Analysis of Debt
Total Debt (Carrying Amount)
Chevron Corp., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The carrying amount of total debt exhibited fluctuations over the five-year period. An initial decrease was followed by a subsequent increase, indicating a dynamic debt management strategy.
- Overall Trend
- Total debt began at US$31,369 million in 2021, decreased to US$20,836 million in 2023, and then increased to US$40,758 million by 2025. This represents a net increase of approximately 30% over the period.
- Short-Term Debt
- Short-term debt demonstrated significant volatility. It rose substantially from US$256 million in 2021 to US$1,964 million in 2022, before declining to US$529 million in 2023. A considerable increase to US$4,406 million occurred in 2024, followed by a decrease to US$977 million in 2025. This suggests active management of short-term financing needs and potentially opportunistic borrowing.
- Long-Term Debt
- Long-term debt, excluding amounts due within one year, generally decreased from US$31,113 million in 2021 to US$20,135 million in 2024. However, a notable increase to US$39,781 million was observed in 2025. This indicates a shift towards longer-term financing, particularly in the most recent year.
- Combined Impact
- The increase in total debt from 2023 to 2025 was driven by the combined effect of increases in both short-term and long-term debt. The substantial rise in long-term debt in 2025 contributed significantly to the overall increase in the total debt carrying amount.
The observed patterns suggest a flexible approach to debt financing, with adjustments made to both the composition and overall level of debt outstanding. The significant changes in both short-term and long-term debt warrant further investigation into the underlying reasons and potential implications for financial risk.
Total Debt (Fair Value)
| Dec 31, 2025 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Short-term debt, excluding finance lease liabilities | 10,132) |
| Long-term debt, excluding due within one year and finance lease liabilities | 28,610) |
| Finance lease liabilities | 1,445) |
| Total debt (fair value) | 40,187) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.99 |
Based on: 10-K (reporting date: 2025-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 4.52%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 2.95% | 2,250) | 66) | |
| 3.59% | 5,000) | 180) | |
| 4.76% | 4,700) | 224) | |
| 5.87% | 1,567) | 92) | |
| 3.96% | 5,350) | 212) | |
| 7.48% | 734) | 55) | |
| 4.94% | 2,083) | 103) | |
| 7.12% | 540) | 38) | |
| 4.91% | 1,650) | 81) | |
| 5.15% | 1,043) | 54) | |
| 5.70% | 1,646) | 94) | |
| 5.25% | 330) | 17) | |
| 5.05% | 222) | 11) | |
| 5.57% | 687) | 38) | |
| 4.20% | 237) | 10) | |
| 2.76% | 1,750) | 48) | |
| 3.72% | 154) | 6) | |
| 7.25% | 60) | 4) | |
| 5.46% | 532) | 29) | |
| 7.32% | 367) | 27) | |
| 5.79% | 20) | 1) | |
| 4.90% | 1,445) | 71) | |
| Total | 32,367) | 1,462) | |
| 4.52% | |||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 1,462 ÷ 32,367 = 4.52%
Interest Costs Incurred
Chevron Corp., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Overall, the company’s financing costs exhibited volatility over the five-year period. While initially decreasing, interest expenses increased significantly in the final year presented. A closer examination of the components reveals fluctuations in both interest expense and the capitalization of interest.
- Interest and Debt Expense
- Interest and debt expense decreased from $712 million in 2021 to $469 million in 2023, representing a cumulative reduction of approximately 34%. However, this trend reversed in 2024, with expenses rising to $594 million, and accelerating in 2025 to $1,217 million. The 2025 value represents an increase of over 104% compared to 2023, and a 205% increase compared to 2021.
- Capitalized Interest
- Capitalized interest demonstrated a consistent upward trend from $63 million in 2021 to $175 million in 2025. This increase suggests a growing proportion of qualifying assets under construction or development during the period. The increase from 2022 to 2023 was particularly notable, rising from $114 million to $148 million, a 29.8% increase. The rate of increase slowed between 2023 and 2025.
- Financing Interest and Debt Costs
- Financing interest and debt costs mirrored the pattern observed in interest and debt expense. A decline was noted from $775 million in 2021 to $617 million in 2023. Subsequently, costs increased to $773 million in 2024 and reached $1,392 million in 2025. The 2025 figure represents a substantial increase of approximately 80% compared to 2023 and 79.6% compared to 2021. This increase aligns with the rise in overall interest and debt expense, and is partially offset by the increasing capitalization of interest.
The significant increase in financing costs in 2025 warrants further investigation to determine the underlying drivers, such as changes in debt levels, interest rates, or the composition of the company’s debt portfolio. The consistent increase in capitalized interest suggests ongoing investment in long-term assets.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest and debt expense
= 20,960 ÷ 1,217 = 17.22
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Financing interest and debt costs
= 20,960 ÷ 1,392 = 15.06
The interest coverage ratios demonstrate a notable shift over the five-year period. Both the interest coverage ratio (without capitalized interest) and the adjusted interest coverage ratio (with capitalized interest) exhibit declining values, though from significantly elevated positions.
- Interest Coverage Ratio (without capitalized interest)
- This ratio begins at 31.39 and increases substantially to 97.27 before decreasing each subsequent year. The decline from 97.27 in 2022 to 17.22 in 2025 is particularly pronounced. This suggests a weakening ability to cover interest expenses from earnings before interest and taxes, despite remaining above 10 throughout the period.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted ratio mirrors the trend of the unadjusted ratio, starting at 28.84 and peaking at 79.67. It then experiences a consistent decrease, ending at 15.06 in 2025. The inclusion of capitalized interest results in consistently lower values compared to the ratio excluding capitalized interest, as expected. The magnitude of the decline, while substantial, still indicates a positive coverage of interest obligations.
The convergence of both ratios suggests that the observed trend is not solely attributable to the impact of capitalized interest. The primary driver appears to be a reduction in earnings relative to interest expense. The significant decrease in both ratios from 2022 to 2025 warrants further investigation into the underlying factors affecting profitability and interest obligations.
While both ratios remain positive, the accelerating downward trend raises concerns about future debt servicing capacity. Continued monitoring of these ratios is recommended to assess the sustainability of this trend and its potential impact on financial health.