proprietary information, including without limitation its intellectual property and business information and that of its employees, customers, partners and other third parties.

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Regardless of the precise method or form, events affecting our networks or digital infrastructure could result in significant financial losses, legal or regulatory violations, reputational harm, and legal liability and could ultimately have a material adverse effect on the company’s business and results of operations.

Chevron is incorporating artificial intelligence technologies into its processes and these technologies may present business, compliance, and reputational risks The company is increasingly utilizing artificial intelligence (“AI”) technologies in certain of its processes, information systems and various operations, and expects that AI will assume a more critical role in its operations over time.

The use of AI technologies introduces certain risks to the company, including potential dependency on biased or incorrect AI outputs, new or enhanced regulatory requirements, litigation, privacy risks, cybersecurity risks, reputational harm, liability or other adverse consequences, any of which could adversely affect its business, financial condition and results of operations.

Additionally, other unforeseen risks stemming from either the company’s or third-party service providers’ use and development of AI tools and technologies, or the company’s inability to adopt such technologies at the same pace as its competitors, may arise in the future that could adversely affect its business and results of operations.

The company’s operations have inherent risks and hazards that require significant and continuous oversight Chevron’s results depend on its ability to identify and mitigate the risks and hazards inherent to operating in the energy industry.

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The occurrence of a significant incident, series of events, or unforeseen liability for which the company is self-insured, not fully insured or for which insurance recovery is significantly delayed could have a material adverse effect on the company’s results of operations or financial condition.

Chevron may not complete the acquisition of Hess Corporation within the time frame the company anticipates or at all, which could have adverse effects on Chevron The completion of the acquisition of Hess Corporation (Hess) is subject to a number of conditions, including approval of any Guyanese governmental body, agency or authority that asserts its approval is required in connection with the transaction, which makes the completion and timing of the completion of the merger uncertain.

Hess Guyana Exploration Limited (HGEL), a wholly owned subsidiary of Hess, is currently in arbitration with respect to the right of first refusal (Stabroek ROFR) contained in an operating agreement among HGEL, affiliates of Exxon Mobil Corporation (Exxon), and China National Offshore Oil Corporation (CNOOC) regarding the Stabroek Block offshore Guyana.

The arbitration merits hearing about the applicability of the Stabroek ROFR to the merger has been scheduled for May 2025, with a decision expected in approximately the following three months.

If the arbitration does not result in a confirmation that the Stabroek ROFR is inapplicable to the merger, and if Chevron, Hess, Exxon and/or CNOOC do not otherwise agree upon an acceptable resolution, then there would be a failure of a closing condition under the merger agreement, in which case the merger would not close.

On December 7, 2023, Chevron and Hess each received a request for additional information and documentary materials (Second Request) from the Federal Trade Commission (FTC).

Following the FTC review of the transaction, on September 30, 2024, the FTC announced that a majority of the Commission voted to accept a consent agreement among the FTC,

Chevron and Hess, resolving the concerns the FTC identified during its review of the transaction.

Chevron and Hess have taken and will continue to take appropriate steps to maintain our ability under the Hart-Scott-Rodino Act of 1976, as amended, to close the merger following satisfactory resolution of the ongoing arbitration proceedings regarding preemptive rights in the Stabroek Block joint operating agreement.

Additionally, if any Guyanese governmental body, agency or authority of competent jurisdiction asserts that its approval is required as a result of the consequences of the merger in Guyana on Hess’ assets in Guyana (which has not occurred as of the filing date of this report), approval of such governmental body, agency or authority will become a condition to each party’s obligation to complete the merger.

The failure to satisfy all of the required conditions could delay the completion of the acquisition for a significant period of time or prevent it from occurring at all.

A failure to complete the acquisition would mean that we will not realize the anticipated benefits of the transaction.

In addition, the terms and conditions of the required regulatory authorizations and consents for the acquisition that are granted, if any, may impose requirements, limitations or costs or place restrictions on the conduct of the company’s business after the transaction or materially delay the completion of the acquisition.

A delay in completing the acquisition could cause the company to realize some or all of the benefits later than we otherwise expect to realize them if the acquisition is successfully completed within the anticipated timeframe, which could result in additional transaction costs or in other negative effects associated with uncertainty about completion of the acquisition.

