Energy Terms

Additives
Chemicals to control engine deposits and improve lubricating performance.
Barrels of oil-equivalent (BOE)
A unit of measure to quantify crude oil, natural gas liquids and natural gas amounts using the same basis. Natural gas volumes are converted to barrels on the basis of energy content. See oil-equivalent gas and production.
Biofuel
Any fuel that is derived from biomass — recently living organisms or their metabolic byproducts — from sources such as farming, forestry, and biodegradable industrial and municipal waste. See renewables.
Condensate
Hydrocarbons that are in a gaseous state at reservoir conditions but condense into liquid as they travel up the wellbore and reach surface conditions.
Development
Drilling, construction and related activities following discovery that are necessary to begin production and transportation of crude oil and natural gas.
Enhanced recovery
Techniques used to increase or prolong production from crude oil and natural gas fields.
Exploration
Searching for crude oil and/or natural gas by utilizing geologic and topographical studies, geophysical and seismic surveys, and drilling of wells.
Gas-to-liquids (GTL)
A process that converts natural gas into high-quality transportation fuels and other products.
Greenhouse gases
Gases that trap heat in Earth's atmosphere (e.g., water vapor, ozone, carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride).
Integrated energy company
A company engaged in all aspects of the energy industry: exploring for and producing crude oil and natural gas (upstream); refining, marketing and transporting crude oil, natural gas and refined products (downstream); manufacturing and distributing petrochemicals (chemicals); and generating power.
Liquefied natural gas (LNG)
Natural gas that is liquefied under extremely cold temperatures to facilitate storage or transportation in specially designed vessels.
Natural gas liquids (NGL)
Separated from natural gas, these include ethane, propane, butane and natural gasoline.
Oil-equivalent gas (OEG)
The volume of natural gas needed to generate the equivalent amount of heat as a barrel of crude oil. Approximately 6,000 cubic feet of natural gas is equivalent to one barrel of crude oil.
Oil sands
Naturally occurring mixture of bitumen (a heavy, viscous form of crude oil), water, sand and clay. Using hydroprocessing technology, bitumen can be refined to yield synthetic oil.
Petrochemicals
Compounds derived from petroleum. These include aromatics, which are used to make plastics, adhesives, synthetic fibers and household detergents; and olefins, which are used to make packaging, plastic pipes, tires, batteries, household detergents and synthetic motor oils.
Production
Total production refers to all the crude oil (including synthetic oil), natural gas liquids and natural gas produced from a property. Gross production is the company's share of total production before deducting both royalties paid to landowners and a government's agreed-upon share of production under a production-sharing contract. Net production is gross production minus both royalties paid to landowners and a government's agreed-upon share of production under a production-sharing contract. Oil-equivalent production is the sum of the barrels of liquids and the oil-equivalent barrels of natural gas produced. See barrels of oil-equivalent and oil-equivalent gas.
Production-sharing contract (PSC)
An agreement between a government and a contractor (generally an oil and gas company) whereby production is shared between the parties in a prearranged manner. The contractor typically incurs all exploration, development and production costs that are subsequently recoverable out of an agreed-upon share of any future PSC production, referred to as cost recovery oil and/or gas. Any remaining production, referred to as profit oil and/or gas, is shared between the parties on an agreed-upon basis as stipulated in the PSC. The government also may retain a share of PSC production as a royalty payment, and the contractor may owe income taxes on its portion of the profit oil and/or gas. The contractor's share of PSC oil and/or gas production and reserves varies over time as it is dependent on prices, costs and specific PSC terms.
Renewables
Energy resources that are not depleted when consumed or converted into other forms of energy (e.g., solar, geothermal, ocean and tide, wind, hydroelectric power, biofuels and hydrogen).
Reserves
Crude oil or natural gas contained in underground rock formations called reservoirs and, effective for 2009, saleable hydrocarbons extracted from oil sands, shale, coalbeds or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas. Proved reserves are the estimated quantities that geoscience and engineering data demonstrate with reasonable certainty to be economically producible in the future from known reservoirs under existing economic conditions, operating methods and government regulations. Estimates change as additional information becomes available. Oil-equivalent reserves are the sum of the liquids reserves and the oil-equivalent gas reserves. See barrels of oil-equivalent and oil-equivalent gas.

The company only discloses proved reserves in its filings with the SEC. Certain terms, such as "probable" or "possible" reserves, "potentially recoverable" volumes, and "resources," among others, may be used to describe certain oil and gas properties in sections of this document that are not filed with the SEC. These other terms are used because they are common to the industry, are measures considered by management to be important in making capital investment and operating decisions, and provide some indication to stockholders of the potential ultimate recovery of oil and gas from properties in which the company has an interest. In that regard, potentially recoverable volumes are those that can be produced using all known primary and enhanced recovery methods.
Synthetic oil
A marketable and transportable hydrocarbon liquid, resembling crude oil, that is produced by upgrading highly viscous or solid hydrocarbons, such as extra-heavy crude oil or oil sands.

Financial Terms

Cash flow from operating activities
Cash generated from the company's businesses; an indicator of a company's ability to pay dividends and fund capital and common stock repurchase programs. Excludes cash flows related to the company's financing and investing activities.
Earnings
Net income attributable to Chevron Corporation as presented on the Consolidated Statement of Income.
Goodwill
An asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized.
Margin
The difference between the cost of purchasing, producing and/or marketing a product and its sales price.
Return on capital employed (ROCE)
Ratio calculated by dividing earnings (adjusted for after-tax interest expense and noncontrolling interests) by the average of total debt, noncontrolling interests and Chevron Corporation stockholders' equity for the year.
Return on stockholders' equity
Ratio calculated by dividing earnings by average Chevron Corporation stockholders' equity. Average Chevron Corporation stockholders' equity is computed by averaging the sum of the beginning-of-year and end-of-year balances.
Total stockholder return (TSR)
The return to stockholders as measured by stock price appreciation and reinvested dividends for a period of time.

Posted: April 2010

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