press release

Chevron Press Release - Chevron Outlines U.S., International Growth Opportunities At Annual Meeting

HOUSTON, May 2 -- With major investments in some of the world's high-growth regions, Chevron has outstanding opportunities to increase stockholder value, Chairman Ken Derr said today.

Speaking here at the company's Annual Meeting of Stockholders, Derr said Chevron has excellent prospects ranging from exploration and production in West Africa and the U.S. Gulf of Mexico to refining and marketing in Asia. Aggressive investment in these and other prospects puts Chevron in an excellent position to meet its goal of the highest total return to stockholders among key competitors for the period 1994 through 1998, Derr said.

Derr characterized 1994 as a year of ups and downs, with a poor first half but a strong third quarter and a fourth quarter that was "one of our best ever." Chevron's net earnings for the year were $1.693 billion. Of that, nearly $1 billion was earned in the second half of the year.

The strong second-half performance was largely due to managers and employees who were "galvanized" to work in teams and meet a wide variety of challenges, Derr said. These included industry trends, such as low crude oil and natural gas prices and poor sales margins for refined products, as well as several Chevron refinery incidents that disrupted production in early 1994.

Chevron's net first quarter earnings for 1995 were $459 million, an 18 percent increase from 1994's first quarter income of $388 million. Absent poor results from U.S. refining and marketing, the quarter was Chevron's second best operational quarter in the last decade.

For the period 1989 through 1993, Chevron's average annualized total stockholder return of nearly 19 percent outstripped the returns of key competitors. Early in 1994, Derr set the goal of staying number one for the next five years. For 1994 and the first quarter of 1995, Chevron's return was about 13 percent, or fourth among key competitors. Thirteen percent still is considerably better than the annualized average index for Standard and Poor's top 500 stocks, which is just under 9 percent, Derr said.

Noting that Chevron's position of number one is becoming harder to defend because competitors are working to catch up, Derr declared, "We still plan to reach our five-year goal."

After five years of intense restructuring, the company has become increasingly adept at dealing with fluctuating industry conditions and quickly taking advantage of growth opportunities, Derr said. The company increased its 1995 capital and exploratory budget to $5.1 billion -- a 6 percent increase over 1994 -- "precisely because we see some splendid growth prospects," he added. "Relative to size, we are clearly spending more than our competitors. But that is good."

Reviewing Chevron's worldwide exploration and production activities, Vice Chairman Dennis Bonney said Chevron's operations offshore West Africa illustrate the company strategy of investing in or near areas of established production. In March 1995, Chevron set a record of 400,000 barrels a day of production in Angola, where the company also discovered four new oil fields in 1994. Nigerian production also reached record levels, while in the Republic of Congo, the company acquired a 30 percent interest in the large offshore N'Kossa Field as well as an exploratory block surrounding it known as the Haute Mer.

Chevron also is developing major new petroleum production in the North Sea, off Northwest Australia and in Papua New Guinea, Bonney said.

In the United States, despite weak oil and natural gas prices, exploration and production contributed more than $750 million in cash in 1994. Chevron acquired the Pakenham Gas Field in West Texas, where the company hopes to triple production to 75 million cubic feet a day in five years. Bonney also described new projects in the Gulf of Mexico, an area he called "one of the few oil regions in the U.S. where frontier exploration opportunities are still accessible."

Worldwide, Chevron replaced 114 percent of its production with new reserves in 1994 while increasing liquids production by 5 percent and gas production by 4 percent.

Vice Chairman Jim Sullivan, reviewing refining, marketing and chemicals activities, noted that Chevron Chemical Co. contributed $215 million to corporate earnings in 1994. He credited the strong performance to a cyclical upturn in the chemicals industry as well as an efficient restructuring at Chevron Chemical.

In international refining and marketing, Chevron is taking advantage of abundant growth opportunities through its 50-percent ownership of Caltex Petroleum Corporation, which operates throughout Asia and Africa, Sullivan said. He added that Caltex is investing more than $8 billion in new, expanded and upgraded facilities over the next five years.

Shifting to U.S. refining and marketing, Sullivan said, "We remain committed to outperforming our key competitors." Having recently completed an extensive restructuring effort that included the sale of two refineries, Chevron's U.S. downstream now is focusing on competitiveness, cost control, incident-free operations and optimal refinery output, he said.

Updated: May 1995