press release

ChevronTexaco on Track to Deliver Strong, Sustained Financial Performance

Chairman & CEO O'Reilly Reports to Security Analysts

NEW YORK, Aug. 1, 2003 -- ChevronTexaco Chairman and Chief Executive Officer David J. O'Reilly, today in a meeting with security analysts, discussed the company's first-half 2003 strong financial performance and reviewed progress on strategic initiatives to further strengthen the company across all its businesses. Earlier in the day, the company announced second-quarter net income of $1.6 billion.

O'Reilly said, "ChevronTexaco is making progress in a number of areas. Besides strong earnings and cash flows in the first half of this year, we've improved our debt position, raised the quarterly dividend, achieved successful start-ups in major oil and gas projects, formed a global gas business, and reorganized global downstream operations. We are moving aggressively on several fronts to increase the value of the company for our stockholders."

During the meeting, O'Reilly reiterated the company's objective to be first among its peers in total stockholder return and said the company continues to focus on closing the gap with its competitors in return on capital employed. He also stated the company will be focusing on those strategic assets that offer the greatest opportunity to build value for stockholders and that ChevronTexaco expects to sell $1 billion to $2 billion in non-strategic assets per year during the next few years.

Upstream Strategies Moving Forward

O'Reilly said the company is gaining momentum in its efforts to grow upstream earnings and maintain competitive returns by maximizing the value of the base business and adding new core positions.

"We have a consistent, long-term strategic focus on the upstream, a stable capital program, a commitment to improve capital efficiency and a broad and deep portfolio. We will continue to deliver competitive results in this business," said O'Reilly. He also cited a number of strategically important exploration and production positions held by the company, including:

  • resource-rich regions where the company is the No. 1 producer, including Kazakhstan, Angola and Indonesia;
  • largest holder of uncommitted natural gas resources in Australia;
  • leadership positions in the Gulf of Mexico Shelf and San Joaquin Valley;
  • recent exploration successes in the Gulf of Mexico, Nigeria and Angola
  • a significant and growing resource base of about 50 billion barrels of oil and gas equivalent.

To focus its upstream portfolio, O'Reilly outlined the planned divestment of non-strategic upstream portfolio assets, including about 400 fields in North America, as well as interests in Papua New Guinea and three fields in the North Sea.

Building the Global Gas Business

O'Reilly reported that ChevronTexaco also is making progress on building a global, integrated gas business that targets attractive markets and commercializes ChevronTexaco's large gas resource base. He said that the company's already substantial gas business -- with a focus on the United States and Asia as major markets -- positions the company to build a global capability in liquefied natural gas and capture market opportunities worldwide.

O'Reilly cited key gas projects and expected near-term milestones, including:

  • in the Pacific Basin, where the Greater Gorgon Area potential resources exceed 40 trillion cubic feet of natural gas and where the company expects a Barrow Island site decision by the end of the year;
  • in the Atlantic Basin, anchored by the Port Pelican Regasification Project, where U.S. government permits are anticipated by the end of 2003 for a terminal to handle natural gas imports from West Africa and the Caribbean region.

Downstream Initiatives on Track

O'Reilly said ChevronTexaco is moving to improve downstream returns by focusing on areas where it has strong brands, well-established supply arrangements and competitive market shares. He cited the North America West Coast, Asia and the U.S. Gulf Coast/Latin America regions as areas of strength.

In commenting on the recently announced restructuring of downstream into a global functional organization, which is targeting before-tax profit improvements of $500 million by 2005, O'Reilly stated the new organization will allow the company to leverage global scale more fully to reduce costs and drive efficiency improvements.

Initiatives reported include:

  • Twenty market areas are now considered non-strategic, including refining and retail marketing interests in Europe, Australia, the Andean countries and the Middle East, as well the Batangas Refinery in the Philippines. ChevronTexaco will limit future investments in these areas and evaluate alternatives.
  • Selling company-owned or leased service stations to dealers and third parties, about 550 in the United States and 900 in Asia and Africa.
  • Improving the refining network's performance, with a goal of making refineries in Asia and North America top tier by 2005.

"We are transforming the downstream into a leaner, more efficient business," said O'Reilly.


This press release 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 and chemicals industries. Words such as "goals," "targets," "expected," "projected," "potential," "strategy," 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 our 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. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. 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 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 company's ability to successfully implement the restructuring of its worldwide downstream organizations and other business units; the company's ability to sell or dispose of assets or operations as expected; the results of operations and financial condition of equity affiliates; the ability of the company's Dynegy equity affiliate to successfully execute its recapitalization and restructuring plans; inability 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 oil and gas development projects; potential delays in the development, construction or start-up of planned projects; ability to receive necessary permits from regulatory bodies to undertake and complete planned projects; potential disruption or interruption of the company's production or manufacturing facilities due to war, accidents, severe weather, political events or other unexpected damage; potential liability for remedial actions under existing or future environmental regulations and litigation; 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; the possibility of changed accounting rules under generally accepted accounting rules promulgated by rule-setting bodies. 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.

U.S. Securities and Exchange Commission (SEC) rules permit oil and gas companies to disclose only proved reserves in their filings with the SEC. Certain terms, such as "resources," "resource base," and "potential resources" are used in this press release that are not permitted to be included in documents filed with the SEC.

Updated: August 2003