press release

Chevron Reports Operating Earnings Of $1.1 Billion

Higher Crude Oil Prices Boost Profits for Oil Producing Operations But Depress Earnings in the Refining and Marketing Business

SAN FRANCISCO, April 26, 2000 -- Chevron Corp. today reported first quarter net income of $1.044 billion ($1.59 per share-diluted), more than three times 1999 first quarter net income of $329 million ($0.50 per share-diluted). Record operating earnings of $1.106 billion ($1.68 per share-diluted) were nearly four times last year's first quarter.

Earnings Summary
Three Months Ended
March 31,
Millions of Dollars 2000 1999
Operating Earnings

Exploration and Production
Refining, Marketing and Transportation
Chemicals and Other

$1,018
63
25
$151
184
(54)
Total
Special Items
$1,106
(62)
$281
48

Net Income

$1,044 $329

Chairman and CEO Dave O'Reilly commented, "We are very pleased with the record operating profits in the first quarter. Our exploration and production business benefited greatly from the sharp rise in crude oil prices that exceeded $30 per barrel for about a month during this period." O'Reilly noted that the higher crude oil prices were a function of several market forces acting together -- production constraints imposed by OPEC and other producing nations, rising demand and low petroleum inventories worldwide.

"The other side of the coin for an integrated oil company such as Chevron,"O'Reilly said, "is our ability to recover higher crude oil costs in the marketplacethrough the prices charged for refined products. Despite well-publicized price increasesfor gasoline, diesel fuel and other products, the higher prices charged to our customersinitially were not sufficient to recoup higher raw material costs -- mainly crude oil. Notuntil late in the first quarter, after crude oil prices started to drop, were pricessufficient to reverse the losses being incurred in the refining and marketing part of ourbusiness."

Chevron's average U.S. crude oil sales realization in the first quarter 2000 rose to$26.19 per barrel, up more than $16 compared with the 20-year lows experienced in the 1999first quarter. Average U.S. natural gas realizations increased from $1.63 to $2.40 perthousand cubic feet, contributing to the profit improvement. The record operating earningsin the first quarter 2000 helped push the company's return on capital employed to 13percent over the last twelve months.

Citing other factors that boosted operating earnings, O'Reilly said, "In ourexploration and production operations, international liquids production rose 4 percentfrom the first quarter of last year to 844,000 barrels per day." O'Reilly noted thatthe company's worldwide increase in oil-equivalent production of one and a half percentwould have been over 4 percent if the effect of higher prices on cost-oil recovery volumesallowed in each period under the company's Indonesian production-sharing agreement wereexcluded. O'Reilly added, "While increasing production volumes worldwide, ouremployees at the same time succeeded in holding overall operating expenses at the samelevel as last year's first quarter -- approximately $5.40 per barrel -- despite higherfuel costs of 35 cents per barrel for our refineries and other operations."

O'Reilly said, "While crude oil and natural gas prices may fluctuate, operationalexcellence, cost control and capital stewardship are key to our competitiveness in thelong run and will continue to be areas of constant focus for our employees."

O'Reilly summarized some of the company's noteworthy achievements since the beginning ofthe year:

