press release

ChevronTexaco Reports Third Quarter Net Income of Nearly $1.2 billion for Former Chevron Operations

  • Sharply lower crude oil and natural gas prices reduce exploration and production earnings
  • Improved margins boost profits for refining, marketing and transportation

SAN FRANCISCO, Oct. 25 -- ChevronTexaco Corp. (NYSE: CVX) today reported net income of $1.168 billion ($1.82 per share -- diluted) for third quarter 2001 for the former operations of Chevron Corp., compared with third quarter 2000 net income of $1.531 billion ($2.35 per share -- diluted). Excluding net charges for special items in both quarters, earnings on an operational basis declined 27 percent to $1.199 billion ($1.86 per share -- diluted). Earnings in the quarter for the stand-alone operations of Texaco Inc. were announced separately today by ChevronTexaco.

Earnings Summary

                                             Three Months     Nine Months
                                            Ended Sept. 30   Ended Sept. 30
     Millions of Dollars                    2001      2000   2001      2000
     Operating Earnings
       Exploration and Production           $783     $1,290  $3,195   $3,276
       Refining, Marketing and
        Transportation                       389        307   1,053      558
       Chemicals and Other                    27         50     (65)      60
         Total*                            1,199      1,647   4,183    3,894
     Special Items                           (31)      (116)    (91)    (203)
         Net Income*                      $1,168     $1,531  $4,092   $3,691
    *Includes Foreign Currency Gains         $26        $75     $69     $150
	

For the first nine months of 2001, Chevron reported record net income of $4.092 billion ($6.36 per share -- diluted), compared with $3.691 billion ($5.65 per share -- diluted) in the 2000 period. Operating earnings were $4.183 billion ($6.50 per share -- diluted) for the nine months, compared with $3.894 billion ($5.96 per share -- diluted) last year.

Chairman and CEO Dave O'Reilly said, "We had solid earnings from the former Chevron operations in the third quarter, although off from the record level achieved in the same period last year.

"Weakened demand in the world economies, even before the tragedies of September 11, pushed oil and gas prices significantly lower than the year-ago quarter. For example, the company's average U.S. crude oil realization fell over $5 per barrel between periods to about $23, and the average U.S. natural gas realization was off nearly 40 percent to about $2.75 per thousand cubic feet. These lower prices worldwide were the main reason for a 39 percent decline in earnings from our exploration and producing operations."

For the company's downstream businesses, O'Reilly said, "Our refining and marketing margins improved from a year ago, especially in the United States. The primary margin benefit was from lower crude oil feedstock and fuel costs. Also contributing to the bottom line were higher refined product sales volumes and improved capacity utilization of our refining system."

Regarding the company's international downstream sector, O'Reilly said that excess capacity and weak demand continued to affect the Asia-Pacific operations of Caltex. However, the international shipping operation increased its profits from the year-ago quarter, mainly through lower operating expenses.

Commenting on the recently completed merger with Texaco, O'Reilly said, "The October 9 merger was historic for both Chevron and Texaco and their shareholders. We fully expect the combination of these two fine companies will result in successes far greater than each alone could have achieved. Employees from Chevron, Texaco and Caltex are now implementing plans they formulated during the regulatory-review period to integrate the organizations and capture the synergies made possible by the merger.

"We're poised to compete with the best," O'Reilly added. "Our constant focus will be on operating reliably, efficiently and safely -- while realizing the synergistic savings that will help us sustain profitable growth.

"We have begun the journey to become the global energy company most admired for its people, partnership and performance," O'Reilly remarked. "We at ChevronTexaco are excited for the opportunity to play an increasingly important role in helping provide the energy to grow the world economies for years to come."

O'Reilly also highlighted other activities of Chevron Corp. in recent months:

