Chevron took on a significant loss in Q2 2020, summing up to $8.3bn, with 74% of the losses coming from its upstream segment. This is mainly due to impairments in the company’s international upstream assets, which sum up to approximately $3.6bn. A contraction in demand has led to a reduced sales volume and lower crude oil prices led to a 57% decline in sales revenue from its upstream segment. The utilisation of its downstream assets has decreased dramatically with its refinery inputs reduced by 27% from Q1 2020 to Q2 2020 due to the extraordinary conditions of Covid-19, which put a halt in economic activity and led to a shrinkage in jet fuel and gasoline demand.

Due to the Covid-19 pandemic, Chevron reduced 2020 capital guidance by 30% from $22bn to $14bn. The reduction is focused on the upstream segment, mainly the Permian Basin. However, Chevron is still looking to grow the production in Permian when oil prices recover as accentuated with its recent acquisition of Noble Energy that will increase its available acreage in the play.

Since Q4 2019, Chevron has performed downward revision on both oil and natural gas prices, which brought upon a huge sum of impairments in Permian Basin, Appalachia Basin, Big Foot in US Gulf of Mexico, as well as Kitimat LNG project in Canada. In Q2 2020, Covid-19 outbreak called for further impairments, especially in Venezuela where the environment and economic outlook proved unsustainable.

The company is actively managing its portfolio and divesting international oil assets in order to reduce its dependency on crude oil outside of US onshore shale. This contrasts with the operator’s strategy to focus on increasing its natural gas and liquefied natural gas (LNG) portfolio, especially in the Asia-Pacific region.

In 2020, Chevron acquired Noble Energy for $5bn. Chevron was interested in Noble’s de-risked natural gas portfolio in the Eastern Mediterranean where 98% of the proved reserves have been developed. In the US onshore, Chevron will be adding new operation in DJ Basin and adding additional acreage to its Permian portfolio. Chevron also acquired Puma Energy (Australia) for $300m with the vision of expanding the company’s refining and marketing value chain in Asia-Pacific and further extending the value of Caltex brand in the region.

With respect to investing or diversifying into renewable energy, Chevron is taking a different approach compared to European oil giants. Companies such as Total, BP and Shell are looking to replace their upstream portfolio with alternative cleaner energy. Chevron’s priority retains in the upstream segment while committing to reduce the carbon intensity in its production. The company signed a partnership with Algonquin to power the company’s operations globally with 500MW of clean energy, which fulfils the company’s commitment to environmental, social and governance (ESG) goals.