Acquisitions may cause Chevron’s financial results to differ from the company’s expectations or the expectations of the investment community, the company may not achieve the anticipated benefits of the acquisition, and the acquisition may disrupt the company’s current plans or operations The success of the pending acquisition of Hess will depend, in part, on Chevron’s ability to successfully integrate the business of Hess and realize the anticipated benefits, including synergies.

Difficulties in integrating Hess may result in the failure to realize anticipated synergies in the expected timeframes, in operational challenges, and in the diversion of management’s attention from ongoing business concerns, as well as in unforeseen expenses associated with the acquisition, which may have an adverse impact on the company’s financial results.

The acquisition of Hess may cause Chevron’s financial results to differ from the company’s expectations or the expectations of the investment community, the company may not achieve the anticipated benefits of the acquisition, and the acquisition may disrupt the company’s current plans or operations The success of the acquisition of Hess, which closed in July 2025, will depend, in part, on Chevron’s ability to realize the anticipated benefits, including the anticipated run-rate cost synergies, estimated five-year production and free cash flow growth rates, and anticipated higher returns to shareholders over the long-term.

Failure to realize anticipated synergies in the expected timeframe, operational challenges, the diversion of management’s attention from ongoing business concerns, and unforeseen expenses associated with the acquisition may have an adverse impact on our financial results.

One of our subsidiaries acts as the general partner of a publicly traded limited partnership, Hess Midstream LP, which may involve a potential legal liability One of our subsidiaries acts as the general partner of Hess Midstream, a publicly traded limited partnership.

Our control of the general partner of Hess Midstream may increase the possibility that we could be subject to claims of breach of duties owed to Hess Midstream, including claims of conflict of interest.

Any liability resulting from such claims could have an adverse impact on our future business, financial condition, results of operations and cash flows.

LEGAL, REGULATORY AND ESG-RELATED RISK FACTORS

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For example, liability or delays could result from an accidental, unlawful discharge or from new conclusions about the effects of the company’s current or former operations or products on human health or the environment.

In addition, to the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to the company’s causation of or contribution to the asserted damage, or to other mitigating factors.

It is also possible that such liability could be imposed without regard to the company’s causation of or contribution to the asserted damage, or to other mitigating factors.

For information concerning some of the litigation in which the company is involved, see Note 16 Litigation .

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As has occurred in the past, actions could be taken by governments to increase public ownership of the company’s partially or wholly owned businesses, to force contract renegotiations, or to impose additional taxes, tariffs, royalties, fees, penalties or other costs.

In a number of locations, including the European Union, governments have proposed or imposed restrictions on the company’s operations, trade, currency exchange controls, burdensome taxes, and public disclosure requirements that might harm the company’s competitiveness, return on investments, or relations with other governments or third parties.

In a number of locations, including the European Union, governments have proposed or imposed direct and indirect obligations with respect to the company’s activities, trade, taxes, and public disclosures, as well as currency exchange controls that might harm the company’s competitiveness, return on investments, or relations with other governments or third parties.

In other countries, political conditions have existed that may threaten the safety of employees and the company’s continued presence in those countries, and internal unrest, acts of violence or strained relations between a government and the company or other governments may adversely affect the company’s operations.

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Further, Chevron is required to comply with sanctions and other trade laws and regulations of the United States and other jurisdictions where we operate, such as sanctions imposed in Venezuela and Russia, which, depending upon their scope, could adversely impact the company’s operations and financial results in these countries.

In addition, litigation or changes in national, state or local environmental regulations or laws, including those

designed to stop or impede the development or production of oil and gas, such as those related to the use of hydraulic fracturing or bans on drilling, or any law or regulation that impacts the demand for our products, could adversely affect the company’s current or anticipated future operations and profitability.

In addition, litigation or changes in national, state or local environmental regulations or laws, including those designed to stop or impede the development or production of oil and gas, such as those related to the use of hydraulic fracturing or bans on drilling, or any law or regulation that impacts the demand for our products, could adversely affect the company’s current or anticipated future operations and profitability.

Legislative or regulatory changes in tax laws may expose Chevron to additional tax liabilities Changes in tax laws and regulations around the world are regularly enacted due to political or economic factors beyond the company’s control.

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Legislation, regulation, and other government actions related to GHG emissions and climate change could reduce demand for Chevron’s hydrocarbon and other products and/or continue to increase Chevron’s operational costs and reduce its return on investment.

The Paris Agreement went into effect in November 2016, and a number of countries in which we operate have adopted and may adopt additional policies intended to meet their Paris Agreement goals.

