CourseProject_j.james-delarosa

Running head: COURSE PROJECT: CHEVRON IN THE OIL DRILLING & GAS 1
Course Project: Chevron in the Oil Drilling & Gas Extraction Industry
Jessica James-De La Rosa
DeVry University
Investment Fundamentals & Security Analysis
FIN-351-15227
Dr. Dale Prondzinski
February 18, 2016

COURSE PROJECT: CHEVRON IN THE OIL DRILLING & GAS 2
Course Project: Chevron in the Oil Drilling & Gas Extraction Industry
Executive Summary
The oil drilling and gas exploration industry of the energy sector has been challenged by
the recent decline in oil prices. Chevron Corporation has been one of the companies that has
been effected by a drastic decrease in their net incomes from each of their different operating
segments. However, it is because of new technologies and improved extraction techniques that
the industry, and Chevron, is able to recover from an economic recession and lead the way into
several years of increasing expansion.
Fundamental Analysis
Economic Analysis
In an industrialized economy, like the United States, the percentage of government
involvement, of overall economic activity, is rather small. Even with assurances, successive
administrations have not been able to find a successful way to reduce the size of the public
sector, as the government only accounted for 14% of GDP in 2003. More recently, the
expansion of fiscal policies, such as tax cuts, and monetary policies, low-interest rates, have been
the reasons behind the progressively high growth of the economy as they have helped stimulate
consumer spending and the housing sector boom. As growth continues to increase and there is
another potential threat of inflation, the challenging situation authorities are now faced with is
how to bring the monetary and fiscal policies toward a more common position that associates
with strong growth. The Bush administration attempted to solve this by making their program of
tax cuts permanent, but in reality, some of the cuts may be reversed if the deficit continues to
climb. Also, the war on terror and in Iraq have only added to the fiscal issues.

The United States’ monetary policy has a worldwide economic significance because the
US dollar is principal for international transactions, as several currencies are linked to the dollar
and many countries use it as their currency. Since the Federal Open Market Committee
(FOMC), who is responsible for establishing the federal funds rate, last met the federal rate was
raised by 25 basis points, which was the first increase since 2006, and they expect four more 25-
basis-point increases in 2016 and additional increases in 2017.
The Fed motivated the rate hike by saying that economic activity is “expanding at a
moderate pace” and that “underutilization of labor resources has diminished
appreciably.” On the other hand, the FOMC statement commented that inflation has been
running below its 2% target, although it attributed this to declines in energy prices and
the prices of non-energy imports (because of a strong dollar). (IHS Global Inc. [IHS],
February 2016, p. 1)
Although inflation was a factor in raising the federal funds rate, the outlook for inflation
remains moderate as the Consumer Price Index (CPI) is forecasted to average a 2.3% annual
increase in fiscal years 2015 to 2045.
There are a few topics with to keep a close eye on regarding economic activity that may
have an effect on future activity. One subject to keep track of should be the Fed’s balance sheet.
Following the recession, the Fed purchased bonds to decrease interest rates, causing the balance
sheet to increase. As the balance is expected to decline to the level it was before the recession,
around $800 billion, it will be the timing and pace of this course that will determine the future of
the markets. Another topic, regarding the fiscal economy, is the potential outcome of
ObamaCare. “As the first vote in fiscal 2016, the House is preparing to vote to repeal

ObamaCare and defund Planned Parenthood. The Congressional Budget Office (CBO) found
that this legislation would reduce deficits by more than $500 billion over 10 years” (IHS,
February 2016, p. 12).
Industry Analysis
The current life cycle phase of the oil drilling and gas extraction industry is mature. The
industry has well-established products and participants, it has begun using new techniques and
technologies to capitalize on new resources, the major competitors are responding to market
developments by merging operations, and new resources to extract have been discovered. The
industry value added (IVA) is a measure of the industry’s contribution to the economy as a
whole and it is expected to grow at an annualized rate of six percent, while the U.S. GDP is
anticipated to grow 2.2 percent, from 2010 to 2020. Although the IVA growth for this industry
is expected to surpass the overall economy, it is escalated by the low revenue that was the result
of the recession in 2010, and it is because of the contingent importance of oil and gas extraction
in the current economy that it will continue to ensure the industry’s relevance. The global
demand for oil is anticipated to be strong as emerging economies continue to build essential
infrastructure resulting in an increased consumption of petroleum-based products.
The United States’ supply of natural gas resources has increased since the recent
discoveries in North Dakota, the Bakken oil field, and the Appalachian basin. Advanced
technologies have helped “extract previously uneconomical supplies from shale formations in
these regions” through horizontal drilling and hydraulic fracturing (Witter, December 2015, p.
11).
Domestic oil production currently faces many unknowns as the majority of oil fields that
had been discovered in the U.S. decades ago are now in decline, and it will still be some time