  • Caspian Pipeline: In October, the first tankers were loaded with crude oil from the Caspian Pipeline Consortium (CPC) facilities near the Black Sea port of Novorossiysk. CPC's pipeline connects the Tengiz Field in western Kazakhstan to Novorossiysk, enabling full access to world market prices for the Tengiz oil and reducing transportation costs. CPC is owned 15 percent by Chevron.
  • Angola: Chevron and partners announced the commencement of crude oil production from the North Nemba Platform in Block 0, offshore Angola. Production from North Nemba is expected to peak in the second quarter 2002 and average 40,000 barrels per day for the full year. Chevron is operator and owns a 39 percent interest.
  • Nigeria: Chevron signed two joint venture agreements with the Nigerian National Petroleum Corp. to begin the engineering design for Escravos Gas Project Phase 3 and the Escravos gas-to-liquids project. These major initiatives will help eliminate the flaring of natural gas at the Nigerian producing operations and generate additional revenue through the export of products derived from the processed gas. Phase 3 will increase the gas processing capability to 680 million cubic feet per day. The gas-to-liquids project is expected to produce about 34,000 barrels per day of ultra-clean synthetic fuel and naphtha for export. The two projects are expected to be completed by late 2005.
  • United Kingdom: The company and its partners announced they would proceed with Phase 1 development of the Clair Field, located about 50 miles west of The Shetland Isles in the North Sea. First oil is expected in late 2004 from Phase 1, which will cost nearly $1 billion. Chevron has a 19 percent interest in the Clair Field.
  • China/Australia: A Memorandum of Understanding was signed with a subsidiary of the Chinese National Offshore Oil Company to explore the feasibility of that subsidiary acquiring an equity interest in the Gorgon Area, offshore western Australia, and developing the gas market in coastal China. Chevron and Texaco own a combined 57 percent interest in the Gorgon project.
  • Deepwater Gulf of Mexico: Production began in late July at the Typhoon Field, operated and 50 percent-owned by Chevron. Production is expected to average more than 30,000 barrels of oil and 35 million cubic feet of gas per day in this year's fourth quarter and to average approximately 29,000 barrels of oil-equivalent in 2002. Chevron and partners also announced the successful Trident and Boris deepwater exploratory wells. Chevron has a 15 percent interest in the Trident prospect and a 25 percent interest in Boris.

Foreign currency gains included in third quarter 2001 net income were $26 million, compared with gains of $75 million in 2000. For the nine-month periods, foreign currency gains were $69 million in 2001, compared with gains of $150 million in 2000.

Third quarter 2001 revenues and other income of $11.9 billion were lower than the $13.6 billion in the 2000 third quarter. Revenues declined on sharply lower prices for crude oil, natural gas and refined products. Revenues for nine months 2001 declined by $1.4 billion to $37.2 billion. This was primarily attributable to the absence of sales revenues in 2001 for most of Chevron's former petrochemicals business, following the July 1, 2000, formation of the Chevron Phillips Chemical Co. joint venture, which is accounted for under the equity method.

EXPLORATION AND PRODUCTION

U.S. Exploration and Production

                                            Three Months       Nine Months
                                           Ended Sept. 30    Ended Sept. 30
     Millions of Dollars                   2001      2000    2001      2000
     Operating Earnings                    $281      $572   $1,447    $1,325
     Special Items                           49       (50)      49       (50)
       Segment Income                      $330      $522   $1,496    $1,275
	

U.S. exploration and production operating earnings of $281 million declined 51 percent in the 2001 third quarter -- primarily the result of significantly lower crude oil and natural gas realizations. The third quarter 2001 special gain of $49 million resulted from the sale of the company's interest in Shenandoah Energy Inc., an equity affiliate with producing properties in Utah.

The third quarter average natural gas realization was $2.76 per thousand cubic feet, compared with $4.42 in the year-ago period. The average crude oil realization of $23.22 per barrel declined 18 percent.

Third quarter net natural gas production averaged 1.444 billion cubic feet per day, down 11 percent from the 2000 period. Net liquids production was down 3 percent to 309,000 barrels per day. In last year's third quarter, combined liquids and natural gas production was the highest during the year -- the result of an intensive program of well workovers and development drilling projects, especially in the Gulf of Mexico, to capture the benefit of higher prices. Also contributing to the decrease in production in the 2001 quarter were reduced rig activity and the August impacts of Tropical Storm Barry and of an incident with another company's pipeline that transports Chevron's production.

International Exploration and Production

                                          Three Months        Nine Months
                                         Ended Sept. 30     Ended Sept. 30
     Millions of Dollars                 2001      2000     2001      2000
     Operating Earnings*                 $502      $718    $1,748    $1,951
     Special Items                         --        --        --        --
       Segment Income*                   $502      $718    $1,748    $1,951
     *Includes Foreign Currency Gains     $25       $42       $46       $91
	

International exploration and production quarterly earnings of $502 million declined about 30 percent, mainly the result of lower realizations for both liquids and natural gas.

Net oil-equivalent production rose about 4 percent from the year-ago period. The net liquids component of production increased 4 percent to 853,000 barrels per day -- primarily from operations in Kazakhstan. Net natural gas production increased 3 percent to 917 million cubic feet per day.

Earnings for the third quarter included net foreign currency gains of $25 million, compared with gains of $42 million in 2000.

