Chevron Press Release - Chevron Ceo Ken Derr Tells Stockholders 1996 Was An Outstanding Year
SAN FRANCISCO, April 30, 1997 - Exceptional financial and operating performances and higher crude oil and natural gas prices combined in 1996 to produce a record-setting year, Chairman and Chief Executive Officer Ken Derr told stockholders gathered today at the company's annual meeting.
"With strong crude oil and natural gas prices during most of the year and excellent results, especially in our exploration and production operations, 1996 earnings were the highest in our 117-year history" said Derr. "As we move into 1997, first-quarter results followed right where we left off at the end of 1996, with record quarterly operating earnings."
Derr said 1996 highlights include:
- 35 percent increase in operating earnings
- Highest return on capital employed in 15 years of 12.8 percent
- Reduction of debt to its lowest level in 13 years
- Annual dividends increased for ninth straight year
- Total stockholder return of 28.5 percent.
- Fourth straight year of adding to oil and gas reserves
- International oil production up 8 percent
Chevron currently has exploration and production activities in 21 countries, many offering future growth opportunities. Derr highlighted as one example the tremendous progress in the Tengiz joint venture formed with the Republic of Kazakhstan in 1993. Tengiz production averaged 112,000 barrels a day in 1996 - double 1995 levels - and it is estimated that production could exceed 700,000 barrels a day within 10 to 15 years.
He also cited a significant crude oil discovery in 1,300 feet of water offshore Angola, Chevron's first find in that country's emerging deep-water area.
Derr expressed concern over the Environmental Protection Agency's (EPA) proposal to revise the National Ambient Air Quality Standards.
"These proposed standards for ozone and particulate matter would impose levels that are much more stringent than current requirements and would cost business and U.S. consumers tens of billions of dollars - far exceeding potential benefits."
He asked Chevron stockholders to voice their displeasure over these new standards, which are not needed to increase health protection, by writing to their state and federal officials.
In 1996 Chevron made several significant moves to improve competitiveness, including the reorganization of three technology companies under a newly appointed vice president.
"Technology has long been one of Chevron's competitive advantages," said Derr. "By integrating the expertise of our upstream, downstream and information technology companies, we'll be able to accelerate the development and application of technologies throughout our worldwide operations."
Technological advances have made one of the oldest of Chevron's exploration and production areas -- the Gulf of Mexico -- one of the most exciting new frontiers.
"Only recently have technology and experience brought promising prospects in the Gulf's deep water within reach," said Vice Chairman Jim Sullivan, as he provided stockholders with an overview of Chevron's worldwide operations.
Sullivan cited Genesis -- a $750-million project that will produce oil and natural gas from a "floating spar structure" -- as the company's premier deep-water Gulf of Mexico endeavor.
Chevron markets in more than 60 countries, primarily through its Caltex affiliate. Caltex is launching a $5 billion, five-year capital expenditure program, which will introduce a new image and station design.
U.S. marketing activities are conducted in an extremely competitive environment, Sullivan said. In spite of that, Chevron increased its retail gasoline volumes about two percent in 1996.
"We were the No. 1 seller in the huge California market and one of the top three sellers in 15 other states," said Sullivan.
Both Derr and Sullivan commented on the company's commitment to protecting people and the environment. Derr stated that continuous improvement in Chevron's safety performance not only has saved money, but, more important, also has saved the pain of personal injuries. The improvement means that 656 fewer injuries occurred in 1996.
Sullivan cited Chevron Shipping Company's outstanding safety performance as another example of the company's interest in protecting people and the environment. In 1996, Chevron Shipping loaded and unloaded its own ships and chartered vessels 600 times, moving nearly 500 million barrels of oil, of which a total of only 4 barrels were accidentally released into the sea, he said.
"It would be like pulling into your Chevron station and filling your gas tank 600 times...and spilling only four drops of gasoline," said Sullivan.
Updated: April 1997