press release

Chevron Press Release - Chevron Announces New Objective To Maintain No. 1 Position In Stockholder Return

SAN FRANCISCO, Jan. 27, 1994 -- Chevron Corp. Chairman Ken Derr today announced an ambitious financial program that will drive Chevron toward a new five-year goal of maintaining its position as the No. 1 major oil company in total stockholder return.

"It will be much harder to repeat this great accomplishment a second time," Derr said, "but we are committed to being No. 1, and we have a dedicated team of employees working hard to help us meet this goal."

Chevron just completed a five-year period in which it was No. 1 in total stockholder return -- combined appreciation in stock price and dividends -- meeting a target set for 1989 through 1993. Annual return was 18.9 percent a year, some 5 percent ahead of the average of a competitor group that included Exxon, Mobil, Texaco, Amoco and ARCO.

Derr discussed Chevron's financial plans in detail today while speaking to approximately 30,000 Chevron employees via satellite broadcast and audio links to 135 locations around the United States, Canada, the United Kingdom, Angola and other work places.

Other key elements of the plan include:

Continuing to reduce operating and administrative costs, which have been cut dramatically by $1.1 billion in the past two years. These costs during 1993 averaged $6.51 per barrel, down 95 cents a barrel from two years ago. Chevron's new goal is a further reduction of 25 cents per barrel, about $300 million, by the end of this year.

"Cost management is and must remain a priority in all aspects of our business," Derr said. "This is especially critical in the current environment of $14 and $15 crude oil prices."

Attaining at least a 12 percent return on capital employed (ROCE), adjusted for special items. In 1991, Chevron's ROCE was 7.8 percent, lowest among its competitor group. In 1993, at 11 percent, it was the highest.

Although cost reduction will remain a major objective, Derr said the company will also focus on a broader goal of pursuing growth opportunities to increase shareholder value.

"Our cost reductions have put us in a stronger competitive position, better able to fund exciting current projects and several new opportunities that will drive our future growth," he said.

Maintaining a capital and exploratory program for 1994 (excluding affiliates) essentially flat at $3.7 billion. The total program (including affiliates) is projected at about $4.9 billion, up 11 percent from the $4.4 billion spent in 1993. The increase over 1993 is principally focused on the high growth Pacific Rim areas of Caltex, Chevron's 50 percent-owned refining and marketing affiliate in the Eastern Hemisphere.

"The strength and flexibility achieved through major cost reductions have allowed us to maintain this level of expenditures," Derr said. "However, if low oil prices persist, we may adjust our capital spending as the year progresses."

Worldwide, Chevron plans to invest about $2.4 billion in exploration and production, up slightly from 1993 spending. About 75 percent of this will be spent outside the United States, continuing a trend toward more overseas spending that began several years ago.

The overall exploration and production program includes projects in:

  • Kazakhstan, to remove mercaptans and double production capacity at the Tengiz field within the next year to 130,000 barrels per day;
  • Angola, to begin the first phase of a multi-part project that will boost current production of about 300,000 barrels a day by almost 200,000 barrels daily by the year 2000;
  • Indonesia, to expand the Duri steamflood project, already the world's largest, where the field holds 3.2 billion barrels of proved reserves;
  • Canada, to continue development of the large Hibernia project offshore Newfoundland, so production can start in 1997. Enough reserves exist there to keep the platform producing for at least 50 years;
  • North Sea, to expand production of the Alba Field, which started earlier this month, and to bring the huge Britannia natural gas field on stream in 1998;
  • U.S. Gulf of Mexico, to begin production this year from the vast Norphlet Trend, where the company's share of gas reserves is 1 trillion cubic feet.

Worldwide refining, marketing and transportation spending is projected at about $2 billion, up about 20 percent from 1993 levels. Most of the increased portion is focused on Caltex, which is building a new refinery in Thailand and is expanding refineries in Singapore and Korea.

In the United States, refining and marketing expenditures are planned at $900 million. Major projects include two previously announced major upgrades at Chevron's California refineries, in Richmond and El Segundo, to improve efficiency and meet new cleaner fuel mandates. Ultimately, about $1.2 billion will be spent on these projects.

Chevron also plans to invest about $200 million in the worldwide chemicals business, approximately 14 percent less than 93 spending.

Updated: January 1994