  • Angola: Chevron had several successes in Block 14, a 1,560 square-mile concession adjacent to Chevron-operated Block 0 that lies offshore the Cabinda Province. Liquids production at the Chevron-operated Kuito Field, Angola's first deepwater oil field, which came on-stream in December of last year, reached 70,000 barrels per day in April. Commissioning work on the Kuito producing facilities is continuing during the second quarter and the reservoir is performing as expected. Also, two successful appraisal wells were completed in the Benguela and Belize fields located in Block 14 near the Kuito Field. Technical evaluation of the well results and options for the development of the field are under study.
  • Caspian Sea Region: Tengizchevroil, which is 45 percent owned by Chevron and located in Kazakhstan, is nearing completion of a three-year plant expansion project, Train 5. This will increase Tengizchevroil's production to 260,000 barrels per day by the fourth quarter of 2000. In addition, excellent progress has been made on the $2.5 billion pipeline under construction by the Caspian Pipeline Consortium (CPC), in which Chevron owns a 15 percent interest. The new and refurbished sections of the 1,500-kilometer pipeline will deliver crude oil from the Tengiz Field to a new marine terminal and tank farm north of the city of Novorossiysk on the Black Sea. Site preparations for the terminal and tank farm are well under way. Overall, the CPC project remains on schedule for delivery of first oil in mid-2001.
  • Chad and Cameroon: In April, Chevron announced that it had taken a 25 percent ownership interest in an international consortium developing the landlocked Doba oil fields in southern Chad and in a related 650-mile export pipeline project through Chad to the coast of Cameroon. Construction of the estimated $3.5 billion project, which is expected to produce and transport one billion barrels of oil over its 25- to 30-year life, is scheduled to begin later this year. This project increases Chevron's position as one of the largest U.S. investors in sub-Saharan Africa.
  • Norway: In April, Chevron was awarded three new licenses to explore for and produce petroleum offshore Norway -- including the operatorship of License PL259. Combined with partnerships in other blocks, these new licenses provide Chevron with an excellent portfolio of near- and longer-term oil and gas exploration and production opportunities in Norway.
  • Chemicals: In February, Chevron and Phillips Petroleum Co. announced their intent to combine most of their petrochemicals businesses into a joint venture by mid-year. Earlier this month, the plan cleared U.S. Federal Trade Commission review. Other regulatory clearances are expected as the formation of the joint venture proceeds. Each company will own 50 percent of the joint venture, to be named Chevron Phillips Chemical Co., which expects to have annual sales and total assets of about $6 billion. When finalized, the combination will provide synergies that are expected to reduce annual costs by $150 million and to improve the effectiveness of capital spending.
  • Dynegy: Dynegy Inc., a 28 percent-owned affiliate, merged in February with Illinova Corp., an energy services holding company in Illinois. The merger with Illinova is part of Dynegy's energy convergence strategy, which includes expanding its power and natural gas marketing and trading activities, as well as its power generation business. Chevron invested an additional $200 million in Dynegy at the time of the merger, and last week Chevron also exercised its contractual right to purchase an additional 1.3 million common shares, as part of a public offering of 4.6 million shares of common equity. These two investments maintained Chevron's approximate 28 percent ownership interest in Dynegy.
  • e-Business: The company is engaged in a number of initiatives as part of an aggressive strategy to capture value associated with Internet technologies. Chevron is participating in Petrocosm marketplace, a global procurement, independent Internet business-to-business marketplace -- scheduled for go-live in June -- that will be owned by buyers and suppliers across the energy industry. In March, the company announced the formation of RetailersMarketXchange.com, a business-to-business alliance that will provide services to convenience store and small business retailers and suppliers.
  • Common Stock Share Repurchase Program: In the first quarter, Chevron purchased 4.8 million of its common shares at an average cost of $79.30 per share, for a total of $380 million. Since the inception of the company's $2 billion program in December 1997, 11.2 million shares have been bought on the open market for $865 million, at an average cost of $77.40 per share.

Total revenues for the quarter were $11.7 billion, an increase of 75 percent from $6.7billion in last year's first quarter. The increase was primarily attributable to higherrealizations from refined products, crude oil and natural gas.

The first quarter 2000 included a $62 million special charge for a patent litigationissue. Net special benefits of $48 million in the first quarter last year were composedlargely of a gain from the sale of an investment in a coal mining affiliate.

Foreign currency gains increased net income by $46 million in the first quarter 2000,compared with losses of $9 million in the first quarter of 1999. The gains in the firstquarter 2000 reflected strengthening of the U.S. dollar, particularly against theAustralian dollar.