REFINING, MARKETING AND TRANSPORTATION

U.S. Refining, Marketing and Transportation

                                           Three Months      Nine Months
                                          Ended Sept. 30    Ended Sept. 30
     Millions of Dollars                  2001      2000    2001      2000
     Operating Earnings                   $317      $260    $785      $482
     Special Items                          --      (155)     --      (217)
       Segment Income                     $317      $105    $785      $265
	

Operating earnings of $317 million improved 22 percent from the year-ago quarter. Higher margins in the western United States for refined products were complemented by higher sales volumes in all marketing areas. The margin improvement resulted mainly from lower costs for refinery feedstocks -- primarily crude oil -- which declined at a faster rate than sales realizations. Operating earnings for the 2000 quarter included a $34 million benefit from business interruption insurance related to a 1999 refinery incident.

The average refined product sales realization decreased 14 percent from the year-ago quarter to $35.41 per barrel. Refined product sales volumes increased 6 percent to 1,479,000 barrels per day, including branded gasoline sales that increased about 2 percent to 569,000 barrels per day.

International Refining, Marketing, and Transportation

                                            Three Months      Nine Months
                                           Ended Sept. 30    Ended Sept. 30
     Millions of Dollars                   2001      2000    2001      2000
     Operating Earnings*                    $72       $47    $268       $76
     Special Items                           --        --      --        --
       Segment Income*                      $72       $47    $268       $76
     *Includes Foreign Currency Gains        $9       $36     $37       $70
	

International refining, marketing and transportation earnings of $72 million increased primarily from improved margins in the Canadian and Caltex areas and lower operating expenses in the shipping business.

Chevron's share of Caltex earnings, excluding foreign currency effects, was approximately break-even, compared with losses of $34 million in the year- ago period. The Asia-Pacific market for refined products continues to suffer from excess supply and weak demand.

Total sales volumes increased 11 percent to 845,000 barrels per day, mainly from the company's share of an affiliate's sales of residual fuels and marine lubricants.

CHEMICALS

                                            Three Months      Nine Months
                                           Ended Sept. 30    Ended Sept. 30
     Millions of Dollars                   2001      2000    2001      2000
     Operating (Losses) Earnings*           $(5)      $35    $(14)     $154
     Special Items                          (43)      (11)    (43)      (11)
       Segment (Losses) Income*            $(48)      $24    $(57)     $143
     *Includes Foreign Currency Gains
      (Losses)                               $2       $(2)    $(3)      $(4)
	

Chemical operations incurred operating losses of $5 million, compared with earnings of $35 million in last year's third quarter -- due to lower earnings by the 50 percent-owned Chevron Phillips Chemical Company LLC affiliate (CPChem). Product sales margins and sales volumes for CPChem both deteriorated between periods, reflecting the general economic downturn. The special charges in the third quarter 2001 were associated with the write-down of assets and tax adjustments for CPChem's manufacturing facilities in Puerto Rico.

ALL OTHER

                                         Three Months      Nine Months
                                        Ended Sept. 30    Ended Sept. 30
     Millions of Dollars                2001      2000     2001      2000
     Net Income (Charges), Excluding
      Special Items*                     $32       $15     $(51)     $(94)
     Special Items                       (37)      100      (97)       75
       Segment Net (Charges) Income*     $(5)     $115    $(148)     $(19)
    *Includes Foreign Currency Losses   $(10)      $(1)    $(11)      $(7)
	

All Other consists of the company's 26 percent ownership interest in Dynegy Inc., coal mining operations, worldwide cash management and debt financing activities, corporate administrative costs, insurance operations, real estate activities and certain e-businesses. Net income before special items was $32 million, compared with $15 million in the year-ago quarter. The company's share of earnings from the Dynegy affiliate increased $15 million to $72 million. Otherwise, the benefits of lower interest expense on corporate debt and higher interest income on marketable securities were offset by various other corporate charges. Special items for the third quarter 2001 consisted of charges for merger-related expenses.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures, including the company's share of affiliates' expenditures, were $4.5 billion for the first nine months of 2001, compared with $3.7 billion in the 2000 period. Expenditures for worldwide exploration and production activities represented 69 percent of the total, reflecting the company's continued emphasis on growing oil and gas production. In 2001, expenditures included the acquisition of an additional 5 percent interest in the Tengizchevroil affiliate. Expenditures in 2000 included an additional investment of approximately $300 million in Dynegy Inc.

