Cash, cash equivalents and marketable securities
Total balances were $8.1 billion and $11.4 billion at December 31, 2007 and 2006, respectively. Cash provided by operating activities in 2007 was $25.0 billion, compared with $24.3 billion in 2006 and $20.1 billion in 2005.
Cash provided by operating activities was net of contributions to employee pension plans of $300 million, $400 million and $1.0 billion in 2007, 2006 and 2005, respectively. Cash provided by investing activities included proceeds from asset sales of $3.3 billion in 2007, $1.0 billion in 2006 and $2.7 billion in 2005.
Cash provided by operating activities and asset sales during 2007 was sufficient to fund the company's $17.7 billion capital and exploratory program, pay $4.8 billion of dividends to stockholders and repay approximately $3.7 billion of debt.
Restricted cash of $799 million associated with capital-investment projects at the company's Pascagoula, Mississippi, refinery and Angola liquefied natural gas project was invested in short-term marketable securities and reclassified from cash equivalents to a long-term asset on the Consolidated Balance Sheet.
Dividends
The company paid dividends of approximately $4.8 billion in 2007, $4.4 billion in 2006 and $3.8 billion in 2005. In April 2007, the company increased its quarterly common stock dividend by 11.5 percent to 58 cents per share.
Debt, capital lease and minority interest obligations
Total debt and capital lease balances were $7.2 billion at December 31, 2007, down from $9.8 billion at year-end 2006. The company also had minority interest obligations of $204 million, down from $209 million at December 31, 2006.
The $2.6 billion reduction in total debt and capital lease obligations during 2007 included the early redemption and maturity of individual debt issues. In February, $144 million of Texaco Capital Inc. bonds matured. In the second and fourth quarters, the company redeemed approximately $809 million and $65 million, respectively, of Texaco Capital Inc. debt and recognized an after-tax loss of approximately $175 million. In August, $2 billion of Chevron Canada Funding Company bonds matured. In December, the company issued a $650 million tax exempt Mississippi Gulf Opportunity Zone bond to fund an upgrade project at the company's refinery in Pascagoula, Mississippi. Commercial paper balances at the end of 2007 declined approximately $450 million from $3.5 billion at year-end 2006. In February 2008, $750 million of Chevron Canada Funding Company bonds matured.
The company's debt and capital lease obligations due within one year, consisting primarily of commercial paper and the current portion of long-term debt, totaled $5.5 billion at December 31, 2007, down from $6.6 billion at year-end 2006. Of these amounts, $4.4 billion and $4.5 billion were reclassified to long-term at the end of each period, respectively. At year-end 2007, settlement of these obligations was not expected to require the use of working capital within
one year, as the company had the intent and the ability, as evidenced by committed credit facilities, to refinance them on a long-term basis.
At year-end 2007, the company had $5 billion in committed credit facilities with various major banks, which permit the refinancing of short-term obligations on a long-term basis. These facilities support commercial paper borrowing and also can be used for general corporate purposes.
The company's practice has been to continually replace expiring commitments with new commitments on substantially the same terms, maintaining levels management
believes appropriate. Any borrowings under the facilities would be unsecured indebtedness at interest rates based on London Interbank Offered Rate or an average of base lending rates published by specified banks and on terms reflecting the company's strong credit rating. No borrowings were outstanding under these facilities at December 31, 2007.
In March 2007, the company filed with the Securities and Exchange Commission (SEC) an automatic registration statement that expires in March 2010. This registration statement is for an unspecified amount of nonconvertible debt securities issued or guaranteed by the company. At the same time, the company withdrew three shelf registration statements on file with the SEC that permitted the issuance of up to $3.8 billion of debt securities.
At December 31, 2007, the company had outstanding public bonds issued by Chevron Corporation Profit Sharing/Savings Plan Trust Fund, Chevron Canada Funding Company (formerly ChevronTexaco Capital Company), Texaco Capital Inc. and Union Oil Company of California. All of these securities are guaranteed by Chevron Corporation and are rated AA by Standard and Poor's Corporation and Aa1 by Moody's Investors Service. The rating by Moody's reflects
an upgrade in December from Aa2. The company's U.S. commercial paper is rated A-1+ by Standard and Poor's and P-1 by Moody's. All of these ratings denote high-quality, investment-grade securities.
