press release

Chevron Press Release - Chevron Reports Fourth Quarter And Year 1995 Results

  • Year 1995 operating earnings up 17 percent to $1.962 billion
  • Company adopts new accounting standard for impairment of long-lived assets (FAS 121) in fourth quarter
  • New accounting standard and special items totaling $869 million result in fourth quarter loss of $418 million
  • Chemicals and International Upstream operations post record earnings for year
  • Sixth consecutive year of increased international oil and gas production and reserves
                                      Fourth Quarter                Year

($ Millions)                          1995       1994         1995       1994

Operating Earnings                     451        578        1,962      1,671

New Accounting Standard              (659)        -          (659)         -

Special Items                        (210)       45          (373)         22

Net Income (Loss)                    (418)      623           930       1,693

SAN FRANCISCO, Jan. 24, 1996 -- Chevron Corporation today reported that special charges and the previously announced adoption of a new accounting standard reduced reported preliminary results for the year and fourth quarter by $1.032 billion and $869 million, respectively, resulting in net income for the year 1995 of $930 million ($1.43 per share) and a net loss for the fourth quarter of $418 million ($ .64 per share loss). Comparable 1994 amounts were net income of $1.693 billion ($2.60 per share) for the year and net income of $623 million ($ .96 per share) for the fourth quarter.

Excluding the effect of the new accounting standard and special items, operating earnings increased 17 percent to $1.962 billion from $1.671 billion earned in 1994. Fourth quarter operating results were $451 million, down 22 percent from the $578 million earned in the 1994 fourth quarter.

Commenting on the year's results, Chairman and CEO Ken Derr said, "We had a very good year operationally, considering the disappointing results of our U.S. downstream operations. Both our chemicals and international upstream businesses turned in record earnings, and our U.S. upstream operations performed well despite low natural gas prices. We knew going into 1995 that U.S. downstream would be impacted by scheduled major maintenance turnarounds at all our core refineries during the year, particularly an extended turnaround of our Richmond, Calif., refinery in the fourth quarter to tie in new units required to produce the new California-mandated reformulated fuels. These planned events, along with some unplanned refinery problems and low industry refining margins, resulted in very poor results for our U.S. refining and marketing business.

"The bright side of this," continued Derr, "is that all our refineries are back on stream with no major maintenance planned for 1996 and are effectively positioned for the roll-out of the cleaner-burning gasolines mandated for California in this year's second quarter."

Derr noted, "Our chemicals business had a record year, despite softening industry conditions in the second half. Considering current conditions, we expect chemical earnings will be lower in 1996, but nonetheless continue to be strong, and we are moving forward on major expansion projects of our ethylene and paraxylene facilities -- areas where we expect continued growth.

"Our international upstream production and earnings continue to grow," said Derr. "Oil and gas production and reserves increased for the sixth consecutive year. Over this period we have more than doubled our international reserves and annual production has increased 43 percent. In 1995, combined international oil and gas production was up 4 percent and we replaced about 140 percent of production through proved reserve additions, resulting in a worldwide replacement rate of about 114 percent. We have several major development projects under way, one of which -- the N'Kossa field offshore Congo -- is scheduled for first production by mid-year. We also had some significant discoveries this past year, which together with our current projects, will ensure continued growth in this business."

Derr said, "The recently announced intent to merge Chevron's natural gas liquids and natural gas marketing businesses with NGC Corporation repositions these activities into an important growth-oriented business. We're very excited with this opportunity and, if an agreement is satisfactorily completed, we hope to have the merger completed by mid-year. When completed, Chevron will have, through common and preferred stock holdings, an approximate 28 percent economic ownership interest in NGC, North America's largest natural gas marketer, as well as largest processor and marketer of natural gas liquids.