NOTICE

The conference call to discuss Chevron's stand-alone third quarter 2001 earnings will take place on Thursday, October 25, 2001, at 11:30 a.m. PDT. During this same session, stand-alone third quarter 2001 earnings for Texaco Inc. will also be discussed. The conference call will be available in a listen-only mode to individual investors, media and other interested parties on ChevronTexaco's Web site at www.chevron.com under the "Investor Relations" heading. Additional financial and operating information is contained in the Investor Relations Supplement that is available under "Financial Reports" on the Website.

ChevronTexaco will post selected fourth quarter interim company and industry performance data on its Web site on Thursday, December 20, 2001, at 2:00 p.m. PST. Interested parties may view this interim data at www.chevron.com under the "Investor Relations" heading.

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 earnings release are forward-looking statements relating to Chevron's operations that are based on management's current expectations, estimates and projections about the petroleum, chemical and other industries, in which the company operates. Words such as "expects," "plans," "projects," "believes," "estimates," and similar expressions are used to identify such forward-looking statements. The statements included in this release are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. These include potential changes in crude oil, natural gas and other commodity prices; potential delays or other changes in exploration, development and repair schedules; political instability or civil unrest in the areas of the world relating to our operations; unexpected damage to company facilities; and the successful integration of the former Chevron and Texaco businesses. Actual outcomes and results could differ materially from what is expressed or forecasted in such forward-looking statements.

                    CHEVRON CORPORATION - FINANCIAL REVIEW
                (Millions of Dollars Except Per-Share Amounts)
	
    CONSOLIDATED STATEMENT OF INCOME
            (unaudited)               Three Months           Nine Months
                                     Ended Sept. 30         Ended Sept. 30
    REVENUES AND OTHER INCOME:       2001       2000        2001       2000
      Sales and Other
       Operating Revenues (A)      $11,563    $12,997     $36,245    $37,364
      Income from Equity Affiliates    162        276         625        647
      Other Income                     184        348         343        561
                                    11,909     13,621      37,213     38,572
    COSTS AND OTHER DEDUCTIONS:
      Purchased Crude
       Oil and Products              6,141      6,953      18,730     20,460
      Operating Expenses             1,166      1,359       3,612      3,901
      Selling, General
       and Administrative Expenses     537        399       1,440      1,162
      Exploration Expenses              75         98         360        317
      Depreciation,
       Depletion and Amortization      713        801       2,085      2,151
      Taxes Other Than on Income (A) 1,253      1,240       3,713      3,572
      Interest and Debt Expense         65        101         227        356
                                     9,950     10,951      30,167     31,919
    INCOME BEFORE INCOME TAX EXPENSE 1,959      2,670       7,046      6,653
      Income Tax Expense               791      1,139       2,954      2,962
    NET INCOME                      $1,168     $1,531      $4,092    $ 3,691

    PER-SHARE AMOUNTS
      Earnings - Basic              $ 1.82      $2.36       $6.37      $5.66
      Earnings - Diluted            $ 1.82      $2.35       $6.36      $5.65
      Dividends                       $.65       $.65       $1.95      $1.95

    Average Common Shares Outstanding (000's)
            - Basic                643,326    648,520     642,750    652,641
            - Diluted              644,474    649,577     644,103    653,827

    NET INCOME BY MAJOR OPERATING AREA  Three Months           Nine Months
            (unaudited)                Ended Sept. 30        Ended Sept. 30
                                      2001       2000       2001        2000
    Exploration and Production
      United States (B)               $330       $522      $1,496     $1,275
      International                    502        718       1,748      1,951
        Total Exploration
         and Production                832      1,240       3,244      3,226
    Refining, Marketing
     and Transportation
      United States                    317        105         785        265
      International                     72         47         268         76
        Total Refining, Marketing
         and Transportation            389        152       1,053        341
    Chemicals                          (48)        24         (57)       143
    All Other (B)                       (5)       115        (148)       (19)
    NET INCOME                      $1,168     $1,531      $4,092     $3,691


    (A) Includes consumer
        excise taxes                $1,074     $1,067      $3,141     $3,029
	

(B) Includes coal operations, Dynegy Inc. equity earnings, interest

        expense, interest income on cash and marketable securities, corporate
        center costs, real estate and insurance activities, and certain
        e-businesses.


