Report to Stockholders

Mike Wirth

By Mike Wirth, Executive Vice President for Downstream
Chevron Corporation

Overview of Downstream

San Ramon, California, April 25, 2007

Good morning. I'm pleased to be here today to discuss downstream's results.

Focus, discipline and execution are essential for delivering strong competitive performance. Those fundamentals helped drive downstream's strong performance in 2006.

Before I discuss results, let me first review the key parts of our business.

Downstream comprises Chevron's supply and trading, refining, and fuels and lubricants marketing operations.

We conduct business in over 170 countries. We manufacture about 2 million barrels per day of refined products, in 19 wholly owned or joint-venture refineries. We market motor fuels through more than 25,000 retail outlets and lubricants through a global network.

And, each day, we serve millions of customers throughout the world.

Slide: Capitalizing on Demand Growth

Product demand is growing — particularly in the United States and Asia — and refining capacity is constrained.

Companies that are positioned in or near the fastest-growing markets, and who also possess strong refining and supply chain capabilities, will benefit.

Chevron is one of those companies.

We have a particularly strong position in the Pacific Basin and possess superior refining capabilities relative to the industry. We also have three world-class brands.

We believe this combination provides us with a strategic advantage.

Slide: 2006: A Record-Breaking Year

2006 was a year of "bests" for downstream: It was our safest year ever, our refinery utilization and energy efficiency were the best ever, and we delivered our best-ever earnings at $4 billion.

We launched projects to selectively grow our manufacturing system.

And we also improved our portfolio through acquisitions and divestments of nonstrategic assets.

Let me go into a bit more detail.

Slide: Improved Refinery Utilization

Last year, we set out a commitment to raise refinery utilization 6 percentage points by 2008. We nearly met this commitment in the first year.

Thanks to a lot of hard work, disciplined execution and a focus on root cause, we increased our year-over-year utilization rate 5 percentage points in 2006. We are building what I call the "reliability refinery," by more effectively utilizing existing capacity.

This is a lot less expensive than building new capacity or acquiring facilities. That's why sustaining the "reliability refinery" is my top priority.

Slide: Increased Manufacturing Scale and Flexibility

Over the next several decades, global demand will continue to increase due to economic and population growth.

We are taking steps to capitalize on this growth. We recently completed a project at our Pascagoula, Mississippi, refinery that increased its gasoline production capacity by 10 percent.

And we acquired a stake in a company in India that is constructing the sixth-largest refinery in the world. This export facility will be completed in late 2008 and will strengthen our position in Asia.

We are also intensely focused on expanding margins.

In the United States, our ability to convert a wide variety of crude oils into clean products is a competitive differentiator. Investments under way at our California refineries will further strengthen this advantage.

To expand margins in the Asia-Pacific, our joint-venture refinery in South Korea is increasing its ability to run heavy crude oils and improve high-value product yields.

Slide: High-Graded Portfolio

To further improve returns, we are creating a more focused footprint — fewer markets but stronger positions in those markets.

Divesting marketing assets generated more than $1 billion in after-tax cash over the past three years.

In Europe, we just sold our 31 percent interest in the Netherlands refinery.

And there's more to come this year. We are in the process of selling our retail fuel business in Uruguay. And we're in discussions regarding the possible sale of our businesses in the Benelux region.

Slide: Focus for 2007 - Operational Excellence

In summary, downstream produced great results in 2006. We're confident we will sustain this progress in 2007 — and it starts with operational excellence.

Achieving world-class operational excellence is a journey. Continual improvement in safety performance over the past five years has made us one of the best, relative to the competition.

This same drive and discipline is being applied to refinery reliability. We are taking a systematic approach that combines advanced capabilities, standardized processes and proactive investment to mitigate risks.

Slide: Focus for 2007 - Selectively Grow

We will pursue targeted growth in scale and flexibility.

Given the outlook of constrained supply, strong demand growth and geopolitical dynamics, scale and flexibility matter.

The resid upgrade project at South Korea is on track for completion at year-end.

At our El Segundo, California, refinery, the heavy sour crude projects are on track for year-end completion.

Focus, discipline and execution are the keys to superior competitive performance. By applying these tenets, Chevron's downstream business will continue to be highly competitive and create long-term value for our stockholders.

Thank you, and now I will turn the meeting over to Dave.

Read the Summary Remarks by David J. O'Reilly

Cautionary Statement

Updated: April 2007