Exploration and Production

U. S. Exploration and Production Three Months Ended
March 31,
Millions of Dollars 2000 1999
Operating Earnings
Special Items
$365
-
$35
3

Net Income

$365 $38

Note: The company's share of 2000 and 1999 earnings from Dynegy Inc. are included in All Other.

U.S. exploration and production operating earnings were $365 million in the firstquarter 2000, up from $35 million in the 1999 first quarter on sharply higher crude oiland natural gas prices.

The company's average 2000 crude oil realization was $26.19 per barrel, more than two anda half times the first quarter 1999 realization. Net liquids production of 307,000 barrelsper day was essentially flat. Average natural gas realization of $2.40 per thousand cubicfeet rose by 47 percent in the 2000 first quarter, while net natural gas production of 1.5billion cubic feet per day declined about 10 percent. The drop in natural gas productionwas primarily attributable to field declines, offset partially by new production fromfields in the Gulf of Mexico, including Genesis and Gemini.

International Exploration and Production Three Months Ended
March 31,
Millions of Dollars 2000 1999
Operating Earnings
Special Items
$653
-
$116
-

Net Income

$653 $116

International exploration and production operating earnings were $653 million, nearly sixtimes earnings in the 1999 first quarter. The increase in earnings reflected significantlyhigher crude oil prices and increased sales volumes when compared with the year-agoquarter.

Net international liquids production increased 35,000 barrels per day to 844,000 barrelsper day, mainly due to production from properties in Thailand and Argentina acquired inMarch and September 1999, respectively, and higher production in Australia and Canada.These increases were partially offset by a decline in Chevron's share of Indonesianproduction, which was primarily associated with the effect of higher prices on cost-oilrecovery volumes allowed under the production-sharing agreement. Natural gas productionincreased 10 percent to 915 million cubic feet per day, mainly reflecting productionvolumes from the newly acquired fields in Thailand and Argentina and higher production inthe United Kingdom.

Earnings in the first quarter 2000 included foreign currency gains of $28 million,compared with losses of $16 million in the 1999 quarter. Over half of the swing in foreigncurrency effects occurred in the company's Australian operations.


Refining, Marketing and Transportation

U.S. Refining, Marketing and Transportation Three Months Ended
March 31,
Millions of Dollars 2000 1999
Operating Earnings
Special Items
$ 55
(62)
$ 97
(15)

Net Income

$ (7) $ 82

U.S. refining, marketing and transportation operating earningswere $55 million, compared with $97 million in the first quarter 1999. Net income in 2000included a special charge of $62 million for a patent litigation matter, and net income inthe 1999 quarter included special charges for environmental remediation reserves.

The lower earnings in the 2000 quarter primarily reflected lower sales margins forgasoline and other refined products. Sales prices for refined products were unable torecover the large cost increases for raw materials -- mainly crude oil -- until late inthe quarter. Chevron's average sales realization for refined products rose 80 percent,while the price of crude oil increased about 150 percent from the year-ago quarter.Earnings in 2000 were further depressed by higher energy costs at the company's facilitiesand the effects of a major planned shutdown at the company's Pascagoula, Miss., refineryand repairs to the Richmond, Calif., Isomax unit, which returned to operation late in thefirst quarter 2000 after being out of service for nearly a year.

Total refined product sales volumes were 1,214,000 barrels per day in 2000, up about 2percent from the comparable quarter last year. Branded motor gasoline sales of 514,000barrels per day in 2000 declined 11,000 barrels per day. First quarter 2000 branded motorgasoline sales were constrained by the effect of late-1999 stockpiling in anticipation ofY2K-related supply disruptions, which did not materialize. In early 2000, distributorsdeferred purchases while working off these excess inventories.

International Refining, Marketing and Transportation Three Months Ended
March 31,
Millions of Dollars 2000 1999
Operating Earnings
Special Items
$ 8
-
$ 87
-

Net Income

$ 8 $ 87

International refining, marketing and transportation operating earnings were $8 million,down from $87 million for the first quarter of 1999. The decline was attributable to lowerearnings from Caltex operations.

