press release

ChevronTexaco Delivering Strong Financial Performance, Well-Positioned for Future Growth

ChevronTexaco Executives Report to Security Analysts

NEW YORK, Dec. 14, 2004 -- ChevronTexaco is delivering on its pledge to achieve industry-leading financial returns, said Chairman and Chief Executive Officer David J. O'Reilly in a presentation to security analysts today. With a strong focus on improving return on capital employed, the company significantly improved its relative performance in 2003 and through the first nine months of 2004 is outperforming its peers.

O'Reilly reported that from the beginning of 2000 to the present, the company is No. 1 among its largest peers in total stockholder return, the key measure of dividend and stock price growth. He said the company is poised to provide strong earnings and returns in the future.

The company has dramatically strengthened its balance sheet in the last two years, O'Reilly said. "We're in a business where financial strength is required to participate in large, long-term projects and take advantage of world-class opportunities. We're currently in the fortunate position where we have a strong balance sheet, as well as the ability to fund our queue of good, economic projects and increase the amount of cash returned directly to our stockholders," he said.

"Our first priority has been to improve profitability," said O'Reilly. "Volume growth will follow because we have major new projects scheduled to come on line over the next several years."

Continuing, he said, "To do well in our business, we must make the right long-term investment decisions and execute those projects well. And we must be an excellent operator of long-lived assets. That's why disciplined processes designed to achieve consistent operational excellence, capital stewardship and cost reduction are important and will continue to make us a top competitor."

O'Reilly said the company has followed through on its objective to high-grade its portfolio and generate value, with asset sale proceeds expected to exceed $3 billion this year. He added that the company's portfolio is well-positioned to leverage strong market conditions and that current industry conditions only serve to reinforce that the company is pursuing the right strategies at the right time.

ChevronTexaco's capital and exploratory expenditure program for 2005 totals $10 billion, O'Reilly said, adding that next year's spending represents an increase over the last two years because the company is going into higher spending stages at several key growth projects.

Joining O'Reilly at the meeting to discuss ChevronTexaco's strategies and financial performance were Vice Chairman Peter Robertson, who heads Global Upstream; Patricia Woertz, Executive Vice President in charge of Global Downstream; George Kirkland, President of Overseas Petroleum; and Chief Financial Officer John Watson.

Upstream to Drive Growth

Vice Chairman Peter Robertson told analysts that the company is delivering on its key upstream strategies. "With 2003 as the base, our objective is to grow production volumes an average of at least 3 percent compounded over the next 5 years," Robertson said.

Robertson indicated the objective could be achieved with a planned strong growth in production capacity during the 2006 through 2008 period. "We are making good progress on our major capital projects. These new projects are expected to bring our production to approximately three million barrels per day in 2008," he added.

The company's strategy to achieve superior exploration success continues to generate results, Robertson said. "This year, we've achieved a success rate of 46 percent in the 41 exploratory wells we have drilled, far above the 10-year industry average of 32 percent."

Robertson acknowledged that the company's reserves replacement rate in 2004 will be low, primarily due to the timing of large projects. "A greater proportion of reserve additions than in the past will come from large, long lead-time projects," Robertson said. Over several years, our plans show that we can more than replace production through reserve additions from a combination of base business focus, continued successful exploration and new major projects."

Global Gas Achieving Milestones

ChevronTexaco has reached several milestones in its strategy to build an integrated gas business, Robertson said. The company has re-established its gas marketing presence in the U.S. and is progressing efforts to open up markets in North America with planned regasification terminals in Baja California and in the Gulf of Mexico. A gas-to-liquids (GTL) growth initiative also is under way, with planned facilities in Nigeria and Qatar. By 2008, the company and its partners expect to market 70,000 barrels a day of clean, high performance fuels from an exclusive GTL process, and plan to be well advanced on the development of an additional 200,000 barrels of GTL production.

The "Big 5" World-Class Projects

George Kirkland, president of Overseas Petroleum, discussed a number of important upstream projects, including five major projects that are planned to come on line between 2006 and 2009 and which are expected to have a significant impact on the company's production growth. The projects are: Benguela/Belize and Lobito/Tomboco in Angola; Tengizchevroil's Sour Gas Injection/Second Generation Plant project in Kazakhstan; the Agbami field in Nigeria; the Tahiti field in the Gulf of Mexico deepwater and Australia's Greater Gorgon development.

"These projects and their anticipated additions to production and reserves over the coming years are critical to our success," Kirkland said.

Downstream Performance

Pat Woertz, Executive Vice President of Global Downstream, discussed the company's strategy to improve downstream returns by focusing on areas of market and supply strength. She outlined numerous accomplishments in 2004, which included improving refinery utilization rates and generating more than $500 million in before-tax earnings improvements compared to a 2002 base period -- a 2005 year-end goal that was met one year in advance. Downstream also improved its marketing portfolio, divesting more than 1,400 marketing sites, while retaining sales volumes, and bringing more than 1,000 new Texaco-branded sites into the company's retail network.

"We will build on this momentum in 2005 to further improve returns," Woertz said. "Our performance is building a foundation for future growth, and investments will make core assets even more competitive. We expect to improve reliability, increase heavy, sour crude runs and expand capacity."

Concluding the presentation to analysts, O'Reilly said, "We continue to consider total stockholder return the ultimate score, and we expect to stay among the top performers in our industry."

Note to Editors: More information about ChevronTexaco may be found at


This presentation of ChevronTexaco Corporation contains forward-looking statements relating to ChevronTexaco's operations that are based on management's current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as "anticipates," "expects," "intends," "plans," "targets," "projects," "believes," "seeks," "estimates" and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond management's control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. 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.

Among the factors that could cause actual results to differ materially are crude oil and natural gas prices; refining margins and marketing margins; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; success of the company's exploration program; the results of operations and financial condition of equity affiliates; inability or failure of the company's joint-venture partners to fund their share of operations and development activities; potential failure to achieve expected production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; potential disruption or interruption of the company's production or manufacturing facilities due to war, accidents, political events, civil unrest or severe weather; the company's ability to successfully achieve the planned improvements from the restructuring of its worldwide downstream organization and other business units; potential liability for remedial actions under existing or future environmental laws or regulations; significant investment or product changes under existing or future environmental regulations (including, particularly, regulations and litigation dealing with gasoline composition and characteristics); potential liability resulting from pending or future litigation; and the company's ability to sell or dispose of assets or operations as expected. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

Updated: December 2004