before deep-water oil exploration can increase extraction at a steady enough rate to significantly
add to the industry’s output. Industry regulations are mostly assigned by the individual states’
statutes and common laws and followed out with their environmental regulatory agencies.
However, there are still primary federal regulatory agencies within the sector, such as the
Department of Energy (DoE) and the Environmental Protection Agency (EPA). Although the
six-month moratorium the President Barack Obama announced in mid-2010 was lifted ahead of
schedule, the permitting process was slow to resume.
This industry is also highly competitive with oil and natural gas being highly globalized
commodities that are consumed for a multiplicity of purposes and without these commodities,
many aspects of the global economy would not function. At the end of 2015, Congress nullified
the 40-year-old ban on U.S. crude oil exports, and it expectedly U.S. producers will charge
higher prices since they now have the ability to sell products abroad.
Chevron Corporation (CVX)
Summary
Chevron Corporation (referred to as Chevron Corp; Chevron; or “the company”), was
founded in October 2001 as a result of a merger with Texaco Inc. It is the second-largest oil
company in the United States with a “production of 2.6 million of barrels of oil equivalent a day
(67% oil)” (Morningstar, 2016, Stock Analysis Tab Analyst Research). “The company is
engaged in fully integrated petroleum operations, including exploration and production, refining,
marketing and transportation, chemicals manufacturing and sales, geothermal, as well as mining
operations and power generation” (MarketLine, 2015, p. 3).
Company Description

In the United States, Chevron Corp. is the largest producer of liquids and one of the
largest hydrocarbon producers. Their major operations in the U.S. are located in “California, the
Gulf of Mexico, Colorado, Louisiana, Michigan, New Mexico, Ohio, Oklahoma, Pennsylvania,
Texas, West Virginia and Wyoming” (BMI, 2014, p. 128). Chevron’s largest business segments
are upstream, which include exploration, production, and refining, and downstream, consist of
marketing and transportation.
Company Analysis
In determining the Chevron’s valuation, the combined dividend and earnings model was
used. In the first part of the model, the earnings per share (EPS) is projected for the next five
years. The company’s payout ratio fluctuated between 23% and 41% from the end of the 2010
fiscal year to the end of the 2014 fiscal year, so the future payout ratio was estimated to be 30%
over the next five years, to ensure the growth continues along the same course. To establish the
present value of the common stock price for the 2015 fiscal year, a price-earnings (P/E) ratio of
15 was used as a multiplier of EPS. A P/E ratio of 15 is higher than Chevron’s historical
average, but the future P/E ratios are estimated to average 16, so a multiplier of 15 is a more
reasonable valuation metric. Using a P/E ratio of 15 and EPS of $14.49 calculated from the first
part of the model, a stock price of $217.34 is expected at the end of the 2019 fiscal year. This
price is then discounted back to the beginning of 2015, resulting in a value of $103.48. When
Company Ticker Market Capital (M)
ConocoPhillips COP $40,619
BP PLC BP $88,752
Chevron Corp. CVX $160,782
Royal Dutch Shell PLC RDS.A $140,665
Exxon Mobil Corporation XOM $337,322
Devon Energy Corp DV $8,914
Hess Corp HES $11,475
Major Companies

the values from both parts are added together, the total present value of the stock is $115.48 for
the beginning of the 2015 fiscal year. Given that Chevron was selling at $112.58 at the time of
this analysis, this model would indicate that the stock is fairly valued, and the dividend growth
pattern is leveling out.
Chevron’s P/E ratio at the end of the 2014 fiscal year was the least out of all five major
companies. However, it is projected to increase at a steady rate over the next five years (2015-
2019) as the company increased their net sales and net income growth rates due to growth in
their major products. In order to accomplish this, the company has set out to invest
approximately $3 billion in exploration activities, in addition to drilling in more than 50
exploration and appraisal wells all over the world.