Chevron's share of Caltex's first quarter 2000 losses was $7 million, compared withearnings of $74 million in last year's first quarter. Caltex's drop in earnings was duemainly to lower refined products sales margins, as competitive pricing prevented recoveryof the rising raw material costs. The Asia-Pacific market continues to suffer from surplusrefined products manufacturing capacity. First quarter 1999 results also benefited from a$29 million favorable inventory adjustment.

Chevron's total international downstream sales volumes decreased in the first quarter of2000 to 811,000 barrels per day, compared with 898,000 barrels per day in last year'squarter. The decline in sales is mainly attributable to Caltex's areas of operations,primarily due to the absence of Caltex's share of sales by an affiliate that was sold inthe 1999 third quarter.

Net income included foreign currency gains of $20 million in the first quarter 2000,compared with gains of $5 million in the 1999 first quarter. Caltex's operations inAustralia were responsible for most of the favorable foreign currency swing.


Chemicals

Chemicals Three Months Ended
March 31,
Millions of Dollars 2000 1999
Operating Earnings
Special Items
$68
-
$50
-

Net Income

$68 $50

Chemicals operating earnings were $68 million in the 2000 quarter, up 36percent from last year's first quarter. Increased U.S. and international demand forcertain commodity chemical products resulted in higher sales volumes and prices,contributing to improved sales margins.


All Other

All Other Three Months Ended
March 31,
Millions of Dollars 2000 1999
Net Operating Charges
Special Items
$(43)
-
$(104)
60

Net Loss

$(43) $ (44)

All Other consists of coal mining operations, the company's ownershipinterest in Dynegy Inc., worldwide cash management and debt financing activities,corporate administrative costs, insurance operations and real estate activities.

For 2000, All Other incurred net operating charges of $43 million, compared with $104million last year. The special item for 1999 represented a gain from the sale of thecompany's equity interest in a coal mining affiliate.

Coal mining operations earned $3 million in the first quarter 2000, compared with $19million in the comparable prior-year quarter. Lower sales volumes and prices led to adecline in earnings in 2000. Results for 1999 included a benefit from lower depreciationof the company's coal assets, at a time when the assets were held for sale.

Net operating charges from other activities were $46 million in 2000, compared with $123million in 1999. The reduction in net charges reflected a combination of several factors,including lower payroll costs, lower insurance expenses, higher pension settlement gainsand higher equity earnings from Dynegy, Inc.


Capital and Exploratory Expenditures

Capital and exploratory expenditures, including the company's share of affiliates'expenditures, were $1.195 billion in the 2000 first quarter, compared with $1.425 billionin the first quarter 1999. Expenditures for international exploration and productionprojects were $456 million, or 38 percent of total expenditures, reflecting the company'scontinued emphasis on increasing international oil and gas production. First quarterexpenditures included an investment of $200 million in Dynegy Inc., which maintainedChevron's approximate 28 percent ownership interest following Dynegy's February mergerwith Illinova. The first quarter 1999 included expenditures of about $500 millionattributable to the acquisition of Rutherford-Moran Oil Corp. and another interest inBlock B8/32 offshore Thailand.


Cautionary Statement Relevant to Forward-Looking Information for the Purpose of "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995.

Some of the items discussed in this earnings release are forward-looking statements relating to Chevron's operations that are based on management's current expectations, estimates and projections about the petroleum, chemical and other industries, in which the company operates. The statements included in this release are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. These include potential changes in crude oil, natural gas and other commodity prices and potential delays or other changes in work and repairs schedule. Actual results could differ materially from management's estimates.


