Report to Stockholders

By Peter J. Robertson, Vice Chairman
ChevronTexaco Corporation

2003 Annual Meeting of Stockholders

Midland, Texas, May 22, 2003

Also see a press release regarding this speech.

Good morning to all of you. It's good to be back in Midland.

Being here brings back many fond memories for me -- first, my tenure with Warren Petroleum, and then, North America Upstream.

I want to describe briefly just a few of the accomplishments and prospects in our global exploration and production activities.

Upstream Portfolio

Our upstream portfolio is diversified, global and world-class. I'm only going to touch on some of our regions and some of our highlights.

Dave has already mentioned the importance of the Permian Basin to ChevronTexaco in his address (read Dave O'Reilly's remarks).

Another important area for us in the United States is the Gulf of Mexico, where your company is the largest producer in the prolific shelf area and is a growing player in the deep water.

Just a month ago, we announced that appraisal work on our Tahiti prospect confirmed up to 500 million barrels of recoverable oil.

Latin America

In Venezuela, we're involved in a number of major oil and gas developments, including the huge, heavy-oil Hamaca project, which is estimated to have recoverable reserves of almost 2 billion barrels of oil.

Europe and Asia

We are also a major player in the Caspian region. At Tengiz in Kazakhstan, we produce about 280,000 barrels of oil a day. Almost all of that oil is delivered to world markets through the Caspian pipeline, which our company led from the start.

The second-generation plant and sour-gas injection projects are under way. They will raise Tengiz production capacity to close to 500,000 barrels of oil a day.


Offshore Australia we have a number of promising prospects and recently confirmed the largest natural gas discovery yet in those waters. It is a world-class asset and one in which we have a 50 percent equity interest.

This, added to our North West Shelf and Gorgon assets, makes us the premier gas-holder in the region.


We are one of the largest producers in West Africa, and we have recently made some significant oil and natural gas discoveries in the deep water of Angola and Nigeria.

Exploration Program Delivering Results

Our strong portfolio of assets has enabled us to consistently replace the reserves we produce.

Last year, we replaced 114 percent of our production through our own drilling efforts and improved recovery techniques. This represents the 10th consecutive year we've had replacement ratios exceeding 100 percent.

Oil and natural gas reserves are the lifeblood of this industry, but there's a natural decline to fields as they mature. Adding to reserves and moving them to market are critical to our continued success and to creating value for our stockholders.

Exploration Expense

At the same time that we've been replacing our reserves, we've done so with lower exploration expenses.

This was clearly apparent in 2002 and reflects the broad success we've had in the Gulf of Mexico, Angola Block 14 and Nigeria deep water.

Production From New Projects

Because we're in a naturally depleting industry, it's important that we consistently bring on new production.

Here you can see the new production we'll be bringing on over the next five years through major projects.

This year, we'll see the start of production from the Athabasca Oil Sands in Canada, as well as from Chad and Cameroon, where we hold a 25 percent interest in production and a 650-mile (1,046-kilometer) pipeline.

We also expect to increase production from our interest in the giant Karachaganak development in Kazakhstan.

Production from these projects will all grow over time. But beyond that, we will be steadily bringing on major new oil and gas developments, which will enable us to add more than 600,000 barrels of daily production by 2007.

These additions will help us maintain a strong production profile well into the future.

Global Natural Gas

Dave alluded to our new initiative to create a global gas business. Natural gas is one ChevronTexaco's great strengths, and our portfolio of assets offers tremendous opportunities (Read Dave O'Reilly's remarks).

  • Demand for clean-burning gas is expected to outpace demand for oil over the next decade. ChevronTexaco is well-situated to meet that demand on a global basis.
  • We are the largest natural gas resource holder in Australia, which can serve both the Far East as well as the U.S. West Coast.
  • We have a large gas presence in Angola and Nigeria. From there, we can serve the U.S. Gulf Coast as well as European markets.
  • We have significant gas holdings in Kazakhstan and Latin America.
  • We have an excellent gas position in North America. This will be supplemented from these global basins as U.S. demand grows significantly in the future.

Gas Value Chain

Not only do we have the natural gas resources but we also have the technologies and infrastructure to capture the full value for natural gas from the field to the marketplace.

We plan to leverage these competencies by converting our gas resources into high-value products, using both our liquefied natural gas and gas-to-liquids technologies.

As we go forward with a new global gas initiative, we are making progress on several fronts:

  • Our North West Shelf joint venture in Australia has signed a 25-year contract to supply China's first liquefied natural gas (LNG) project.
  • We are now focused on developing Australia's giant offshore Gorgon-area fields to supply LNG markets in China, Korea, Japan and the U.S. West Coast.
  • We are pursuing plans to build a gas liquefaction plant in Angola to supply U.S. markets.
  • In our Sasol Chevron joint venture, we're developing a gas-to-liquids plant in Nigeria to serve markets in the United States and Europe.
  • We're on track to receive permits by the end of the year to construct Port Pelican, a liquefied natural gas import facility offshore Louisiana.

We are very optimistic about the future of natural gas. We are positioned to take advantage of our existing resources and develop new opportunities that will deliver stockholder value.

Read full text of Chairman David O'Reilly's remarks to 2003 Annual Meeting of Stockholders

Read full text of Executive Vice President Patricia Woertz's remarks to 2003 Annual Meeting of Stockholders

Updated: May 2003