The program supports continued exploration and appraisal activity in the U.S. Gulf of
Mexico, Western Australia, West Africa, and shale and tight resource plays in the
Permian Basin and Canada. This planned spending also includes initial evaluation of
acreage acquired over the past three years, including Australia, the Kurdistan Region of
Iraq and Morocco. (Chevron Corporation [CVX], 2015, p. 10)
Financial Analysis
Liquidity
Chevron’s current ratio has declined by almost 19% from 2012 to the 2014 fiscal year.
Although the ratio is still greater than 1, indicating the company has a positive working capital,
normally a good current ratio is equal or slightly exceed the value of 2. The quick ratio has also
declined over the past two years by a little over 9%, for a total of 1.12 at the end of 2014. As
many oil companies are very dependent on the economic conditions, causing their assets to
decline quicker than their liabilities, they can perform conventionally well with a current ratio of
approximately 1.2 and a quick ratio that is somewhat less. As Chevron does fall into this
position, for all three years, the more important issue is the declining trend over the past three
years. In addition to this, the company’s net working capital is weakening, indicating that their
business may be inadequately liquid and may have future problems meeting current debt
obligations.
Profitability
Liquidity Ratios 2012 2013 2014
Current Ratio 1.63 1.52 1.32
Quick Ratio 1.23 1.15 1.12
Net Working Capital to Total Assets 0.09 0.07 0.04

The oil & gas industry gross profit margin at the end of the 2014 fiscal year was
approximately 28%, compared to a ratio of nearly 16% for the coal mining industry. This
demonstrates that although this ratio allows stockholder’s to quickly determine the degree of
profit potential, it is not a reliable indicator on its own, as the industry has to adjust to price
increases from inflationary effects and the price of crude oil.
The future path of crude oil and natural gas prices can vary substantially, depending on
assumptions about the size of global and domestic resources, demand for petroleum
products and natural gas (particularly in non-Organization for Economic Cooperation and
Development (non-OECD) countries), levels of production, and supplies of other fuels.
(U.S. Energy Information Administration [EIA], 2015, p. ES-1)
Profitability Ratios 2012 2013 2014
Gross Profit Margin 32.48% 30.38% 31.61%
After Tax Profit Margin 10.82% 9.36% 9.08%
Return on Assets 11.24% 8.44% 7.23%
Return on Equity 19.18% 14.37% 12.41%

The return on equity (ROE) is a measure of the amount of return a company generates on
the capital provided by the shareholders and return on assets (ROA) measures the return
generated from assets. Chevron’s ROE has decreased approximately an average of 16.64% each
year, from 2011 to 2014, each due to a reduction of net income. Their ROA also decreased, in
the same time period, almost an average of 18.26% each year. In 2014 Chevron’s net income
decreased almost 11% to $19,241 million, from $21,423 million the previous year, as their assets
were $266,026 million.
Return On Equity 2014 2013 2012 2011
Y / Y Equity Change 3.97% 9.22% 11.74% 16.27%
Y / Y Net Income Change -10.59% -17.99% -2.49% 41.14%
Return On Equity 12.65% 15.00% 20.30% 22.10%

As net income increases or decreases, so does the ROE and ROA, however neither of
these ratios offer much help in deciding what to change in order to improve them.
Typically, a company can maximize profitability by delivering a desired and properly
priced product or service with controlled operating costs…. Generation of income
requires assets, but they should be purchased only to the extent that they contribute
positively to net sales and net income. (Gildersleeve, 1999, p. 32)
As this is not always possible with companies in the oil industry, these return ratios can be hard
to confidently forecast due to the assumptions previously stated.
Asset-Utilization Ratios
The company’s ability to collect accounts receivables increased slightly by three percent
from 2013 to 2014, with their average receivable collection period decreasing by approximately
a day. While Chevron’s receivables turnover increased, their inventory, fixed-assets, and total
asset turnovers decreased. There was an excess amount of inventory at the end of 2013,
increasing by 3.84% from the previous year, and in 2014, with a 1.96% increase. The average
inventory turnover period at the end of the 2014 fiscal year was 16.22, an increase of almost two
days from 2013 and from the industry average. Compared to the industry average of 1.66,
Chevron’s fixed-assets turnover decreased from 1.83, at the end of 2012, to 1.22, at the end of
Return On Assets 2014 2013 2012 2011
Y / Y Total Assets Change 4.84% 8.92% 7.94% 16.82%
Return On Assets 7.40% 8.80% 11.83% 13.64%
Asset-Utilization (Efficiency) Ratios 2012 2013 2014
Receivables Turnover 11.26 10.70 11.02
Inventory Turnover 27.95 25.44 22.50
Fixed-Assets Turnover 1.83 1.49 1.22
Total Asset Turnover 1.09 0.94 0.82