CHEVRON CORPORATION - FINANCIAL REVIEW -1-
(Millions of Dollars, Except Per-Share Amounts)
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
Three Months Ending March 31,
REVENUES: 2000 1999
Sales and Other Operating Revenues (1) $ 11,356 $ 6,399
Income From Equity Affiliates 196 144
Other Income 146 146
11,698 6,689
COSTS AND OTHER DEDUCTIONS:
Purchased Crude Oil and Products 6,249 2,781
Operating Expenses 1,238 1,160
Selling, General and Administrative Expenses 377 397
Exploration Expenses 96 88
Depreciation, Depletion and Amortization 651 566
Taxes Other Than on Income (1) 1,109 1,078
Interest and Debt Expense 129 105
9,849 6,175
Income Before Income Tax Expense 1,849 514
Income Tax Expense 805 185
NET INCOME $ 1,044 $ 329
PER-SHARE AMOUNTS
Earnings - Basic $ 1.59 $ .50
Earnings - Diluted $ 1.59 $ .50
Dividends $ .65 $ .61
Average Common Shares Outstanding (000's)
- Basic 656,132 654,677
- Diluted 658,124 657,493
NET INCOME BY MAJOR OPERATING AREA
(unaudited) Three Months Ending March 31,
2000 1999
Exploration and Production
United States (2) $ 365 $ 38
International 653 116
Total Exploration and Production 1,018 154
Refining, Marketing and Transportation
United States (7) 82
International 8 87
Total Refining, Marketing and Transportation 1 169
Chemicals 68 50
All Other (2), (3) (43) (44)
NET INCOME $ 1,044 $ 329
(1) Includes consumer excise taxes. $ 913 $ 912
(2) 1999 restated to conform to the 2000 presentation. Effective in the first quarter 2000, the company's share of earnings for Dynegy, Inc. is reported in All Other.
(3) Includes coal operations, Dynegy Inc. equity earnings, interest expense, interest income on cash and marketable securities, corporate center costs, and real estate and insurance activities.

CHEVRON CORPORATION - FINANCIAL REVIEW
(Millions of Dollars)
-2-
SPECIAL ITEMS BY MAJOR OPERATING AREA Three Months Ending March 31,
(unaudited) 2000 1999
U. S. Exploration and Production $ - $ 3
U. S. Refining, Marketing and Transportation (62) (15)
All Other (1) - 60
Total Special Items $ (62) $ 48
SUMMARY OF SPECIAL ITEMS Three Months Ending March 31,
(unaudited) 2000 1999
Asset Dispositions $ - $ 60
Environmental Remediation Provisions - (12)
Litigation (62) -
Total Special Items $ (62) $ 48
FOREIGN CURRENCY GAINS (LOSSES) $ 46 $ (9)
EARNINGS BY MAJOR OPERATING AREA
EXCLUDING SPECIAL ITEMS
(unaudited) Three Months Ending March 31,
2000 1999
Exploration and Production
United States (2) $ 365 $ 35
International 653 116
Total Exploration and Production 1,018 151
Refining, Marketing and Transportation
United States 55 97
International 8 87
Total Refining, Marketing and Transportation 63 184
Chemicals 68 50
All Other (1), (2) (43) (104)
Earnings, Excluding Special Items 1,106 281
Special Items (62) 48
Net Income $ 1,044 $ 329
(1) Includes coal operations, Dynegy Inc. equity earnings, interest expense, interest income on cash and marketable securities,corporate center costs, and real estate and insurance activities.
(2) 1999 restated to conform to the 2000 presentation. Effective in the first quarter 2000, the company's share of earnings for Dynegy, Inc. is reported in All Other.

