Chevron Press Release - Chevron CEO Says Company Has Established Strong Foundation 1998-04-29
NEW ORLEANS, April 29, 1998 -- Having completed the most successful year in its 118-year history, Chevron has established a strong foundation for future growth in spite of the recent downturn in oil prices, Chairman Ken Derr said today.
Speaking here at the company's Annual Meeting of Stockholders, Derr expressed great confidence in Chevrons excellent prospects, from the U.S. Gulf of Mexico to West Africa to Kazakhstan.
"I believe Chevron has better long-term growth opportunities than any of our competitors," he said. "We plan to move ahead with them because we expect oil prices will bounce back later in the year."
The company's 1998 budget for capital and exploratory expenditures, $6.3 billion, is the largest in its history and no significant changes are planned, he added.
Derr cited several areas in which Chevron has provided strong returns for its stockholders.
"A fundamental driver of this company is to provide you a total return that's higher than any of our key competitors," he said, citing the company's total stockholder return (stock-price appreciation plus dividends) of 22.1 percent for 1997. For the past nine years, the return has been first among peer competitors at 19.2 percent.
The company increased its dividend to $2.44 per share in January -- the 11th straight year of dividend increases, he noted. And return on capital employed -- a significant measure of how a company is managing its assets -- was 14.7 percent, exceeding the company's 12 percent target for the second straight year.
Derr noted that operating costs have been cut a total of $1.8 billion since 1991, including $400 million last year.
"But success isn't built just on lower costs," he said. "Success is also built on growth. I think we've struck a good balance between them, and well continue to focus on both cost reduction and growth."
Among the growth projects and company milestones cited by Derr and Vice Chairman Jim Sullivan at the meeting were:
- Oil and gas production of 1.5 million barrels per day (bpd) was the highest in 12 years.
- The Tengiz joint venture in Kazakhstan, which celebrated its fifth anniversary on April 6, had its most successful year to date with 1997 production averaging 155,000 bpd, and a new peak of 195,000 bpd set last month. In two years, production is expected to average 250,000 bpd.
- For five years running, Chevron has had the best reserves-replacement rate among its peer competitors. Last year, Chevron replaced 142 percent of the oil and gas it produced, excluding sales and acquisitions.
- Two giant fields -- Kuito and Landana -- were discovered in deep water offshore Angola last year, and oil was found in the same geologic trend offshore the Republic of Congo.
- In Nigeria, Chevron started production earlier this month from the Gbokoda field, the second of four new fields expected to start producing oil this year.
- Indonesian operations continue to account for a sizable portion, nearly 16 percent, of Chevrons worldwide liquids production.
- Two deep-water projects are under way in the U.S. Gulf of Mexico: Genesis, which is expected to have its floating production platform in place by year-end; and Gemini, expected to start producing oil next year.
- The company just announced discovery of a significant natural gas trend, Viosca Knoll, in shallow waters of the Gulf, where Chevron is already the top producer. The trend is noteworthy because of its large size and because its the first in its particular geologic zone.
Derr also noted great improvement in the company's safety and environmental programs. The company's accident rate has been cut nearly in half since 1993, and the company continues with a concerted effort to be recognized worldwide for environmental excellence.
In closing, Derr cited Chevrons "committed team of very talented and hard-working employees. I'm very proud of them, of what they've accomplished, and of what they will accomplish in the future."
Updated: April 1998