2014, due to an increase of almost 30% in the company’s property, plant, and equipment, net. If
sales drop, as they did with Chevron and the oil & gas industry, it is harder to maintain fixed
assets as opposed to reducing variable costs, causing a company some discomfort during an
economic slowdown. Since Chevron’s fixed-asset turnover ratio is declining, it displays their
strong investments in their plants and equipment but, unlike companies in other sectors, they
need their fixed assets in order to get their revenue. If they did not have such strong investments
in them they would not be a strong, or top, competitor in their industry. Chevron’s fixed-assets
account for almost 70% of their total assets, along with 10% from investments and advances, and
another five percent from their cash, cash equivalents, and marketable securities.
Debt-Utilization Ratios
The Chevron Corporation has not had an interest expense for over the past three years, so
this ratio does not benefit here, however the fixed charge coverage is very applicable as it takes
into account the annual obligations of lease payments. The higher the value of the ratio, the
more protected the creditor’s position. Chevron’s fixed charge coverage has decreased by 50%
since 2012 to 2014. After review of their 2015 Form 10- Q (see appendix), although the
company has increased their fixed charges in 2014 by almost 31% from 2012, the main
contributing factor is their decrease in ‘Earnings Before Provision for Taxes and Fixed Charges’
by 35%. There was not much to be found on industry averages for this ratio, so in order to get
additional information for comparison, ExxonMobil’s (XOM) fixed charge cover ratio was used.
It appears that both companies’ have experienced similar trends.
Debt-Utilization (Leverage) Ratios 2012 2013 2014
Long-Term Debt to Equity 0.09 0.13 0.15
Debt to Total Assets 0.41 0.41 0.42
Times Interest Earned - - -
Fixed Charge Coverage 83.19 56.17 41.25

Price Ratios
The trailing price-to-earnings (P/E) ratio for the last three years, increased from 8.06 in
2012 to 10.98 in 2014. A better indicator would be to use EPS for 2015 of $10.65 (see the
Combined Dividends-Earnings model in the Appendix), for a forward P/E ratio of 10.53. The
price-to-book (P/B) value ratio for the end of the 2014 fiscal year is the lowest of the three years
analyzed, however with a value of 1.37 it is still 50% higher than the industry average for the
year. One explanation for why this value has decreased is due to the amount of new,
undepreciated fixed assets Chevron has attained and as they are continuing to build on their
projects, it is possible for it to continue to decrease through 2015. The dividend yields for the
company have also increased, and are expected to continue rising as the oil drilling and gas
Per Share Data 2012 2013 2014
Price to Earnings 8.06 11.18 10.98
Price to Book Value 1.56 1.62 1.37
Dividends to Price (Dividend Yield) 3.25% 3.12% 3.75%

extraction industry “is expected to grow substantially in the five years to 2020” (Witter,
December 2015, p. 8).
Other Ratios
The average tax rate for the Chevron Corporation is above the statutory rate of 35% but
has decreased from almost 40% at the end of 2013 to 38% at the end of 2014. The company
states that the primary reason for this decrease is due to “impact of changes in jurisdictional mix
and equity earnings, and the tax effects related to the 2014 sale of interests in Chad and
Cameroon, partially offset by other one-time and ongoing tax charges” (Chevron Corporation,
2015, p. 54). There has been a slight continuous increase in the dividends per share ratio from
2012 through 2014. However, although it is increasing, it is still at a low rate, indicating that the
company is retaining much of the income in order to invest in new plant and equipment.
Technical Analysis
Price & Volume
The closing price for the Chevron Corp. (CVX) stock on February 18, 2016 was $86.73.
This is -1.58 points, or -1.8%, from the previous days close. The typical price range is $87.01 to
$89.61; ± 1.3 points, or ± 1.5% and the extreme price range (85% of the time) is $85.71 to 90.91;
± 2.6 points, or ± 3%. On this closing day, February 18, 2016, the volume was 9.51 million
shares, which is -19.4% compared to the typical daily volume, over the last six months, of 11.8
million shares.
Other Ratios 2012 2013 2014
Average Tax Rate 43.16% 39.85% 38.11%
Dividends Per Share 0.26 0.35 0.41

