press release

ChevronTexaco Increases 2005 Capital and Exploratory Budget to $10 Billion – Up $1.5 Billion

SAN RAMON, Calif., Dec. 14, 2004 -- ChevronTexaco today announced a $10 billion capital and exploratory (C&E) spending program for 2005, which includes $1.8 billion for the company's share of affiliate expenditures. While actual 2004 C&E expenditures will not be known until year-end, they are estimated to be in the range of the 2004 budgeted amount of $8.5 billion.

"Our capital program continues to target our strategies to focus on high-return upstream growth projects, to commercialize our company's large natural gas resource base and to enhance the financial returns in our downstream business. These are the right strategies at the right time and continue to yield very strong results," said ChevronTexaco Chairman and CEO Dave O'Reilly.

"We have made great strides in improving the company's overall return on capital employed and the 2005 program reflects a continued emphasis on spending discipline while maintaining our financial flexibility to take advantage of new growth opportunities. It also recognizes we are entering into higher spending stages on several key growth projects," O'Reilly said.

Exploration, Production and Global Gas

Approximately 74 percent of total capital spending, or $7.4 billion, is targeted for upstream investment in exploration, production and global gas-related projects, including $2.5 billion in the United States.

Peter Robertson, ChevronTexaco's vice chairman, said, "Our exploration and production focus continues to be on growth while maximizing overall performance in our base business. We will continue to select projects that represent the best economic opportunities and work diligently to deliver superior results."

Robertson said the upstream program builds on a series of exploration successes over the past three years and includes continued investment in high-impact exploration opportunities in the deepwater Gulf of Mexico and West Africa, as well as in prospective areas outside those regions. He cited major 2005 spending on longer-term projects in the following areas:

  • Angola -- ongoing investment in near-shore producing fields following the recent Block 0 concession renewal, in the Sanha condensate project and in deepwater developments at Benguela/Belize
  • Nigeria -- ongoing investment in deepwater developments at Agbami
  • Kazakhstan -- continued development of the Sour Gas Injection and Second Generation projects at Tengiz, which are targeting production increases in 2006
  • Gulf of Mexico -- continued appraisal and engineering work for deepwater discoveries, including the Tahiti and Blind Faith projects

Robertson said the 2005 program also includes significant spending to commercialize the company's international natural gas resource base to help meet future demand. The upstream portion of global gas-related investments in 2005 is estimated at $400 million and includes projects in the following areas:

  • Australia -- further development of the Gorgon natural gas resource offshore Western Australia
  • Angola and Nigeria -- reduction of natural gas flaring through the construction of pipelines, liquefied natural gas facilities and a world-scale gas-to-liquids plant
  • United States and Mexico -- continued investments to ensure import capability in both the Atlantic and Pacific basins in support of our future upstream equity gas production

Global Downstream

About $1.9 billion, or 19 percent of total spending, is targeted for global downstream. Refining and marketing investments are estimated at about $600 million in the United States and $900 million internationally. These investments will allow ChevronTexaco to meet future product specifications and to enhance our ability to process these products from heavy and/or sour crudes. Another $400 million is budgeted primarily for supply and transportation projects, including pipelines to support expanded upstream production.

Chemicals and Other

Investments are expected to total about $700 million in chemicals, technology and power.

ChevronTexaco 2005 Planned Capital & Exploratory Expenditures* $ Billions
U.S. Upstream $2.5
International Upstream 4.9
U.S. Downstream 0.7
International Downstream 1.2
Chemicals and Other 0.7
TOTAL C&E 10.0
Affiliate (noncash) (1.8)
Cash C&E $8.2
* 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.

Some of the items discussed in this press release are forward-looking statements about ChevronTexaco's 2005 capital and exploratory expenditure program. The statements are based upon 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 crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and competitive conditions affecting supply and demand for aromatics, olefins and additives products; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; 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 net production from existing and future oil and gas development projects; potential delays in the development, construction or start-up of planned projects; potential disruption or interruption of the company's net production or manufacturing facilities due to war, accidents, political events or severe weather; and significant investment or product changes under existing or future environmental regulations (including, particularly, regulations and litigation dealing with gasoline composition and characteristics). 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. 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 2004