"We're continuing to focus and concentrate our efforts in our areas of strength and have recently announced reorganizations of our U.S. marketing operations, chemicals, and international trading and lubricants businesses. All our operations and assets continue to be reviewed and cost control continues to be a top priority. Because of the high refinery maintenance costs in 1995, we didn't make as much progress in reducing costs last year as we had hoped. Nevertheless, ongoing costs, including own-use fuel costs, declined almost $300 million from 1994 and were $1.5 billion lower than in our 1991 base year. Further savings are expected this year as we realize the benefits of our reorganizations and other initiatives. We're managing our businesses on the conservative assumption of a continued low price environment," concluded Derr.

Special items and the new accounting standard had a significant effect on the 1995 fourth quarter and year results. As previously announced, in the fourth quarter, the company adopted a new accounting standard that establishes a uniform approach for recognizing and measuring impairment of long-lived assets. This change resulted in an after-tax write-down of the carrying value of the company's fixed assets, mostly U.S. oil and gas properties, of $659 million. In connection with implementing the new standard, a comprehensive review of all the company's fixed assets was conducted that, along with the write-down of certain assets made obsolete by the conversion of two West Coast refineries to produce the new California-mandated reformulated gasolines, resulted in additional after-tax adjustments of $136 million.

Apart from the accounting change, the largest special item in 1995 was the $168 million after-tax write-down in the third quarter of the company's real estate development business, which is being sold. Other net special charges totaled $69 million for the year (of which $74 million were included in fourth quarter results) and consisted of environmental remediation provisions ($90 million), reorganization and restructuring provisions ($50 million), prior year tax adjustments ($22 million), and asset sale gains and other items (net benefit of $93 million).

Total revenues in 1995 were $37.1 billion, compared with $35.8 billion in 1994. Fourth quarter revenues were $9.2 billion in both 1995 and 1994. For the year, higher crude oil and refined product prices and higher chemicals prices and sales volumes were partially offset by lower refined product sales volumes and lower natural gas prices.

Foreign currency losses included in net income were $15 million in 1995 and $64 million in 1994. For the fourth quarter, foreign currency effects were gains of $5 million in 1995 and a loss of $13 million in 1994.

Exploration and Production

U.S. exploration and production      Fourth Quarter                Year

($ Millions)                         1995       1994          1995       1994

Operating Earnings                    140        169           552        584

New Accounting Standard             (490)          -          (490)         -

Special Items                         (9)         10            10       (66)

Net (Loss) Earnings                 (359)        179            72        518

Higher crude oil prices in 1995 did not fully offset the effects of lower production volumes and lower natural gas prices. Natural gas accounts for about half of the company's combined U.S. oil and gas production. Ongoing operating expenses and exploration expenses both declined year to year. Normal depreciation declined, principally as a result of lower production volumes.

In the fourth quarter, crude oil and natural gas prices were higher than in the year earlier quarter. Depreciation expense declined as a result of lower production volumes and the effect of the new accounting standard adopted in the fourth quarter. However, these benefits were more than offset by the effect of lower production volumes and higher exploration expenses, due to well write-offs.

In 1995, the company's average crude oil realizations increased $1.48 per barrel to $15.34. In the fourth quarter, average crude oil realizations were $14.94 per barrel, up $.41 from the prior year quarter. Average natural gas prices for the full year 1995 fell $.26 from the 1994 average to $1.51 per thousand cubic feet; however, in the fourth quarter natural gas prices increased to their highest level of the year and, at an average of $1.69, were $.18 per thousand cubic feet higher than in the prior year fourth quarter.

Net liquids production for the year averaged 350,000 barrels per day, down from 369,000 in 1994; fourth quarter production of 343,000 barrels per day declined from 360,000 in the prior year fourth quarter. Net natural gas production in 1995 averaged about 1.9 billion cubic feet per day, compared with 2.1 billion in 1994. For the 1995 fourth quarter, natural gas production averaged 1.8 billion cubic feet per day, down from 2.0 billion in the year earlier quarter.

Natural gas prices increased in December and have remained strong into 1996, reflecting increased demand caused by abnormally cold weather in the eastern United States. The company has several projects under way, including major long-term development projects in the Gulf of Mexico, which should stabilize its U.S. oil and gas production volumes.