Projected Stock Prices
The projected stock price for 2017 is $118.23 and the projected stock price for 2018 is
$123.
Investment Recommendation

Based on the fundamental and technical analysis, it would be my recommendation to
either buy or hold the CVX stock, but not to sell. Enough time has passed for the economy to
start moving back in a positive direction for the oil drilling and gas extraction industry, as it is
expected to grow significantly from 2015 to 2020. The crude oil prices will recover quickly, as
the global demand for this resource is expected to be strong. “Gains in revenue will flow
through to the bottom line as the industry focuses on containing costs, with exploration and
production activities becoming more efficient as technology improves” (Witter, December 2015,
p. 8).
Although many of the financial ratios over the past three years, from the end of the fiscal
year 2012 to the end of the fiscal year 2014, were declining, or not increasing very fast, this was
due to the central issue of the decrease in oil prices. This industry, and Chevron, are sensitive to
price fluctuations and because crude oil is a natural resource there are not always available
supplies. This is why the company has to make such large investments into their fixed assets, so
they can have the proper tools and equipment in order to find and extract them the most tactful
way possible. It is also why company shareholders are not getting back as much of a return
currently, because the company is using its net income to reinvest back into itself.
It is clear from the chart of the company’s historical stock prices that they are making
their way back to an increasing trend and they will continue to do this now that the price of crude
oil is increasing and will continue to be in demand.

Appendix
2012 2013 2014
Income Statement % Change % Change
Sales (Revenue) 241,909 228,848 -5.40% 211,970 -7.38%
Cost of goods sold 163,336 159,323 -2.46% 144,956 -9.02%
Gross profit 78,573 69,525 -11.52% 67,014 -3.61%
Costs and expenses (Fixed charges) 32,241 33,620 4.28% 35,812 6.52%
Interest 1,308 1,314 0.46% 1,163 -11.49%
EBIT 46,332 35,905 -22.50% 31,202 -13.10%
Rental expense 12,192 20,431 67.58% 27,818 36.16%
Total taxes on income 19,996 14,308 -28.45% 11,892 -16.89%
Net income 26,179 21,423 -18.17% 19,241 -10.19%
EBITDA 59,745 50,091 -16.16% 47,995 -4.18%
Earnings per share 13.43 11.18 -16.75% 10.21 -8.68%
Dividends per share 3.51 3.90 11.11% 4.21 7.95%
Weighted average shares 1,965 1,932 -1.68% 1,898 -1.76%
Balance Sheet
Assets
Cash 21,205 16,508 -22.15% 13,207 -20.00%
Receivables 20,997 21,622 2.98% 16,736 -22.60%
Inventory 6,144 6,380 3.84% 6,505 1.96%
Total current assets 55,720 50,250 -9.82% 42,232 -15.96%
Total non-current assets 177,262 203,503 14.80% 223,794 9.97%
Fixed assets 141,348 164,829 16.61% 183,173 11.13%
Total assets 232,982 253,753 8.92% 266,026 4.84%
Liabilities & Equity
Total current liabilities 34,212 33,018 -3.49% 31,926 -3.31%
Long-term debt 11,966 19,960 66.81% 23,960 20.04%
Total non-current liabilities 62,246 71,622 15.06% 79,072 10.40%
Total liabilities 96,458 104,640 8.48% 110,998 6.08%
Common stock 1,965 1,932 -1.68% 1,898 -1.76%
Common stock price at end of year 108.14 124.91 15.51% 112.18 -10.19%
Retained earnings 159,730 173,677 8.73% 184,987 6.51%
Treasury stock (33,884) (38,290) 13.00% (42,733) 11.60%
Total stockholders' equity 136,524 149,113 9.22% 155,028 3.97%
Total liabilities & equity 232,982 253,753 8.92% 266,026 4.84%
Company Actual

