Chevron Corporation, through its subsidiaries, engages in integrated energy, chemicals, and petroleum operations worldwide. The company operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as operates a gas-to-liquids plant. The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil and refined products; transporting crude oil and refined products through pipeline, marine vessel, motor equipment, and rail car; and manufacturing and marketing commodity petrochemicals, and fuel and lubricant additives, as well as plastics for industrial uses. It is also involved in the cash management and debt financing activities; insurance operations; real estate activities; and technology businesses. Further, the company holds interests in power plants, as well as operates geothermal plants; and engages in the transportation of refined products primarily in the coastal waters of the United States. The company was formerly known as ChevronTexaco Corporation and changed its name to Chevron Corporation in 2005. Chevron Corporation was founded in 1879 and is headquartered in San Ramon, California.
Business Analysis of Chevron
The Oil & Gas Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Chevron compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Chevron to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Chevron with an interactive chart.
- Revenue Growth: Chevron reported a revenue growth of -17.3% year-on-year during 2016. Oil & Gas Production Industry grew at -15.5% in the same period
- COGS share of Revenues: As a percentage of revenue, Chevron spent 79.7% of its total revenues on COGS. Oil & Gas Production industry average (COGS share of revenue) in the same period was 78.0%
- R&D share of Revenues: As a percentage of revenue, Chevron spent 0.9% of its total revenues on R&D. Oil & Gas Production industry average R&D spending in the same period was 1.2%
- SG&A share of Revenues: As a percentage of revenue, Chevron spent 4.1% of its total revenues on Sales, Marketing, and General Administration (SG&A). Oil & Gas Production industry average SG&A spending in the same period was 4.3%
- Inventory share of Revenues: As a percentage of revenue, Chevron spent 4.7% of its total revenues on Inventories. Oil & Gas Production industry average Inventory spending in the same period was 6.1%
- Accounts Payable share of Revenues: As a percentage of revenue, Chevron invested 12.2% of its total revenues on Accounts Payable (A/P) Oil & Gas Production industry average Accounts Payable investment in the same period was 12.4%
- Accounts Receivable share of Revenues: As a percentage of revenue, Chevron invested 14.5% of its total revenues on Accounts Receivable (A/R). Oil & Gas Production industry average Accounts Receivable investment in the same period was 10.5%
- PP&E share of Revenues: As a percentage of revenue, Chevron invested 159.2% of its total revenues on Property, Plants, and Equipments (PP&E). Oil & Gas Production industry average PPE investment in the same period was 132.9%
- Intangibles share of Revenues: As a percentage of revenue, Chevron invested 4.0% of its total revenues on Intangibles. Oil & Gas Production industry average Intangibles investment in the same period was 4.1%
- Net Margins: Chevron Net Margins in the year 2016 were -0.4%. Oil & Gas Production industry average Net Margins in the same period were -4.2%
Sector and Industry Association of Chevron
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Chevron is associated with Oil & Gas Sector and Oil & Gas Production Industry.
Oil & Gas sector is comprised of the following industries: Oil & Gas Production; Oil & Gas Distribution; Oil & Gas Equipment and Services; Alternative Energy. The definitions for each of the industries is as follows:
- Oil & Gas Production industry includes companies primarily engaged in operating oil & gas properties. Key activities may include exploration for crude petroleum and natural gas; drilling, completing, and equipping wells; and all other activities in the preparation of oil and gas up to the point of shipment from the producing property. It also includes companies engaged in crude petroleum refining and producing gasoline, kerosene, distillate fuel oils, residual fuel oils, and lubricants, through fractionation or straight distillation of crude oil.
- Oil & Gas Distribution industry includes companies primarily engaged in the pipeline transportation of petroleum, natural gas, and other commodities. It also includes companies primarily engaged in the wholesale and retail distribution of petroleum and petroleum products.
- Oil & Gas Equipment and Services industry includes companies primarily engaged in drilling wells for oil or gas field operations for others on a contract or fee basis. It also includes companies providing exploration services and machinery & equipment for oil and gas field operations.
- Alternative Energy industry includes companies that develop or manufacture renewable energy equipment utilizing sources such as solar, wind, geothermal, hydro, and waves. It also includes companies that produce alternative fuels such as methanol, ethanol, hydrogen and biofuels that are mainly used to power vehicles.
Industry Ranking of Chevron
With $114.5 billion revenues, Chevron ranked number 2 of all the companies in the US Oil & Gas Production industry. There were a total of 89 public companies in the US Oil & Gas Production industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Oil & Gas Production industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.