                    CHEVRON CORPORATION - FINANCIAL REVIEW
                            (MILLIONS OF DOLLARS)
	
        SPECIAL ITEMS                    Three Months           Nine Months
    BY MAJOR OPERATING AREA             Ended Sept. 30         Ended Sept. 30
        (unaudited)                     2001       2000        2001      2000

     U. S. Exploration and Production    $49       $(50)       $49      $(50)
     U. S. Refining, Marketing
      and Transportation                 --        (155)        --      (217)
     Chemicals                          (43)       (11)        (43)      (11)
     All Other *                        (37)        100        (97)       75
        Total Special Items             $(31)     $(116)      $(91)    $(203)

                                        Three Months           Nine Months
    SUMMARY OF SPECIAL ITEMS           Ended Sept. 30         Ended Sept. 30
        (unaudited)                    2001       2000       2001       2000

     Asset Dispositions                $49        $99         $49       $ 99
     Asset Write-offs
      and Revaluations                 (43)       (80)        (43)       (80)
     Environmental
      Remediation Provisions            --       (136)         --       (136)
     Prior-Year Tax Adjustments         --        (26)        (31)       (51)
     Other, Net                        (37)        27         (66)       (35)
        Total Special Items           $(31)     $(116)       $(91)     $(203)

    FOREIGN EXCHANGE GAINS             $26        $75         $69       $150


    EARNINGS BY MAJOR OPERATING AREA
        EXCLUDING SPECIAL ITEMS         Three Months           Nine Months
            (unaudited)                Ended Sept. 30        Ended Sept. 30
                                      2001       2000       2001        2000
    Exploration and Production
      United States                   $281       $572      $1,447     $1,325
      International                    502        718       1,748      1,951
        Total Exploration
         and Production                783      1,290       3,195      3,276
    Refining, Marketing
     and Transportation
      United States                    317        260         785        482
      International                     72         47         268         76
        Total Refining, Marketing
         and Transportation            389        307       1,053        558
    Chemicals                           (5)        35         (14)       154
    All Other *                         32         15         (51)       (94)
        Earnings Excluding
         Special Items               1,199      1,647       4,183      3,894

    Special Items                      (31)      (116)        (91)      (203)
        Net Income                  $1,168     $1,531      $4,092     $3,691
	
  • Includes coal operations, interest expense, interest income on cash and marketable securities, corporate center costs, real estate and insurance activities, and certain e-businesses.
                                                   At Sept. 30     At Dec. 31
    SELECTED BALANCE SHEET ACCOUNT DATA               2001            2000
            (unaudited)

     Cash, Cash Equivalents
      and Marketable Securities                       $5,108         $2,630
     Total Assets                                    $44,529        $41,264
     Total Debt                                       $6,584         $6,232
     Shareholders' Equity                            $23,004        $19,925


                    CHEVRON CORPORATION - FINANCIAL REVIEW
	
          CAPITAL AND                   Three Months          Nine Months
    EXPLORATORY EXPENDITURES (A)       Ended Sept. 30       Ended Sept. 30
     (millions of dollars)            2001       2000       2001        2000
    United States
      Exploration and Production      $295       $372     $1,033        $934
      Refining, Marketing
       and Transportation              125        128        325         303
      Chemicals                         36          3        102          68
      Other                             58         74        516         557
        Total United States            514        577      1,976       1,862

    International
      Exploration and Production       493        511      2,082       1,409
      Refining, Marketing
       and Transportation              167        133        429         369
      Chemicals                          6         13         18          42
        Total International            666        657      2,529       1,820
        Worldwide                   $1,180     $1,234     $4,505      $3,682

                                       Three Months            Nine Months
                                      Ended Sept. 30          Ended Sept. 30
    OPERATING STATISTICS (A)          2001       2000       2001        2000
    NET LIQUIDS PRODUCTION (MB/D):
      United States                    309        319         307        312
      International (B)                853        822         863        836
        Worldwide                    1,162      1,141       1,170      1,148

    NET NATURAL GAS PRODUCTION (MMCF/D):
      United States                  1,444      1,615       1,525      1,546
      International                    917        888         979        906
        Worldwide                    2,361      2,503       2,504      2,452

    SALES OF NATURAL GAS (MMCF/D):
      United States                  3,446      3,535       3,525      3,407
      International                  2,033      1,770       1,833      1,873
        Worldwide                    5,479      5,305       5,358      5,280

    SALES OF NATURAL GAS LIQUIDS (MB/D):
      United States                    171        180         173        151
      International                     72         69          68         66
        Worldwide                      243        249         241        217

    SALES OF REFINED PRODUCTS (MB/D):
      United States                  1,479      1,396       1,392      1,331
      International                    845        763         824        758
        Worldwide                    2,324      2,159       2,216      2,089

    REFINERY INPUT (MB/D):
      United States                  1,029      1,020         978        953
      International                    422        413         415        409
        Worldwide                    1,451      1,433       1,393      1,362

    (A) Includes interest in affiliates.
    (B) Excludes volumes
        produced for operating
        service agreements.            103        124         106        126
	

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Updated: October 2001