International exploration and production         Fourth Quarter          Year

($ Millions)                                     1995        1994     1995     1994

Operating Earnings                                273         143      811      519

New Accounting Standard                          (81)          -       (81)       -

Special Items                                     (8)         20       (40)      20

Net Earnings                                      184         163      690      539

International upstream results reflect higher crude oil sales volumes and prices. Also, fourth quarter operations include the benefit of significantly lower effective tax rates in West Africa, primarily resulting from crude oil reserve additions.

For the year 1995, net liquids production increased 4 percent to 651,000 barrels per day, and was up 5 percent to 670,000 barrels per day in the fourth quarter. New production in West Africa, China and Australia accounted for most of the increase. Net natural gas production volumes also increased, from 546 million cubic feet per day in 1994 to 565 million cubic feet per day in 1995 and from 560 million cubic feet per day in the 1994 fourth quarter to 573 million cubic feet per day in the 1995 quarter.

Further production increases are expected in 1996 with the mid-year start up of oil from the N'Kossa field offshore Congo. Other major development projects underway include the Congo Kitina field, the Britannia gas field and the expansion of the Alba oil field in the U.K. North Sea, the offshore Canada Hibernia oil field, and continued new field developments in West Africa. Also, the recently signed service agreement to operate the Boscan field in Venezuela marks a profitable new growth area for the company. In 1995, there were two major new oil field discoveries in West Africa and two natural gas discoveries offshore Australia. In 1995, the company replaced about 140 percent of its international oil and gas production through additions to proved reserves.

Refining and Marketing

U.S. refining and marketing                     Fourth Quarter           Year

($ Millions)                                     1995       1994      1995      1994

Operating (Loss) Earnings                        (50)        135        75       325

New Accounting Standard                            -           -         -         -

Special Items                                   (158)        (41)     (179)     (285)
 
Net (Loss) Earnings                             (208)         94      (104)       40

U.S. refining and marketing turned in poor results in 1995. Extensive refinery downtime coupled with weak industry refining margins resulted in a loss for the fourth quarter and significantly reduced operating earnings for the year. The company's three largest refineries underwent major maintenance turnarounds in 1995. In addition, the Richmond, Calif., refinery was down for an extended period in the fourth quarter for upgrades required to produce cleaner burning California-mandated gasolines. These turnarounds, along with some unplanned maintenance downtime, resulted in increased maintenance expense and required the higher cost purchase of refined products from third parties to supply the company's marketing system.

Average refined product prices were higher in the year and fourth quarter, reflecting the increase in crude oil feed stock costs, but industry refining margins were weak throughout much of the year as refined product availability remained ample.

Total product sales volumes declined about 15 percent to 1.1 million barrels per day for the 1995 year and fourth quarter. The volume decline was due to the sales of the company's Philadelphia refinery in August 1994 and its Port Arthur, Texas, refinery in February 1995, in connection with a major restructuring of U.S. refining and marketing operations. The volume decline occurred in unbranded bulk sales; volumes sold through the company's marketing system were about flat for the year and fourth quarter.

Special charges in the fourth quarter totaled $158 million and primarily consisted of asset write-offs and environmental remediation provisions. In connection with implementing the new accounting standard, a comprehensive review of all the company's fixed assets was undertaken that resulted in asset write-offs. Also, certain assets were made obsolete at the Richmond and El Segundo refineries in connection with the modifications required to produce California-reformulated gasolines. Environmental provisions totaled $41 million and related to operating and closed refineries as well as various former and current marketing sites.

The company has no major refinery maintenance planned for 1996 and is ready to begin selling California-reformulated gasoline, required at the pump by June 1. As previously announced, the marketing operations are being reorganized to provide better customer focus and increased efficiencies.

