press release

Chevron Announces $14.8 Billion Capital and Exploratory Budget for 2006

  • Spending increase of 35% supports extensive queue of oil and gas projects
  • Company extends share repurchase program

SAN RAMON, Calif., Dec. 8, 2005 -- Chevron Corporation (NYSE: CVX) today announced a $14.8 billion capital and exploratory spending program for 2006, a 35 percent increase compared with estimated expenditures of approximately $11 billion in 2005. "The size of our overall program reflects a strong queue of growth projects, many of which are entering their construction phase, and demonstrates our commitment to bring new energy supplies to market," said Chairman and CEO Dave O'Reilly.

For 2006, the $14.8 billion budget includes $4.9 billion for investment in the United States, a $1.1 billion increase over 2005 estimated spending. "Our overall investment program continues to advance our strategies to build legacy positions in key producing regions and commercialize our significant natural gas resource base. We also have planned investments to expand gasoline production capacity, produce cleaner fuels and develop transportation infrastructure to bring fuels to market," O'Reilly said.

Of the planned increase over 2005 spending, approximately $3 billion is targeted to the company's upstream operations. The higher investment reflects three primary impacts: several key growth projects entering the more capital-intensive construction phase; full-year spending to develop the growth projects of Unocal, which was acquired in August 2005; and increased industry-wide costs for materials and services. Investments to commercialize the company's natural gas resources are estimated at $1 billion, including liquefied natural gas (LNG) facilities, gas-to-liquids (GTL) facilities and ensuring natural gas regasification and import capability for the U.S. markets.

Highlights of the 2006 Capital and Exploratory Spending Program

Exploration and Production

Approximately 75 percent of total capital and exploratory spending, or $11.3 billion, is targeted for upstream investment in exploration, production and natural gas-related projects, including $3.3 billion in the United States. George Kirkland, Chevron's executive vice president of Upstream and Gas, said, "Our upstream and gas investment opportunities will help the company deliver more oil and gas resources to world markets. In the past year, we commenced construction of two important U.S. energy projects, Tahiti and Blind Faith, in the Gulf of Mexico."

The upstream program builds on the company's exploration successes that have delivered significant resources for growth and includes continued investment in high-impact opportunities in the deepwater Gulf of Mexico and western Africa, as well as in prospective areas outside those regions.

In addition to Tahiti and Blind Faith, major development spending in 2006 includes longer-term projects in the following areas:

  • Angola – investments in LNG facilities, as well as ongoing development programs for near-shore producing fields and deepwater developments at Benguela Belize-Lobito Tomboco.
  • Nigeria – ongoing investments in deepwater developments at Agbami and near-shore developments, and LNG facilities.
  • Kazakhstan – continued development of the expansion project at Tengiz.
  • Australia – further development of the Greater Gorgon Area natural gas resource offshore Western Australia.

Refining, Marketing and Transportation

About $2.8 billion, or 19 percent of total capital and exploratory spending in 2006, is targeted for downstream, of which $1 billion is in the United States. Certain of these expenditures are aimed at increasing gasoline production, meeting future product specifications and enhancing the company's ability to produce products from heavy and/or sour crudes. In addition, funds are budgeted for GTL facilities, which will produce clean diesel fuels.

Chemicals and Other

Expenditures of approximately $700 million in 2006 are estimated for chemical, technology investments, alternative energy spending including the development of batteries for hybrid vehicles, and other corporate activities.

Chevron 2006 Planned Capital & Exploratory Expenditures* $ Billions
U.S. Upstream 3.3
International Upstream 8.0
U.S. Downstream 1.0
International Downstream 1.8
Chemicals and Other 0.7
TOTAL (Including Chevron's Share of Expenditures by Affiliated Companies) 14.8
Expenditures by Affiliated Companies (2.0)
Cash Expenditures by Chevron Consolidated Companies 12.8

*Global gas-related expenditures are included in each of the listed businesses depending on the nature of the investment.

Share Repurchase Program

The company also indicated board approval to acquire up to $5 billion of the company's common stock over a period of up to three years. This program follows stock repurchases totaling $5 billion under an earlier program initiated in April 2004.

Chevron Corporation is one of the world's leading energy companies. With more than 53,000 employees, Chevron subsidiaries conduct business in approximately 180 countries around the world, producing and transporting crude oil and natural gas, and refining, marketing and distributing fuels and other energy products. Chevron is based in San Ramon, Calif. More information on Chevron is available at


Some of the items discussed in this press release are forward-looking statements about Chevron's 2006 capital and exploratory expenditure and common stock repurchase programs. Words such as "anticipates," "expects," "intends," "plans," "targets," "projects," "believes," "seeks," "schedules," "estimates" and similar expressions are intended to identify such forward-looking statements. The statements are based upon management's current expectations, estimates, and projections; are not guarantees of future performance, and are subject to certain risks, uncertainties, and other factors, some of which are beyond the company's control and are difficult to predict. Among the factors that could cause actual results to differ materially are crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and competitive conditions affecting supply and demand for aromatics, olefins and additives products; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; inability or failure of the company's joint-venture partners to fund their share of operations and development activities; potential failure to achieve expected net production from existing and future oil and gas development projects; potential delays in the development, construction or start up of planned projects; potential disruption or interruption of the company's net production or manufacturing facilities due to war, accidents, political events or severe weather; and significant investment or product changes under existing or future environmental regulations (including, particularly, regulations and litigation dealing with gasoline composition and characteristics). In addition, such statements could be affected by general domestic and international economic and political conditions. Acquisitions under the common stock repurchase program will be made from time to time at prevailing prices, as permitted by securities laws and other legal requirements and subject to market conditions and other factors. The program may be discontinued at any time. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Updated: December 2005