speech

Report to Stockholders

Peter J. Robertson

By Peter J. Robertson, Vice Chairman
Chevron Corporation

Opening Remarks and Corporate Overview

San Ramon, California, April 25, 2007

Good morning and welcome to this meeting of Chevron stockholders.

We're pleased you could join us today to hear about our performance in 2006, how our company is building for the future and how we are committed to creating value for you, our stockholders.

Title Slide

First, let me introduce our nominees for the Board of Directors. Would you please stand as I call your name and remain standing until all have been introduced.

  • Sam Armacost, chairman of SRI International.
  • Linnet Deily, former Deputy U.S. Trade Representative and retired vice chairman of Charles Schwab Corporation.
  • Bob Denham, partner in the law firm of Munger, Tolles and Olson.
  • Bob Eaton, retired chairman of the board of management of DaimlerChrysler.
  • Sam Ginn, retired chairman of Vodafone AirTouch.
  • Frank Jenifer, president emeritus of The University of Texas at Dallas.
  • Don Rice, chairman and CEO of Agensys, Inc.
  • Kevin Sharer, a director nominee. Kevin is CEO and president of Amgen Inc.
  • Ron Sugar, chairman of the board, chief executive officer and president of Northrop Grumman Corporation.
  • Carl Ware, retired executive vice president of The Coca-Cola Company.
  • And finally, Dave O'Reilly, chairman of the board and chief executive officer of Chevron Corporation.

I would like to acknowledge Sam Nunn, former senator from Georgia, and Dick Shoemate, retired chairman of the board, president and chief executive officer of Bestfoods, who are unable to be here today.

Thanks to all of you for your willingness to serve as directors of our great company.

Chairman O'Reilly will be joining me in today's presentation, along with George Kirkland, executive vice president of Upstream and Natural Gas, and Mike Wirth, executive vice president of Downstream.

We have several corporate officers here today. Would you please stand and be recognized.

Thank you.

Now I'd like to introduce:

  • Alan Page and Chuck Chang, partners from PricewaterhouseCoopers.
  • And Douglas Czarnecki, the Inspector of Election.

Thanks to all of you.

Let's take a look at a short video highlighting some of our milestones and accomplishments in 2006.

I think you will agree, as this video illustrates, 2006 was another strong year for Chevron. Let's take a closer look.

Slide: Delivering Results

We achieved a third consecutive year of record earnings with reported net income of $17.1 billion.

We achieved a strong return on capital employed of about 23 percent.

We ended 2006 with a debt-to-total-debt-plus-equity ratio of 12.5 percent, down from 17 percent from year-end 2005.

And I am very proud to say that in 2006 we set another new record for safety performance. With an unrelenting focus on safety, we are closing in on our goal to be the industry leader in safety performance.

Slide: Delivering Results - Annual Cash Dividends

Our strong earnings and cash flows are enabling us to return cash to our stockholders and, at the same time, fund a robust capital program.

In 2006, we increased our quarterly dividend by 15.6 percent. It was the 19th consecutive increase in as many years.

We also completed a $5 billion stock buyback in one year, bringing our buybacks to a total of $10 billion in the last three years.

Slide: Delivering Results - 2006 TSR

Total stockholder return is the ultimate measure of our performance, and our goal is to continue to be a top performer over the long term.

Last year our stock was up nearly $17 per share, which combined with dividends, resulted in a total stockholder return of nearly 34 percent — an excellent one-year performance that outperformed the broad market indicator of the S&P 500 by 18 percent.

And year-to-date for 2007, we are No. 1 in total stockholder return among our peer group.

Now a quick look at our capital and exploratory expenditures.

Slide: Capital & Exploratory Program

In 2007, we expect to invest approximately $19.6 billion, roughly 18 percent or $3 billion higher than our 2006 spending level.

Roughly 75 percent is planned for oil and gas exploration and production projects worldwide. Another 20 percent is dedicated to the company's global refining, marketing and transportation businesses.

Slide: Strategies to Grow Value

For several years now, our strategies have remained largely unchanged. They are the right strategies for Chevron, ones that leverage the strength of our assets, our competencies and our access to growth markets.

Our overarching aim is to develop leading integrated positions in growth areas. To accomplish this, we maintain a sharp focus on our major business strategies:

  • In the upstream, our strategy is to grow profitably in our core areas and build new legacy positions.
  • Our natural gas strategy is to commercialize our large equity resource base while growing a high-impact global business.
  • Our downstream strategy is to improve base business returns and selectively grow with a focus on integrated value creation.
  • And we have a renewable energy strategy — to invest in renewable technologies and capture profitable positions in renewable sources of energy.

Now we'll hear about how we are advancing our key strategies across our major business units. At this time, I would like to introduce George Kirkland who will highlight our upstream and natural gas activities.

Read the Overview of Upstream and Gas by George L. Kirkland

Cautionary Statement

Updated: April 2007