The company's future debt level is dependent primarily on results of operations, the capital-spending program and cash that may be generated from asset dispositions. The company believes that it has substantial borrowing capacity to meet unanticipated cash requirements and that during periods
of low prices for crude oil and natural gas and narrow margins for refined products and commodity chemicals, it has the flexibility to increase borrowings and/or modify capital spending plans to continue paying the common stock dividend and maintain the company's high-quality debt ratings.
Common stock repurchase program
A $5 billion stock repurchase program initiated in December 2006 was completed in September 2007. During 2007, about 61.5 million common shares were acquired under this program at a total cost of $4.9 billion. Upon completion of this program, the company authorized the acquisition of up to $15 billion of additional common shares from time to time at prevailing prices, as permitted by securities laws and other legal requirements and subject to market conditions and other factors. The program is for a period of up to three years and may be discontinued at any time. As of December 31, 2007, 23.5 million shares had been acquired under the new program for $2.1 billion. Purchases through mid-February 2008 increased the total shares acquired to 34.2 million at a cost of approximately $3.0 billion.
Capital and exploratory expenditures
Total reported expenditures for 2007 were $20 billion, including $2.3 billion for the company's share of affiliates' expenditures, which did not require cash outlays by the company. In 2006 and 2005, expenditures were $16.6 billion and $11.1 billion, respectively, including the company's share of affiliates' expenditures of $1.9 billion and $1.7 billion in the corresponding periods. The 2005 amount excludes $17.3 billion for the acquisition of Unocal Corporation.
Of the $20 billion in expenditures for 2007, about three-fourths, or $15.5 billion, related to upstream activities. Approximately the same percentage was also expended for upstream operations in 2006 and 2005. International upstream accounted for about 70 percent of the worldwide upstream investment in each of the three years, reflecting the company's continuing focus on opportunities that are available outside the United States.
In 2008, the company estimates capital and exploratory expenditures will be 15 percent higher at $22.9 billion, including $2.6 billion of spending by affiliates. About three-fourths of the total, or $17.5 billion, is budgeted for exploration and production activities, with $12.7 billion of this amount outside the United States. Spending in 2008 is primarily targeted for exploratory prospects in the deepwater U.S. Gulf of Mexico and western Africa and major
development projects in Angola, Australia, Brazil, Indonesia, Kazakhstan, Nigeria, Thailand, the deepwater U.S. Gulf of Mexico, the Piceance Basin in Colorado and an oil sands project in Canada.
Worldwide downstream spending in 2008 is estimated at $4.1 billion, with about $2.3 billion for projects in the United States. Capital projects include
upgrades to refineries in the United States and South Korea and construction of gas-to-liquids facilities in support of associated upstream projects.
Investments in chemicals, technology and other corporate businesses in 2008 are budgeted at $1.3 billion. Technology investments include projects related to unconventional hydrocarbon technologies, oil and gas reservoir management and gas-fired and renewable power generation.
Capital and Exploratory Expenditures
|
2007 |
2006 |
2005 |
| Millions of dollars |
U.S. |
Int'l |
Total |
U.S. |
Int'l |
Total |
U.S. |
Int'l |
Total |
| Upstream — Exploration and Production |
$4,558 |
$10,980 |
$15,538 |
$4,123 |
$8,696 |
$12,819 |
$2,450 |
$5,939 |
$8,389 |
| Downstream — Refining, Marketing and Transportation |
1,576 |
1,867 |
3,443 |
1,176 |
1,999 |
3,175 |
818 |
1,332 |
2,150 |
| Chemicals |
218 |
53 |
271 |
146 |
54 |
200 |
108 |
43 |
151 |
| All Other |
768 |
6 |
774 |
403 |
14 |
417 |
329 |
44 |
373 |
| Total |
$7,120 |
$12,906 |
$20,026 |
$5,848 |
$10,763 |
$16,611 |
$3,705 |
$7,358 |
$11,063 |
| Total, Excluding Equity in Affiliates |
$6,900 |
$10,790 |
$17,690 |
$5,642 |
$9,050 |
$14,692 |
$3,522 |
$5,860 |
$9,382 |
Pension Obligations
In 2007, the company's pension plan contributions were $317 million (approximately $78 million to the U.S. plans). The company estimates contributions in 2008 will be approximately $500 million. Actual contribution amounts are dependent upon plan-investment results, changes in pension obligations, regulatory requirements and other economic factors. Additional funding may be required if investment returns are insufficient to offset increases in plan obligations. Refer also to the discussion of pension accounting in "Critical Accounting Estimates and Assumptions."