• Financial Highlights
• Management's Discussion and Analysis
  • Key Financial Results
  • Income by Major Operating Area
  • Business Environment and Outlook
  • Operating Developments
  • Results of Operations
  • Consolidated Statement of Income
  • Selected Operating Data
  • Liquidity and Capital Resources
  • Financial Ratios
  • Guarantees, Off-Balance-Sheet Arrangements and Contractual Obligations, and Other Contingencies
  • Financial and Derivative Instruments
  • Transactions with Related Parties
  • Litigation and Other Contingencies
  • Environmental Matters
  • Critical Accounting Estimates and Assumptions
  • New Accounting Standards
• Consolidated Financial Statements
• Notes to the Consolidated Financial Statements
• Five-Year Operating Summary
• Five-Year Financial Summary
• Supplemental Information on Oil and Gas Producing Activities

Consolidated Statement of Income

Comparative amounts for certain income statement categories are shown below:

Millions of dollars	2007	2006	2005
Sales and other operating revenues	$214,091	$204,892	$193,641

Sales and other operating revenues in 2007 increased over 2006 due primarily to higher prices for crude oil, natural gas, natural gas liquids and refined products, partially offset by lower sales volumes. The increase in 2006 from 2005 was primarily due to higher prices for refined products. The higher revenues in 2006 were net of an impact from a change in the accounting for buy/sell contracts, as described in Note 13.

Millions of dollars	2007	2006	2005
Income from equity affiliates	$4,144	$4,255	$3,731

Lower income from equity affiliates in 2007 was mainly due to a decline in earnings from CPChem, Dynegy (sold in May 2007) and downstream affiliates in the Asia-Pacific area. Partially offsetting these declines were improved results for Tengizchevroil (TCO) and income for a full year from Petroboscan, which was converted from an operating service agreement to a joint-stock company in October 2006. The increase between 2005 and 2006 was primarily due to improved results for TCO and CPChem. Refer to Note 11 for a discussion of Chevron's investment in affiliated companies.

Millions of dollars	2007	2006	2005
Other income	$2,669	$971	$828

Other income of nearly $2.7 billion in 2007 included the net of gains totaling $1.7 billion from the sale of downstream assets in the Benelux countries and the company's investment in Dynegy and a loss of approximately $245 million on the early redemption of Texaco debt. Interest income was approximately $600 million, $600 million and $400 million in 2007, 2006 and 2005, respectively. Foreign currency losses were $352 million, $260 million and $60 million in the corresponding years.

Millions of dollars	2007	2006	2005
Purchased crude oil and products	$133,309	$128,151	$127,968

Crude oil and product purchases in 2007 increased from 2006 due to higher prices for crude oil, natural gas, natural gas liquids and refined products. Crude oil and product purchases in 2006 increased from 2005 on higher prices for crude oil and refined products and the inclusion of Unocal-related amounts for the full year 2006 versus five months in 2005. The increase was mitigated by the effect of the accounting change in April 2006 for buy/sell contracts.

Millions of dollars	2007	2006	2005
Operating, selling, general and administrative expenses	$22,858	$19,717	$17,019

Operating, selling, general and administrative expenses in 2007 increased 16 percent from a year earlier. Expenses were higher in a number of categories, with the largest increases recorded for the cost of employee payroll and contract labor. Total expenses increased in 2006 from 2005 due mainly to the inclusion of former-Unocal expenses for the full year 2006. Besides this effect, expenses were higher in 2006 for labor, transportation and uninsured costs associated with the hurricanes in 2005.

Millions of dollars	2007	2006	2005
Exploration expense	$1,323	$1,364	$743

Exploration expenses in 2007 declined from 2006 mainly due to lower amounts for well write-offs and geological and geophysical costs for operations outside the United States. Expenses increased in 2006 from 2005 due to higher amounts for well write-offs and geological and geophysical costs for operations outside the United States, as well as the inclusion of Unocal-related amounts for the full year 2006.

Millions of dollars	2007	2006	2005
Depreciation, depletion and amortization	$8,708	$7,506	$5,913

Depreciation, depletion and amortization expenses increased from 2005 through 2007, reflecting an increase in charges related to asset write-downs and higher depreciation rates for certain crude oil and natural gas producing fields worldwide and the inclusion of Unocal-related amounts beginning in August 2005.

Millions of dollars	2007	2006	2005
Taxes other than on income	$22,266	$20,883	$20,782

Taxes other than on income increased in 2007 from a year earlier due to higher duties in the company's U.K. downstream operations. Taxes other than on income were essentially unchanged in 2006 from 2005, with the effect of higher U.S. refined-product sales being offset by lower sales volumes subject to duties in the company's European downstream operations.

Millions of dollars	2007	2006	2005
Interest and debt expense	$166	$451	$482

Interest and debt expense in 2007 decreased from 2006 primarily due to lower average debt balances and higher amounts of interest capitalized. The decrease in 2006 versus 2005 was mainly due to lower average debt balances and an increase in the amount of interest capitalized, partially offset by higher average interest rates on commercial paper and other variable-rate debt.

Millions of dollars	2007	2006	2005
Income tax expense	$13,479	$14,838	$11,098

Effective income tax rates were 42 percent in 2007, 46 percent in 2006 and 44 percent in 2005. Rates were lower in 2007 compared with the prior year due mainly to the impact of nonrecurring items, including asset sales in 2007 and the absence of 2006 charges related to a tax-law change that increased tax rates on upstream operations in the U.K. North Sea and the settlement of a tax claim in Venezuela. The higher tax rate in 2006 compared with 2005 also reflected these nonrecurring charges in 2006. Refer also to the discussion of income taxes in Note 15.