CHEVRON CORPORATION - FINANCIAL REVIEW
(MILLIONS OF DOLLARS)
-3-
CONSOLIDATED BALANCE SHEET March 31,
2000
December 31, 1999
ASSETS: (unaudited) 1,345 6,952
Cash and Cash Equivalents $ 1,185 7,332 $
Other Current Assets
Total Current Assets 8,517
5,643 25,182 1,907

8,297

5,231 25,317 1,823
Investments and Advances
Properties, Plant and Equipment-Net
Other
TOTAL ASSETS $ 41,249 $ 40,668
LIABILITIES:
Short-Term Debt $ 3,512 5,571 $ 3,434 5,455
Other Current Liabilities
Total Current Liabilities 9,083 5,400 5,094 1,846 1,821 8,889 5,485 5,010 1,796 1,739
Long-Term Debt and Capital Lease Obligations
Noncurrent Deferred Income Taxes
Reserves For Employee Benefit Plans
Deferred Credits and Other Noncurrent Obligations
TOTAL LIABILITIES

23,244
18,005

22,919

17,749
STOCKHOLDERS' EQUITY
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 41,249 $ 40,668
CONSOLIDATED STATEMENT OF CASH FLOWS Three Months Ended March 31,
(unaudited) 2000 1999
OPERATING ACTIVITIES
Net Income $ 1,044 $ 329
Adjustments
Depreciation, depletion and amortization

651

14 (129) (56) (27) 94 (325) 30
566
Dry hole expense related to prior years' expenditures 19
Distributions less than equity in affiliates' income (102)
Net before-tax gains on asset retirements and sales (108)
Net foreign exchange (gains) losses 15
Deferred income tax provision 90
Net (increase) decrease in operating working capital 60
Other (78)
Net cash provided by operating activities 1,296 791
INVESTING ACTIVITIES
Capital expenditures

(881)

146 (5) 75
(797)
Proceeds from asset sales 145
Other investing cash flows, net (22)
Net sales (purchases) of marketable securities (102)
Net cash used for investing activities (665) (776)
FINANCING ACTIVITIES
Net borrowings of short-term obligations

68

19 (80) (427) (370)
484
Proceeds from issuance of long-term debt 12
Repayments of long-term debt and other financing obligations (214)
Cash dividends paid (399)
Net (purchases) sales of treasury shares 70
Net cash used for financing activities (790) (47)
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (1) 1
NET CHANGE IN CASH AND CASH EQUIVALENTS (160) (31)
CASH AND CASH EQUIVALENTS AT JANUARY 1, 2000 AND 1999 1,345 569
CASH AND CASH EQUIVALENTS AT MARCH 31, 2000 AND 1999 $ 1,185 $ 538

CHEVRON CORPORATION - FINANCIAL REVIEW -4-
CAPITAL AND EXPLORATORY EXPENDITURES (1) Three Months Ending March 31,
(millions of dollars) 2000 1999
United States
Exploration and Production $ 210 $ 253
Refining, Marketing and Transportation 81 113
Chemicals 23 101
Other 301 20
Total United States 615 487
International
Exploration and Production 456 860
Refining, Marketing and Transportation 108 53
Chemicals 16 25
Total International 580 938
Worldwide $ 1,195 $ 1,425
OPERATING STATISTICS(1)
NET LIQUIDS PRODUCTION (MB/D):
United States 307 306
International 844 809
Worldwide 1,151 1,115
NET NATURAL GAS PRODUCTION (MMCF/D):
United States 1,515 1,676
International 915 832
Worldwide 2,430 2,508
SALES OF NATURAL GAS (MMCF/D):
United States 3,331 3,359
International 2,050 1,908
Worldwide 5,381 5,267
SALES OF NATURAL GAS LIQUIDS (MB/D):
United States 113 146
International 70 52
Worldwide 183 198
SALES OF REFINED PRODUCTS (MB/D):
United States 1,214 1,188
International (2) 811 898
Worldwide 2,025 2,086
REFINERY INPUT (MB/D):
United States 816 924
International 434 494
Worldwide 1,250 1,418
CHEMICALS SALES & OTHER OPERATING
REVENUES (millions of dollars) (3)
United States $ 917 $ 627
International 250 177
Worldwide $ 1,167 $ 804
(1) Includes interest in affiliates.
(2) 1999 restated to conform to the 2000 presentation.
(3) Includes sales to other Chevron companies.

Updated: April 2000