speech

Report to Stockholders

George L. Kirkland

By George L. Kirkland, Executive Vice President for Upstream and Gas
Chevron Corporation

Overview of Upstream and Gas

San Ramon, California, April 25, 2007

I'm pleased to be here again to review with you Chevron's upstream and gas businesses.

We had an excellent 2006 — operationally and financially — and I will spend some time today discussing last year's accomplishments and also cover our plans for 2007 and beyond.

Slide: Positioned with a Strong Worldwide Portfolio - Overview

Let's look at Chevron's upstream portfolio. We have a strong position in key basins worldwide. The diversity and balance of this portfolio, together with our organizational structure, give us a competitive advantage.

Let me spend some time highlighting some of our key regions of the world.

Slide: Positioned with a Strong Worldwide Portfolio

First, let's look at Asia.

Chevron is the No. 1 producer in the Caspian region, Thailand and Indonesia. In Australia, we are the largest holder of natural gas resources.

In western Africa, we are among the largest deepwater leaseholders in Nigeria, and we are a top-tier producer in both Angola and Nigeria.

In Latin America we have solid positions in Argentina, Brazil, Colombia, Venezuela, and Trinidad and Tobago.

In North America, Chevron is the largest producer in the Gulf of Mexico Shelf and the San Joaquin Valley, and we are the largest leaseholder in the Gulf of Mexico Shelf and deep water combined.

This adds up to a net daily production capacity approaching 2.7 million barrels per day of oil-equivalent and 12 billion barrels of proved oil and gas reserves.

Slide: Exploration Strategic Direction - Focus and Impact

Production and reserves growth begins with exploration success. Over the past five years, our exploration program achieved an industry-leading success rate of 45 percent.

In 2006, 42 successful exploration and appraisal wells added over 1 billion barrels of oil-equivalent, continuing the average of 1 billion barrels per year over the five-year period. Major new discoveries included the deepwater Gulf of Mexico, Western Australia and West Africa.

Let's look at some of the major projects we're pursuing that will be contributing to our growth plans.

Slide: World-Class Portfolio of Major Capital Projects

This map shows the locations of about 30 major capital projects in our queue, each representing greater than $1 billion in Chevron share investments.

Also note the geographic diversity of these projects. These are legacy developments and are key to bringing on new production — and new reserves — during the next five years.

Let me spend a moment to highlight a few of these projects.

Slide: Upstream: Major Capital Projects - Asia-Pacific

In Asia, let's start with the Gorgon natural gas project. We continue to achieve a number of project milestones.

Recently, the Western Australian government issued the environmental framework for the LNG facility on Barrow Island. We anticipate a positive decision on the final environmental permit this year.

And in March of this year we achieved first production from our Bibiyana natural gas project in Bangladesh, which is expected to supply reliable, clean energy for the next 20 to 30 years.

Slide: Upstream: Major Capital Projects - Angola

In Angola's deep water, we achieved first oil from the Benguela Belize project in 2006 — ahead of schedule and under budget. Current production is over 160,000 barrels per day.

We also have facilities fabrication under way for the 100,000-barrel-per-day Tombua-Landana project, which is scheduled for first oil in 2009.

And, as part of our global gas strategy, the Angola LNG project has received key government endorsements, and the project team has awarded two major contracts.

Slide: Upstream: Major Capital Projects - Nigeria

In Nigeria, the deepwater Agbami project is progressing with drilling, construction and subsea activities in high gear. First production is expected in 2008.

We are proceeding with the Usan deepwater project, which is scheduled for first oil in 2011.

We also continue to make progress on the Olokola LNG Project in Nigeria, another important component of our global gas strategy.

Slide: Upstream: Major Capital Projects - Eurasia

In Kazakhstan, the nearly $6 billion Tengiz Sour Gas Injection and Second Generation Plant are close to completion. Startup of the first phase occurred in late 2006, and once fully online in 2008, this project will significantly increase the production from the Tengiz Field by about 250,000 barrels of oil per day.

We also expect significant production increases from the next expansion phases at Karachaganak in Kazakhstan and the Azeri-Chirag-Gunashli development in Azerbaijan.

Slide: Upstream: Major Capital Projects - Americas

In Brazil, we are moving ahead with our $2.8 billion deepwater Frade development. Construction is already under way on the processing facilities, and first oil is expected in 2009.

In the Gulf of Mexico, we concluded development drilling activities for our $3.5 billion Tahiti project in 2006. With much of the construction for the massive deepwater platform well under way, we expect first production from this project in 2008.

We also are fabricating key facilities for the Perdido deepwater project in the Gulf of Mexico, which should begin producing near 2010.

And in Canada, we recently approved a $2 billion investment in the Athabasca Oil Sands Expansion Project.

Slide: Upstream: Major Capital Projects - Americas - Jack

In 2006, we successfully tested the Jack discovery, setting several records for a well test in the deepwater Gulf of Mexico, including well depth.

To put this depth in perspective, the next time you fly commercially, look out the window to the surface below. At a cruising altitude of about 30,000 feet, you are seeing the approximate length of the drill pipe to reach the Jack Field from the platform deck.

And most important, all of this was accomplished with a perfect environmental and safety record at Jack. This success sets a foundation for future developments in this high-potential and exciting geologic trend.

Slide: Production Growth

These are just a few of the major projects we are pursuing. When coupled with our strong focus to efficiently produce as many barrels as we can from our existing operations, we expect to achieve production growth in excess of 3 percent per year over the period 2005 to 2010.

Turning now to our global natural gas business.

Slide: Upstream: Growing Global Gas

Our natural gas resources span six continents, including significant holdings in Africa, Australia, Southeast Asia, the Caspian region, Latin America and North America.

With Chevron's current holdings of 140 trillion cubic feet of natural gas resources, it is clear that natural gas will play an increasingly important role in our future production.

We are pursuing growth opportunities in both LNG and gas-to-liquids to commercialize our natural gas resources. Our projects are targeted to supply an ever-growing and more interconnected world market.

Slide: Upstream: A Record-Setting Year

In closing, 2006 was a record-setting year for our upstream and gas businesses. Our asset base is strong, our opportunities are numerous, our processes are sound, and our workforce is talented and committed. The sum of these parts bodes extremely well for Chevron's future.

Now I would like to introduce Mike Wirth, who will discuss our downstream businesses.

Read the Overview of Downstream by Mike Wirth

Cautionary Statement

Updated: April 2007