International refining and marketing           Fourth Quarter            Year

($ Millions)                                  1995        1994      1995      1994

Operating Earnings                              103         104      283       249

New Accounting Standard                           -           -        -         -

Special Items                                   (3)        (10)      62       (10)

Net Earnings                                    100          94      345       239

International refining and marketing results for the year primarily reflect improved shipping operations, partially offset by lower results in the United Kingdom refining and marketing operations, where low industry sales margins and an extensive planned refinery turnaround in the second quarter negatively affected earnings. There was also a modest improvement in earnings reported by the company's Caltex affiliate despite poor refining margins throughout its major operating areas in the Asia-Pacific region and South Africa. Caltex's foreign currency effects were a $53 million favorable swing year-to-year.

Operating earnings were flat in the fourth quarter as improved U.K. refining and marketing operations and world-wide shipping results were offset by lower Caltex earnings. Caltex results included $13 million of favorable foreign tax benefits. Caltex fourth quarter inventory valuation benefits were $15 million in 1995 and $20 million in 1994.

Refined product sales volumes averaged 969,000 barrels per day for the year and 1,055,000 barrels per day for the fourth quarter, up 4 percent and 9 percent, respectively, from the corresponding prior year periods. The increases reflect higher Caltex sales volumes and increased sales in Chevron's international trading operations.

International downstream net earnings for the year included an $86 million benefit from the company's share of a gain related to a land sale by a Caltex affiliate in Japan. This gain was partially offset by various special charges in the year and fourth quarter related to restructurings and asset write-offs.

Caltex recently announced an agreement to sell its 50 percent interest in a Japanese refining company to its partner for approximately $2 billion, which will provide proceeds for investment in higher growth areas in the Asia-Pacific region. Caltex's new grass-roots refinery in Thailand is scheduled for completion in mid-1996.

Chemicals

Chemicals                                 Fourth Quarter              Year

($ Millions)                             1995        1994         1995      1994

Operating Earnings                         38          68          524       215

New Accounting Standard                   (13)          -          (13)        -

Special Items                             (6)         (5)         (27)       (9)

Net Earnings                               19          63          484       206

Chemicals reported record earnings for the year; however, industry conditions began to soften during the second half of 1995. Falling prices for the company's major products coupled with increased feedstock costs caused fourth quarter earnings to decline, compared with the 1994 fourth quarter.

Chemicals recently announced a restructuring of its businesses along geographic lines to facilitate growth of its U.S. and international operations. The company is expanding its ethylene and paraxylene facilities in the United States and has international projects under way in the Middle East and the Pacific Rim.


Coal and Other Minerals

Coal and other minerals                  Fourth Quarter                Year

($ Millions)                           1995        1994          1995       1994

Operating Earnings                       22          30            47         63

New Accounting Standard                (63)           -           (63)         -

Special Items                           (1)         48             (2)        48

Net (Loss) Earnings                    (42)         78            (18)       111

Coal results were lower for the year and fourth quarter due to reduced demand and lower prices. Mild winter and summer weather in the first half of the year coupled with customers electing to purchase cheaper alternative fuels resulted in lower sales volumes. Fourth quarter operating results improved from the first three quarters as industry conditions improved.

Corporate and Other

Corporate and other                       Fourth Quarter              Year

($ Millions)                            1995        1994        1995       1994

Operating Charges, net                  (75)        (71)       (330)      (284)

New Accounting Standard                 (12)          -         (12)         -

Special Items                           (25)         23        (197)       324

Net Charges                            (112)        (48)       (539)        40

Corporate and other net operating charges for the year increased as higher interest expense and lower earnings from real estate operations more than offset lower corporate overhead expenses. In the fourth quarter, however, these and other items were about flat with the prior year fourth quarter. Higher interest rates resulted in higher interest expense for the year, but by the fourth quarter the company's interest rates had declined to about the same level as in the prior year quarter.

Included in corporate and other charges for the year was a third quarter provision of $168 million for the expected loss on the sale of real estate development assets in connection with the company's exit from that business. Other special charges in 1995 included litigation and employee severance provisions, most of which were recognized in the fourth quarter.

Special items in 1994 consisted of favorable income tax adjustments totaling $324 million, of which $23 million were included in the fourth quarter.

