Operating Segments and Geographic Data

6 Months Ended

Jun. 30, 2012

Operating Segments and Geographic Data [Abstract]

Operating Segments and Geographic Data

Note 4. Operating Segments and Geographic Data

Although each subsidiary of Chevron is responsible for its own affairs, Chevron Corporation manages its investments in these subsidiaries and their affiliates. The investments are grouped into two business segments, Upstream and Downstream, representing the company’s “reportable segments” and “operating segments” as defined in accounting standards for segment reporting (ASC 280). Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transporting crude oil by major international oil export pipelines; processing, transporting, storage and marketing of natural gas; and a gas-to-liquids project. Downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil and refined products; transporting of crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. All Other activities of the company include mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, energy services, and alternative fuels and technology companies.

The segments are separately managed for investment purposes under a structure that includes “segment managers” who report to the company’s “chief operating decision maker” (CODM) (terms as defined in ASC 280). The CODM is the company’s Executive Committee (EXCOM), a committee of senior officers that includes the Chief Executive Officer, and EXCOM reports to the Board of Directors of Chevron Corporation.

The operating segments represent components of the company, as described in accounting standards for segment reporting (ASC 280), that engage in activities (a) from which revenues are earned and expenses are incurred; (b) whose operating results are regularly reviewed by the CODM, which makes decisions about resources to be allocated to the segments and assesses their performance; and (c) for which discrete financial information is available.

Segment managers for the reportable segments are directly accountable to and maintain regular contact with the company’s CODM to discuss the segment’s operating activities and financial performance. The CODM approves annual capital and exploratory budgets at the reportable segment level, as well as reviews capital and exploratory funding for major projects and approves major changes to the annual capital and exploratory budgets. However, business-unit managers within the operating segments are directly responsible for decisions relating to project implementation and all other matters connected with daily operations. Company officers who are members of the EXCOM also have individual management responsibilities and participate in other committees for purposes other than acting as the CODM.

The company’s primary country of operation is the United States of America, its country of domicile. Other components of the company’s operations are reported as “International” (outside the United States).

Segment Earnings The company evaluates the performance of its operating segments on an after-tax basis, without considering the effects of debt financing interest expense or investment interest income, both of which are managed by the company on a worldwide basis. Corporate administrative costs and assets are not allocated to the operating segments. However, operating segments are billed for the direct use of corporate services. Nonbillable costs remain at the corporate level in “All Other.” Earnings by major operating area for the three- and six-month periods ended June 30, 2012, and 2011, are presented in the following table:

	Three Months Ended June  30								Six Months Ended June 30
Segment Earnings	2012				2011				2012				2011
	(Millions of dollars)
Upstream
United States		$	1,318			$	1,950			$	2,847			$	3,399
International			4,302				4,921				8,944				9,449
Total Upstream			5,620				6,871				11,791				12,848
Downstream
United States			802				564				1,261				1,006
International			1,079				480				1,424				660
Total Downstream			1,881				1,044				2,685				1,666
Total Segment Earnings			7,501				7,915				14,476				14,514
All Other
Interest Income			19				19				39				37
Other			(310	)			(202	)			(834	)			(608	)
Net Income Attributable to Chevron Corporation		$	7,210			$	7,732			$	13,681			$	13,943

Segment Assets Segment assets do not include intercompany investments or intercompany receivables. “All Other” assets consist primarily of worldwide cash, cash equivalents, time deposits and marketable securities; real estate; information systems; mining operations; power generation businesses; energy services; alternative fuels; technology companies; and assets of the corporate administrative functions. Segment assets at June 30, 2012, and December 31, 2011, are as follows:

Segment Assets	At June 30 2012			At December  31 2011
	(Millions of dollars)
Upstream
United States		$	38,099		$	37,108
International			105,990			98,540
Goodwill			4,641			4,642
Total Upstream			148,730			140,290
Downstream
United States			23,002			22,182
International			21,069			20,517
Total Downstream			44,071			42,699
Total Segment Assets			192,801			182,989
All Other
United States			6,484			8,824
International			20,094			17,661
Total All Other			26,578			26,485
Total Assets — United States			67,585			68,114
Total Assets — International			147,153			136,718
Goodwill			4,641			4,642
Total Assets		$	219,379		$	209,474

Segment Sales and Other Operating Revenues Segment sales and other operating revenues, including internal transfers, for the three- and six-month periods ended June 30, 2012, and 2011, are presented in the following table. Products are transferred between operating segments at internal product values that approximate market prices. Revenues for the upstream segment are derived primarily from the production and sale of crude oil and natural gas, as well as the sale of third-party production of natural gas. Revenues for the downstream segment are derived from the refining and marketing of petroleum products such as gasoline, jet fuel, gas oils, lubricants, residual fuel oils and other products derived from crude oil. This segment also generates revenues from the manufacture and sale of fuel and lubricant additives and the transportation and trading of refined products and crude oil. “All Other” activities include revenues from mining operations, power generation businesses, insurance operations, real estate activities, energy services, and alternative fuels and technology companies.

Sales and Other Operating Revenues

	Three Months Ended June 30								Six Months Ended June 30
	2012				2011				2012				2011
	(Millions of dollars)
Upstream
United States		$	5,732			$	7,357			$	11,933			$	14,023
International			13,185				14,538				27,700				27,407
Subtotal			18,917				21,895				39,633				41,430
Intersegment Elimination — United States			(4,444	)			(4,897	)			(9,041	)			(9,162	)
Intersegment Elimination — International .			(8,022	)			(9,197	)			(17,248	)			(17,650	)
Total Upstream			6,451				7,801				13,344				14,618
Downstream
United States			22,657				24,612				45,341				46,046
International			30,598				34,180				59,848				64,237
Subtotal			53,255				58,792				105,189				110,283
Intersegment Elimination — United States			(10	)			(23	)			(25	)			(43	)
Intersegment Elimination — International			(22	)			(31	)			(33	)			(51	)
Total Downstream			53,223				58,738				105,131				110,189
All Other
United States			436				397				762				762
International			13				12				25				22
Subtotal			449				409				787				784
Intersegment Elimination — United States			(332	)			(266	)			(563	)			(488	)
Intersegment Elimination — International			(11	)			(11	)			(23	)			(20	)
Total All Other			106				132				201				276
Sales and Other Operating Revenues
United States			28,825				32,366				58,036				60,831
International			43,796				48,730				87,573				91,666
Subtotal			72,621				81,096				145,609				152,497
Intersegment Elimination — United States			(4,786	)			(5,186	)			(9,629	)			(9,693	)
Intersegment Elimination — International			(8,055	)			(9,239	)			(17,304	)			(17,721	)
Total Sales and Other Operating Revenues		$	59,780			$	66,671			$	118,676			$	125,083