press release

ChevronTexaco Announces $8.5 Billion Capital and Exploratory Spending Program for 2004

SAN RAMON, Calif., Dec. 16, 2003 -- ChevronTexaco today announced an $8.5 billion capital and exploratory spending program for 2004, which includes $1.8 billion for the company's share of affiliate expenditures.

"The 2004 program fully supports our strategies to focus on high-return upstream growth projects, commercialize our company's large natural gas resource base and enhance the financial returns from our global downstream business," said ChevronTexaco Chairman and CEO Dave O'Reilly.

"In support of our objective to improve the company's overall return on capital employed, this 2004 program reflects an ongoing emphasis on spending discipline, while at the same time maintaining the financial flexibility to take advantage of new growth opportunities," O'Reilly added.

For 2003, the company expects capital and exploratory spending will be about $8 billion, including the company's share of outlays by affiliates.

Exploration, Production and Global Gas

Approximately 75 percent of total capital spending, or $6.4 billion, is targeted for upstream's investment in exploration, production and global gas-related projects, including $1.9 billion in the United States.

"Our exploration and production spending program is focused on opportunities that deliver growth while improving overall returns," said Peter Robertson, ChevronTexaco's vice chairman. "Our focus will continue to be on selecting projects that represent the best economic opportunities and executing them successfully."

Robertson said the upstream program builds on a string of exploration successes over the last two years and includes continued investment in impact exploration opportunities in deepwater Gulf of Mexico and West Africa, as well as prospective areas outside those regions. He cited major 2004 spending on longer-term projects in the following areas:

  • Nigeria and Angola -- ongoing investment in near-shore producing fields, in the Sanha condensate project, and in deepwater developments at Agbami and Benguela/Belize;
  • Kazakhstan -- continued development of the Sour Gas Injection Second Generation Project at Tengiz, which is targeting production increases in 2006;
  • Venezuela -- further development of the Hamaca Field and an associated crude oil upgrading facility that is expected to reach full production in 2004;
  • Gulf of Mexico -- continued appraisal and engineering work for deepwater discoveries, including the Tahiti project that is moving toward an expected 2007 start-up.

Robertson said the 2004 program also includes significant spending to commercialize the company's international natural gas resource base, including the construction of additional liquefied natural gas (LNG) facilities to help meet future demand for natural gas. The upstream portion of global gas-related investments in 2004 is estimated at $400 million, out of a companywide total of $500 million. The total budget amount includes projects in the following areas:

  • Australia -- further development of the Gorgon natural gas resource offshore Western Australia and expansion of the Australia North West Shelf LNG capacity;
  • Angola and Nigeria -- reduction of natural-gas flaring through the construction of pipelines, LNG facilities and a gas-to-liquids operation;
  • United States and Mexico -- two proposed offshore LNG import and regasification terminals, one recently permitted (Port Pelican in the Gulf of Mexico) and the other with permits aggressively being sought (Baja California, Mexico).

Global Downstream

About $1.4 billion, or 16 percent of total spending, is targeted for global downstream. Refining and marketing investments are estimated at about $400 million in the United States and $600 million internationally. Another $400 million is budgeted primarily for supply and transportation projects, including pipelines to support expanded upstream production.

"In 2004, we will operate along functional lines, rather than our previous geographic focus," said Patricia Woertz, downstream's executive vice president. "Our 2004 capital spending program fully supports our new organization's objectives to operate safely, reliably and with environmental care; to be more efficient; and to improve our financial returns."

Chemicals and Other

Investments are expected to total about $200 million in chemicals and about $150 million in power and related businesses. Another $300 million is targeted for energy technology, information technology and facilities.

ChevronTexaco 2004 Planned Capital & Exploratory Expenditures* $ Billions
U.S. Upstream $1.9
International Upstream 4.5
U.S. Downstream 0.5
International Downstream 0.9
Chemicals and Other 0.7
Affiliate (noncash) (1.8)
Cash C&E $6.7
*Global gas-related expenditures are included in each business segment, depending on the nature of the investment.

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

This news release contains forward-looking statements about ChevronTexaco's capital and exploratory spending program for 2004. Words such as "anticipates," "expects," "intends," "plans," "targets," "seeks," "estimates" and similar expressions are intended to identify such forward-looking statements. The statements are based on management's current expectations, estimates and projections; are not guarantees of future performance; and are subject to certain risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Among the factors that could cause actual results to differ materially are the success and timing of securing necessary government and partner approvals for the construction and operation of planned facilities; future demand for natural gas demand in Mexico and North America; availability of similar competing facilities; future exploration and appraisal successes; results of evaluations of development alternatives; actions of competitors; inability or failure of the company's joint venture partners to fund their share of operations and development activities; potential delays in development, construction and start-up of planned projects; potential disruption or interruption of the company's production or manufacturing facilities due to accidents, political events, severe weather or war; local and general economic conditions; and local political events. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, ChevronTexaco undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Updated: December 2003