Millions of dollars 2010 2011 2012 2013 2014
Upstream United States 4,122 6,512 5,332 4,044 3,327
Growth 57.98% -18.12% -24.16% -17.73%
International 13,555 18,274 18,456 16,765 13,566
Growth 34.81% 1.00% -9.16% -19.08%
Total 17,677 24,787 23,788 20,809 16,893
Growth 40.22% -4.03% -12.52% -18.82%
Downstream United States 1,339 1,506 2,048 787 2,637
Growth 12.47% 35.99% -61.57% 235.07%
International 1,139 2,085 2,251 1,450 1,699
Growth 83.06% 7.96% -35.58% 17.17%
Total 2,478 3,591 4,299 2,236 4,338
Growth 44.92% 19.72% -47.98% 93.99%
All Other* (1,131) (1,482) (1,908) (1,623) (1,988)
Growth 31.03% 28.74% -14.94% 22.49%
19,024 26,896 26,179 21,422 19,243
Growth 41.38% -2.66% -18.17% -10.17%
Net Income Attributable to Chevron
* All Other includes income from power and energy services, insurance operations, real estate activities, and technology companies.
Income Attributable to Chevron Corporation by Operating Segment
Fiscal Year Ends Dec. 31
17,677
24,787 23,788
20,809
16,89316,893 17,818 17,065 16,312 15,558 14,805 14,051
16,893
1,590
(1,086)
(3,584)
(5,946)
(8,203)
(10,372)
16,893
34,046 35,216 36,207 37,063 37,812 38,475
(20,000)
(10,000)
0
10,000
20,000
30,000
40,000
50,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Forecasted Net Income by Upstream Operating Segment
Values Forecast Lower Confidence Bound Upper Confidence Bound

2,478
3,591
4,299
2,236
4,3384,338
2,927 2,919 2,740 2,733 2,554 2,547
4,338
(1,879) (2,037) (2,364) (2,515) (2,836) (2,982)
4,338
7,733 7,876 7,845 7,981 7,945 8,076
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000
10,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Forecasted Net Income by Downstream Operating Segment
Values Forecast Lower Confidence Bound Upper Confidence Bound

123
1 EPS = Net income ÷ Number of common shares outstanding
2 Received from Chevron Corp.’s 2013 & 2014 AnnualReport.
3 P/E Ratio = Common stock price at year-end ÷ EPS
Price to Earnings (P/E)
P/E Ratio, Chevron Year ended December 31
2012 2013 2014
Number of common shares outstanding 1,950 1,917 1,884
Net income (in millions) $26,179 $21,423 $19,241
Earnings per share (EPS)1
$13.43 $11.18 $10.21
Common stock price at year-end2
$108.14 $124.91 $112.18
Price to earnings (P/E) ratio3
8.06 11.18 10.98
P/E Ratio, Competitors
2014 2013 2012
ConocoPhillips 9.8 10.5 11.8
BP PLC 11.15 6.3 12.8
Royal Dutch Shell PLC 8.1 10.6 13.1
Exxon Mobil Corporation 8.9 13.2 11.6
P/E Ratio, Sector
Oil & Gas Producers 9.76 12.23 14.83
P/E Ratio, Industry
Oil & Gas 10.75 13.04 15.78

Combined Dividend-Earnings Model
Present Value of Dividends for 5 Years
Estimated Estimated Estimated Present Value Present Value
Earnings Payout Dividends Factor at of Cash Flows
Year Per Share Ratio Per Share 16% From Dividends
2015 $10.65 30% $3.20 0.862 $2.75
2016 $11.50 30% $3.45 0.743 $2.56
2017 $12.42 30% $3.73 0.641 $2.39
2018 $13.42 30% $4.02 0.552 $2.22
2019 $14.49 30% $4.35 0.476 $2.07
Present Value of Estimated Dividends $12.00
Present Value of 2015 Common Stock Price
Terminal EPS Estimated Price PV Factor PV of 2015
Year P/E Ratio 2015 Stock Price
2015 $14.49 15 $217.34 0.476 103.48
$115.48
Present Value of Estimated Dividends + Present Value of 2015 Common Stock
Price = the total PV at the beginning of 2015

