Cash, cash equivalents and marketable securities
Total balances were $9.6 billion and $8.1 billion at December 31, 2008 and 2007, respectively. Cash provided by operating activities in 2008 was $29.6 billion, compared with $25.0 billion in 2007 and $24.3 billion in 2006.
Cash provided by operating activities was net of contributions to employee pension plans of approximately $800 million, $300 million and $400 million in 2008, 2007 and 2006, respectively. Cash provided by investing activities included proceeds from asset sales of $1.5 billion in 2008, $3.3 billion in 2007 and $1.0 billion in 2006.
At December 31, 2008, restricted cash of $367 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 $5.2 billion in 2008, $4.8 billion in 2007 and $4.4 billion in 2006. In April 2008, the company increased its quarterly common stock dividend by 12.1 percent to $0.65 per share.
Debt, capital lease and minority interest obligations
Total debt and capital lease balances were $8.9 billion at December 31, 2008, up from $7.2 billion at year-end 2007. The company also had minority interest obligations of $469 million and $204 million at December 31, 2008 and 2007, respectively.
The $1.7 billion increase in total debt and capital lease obligations during 2008 included the net effect of an approximate $2.7 billion increase in commercial paper and $749 million of Chevron Canada Funding Company bonds that 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 $7.8 billion at December 31, 2008, up from $5.5 billion at year-end 2007. Of these amounts, $5.0 billion and $4.4 billion were reclassified to long-term at the end of each period, respectively. At year-end 2008, 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 2008, 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. Terms of new commitments in the future will be subject to market conditions at the time of renewal. 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, 2008. In addition, the company has an automatic shelf registration statement that expires in March 2010 for an unspecified amount of nonconvertible debt securities issued or guaranteed by the company. In January 2009, the company's Board of Directors authorized the issuance of one or more series of notes or debentures in an aggregate amount up to $5 billion for a term not to exceed 10 years.
At December 31, 2008, the company had outstanding public bonds issued by Chevron Corporation Profit Sharing/ Savings Plan Trust Fund, 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 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. During periods of low prices for crude oil and natural gas and narrow margins for refined products and commodity chemicals, the company 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
In September 2007, 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. Through December 31, 2008, 119 million shares had been acquired under the program for $10.1 billion, including $8.0 billion in 2008. These amounts include shares acquired in October 2008 as part of an asset exchange transaction described in Note 2. The company did not acquire any shares in early 2009 and does not plan to acquire any shares in the 2009 first quarter.
Capital and exploratory expenditures
Total reported expenditures for 2008 were $22.8 billion, including $2.3 billion for the company's share of affiliates' expenditures, which did not require cash outlays by the company. In 2007 and 2006, expenditures were $20.0 billion and $16.6 billion, respectively, including the company's share of affiliates' expenditures of $2.3 billion and $1.9 billion in the corresponding periods.
Of the $22.8 billion in expenditures for 2008, about three-fourths, or $17.5 billion, related to upstream activities. Approximately the same percentage was also expended for upstream operations in 2007 and 2006. 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.
The company estimates that in 2009, capital and exploratory expenditures will be $22.8 billion, including $1.8 billion of spending by affiliates. About three-fourths of the total, or $17.5 billion, is budgeted for exploration and production activities, with $13.9 billion of this amount outside the United States. Spending in 2009 is primarily targeted for exploratory prospects in the deepwater U.S. Gulf of Mexico, western Africa, and the Gulf of Thailand and major development projects in Angola, Australia, Brazil, Indonesia, Nigeria, Thailand and the deepwater U.S. Gulf of Mexico. Also included are one-time payments associated with upstream operating agreements in China and the Partitioned Neutral Zone between Saudi Arabia and Kuwait.
Capital and Exploratory Expenditures
|
2008 |
2007 |
2006 |
| Millions of dollars |
U.S. |
Int'l |
Total |
U.S. |
Int'l |
Total |
U.S. |
Int'l |
Total |
| Upstream — Exploration and Production |
$5,516 |
$11,944 |
$17,460 |
$4,558 |
$10,980 |
$15,538 |
$4,123 |
$8,696 |
$12,819 |
| Downstream — Refining, Marketing and Transportation |
2,182 |
2,023 |
4,205 |
1,576 |
1,867 |
3,443 |
1,176 |
1,999 |
3,175 |
| Chemicals |
407 |
78 |
485 |
218 |
53 |
271 |
146 |
54 |
200 |
| All Other |
618 |
7 |
625 |
768 |
6 |
774 |
403 |
14 |
417 |
| Total |
$8,723 |
$14,052 |
$22,775 |
$7,120 |
$12,906 |
$20,026 |
$5,848 |
$10,763 |
$16,611 |
| Total, Excluding Equity in Affiliates |
$8,241 |
$12,228 |
$20,469 |
$6,900 |
$10,790 |
$17,690 |
$5,642 |
$9,050 |
$14,692 |
Worldwide downstream spending in 2009 is estimated at $4.3 billion, with about $2.0 billion for projects in the United States. Capital projects include upgrades to refineries in the United States and South Korea and construction of a gas-to-liquids facility in support of associated upstream projects.
Investments in chemicals, technology and other corporate businesses in 2009 are budgeted at $1.0 billion. Technology investments include projects related to unconventional hydrocarbon technologies, oil and gas reservoir management, and gas-fired and renewable power generation.
Pension Obligations
In 2008, the company's pension plan contributions were $839 million (including $577 million to the U.S. plans). The company estimates contributions in 2009 will be approximately $800 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."