Capital and Exploratory Expenditures

Capital and exploratory expenditures, including the company's share of affiliates' expenditures, were $4.800 billion for the year 1995, about level with the $4.819 billion spent in 1994. Fourth quarter expenditures were $1.508 billion and $1.645 billion in 1995 and 1994, respectively. In 1995, exploration and production spending totaled $2.714 billion, of which 68 percent was in international areas. The company recently announced its 1996 capital and exploratory budget is about $5.3 billion, a 10 percent increase from 1995 expenditures.

CHEVRON CORPORATION
- FINANCIAL REVIEW


  CHEVRON CORPORATION - FINANCIAL REVIEW                             -1-

  (MILLIONS OF DOLLARS)

  CONSOLIDATED STATEMENT OF INCOME

  (unaudited)                                    Fourth Quarter       Twelve Months

  REVENUES:                                        1995       1994       1995     1994

  Sales and Other

  Operating Revenues (1)                        $ 8,922    $ 8,927   $ 36,310 $ 35,130

  Equity in Net Income of Affiliated

  Companies and Other Income                        235        305        772      699

                                                  9,157      9,232     37,082   35,829

  COSTS AND OTHER DEDUCTIONS:

  Purchased Crude Oil and Products                4,463      4,430     18,033   16,990

  Operating Expenses                              1,608      1,321      5,974    6,358

  Exploration Expenses                              138        110        372      379

  Selling, General and

  Administrative Expenses                           397        339      1,384      963

  Depreciation, Depletion and

  Amortization                                     1,679        598      3,381    2,431

  Taxes Other Than on Income (1)                   1,483      1,406      5,748    5,559

  Interest and Debt Expense                           94         97        401      346

                                                   9,862      8,301     35,293   33,026

  Income Before Income Tax Expense                  (705)       931      1,789    2,803

  Income Tax Expense                                (287)       308        859    1,110

  NET INCOME                                      $ (418)     $ 623      $ 930  $ 1,693

  PER SHARE AMOUNTS
  NET INCOME                                     $ ( .64)     $ .96     $ 1.43   $ 2.60

  DIVIDENDS                                      $   .50      $ .4625   $ 1.925  $ 1.85

  Average Common
  Shares Outstanding (000's)                     652,263    651,721    652,084  651,672


  EARNINGS BY MAJOR OPERATING AREA
   (unaudited)                                  Fourth Quarter            Twelve Months

                                                1995      1994           1995      1994

  Exploration and Production

  United States                               $ (359)    $ 179           $ 72     $ 518

  International                                  184       163            690       539

  Total Exploration and

  Production                                    (175)      342            762     1,057

  Refining, Marketing and Transportation

  United States                                 (208)       94           (104)       40

  International                                  100        94            345       239

  Total Refining, Marketing

  and Transportation                            (108)      188            241       279

  Total Petroleum Operations                    (283)      530          1,003     1,336

  Chemicals                                       19        63            484       206

  Coal and Other Minerals                        (42)       78            (18)      111

  Corporate and Other (2)                       (112)      (48)          (539)       40

  NET INCOME                                  $ (418)    $ 623          $ 930   $ 1,693

                                             $ 1,286   $ 1,212        $ 4,988   $ 4,790

  (1)Includes consumer excise taxes

  (2)  "Corporate and Other" includes interest expense, interest income
  on cash and marketable securities, corporate center costs, and real
  estate and insurance activities.


 CHEVRON CORPORATION - FINANCIAL REVIEW                                 -2-

(MILLIONS OF DOLLARS)SPECIAL ITEMS BY MAJOR

 OPERATING AREA                                Fourth Quarter          Twelve Months
 (unaudited)                                   1995       1994        1995       1994  

U.S. Exploration and Production 
                                            $ (499)      $ 10      $ (480)     $ (66) 

International Exploration 

 and Production                                (89)        20        (121)        20

U.S. Refining, Marketing and

 Transportation                               (158)       (41)       (179)      (285)

International Refining,

 Marketing and Transportation                   (3)       (10)         62        (10)

Chemicals                                      (19)        (5)        (40)        (9)

