press release

Chevron Press Release - Chevron Revises 1998 Net Income To $1.339 Billion

SAN FRANCISCO, March 5, 1999 -- Chevron Corp. today announced that net income for the fourth quarter and year 1998 has been revised to include a special charge of $637 million arising from the March 2 Oklahoma Supreme Court opinion in the Cities Service case.

Even though Chevron plans to aggressively seek further review of this case in the courts, the company indicated the adjustment was made to comply with accounting standards that require recognition of certain potential losses.

Net income for 1998 was reduced to $1.339 billion ($2.04 per share - diluted) from the previously reported preliminary earnings of $1.976 billion. Fourth quarter net income was reduced to a loss of $206 million ($0.31 loss per share - diluted) from the previously reported preliminary profit of $431 million.

Excluding special items, operating earnings for 1998 of $1.945 billion were not affected.

The $637 million charge reflects an increased reserve for the potential estimated after-tax impact of the $742.2 million judgement in July 1996, plus interest through December 31, 1998.

The case reaches back to 1982 when Cities Service Co., a Tulsa oil company, filed suit against Gulf Oil Corp., when Gulf terminated plans to acquire Cities Service. In the years since the suit was filed, both companies were acquired by other energy firms: Cities Service by Occidental Petroleum and Gulf by Chevron. The lawsuit remained in the names of the original parties.


View 4th Quarter and Year 1998 Earnings issued 1/25/99


CHEVRON CORPORATION - FINANCIAL REVIEW - REVISED MARCH 4, 1999
(MILLIONS OF DOLLARS EXCEPT PER-SHARE AMOUNTS)

CONSOLIDATED STATEMENT OF INCOME

Fourth Quarter
(unaudited)
Year Ended
December 31,
1998 1997 1998 (2) 1997
Sales and Other Operating Revenues (1) $ 7,164 $ 9,725 $ 29,943 $ 40,596
Income from Equity Affiliates (66) 153 228 688
Other Income 184 390 386 679
7,282 10,268 30,557 41,963
COSTS AND OTHER DEDUCTIONS:
Purchased Crude Oil and Products 3,358 4,599 14,036 20,223
Operating Expenses 1,160 1,303 4,834 5,280
Selling and Administrative Expenses 1,343 496 2,239 1,533
Exploration Expenses 117 205 478 493
Depreciation, Depletion and Amortization 646 657 2,320 2,300
Taxes Other Than on Income (1) 1,115 1,525 4,411 6,320
Interest and Debt Expense 109 85 405 312
7,848 8,870 28,723 36,461
INCOME BEFORE INCOME TAX EXPENSE (566) 1,398 1,834 5,502
Income Tax Expense (360) 523 495 2,246
NET INCOME $ (206) $ 875 $ 1,339 $ 3,256
PER-SHARE AMOUNTS
Earnings - Basic $ (0.31) $ 1.33 $ 2.05 $ 4.97
Earnings - Diluted $ (0.31) $ 1.33 $ 2.04 $ 4.95
Dividends $ .61 $ .58 $ 2.44 $ 2.28
Average Common Shares Outstanding (000's)
- Basic 654,076 658,249 654,858 656,306
- Diluted 656,237 660,826 657,076 658,363


NET INCOME BY MAJOR OPERATING AREA
Fourth Quarter
(unaudited)
Year Ended
December 31,
1998 1997 1998 1997
Exploration and Production
United States $ 72 $ 265 $ 365 $ 1,001
International 202 261 707 1,252
Total Exploration and Production 274 526 1,072 2,253
Refining, Marketing and Transportation
United States 114 156 572 601
International (118) 139 28 298
Total Refining, Marketing and Transportation (4) 295 600 899
Chemicals (2) 63 122 228
All Other (3) (4) (474) (9) (455) (124)
NET INCOME $ (206) $ 875 $ 1,339 $ 3,256


(1) Includes consumer excise taxes. 1997 amounts have been reclassified to conform to the 1998 presentation. $ 943 $ 1,339 $ 3,756 $ 5,587

(2) Includes restatements of 1998 periods for the company's share of the cumulative effect of accounting changes, effective January 1, 1998, the net effect of which was immaterial.

(3) Renamed in connection with the fourth quarter 1998 implementation of SFAS 131, "Disclosures about Segments of an Enterprise and Related Information".

(4) "All Other" includes coal operations, interest expense, interest income on cash and marketable securities, corporate center costs, real estate and insurance activities.

SPECIAL ITEMS BY MAJOR OPERATING AREA

Fourth Quarter
(unaudited)
Year Ended
December 31,
1998 1997 1998 (1) 1997
U. S. Exploration and Production $ (34) $ (3) $ (16) $ 29
International Exploration and Production (7) (4) (10) 55
U. S. Refining, Marketing and Transportation (48) (18) (61) (61)
International Refining, Marketing and Transportation (27) 6 (95) (69)
Chemicals (24) 22 (29) 4
All Other (2) (3) (569) 65 (395) 118
Total Special Items $ (709) $ 68 $ (606) $ 76


SUMMARY OF SPECIAL ITEMS Fourth Quarter
(unaudited)
Year Ended
December 31,
1998 1997 1998 (2) 1997
Asset Dispositions $ 29 $ 156 $ (9) $ 183
Asset Write-offs and Revaluations (91) (78) (159) (86)
Environmental Remediation Provisions (21) - (39) (35)
Prior-Year Tax Adjustments 81 54 271 152
Restructurings & Reorganizations - (60) (43) (60)
LIFO Inventory (Losses) Gains (25) 5 (25) 5
Other, Net (682) (9) (602) (83)
Total Special Items $ (709) $ 68 $ (606) $ 76


FOREIGN EXCHANGE GAINS (LOSSES) $ (71) $ 205 $ (47) $ 246


EARNINGS BY MAJOR OPERATING AREA
EXCLUDING SPECIAL ITEMS
Fourth Quarter
(unaudited)
Year Ended
December 31,
1998 1997 1998 1997
Exploration and Production
United States $ 106 $ 268 $ 381 $ 972
International 209 265 717 1,197
Total Exploration and Production 315 533 1,098 2,169
Refining, Marketing and Transportation
United States 162 174 633 662
International (91) 133 123 367
Total Refining, Marketing and Transportation 71 307 756 1,029
Chemicals 22 41 151 224
All Other (2) (3) 95 (74) (60) (242)
Earnings Excluding Special Items 503 807 1,945 3,180
Special Items (709) 68 (606) 76
Net Income $ (206) $ 875 $ 1,339 $ 3,256


(1) Includes restatements of 1998 periods for the company's share of the cumulative effect of accounting changes, effective
January 1, 1998, the net effect of which was immaterial.

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

(3) Renamed in connection with the fourth quarter 1998 implementation of SFAS 131, "Disclosures about Segments of an Enterprise and Related Information".

Updated: March 1999