Globally, multiple jurisdictions are considering adopting or are in the process of implementing laws or regulations to directly regulate GHG emissions through a carbon tax, a cap-and-trade program, performance standards or other mechanisms, or to attempt to indirectly advance reduction of GHG emissions through restrictive permitting, procurement standards, trade barriers, minimum renewable usage requirements, financing standards, standards or requirements for environmental benefit claims, increased GHG reporting and climate-related disclosure requirements, or tax advantages or other incentives to promote the use of alternative energy, fuel sources or lower-carbon technologies.

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and customers’ and consumers’ use of the company’s hydrocarbon products.

In addition, the U.S.

Inflation Reduction Act (IRA) implements various incentives for lower carbon activities, including carbon capture and storage and the production of hydrogen and sustainable aviation fuel.

Although the IRA offers incentives that could support certain lower carbon lines of business, those same incentives could negatively impact supply and/or demand for our oil and gas products in the future or any existing or future lower carbon business lines.

Many of these actions, as well as customers’ and consumers’ preferences and use of the company’s products or substitute products, and actions taken by the company’s competitors in response to legislation and regulations, are beyond the company’s control.

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Such factors include, among others, the sectors covered, the GHG emissions reductions required, the use of standardized carbon accounting, the extent to which Chevron would be able to receive, generate, purchase, or retire credits, the price and availability of credits and the extent to which the company is able to recover, or continue to recover, the costs incurred through the pricing of the company’s products in the competitive marketplace.

Further, the ultimate impact of GHG emissions and climate change-related agreements, legislation, regulation, and government actions on the company’s financial performance is highly uncertain because the company is unable to predict with certainty, for a multitude of individual jurisdictions, the outcome of political decision-making processes and legal challenges, including the actual laws and regulations enacted, the variables and trade-offs that inevitably occur in connection with such processes, and market conditions, including the responses of consumers to such changes.

legal challenges, including the actual laws and regulations enacted, the variables and trade-offs that inevitably occur in connection with such processes, and market conditions, including the responses of consumers to such changes.

Attention to environmental, social, and governance (ESG) matters impacts our company Attention to ESG matters, including those related to climate change and sustainability, evolving societal, investor and governmental pressure on companies to address ESG matters, and potential customer and consumer use of substitutes to Chevron’s products have resulted and may continue to result in changes to the portfolio and company activities, increased costs, reduced demand for our products, reduced profits, increased investigations and litigation or threats thereof, negative impacts on our stock price and access to capital markets, impaired participation in public discourse and debate by the company relating to mandatory and voluntary standards and regulations, and damage to our reputation.

For example, increasing attention to ESG matters, including climate change, has resulted and may result in the future in shifting demand for our hydrocarbon products, and have resulted in additional litigation and governmental investigations, or threats thereof, against the company.

For example, trends in attention to ESG matters, including climate change, have resulted and may result in the future in shifting demand for our hydrocarbon products, additional litigation and governmental investigations, and/or threats thereof, against the company.

For instance, we have received investigative requests and demands from the U.S.

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Information related to climate-change related litigation matters is included in Note 16 Litigation under the heading “Climate Change.”

Some stakeholders, including but not limited to sovereign wealth, pension, and endowment funds, have been divesting and promoting divestment of or screening out of fossil fuel equities and urging lenders to limit funding to companies engaged in the extraction of fossil fuel reserves.

Some stakeholders, including but not limited to sovereign wealth, pension, and endowment funds, have been divesting and promoting divestment of, or screening out, fossil fuel equities and urging lenders to limit funding to companies engaged in the extraction of fossil fuel reserves.

Further, voluntary carbon-related and target-setting frameworks have been developed that may limit the ability of certain sectors, including the oil and gas sector, from accessing capital, and may result in exclusion of the company’s equity or debt from being included as an investment option in portfolios.

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Our ambitions and disclosures related to ESG matters subject us to numerous risks that may negatively impact our reputation and stock price or result in other material adverse impacts to the company Chevron has set a number of lower carbon-related ambitions, which may include aspirations, targets, guidance, objectives, metrics, and/or goals.

In particular, Chevron has announced an aspiration to achieve net zero Scope 1 and 2 emissions in upstream by 2050.

The company also has set nearer-term GHG emission-related targets for upstream carbon intensity and portfolio carbon intensity.