Coal and Other Minerals                        (64)        48         (65)        48
 Corporate and Other (1)                       (37)        23        (209)       324

  Total Special Items                       $ (869)      $ 45    $ (1,032)      $ 22
  
  
  SUMMARY OF SPECIAL ITEMS                     Fourth Quarter          Twelve Months

        (unaudited)                            1995      1994        1995       1994

Asset Write-offs and Revaluations

 Accounting Change                          $ (659)      $ -       $ (659)      $ -

 Other                                        (136)        -         (304)        -

Environmental Remediation

 Provisions                                   (41)      (11)         (90)      (304)

Restructurings & Reorganizations(19)                (45)         (50)       (45)

Prior-Year Tax Adjustments                      -        43          (22)       344

Asset Dispositions                              7        48            7         48

LIFO Inventory Gains (Losses)                   2       (10)           2        (10)

Other, Net                                    (23)       20           84        (11)

  Total Special Items                      $ (869)     $ 45     $ (1,032)      $ 22
  
FOREIGN EXCHANGE GAINS (LOSSES)               $ 5     $ (13)       $ (15)     $ (64)



EARNINGS BY MAJOR OPERATING AREA
EXCLUDING SPECIAL ITEMS

               (unaudited)                     Fourth Quarter         Twelve Months

                                             1995      1994         1995       1994

Exploration and Production

 United States                              $ 140     $ 169        $ 552      $ 584

 International                                273       143          811        519

Total Exploration and
Production                                    413       312        1,363      1,103

Refining, Marketing and Transportation 

 United States                                (50)      135           75        325

 International                                103       104          283        249

   Total Refining, Marketing

   and Transportation                          53       239          358        574

   Total Petroleum Operations                 466       551        1,721      1,677

Chemicals                                      38        68          524        215

Coal and Other Minerals                        22        30           47         63

Corporate and Other (1)                       (75)      (71)        (330)      (284)

Earnings Excluding
Special Items                                 451       578        1,962      1,671
    
    Special Items                            (869)       45       (1,032)        22

    Net Income                             $ (418)    $ 623        $ 930    $ 1,693


 (1)  "Corporate and Other" includes interest expense, interest income on
 cash and marketable securities, corporate center costs, and real estate
 and insurance activities.


CHEVRON CORPORATION - FINANCIAL REVIEW                               -3-
OPERATING STATISTICS (1)

                                 Fourth Quarter          Twelve Months

                                   1995    1994          1995     1994

NET LIQUIDS PRODUCTION (MB/D):

   United States                    343     360           350      369

   International                    670     638           651      624

    Worldwide                     1,013     998         1,001      993
    
NET NATURAL GAS PRODUCTION (MMCF/D):

   United States                  1,795   1,968         1,868    2,085

   International                    573     560           565      546

     Worldwide                    2,368   2,528         2,433    2,631
     
SALES OF NATURAL GAS (MMCF/D):

   United States                  2,918   2,567         2,815    2,598

   International                    633     456           564      461

     Worldwide                    3,551   3,023         3,379    3,059
     
SALES OF NATURAL GAS LIQUIDS (MB/D):

   United States                    211     247           213      215

   International                     38      45            47       34

     Worldwide                      249     292           260      249
     
SALES OF REFINED PRODUCTS (MB/D):

   United States                  1,087   1,255         1,117    1,314

   International                  1,055     971           969      934

     Worldwide                    2,142   2,226         2,086    2,248
     
REFINERY INPUT (MB/D):

   United States                    826   1,196           925    1,213

   International                    631     627           598      623

     Worldwide                    1,457   1,823         1,523    1,836
     
CHEMICALS SALES & OTHER OPERATING
REVENUES (millions of dollars) (2)

   United States                  $ 698   $ 774       $ 3,332  $ 2,800

   International                    148     149           621      562

     Worldwide                    $ 846   $ 923       $ 3,953  $ 3,362
     
(1) Includes interest in affiliates.

(2) Includes sales to other Chevron companies.1994 amounts restated
 to conform with 1995 presentation.

Updated: January 1996