Return On Equity 2014 2013 2012 2011
Y / Y Equity Change 3.97% 9.22% 11.74% 16.27%
Return On Equity 12.65% 15.00% 20.30% 22.10%
Growth -15.67% -26.11% -8.14%
Average -16.64%
Return On Assets 2014 2013 2012 2011
Y / Y Total Assets Change 4.84% 8.92% 7.94% 16.82%
Return On Assets 7.40% 8.80% 11.83% 13.64%
Growth -15.91% -25.61% -13.27%
Average -18.26%
Asset-Utilization (Efficiency) Ratios 2012 2013 2014
Receivables Turnover 11.26 10.70 11.02
Collection Period 32.42 34.11 33.12
Inventory Turnover 27.95 25.44 22.50
Fixed-Assets Turnover 1.83 1.49 1.22
Total Asset Turnover 1.09 0.94 0.82

CHEVRON CORPORATION — TOTAL ENTERPRISE BASIS
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31
2014 2013 2012 2011
Net Income Attributableto Chevron Corporation $ 19,241 $ 21,423 $ 26,179 $ 26,895
Income Tax Expense 11,892 14,308 19,996 20,626
Distributions Less Than Equity in Earnings of
Affiliates (2,202) (1,178) (1,351) (570)
Noncontrolling Interests 69 174 157 113
Previously Capitalized Interest Charged to Earnings
During Period 100 96 123 117
Interest and Debt Expense — — — —
Interest Portion of Rentals 356 342 316 288
Earnings Before Provision for Taxes and Fixed
Charges $ 29,456 $ 35,165 $ 45,420 $ 47,469
Interest and Debt Expense — — — —
Interest Portion of Rentals 356 342 316 288
Preferred Stock Dividends of Subsidiaries — — — —
Capitalized Interest 358 284 230 288
TotalFixed Charges $ 714 $ 626 $ 546 $ 576
Ratio of Earnings to FixedCharges 41.25 56.17 83.19 82.41
____________
(Chevron Corporation, 2015, Exhibit 12.1)

Company P/E P/B P/CF*
Dividend
Yield*
EPS* ROA ROE
Receivables
Turnover
Inventory Turnover
Fixed-
Assets
Total
Asset
Chevron Corp. 10.3 1.4 6.0 3.75 10.14 7.23 12.41 11.02 22.5 1.22 0.82
ConocoPhillips 11.8 1.5 4.8 4.11 5.51 5.86 13.21 7.43 24.56 0.75 0.47
BP PLC 12.8 0.9 3.8 6.14 1.23 1.28 3.14 12.06 12.99 2.71 1.22
Royal Dutch Shell PLC 13.1 1.2 5.1 5.56 4.72 4.19 8.45 12.78 14.38 2.24 1.21
Exxon Mobil Corporation 11.6 2.2 8.3 2.92 7.6 9.34 18.67 18.5 16.26 1.66 1.18
Industry 9.3 0.91 5.6 4.50 5.84 6.16 12.29 12.26 25.06 1.72 1.04
*Average ofthe five companies was used for industry value

References
Business Monitor International. (2014). United States oil & gas report Q4 2014 (ISSN 1748-
4359). Retrieved from http://web.b.ebscohost.com.proxy.devry.edu/
Chevron Corporation. (2015). 2014 Annual report. Retrieved from
http://www.chevron.com/annualreport/2014/
Chevron Corporation. (2015). 2014 Supplement to the annual report. Retrieved from
http://www.chevron.com/news/publications/
Chevron Corporation. (2015). Form 10-Q [Quarterly Report to SEC]. Retrieved from
http://investor.chevron.com/phoenix.zhtml?c=130102&p=irol-sec
ExxonMobil. (2014). Financial statements and supplemental information. Retrieved from
http://ir.exxonmobil.com/phoenix.zhtml?c=115024&p=irol-reportsAnnual
Gildersleeve, R. (1999). Winning business. Houston, TX: Gulf Publishing Company.
IHS Global Inc. (February 2016). United States Country monitor (No. 112896506). Retrieved
from http://eds.a.ebscohost.com.proxy.devry.edu/
MarketLine. (2015). Company profile Chevron Corporation. Retrieved from
http://web.b.ebscohost.com.proxy.devry.edu/
Morningstar. (2016). Chevron Corp [Investment Research Center]. Retrieved from
http://library.morningstar.com/default.html
U.S. Energy Information Administration. (2015). Annual energy outlook 2015 (AEO2015).
Retrieved from www.eia.gov/forecasts/aeo
Witter, D. (December 2015). Oil drill & gas extraction in the US (Industry Report 21111).
Retrieved from IBISWorld: http://clients1.ibisworld.com.proxy.devry.edu/reports/

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