Chevron regularly evaluates its ambitions and expects to change or eliminate some of these aspirations, targets, and other ambitions for various reasons, including market conditions;

Chevron regularly evaluates its ambitions.

The company has changed and/or eliminated some of these aspirations, targets, and other ambitions and may continue to do so in the future for various reasons, including market conditions;

its strategy or portfolio;

and financial, operational, policy, reputational, legal and other factors.

Our ability to achieve any ambition, including with respect to climate-related initiatives, including those outlined in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, pages 35 through 37, and any new businesses, is subject to numerous risks and contingencies, many of which are outside of Chevron’s control.

Our ability to achieve any ambition, including those related to GHG emissions or climate-related initiatives, such as those outlined in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, on pages 36 through 37, as well as efforts concerning new businesses, is subject to numerous risks and contingencies, many of which are outside of Chevron’s control and persist.

Examples of such risks and contingencies include:

(1) sufficient and substantial advances in technology, including the continuing progress of commercially viable technologies and low- or non-carbon-based energy sources;

(1) sufficient and substantial advances in technology, including progress of commercially viable technologies and low- or non-carbon-based energy sources;

(2) laws, governmental regulation, policies, and other enabling actions, including those regarding subsidies, tax and other incentives as well as the granting of necessary permits by governing authorities;

(3) the availability and acceptability of cost-effective, verifiable carbon credits;

(4) the availability of suppliers that can meet our sustainability-related standards;

(5) evolving regulatory requirements, including changes to IPCC’s Global Warming Potentials and the United States Environmental Protection Agency (U.S.

EPA) Greenhouse Gas Reporting Program, affecting ESG standards or disclosures;

(6) evolving standards for tracking and reporting on emissions and emission reductions and removals;

(3) successful generation, acquisition, retirement and accounting of cost-effective, verifiable carbon offsets from nature-based solutions or carbon capture and storage;

(4) the availability of suppliers that can meet sustainability-related standards;

(5) evolving regulatory requirements affecting ESG standards or disclosures;

(6) evolving standards for tracking and reporting on

emissions and emission reductions and removals;

(7) customers’ and consumers’ preferences and use of the company’s products or substitute products;

(8) actions taken by the company’s competitors in response to legislation and regulations;

and (9) successful negotiations for carbon capture and storage and nature-based solutions with customers, suppliers, partners, and governments.

and (8) actions taken by the company’s competitors.

The standards and regulations for tracking, reporting, disclosing, marketing and advertising related to ESG matters are relatively new, have not been harmonized and continue to evolve.

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Our interpretation of reporting standards may differ from those of others, and such standards may change over time, including through non-public processes, any of which could result in significant revisions to our goals or reported progress in achieving such goals.

For example, Chevron’s methane intensity target is calculated based on Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry (2021), which requires use of local regulatory reporting methodologies where applicable.

EPA has adopted notable changes to reporting methodologies in its Greenhouse Gas Reporting Program (40 C.F.R.

Part 98.230), which are applicable to Chevron’s U.S.

We expect these adopted changes may increase our reported emissions in future years, and therefore, increase our reported methane intensity.

In addition, Chevron participates, along with other companies, institutes, universities, trade associations and other organizations, in various initiatives, campaigns, and other projects that express various ambitions, aspirations and goals related to climate change, emissions and energy transition.

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Achievement of or efforts to achieve ambitions such as the foregoing and future internal climate-related initiatives has, and may continue to, increase costs, and, in addition, may require purchase of carbon credits, or limit or impact the company’s business plans, operations and financial results, potentially resulting in reduction to the economic end-of-life of certain assets, impairing the associated net book value, among other material adverse impacts.

Our failure or

perceived failure to pursue or fulfill such ambitions within the timelines we announce, or at all, or to satisfy various reporting standards and regulations could have a negative impact on the company’s reputation, investor sentiment, ratings outcomes for evaluating the company’s approach to ESG matters, stock price, and cost of capital and expose us to government enforcement actions and private litigation, among other material adverse impacts.

Our failure or perceived failure to pursue or fulfill such ambitions within the timelines we announce, or at all, or to satisfy various reporting standards and regulations could have a negative impact on the company’s reputation, investor sentiment, ratings outcomes for evaluating the company’s approach to ESG matters, stock price, and cost of capital and expose us to government enforcement actions and private litigation, among other material adverse impacts.

GENERAL RISK FACTORS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors