press release

ChevronTexaco Reports Third Quarter Operating Earnings of $531 million for Former Texaco Operations

  • Net income of $101 million includes anticipated loss on disposition of U.S. downstream operations

SAN FRANCISCO, Oct. 25 -- ChevronTexaco Corp. (NYSE: CVX) today reported third quarter net income of $101 million ($0.19 per share diluted) for the former operations of Texaco Inc., compared with net income of $798 million ($1.46 per share -- diluted) in the year-ago period. Excluding net charges for special items in both quarters, earnings on an operational basis declined to $531 million ($0.98 per share -- diluted) from $815 million ($1.49 per share -- diluted).

Net special charges in the 2001 third quarter included $393 million associated with the write-down of investments in U.S. downstream operations and partially offsetting tax benefits that will be realized upon completion of the divestiture. In connection with the ChevronTexaco merger on Oct. 9, the downstream investments were transferred into a trust for sale by the trustee, pursuant to the terms of the Federal Trade Commission's proposed consent order.

Earnings in the quarter for the stand-alone operations of Chevron Corp. were announced separately today by ChevronTexaco.

Earnings Summary

                              Three Months Ended         Nine Months Ended
                                 September 30               September 30
                              ------------------         ------------------
     Millions of Dollars      2001          2000         2001          2000
    -----------------------------------------------------------------------
     Operating Earnings
       Exploration and
        Production            $467          $786       $1,972        $2,028
       Refining, Marketing
        and Distribution       162           143          546           389
       Other and Corporate     (98)         (114)        (334)         (359)
                              ------        ------       ------        ------
         Total                 531           815        2,184         2,058
       Special items          (430)          (17)        (466)          (61)
                              ------        ------       ------        ------
       Net income            $ 101         $ 798       $1,718        $1,997
                              ======        ======       ======        ======
	

For the first nine months, Texaco had operating earnings of $2.184 billion ($4.01 per share -- diluted) compared with $2.058 billion ($3.76 per share -- diluted) in the 2000 period. Net income was $1.718 billion ($3.15 per share -- diluted) for the nine months, compared with $1.997 billion ($3.65 per share -- diluted) last year.

Glenn Tilton, Vice Chairman of ChevronTexaco and former Chairman and CEO of Texaco Inc., commented, "The successful execution of our business plans produced another solid quarter of earnings for Texaco despite the sharp drop off in crude oil and natural gas prices.

"In the upstream, ample supplies and weakening demand caused commodity prices to fall well below last year's levels, lowering our results. In the downstream, earnings improved compared to a year ago on the strength of higher marketing margins. However, our downstream earnings were well below record results in the second quarter of this year.

"Our capital spending program continued to show success as we announced oil and natural gas discoveries in offshore Brazil, the Gulf of Mexico and coastal Louisiana. Additionally during the quarter, we confirmed the significant potential of the Agbami field in Nigeria with the completion of appraisal drilling. Also, our Hamaca oil project in Venezuela remained on schedule and first gas was produced at the Malampaya deepwater project in the Philippines.

Commenting on the recently completed merger with Chevron, Tilton added, "Our merger with Chevron creates one of the largest energy companies in the world. ChevronTexaco will be a formidable competitor and should create greater value for all shareholders."

                                 Third Quarter               Nine Months
                                ---------------            --------------
      Texaco Inc.
     (Millions of dollars):    2001         2000         2001          2000
     -----------------------------------------------------------------------
     Operating earnings      $ 531         $ 815       $2,184        $2,058
                              ------        ------        ------        ------
     Write-down of
      investments in U.S.
      downstream              (496)           --         (496)           --
     Tax benefit on
      sale of assets           103            --          103            --
     Other write-downs
      of assets                 --            --          (25)           --
     Net losses on major
      asset sales               --           (12)          --           (77)
     Tax issues                 --            --           --            46
     Litigation issues         (16)           (5)         (16)          (22)
     Net loss on Erskine
      pipeline                  --            --           --           (14)
     Employee related issues    --            --           --             6
     Merger related costs      (21)           --          (32)           --
                              ------        ------        ------        ------
     Special items            (430)          (17)        (466)          (61)
                              ------        ------        ------        ------
     Net income              $ 101         $ 798       $1,718        $1,997
                              ======        ======        ======        ======
	

Details on special items are included in the following segment information.

OPERATING RESULTS

EXPLORATION AND PRODUCTION

                                Third Quarter             Nine Months
                               ---------------           -------------
      United States
     (Millions of dollars):   2001          2000       2001          2000
    ------------------------------------------------------------------------
     Operating earnings      $ 260         $ 487       $1,260       $ 1,241
     Special items             (16)           (8)         (16)         (115)
                             ------        ------       ------        ------
     Total                   $ 244         $ 479       $1,244        $1,126
                             ======        ======       ======        ======
	

U.S. Exploration and Production operating earnings for this year's third quarter were below last year, impacted significantly by both lower crude oil and natural gas prices. For the first nine months of this year operating earnings were slightly higher, as the effect of lower crude oil prices was offset by higher natural gas prices.

Crude oil prices were lower in both periods as demand has slowed and concerns over low global inventories of both crude oil and refined products have eased. Last year crude oil prices were at their highest levels since the Gulf War in 1991 threatened crude oil supplies. For the third quarter and nine months 2001, Texaco's realized crude oil prices were $21.74 and $22.86 per barrel, 23 percent and 11 percent lower than last year. In the third quarter, U.S. natural gas prices continued to decline as demand continued to soften and inventory levels remained stable. Natural gas prices for the year, however, benefited from historically high levels early in the year. Texaco's average realized natural gas prices for the third quarter and nine months 2001 were $2.74 and $4.85 per thousand cubic feet, 32 percent lower and 50 percent higher than last year.

Daily production decreased five percent for the third quarter to 524,000 barrels of oil equivalent per day (BOEPD) and nine percent for the nine months to 530,000 BOEPD. A significant portion of the expected reduction was due to last year's sales of non-core producing properties. Natural field declines and lower production in our California fields due to reduced steam injection also contributed to the lower production volumes. Operating expenses decreased for the third quarter but were higher for the nine months as natural gas price fluctuations impacted utilities expenses and production taxes. Exploratory expenses for the third quarter were $48 million before tax, $19 million higher than the same period last year. Exploratory expenses for nine months 2001 were $97 million before tax, $27 million higher than last year.

Results for the first nine months and third quarter of 2001 included a special charge of $16 million for a crude oil and natural gas royalty settlement. Results for the first nine months of 2000 included a special charge of $115 million for net losses on sales of non-core producing assets, including $8 million in the third quarter.

                                Third Quarter                 Nine Months
                               ---------------               -------------
      International
     (Millions of dollars):   2001          2000          2001          2000
    -------------------------------------------------------------------------
     Operating earnings       $207          $299         $712          $787
     Special items              --            (4)          --            62
                              ------       ------        ------        ------
     Total                    $207          $295         $712          $849
                              ======       ======        ======        ======
	

International Exploration and Production operating results for the third quarter 2001 and nine months were lower than last year due mostly to lower crude oil prices. Average realized crude oil prices were $21.92 per barrel for the third quarter and $22.04 per barrel for nine months, 18 percent and 10 percent below last year. Earnings for the third quarter and nine months of 2001 benefited from slightly higher natural gas prices and lower operating expenses as compared to last year. Texaco's average realized natural gas prices for the third quarter and nine months 2001 were $1.80 and $1.87 per thousand cubic feet, 14 percent and 25 percent higher than last year.

Daily production decreased three percent for the third quarter to 511,000 BOEPD and one percent for nine months to 534,000 BOEPD. The decreased production was due to the sale of non-core producing assets last year. Excluding asset sales, production from our ongoing operations increased one percent for the third quarter and four percent for the nine months.

Operating expenses decreased nine percent in the third quarter and for nine months due to last year's sale of non-core producing properties. Exploratory expenses for the third quarter were $43 million before tax, $34 million lower than last year. Exploratory expenses for the nine months were $106 million before tax, $43 million lower than last year.

Results for the third quarter of 2000 included a special charge of $4 million for net losses on the sale of non-core producing properties. Results for 2000 also included a special benefit of $80 million for net gains on the sale of non-core producing properties and a special charge of $14 million for net losses resulting from the Erskine pipeline interruption in the U.K. North Sea.

Refining, Marketing and Distribution

                                 Third Quarter                Nine Months
                                ---------------              -------------
      United States
     (Millions of dollars):    2001         2000          2001          2000
     -----------------------------------------------------------------------
     Operating earnings        $97           $82         $331          $175
     Special items            (496)           (5)        (496)          (35)
                             ------         ------      ------        ------
     Total                   $(399)          $77        $(165)         $140
                             ======         ======      ======        ======
	

Motiva's third quarter operating earnings increased slightly due to stronger marketing margins. However, refining margins declined sharply as economic pressures dampened the demand for oil products. Carried by stronger results over the first half, earnings for nine months benefited from substantially higher refining margins in an environment of tight supplies and industry refinery maintenance. Marketing margins were slightly higher for the year.

During the third quarter, Equilon's operating earnings benefited from significantly higher marketing margins as supply costs fell faster than pump prices. Lubricant margins were also strong. Lower refining margins, and unscheduled maintenance activity at the Puget Sound refinery negatively impacted results. Equilon's results for first nine months of 2001 improved due to higher lubricant and refining margins, and reduced maintenance activity. Earnings also benefited from higher utilization of proprietary pipelines and strong trading results. Marketing results were slightly higher, as margins improved mid-year. These improvements were reduced by extremely high West Coast utilities expense.

Results for the nine months and third quarter of 2001 included a special charge of $496 million for the write down of Texaco's investments in Equilon and Motiva. In connection with the ChevronTexaco merger on Oct. 9, these investments were transferred into a trust for sale by the trustee, pursuant to the terms of the FTC's proposed consent order. The write down was based on the terms of the recently announced Memorandum of Understanding to sell these investments to Shell Oil Company and Saudi Refining Inc. Results for the third quarter of 2000 included a $5 million special charge for environmental issues. Additionally, the first nine months of 2000 included special charges of $31 million for the loss on the sale of the Wood River refinery, a charge for a patent litigation issue of $17 million, and a gain of $18 million for an employee benefits revision.

                                  Third Quarter               Nine Months
                                 ---------------             -------------
       International
      (Millions of dollars):   2001          2000         2001          2000
      -----------------------------------------------------------------------
     Operating earnings        $65           $61         $215          $214
     Special items              --            --           --           (12)
                              ------       ------        ------       ------

     Total                     $65           $61         $215          $202
                              ======       ======        ======       ======
	

International Refining and Marketing operating earnings for the third quarter of 2001 increased slightly from last year. Operating results, excluding foreign currency effects, in the Asia Pacific area improved to approximately break-even due to stronger marketing margins from lower supply costs, and higher sales volumes. Overall earnings in Latin America were slightly better than last year with higher refining but lower marketing results. European marketing earnings increased due to higher margins, but results were negatively impacted by currency losses. European refining results decreased significantly from lower margins and unscheduled downtime.

Overall results for the first nine months of 2001 were flat. Earnings in the Asia Pacific area increased significantly as crude costs stabilized allowing greater recovery in the marketplace, and trading results were strong. European earnings decreased substantially from weak markets. In the U.K., lower sales volumes, reduced margins and unscheduled maintenance negatively impacted refining results. The inability to recover increased supply costs in the marketplace resulted in depressed marketing margins. Operations in Latin America improved with higher refining margins in Panama. However, lower sales volumes and the weakening of the local currency in Brazil caused marketing results to decline.

Results for the first nine months of 2000 included a special charge of $12 million for employee separation costs.

GLOBAL GAS, POWER AND ENERGY TECHNOLOGY

                                  Third Quarter               Nine Months
                                 ---------------             -------------
     (Millions of dollars):    2001          2000          2001         2000
     ------------------------------------------------------------------------
     Operating earnings        $22           $13          $45           $33
     Special items              --            --           --            --
                              ------        ------        ------       ------
     Total                     $22           $13          $45           $33
                              ======        ======        ======       ======
	

During the third quarter and nine months of 2001, operating results benefited from improved natural gas margins and from power projects in Indonesia and Thailand. Operating results were negatively impacted by expenses associated with energy technology ventures as well as higher fuel expenses for cogeneration facilities.

        OTHER BUSINESS UNITS
                                 Third Quarter              Nine Months
                                ---------------            -------------
     (Millions of dollars):   2001          2000         2001          2000
     -----------------------------------------------------------------------
    Operating earnings         $(4)          $(4)        $(16)          $(6)
    Special items               --            --          (25)           --
                              ------        ------       ------        ------
    Total                      $(4)          $(4)        $(41)          $(6)
                              ======        ======       ======        ======
	

Results before special items for nine months were lower than last year due to higher costs associated with E-Business activities.

Results for the first nine months of 2001 included a special charge of $25 million for write-downs associated with selected E-Business investments, including our investment in PetroCosm, a procurement marketplace, which ceased operations.

        CORPORATE
                                 Third Quarter              Nine Months
                                ---------------            -------------
     (Millions of dollars):   2001         2000          2001         2000
    ------------------------------------------------------------------------
    Results before special
     items                   $(116)        $(123)       $(363)        $(386)
    Special items               82            --           71            39
                              ------       ------        ------       ------
    Total corporate           $(34)        $(123)       $(292)        $(347)
                              ======       ======        ======       =====
	

Corporate results before special items improved for the third quarter and nine months of 2001 as a result of lower interest rates and average debt levels. Lower overhead expenses also contributed to the improvement in both periods.

Special items for the third quarter and first nine months of 2001 included a tax benefit of $103 million which will be realized upon completion of the divestiture of the U.S. downstream investments. Additionally, the first nine months of 2001 included a special charge of $32 million, $21 million in the third quarter, for costs associated with the merger with Chevron. Results for 2000 included special benefits of $46 million for favorable income tax settlements and a special charge of $7 million for early extinguishment of debt.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures, including our share of affiliates, were $2,757 million for the first nine months of 2001 compared with $2,803 for the same period last year.

Total upstream expenditures increased slightly over last year's levels led by a 16% increase in the United States. Investment continued to focus on drilling activity in the Gulf of Mexico and Louisiana, where additional oil and gas reserves have been identified, and growth opportunities in the Central region. Internationally, development work continued on our ongoing programs, including the Hamaca heavy oil project in Venezuela, the Karachaganak joint venture in Kazakhstan, the QHD field in Bohai Bay, China and the Agbami field in Nigeria where appraisal drilling was recently completed. The Malampaya natural gas to power project in the Philippines delivered gas to both the Santa Rita and Ilijan power plants on schedule.

U.S. downstream expenditures were three percent less than last year, while international spending for marketing activities was lower in the U.K. and Latin America.

Global Gas, Power and Energy Technology spending for 2001 included investments in Texaco Ovonic Battery Systems -- a joint venture with Ovonic Battery Company, and the Sunrise Power project which is jointly owned with Edison International Company. Overall, spending for Global Gas, Power and Energy Technology decreased from last year due to completion of projects in Thailand, Singapore and Korea.

NOTICE

The conference call to discuss Texaco'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 Chevron Corp. 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 Texaco'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.

      Income (loss)             Third Quarter (a)         Nine Months (a)
       (Millions of dollars)   -------------------       -----------------
                              2001         2000         2001          2000
     Exploration and         ------       ------       ------        ------
      production
       United States          $244          $479       $1,244        $1,126
       International           207           295          712           849
                              ------        ------      ------        ------
         Total                 451           774        1,956         1,975

    Refining, marketing
      and distribution
       United States          (399)           77         (165)          140
       International            65            61          215           202
                              ------        ------        ------       ------
         Total                (334)          138           50           342

     Global gas, power
      and energy technology     22            13           45            33

     Other business units       (4)           (4)         (41)           (6)

     Corporate                 (34)         (123)        (292)         (347)
                              ------       ------       ------        ------
         Net income           $101          $798       $1,718        $1,997
                              ======       ======       ======        ======
    Net income per common
     share (dollars)
     - diluted               $0.19         $1.46        $3.15         $3.65

    Average number of
     common shares
     outstanding for
     computation of
     earnings per share
     (millions) - diluted    542.8         543.2        543.9         544.4

    Provision for income
     taxes included in
     net income              $ 113         $ 622       $1,344        $1,389
	

(a) Includes special items indicated in this release.

     Other Financial Data
    (Millions of dollars)      Third Quarter                Nine Months
                              ---------------              -------------
                             2001          2000         2001           2000
                            ------        ------       ------         ------
    Revenues               $10,713       $13,359      $37,755       $36,699

    Total assets as of
     Sept. 30                                         $31,900(b)    $30,668

    Stockholders' equity
     as of Sept. 30                                   $14,200(b)    $13,145

    Total debt as of
     Sept. 30                                          $7,400(b)     $7,358


    Capital and exploratory
     expenditures
    Exploration and
     production
      United States           $264          $277         $764          $661
      International            439           482        1,317         1,361
                              ------       ------       ------        ------
        Total                  703           759        2,081         2,022

    Refining, marketing
     and distribution
      United States             89           112          240           248
      International            106            94          228           235
                              ------       ------       ------        ------
        Total                  195           206          468           483

    Global gas, power
     and energy technology      80            68          200           252

    Other business units         3             1            8            46
                              ------       ------       ------        ------
        Total                 $981        $1,034       $2,757        $2,803
                              ======       ======       ======        ======
    Exploratory expenses
     included above
      United States            $48          $ 29         $ 97          $ 70
      International             43            77          106           149
                              ------       ------       ------        ------
        Total                  $91          $106         $203          $219
                              ======       ======       ======        ======
    Dividends paid to
     common stockholders      $244          $244         $731          $733

    Dividends per common
     share (dollars)          $.45          $.45        $1.35         $1.35

    Dividend requirements for
     preferred stockholders    $--            $4           $6          $ 11
	

(b) Preliminary

    Operating Data               Third Quarter               Nine Months
                                ---------------             -------------
                               2001         2000          2001          2000
                              ------       ------        ------        ------
	

Exploration and production

      United States
        Net production of
         crude oil and
         natural gas
         liquids (MBPD)        331           338          327           360

        Net production of
         natural gas
         available for
         sale (MMCFPD)       1,160         1,273        1,217         1,328
                             ------        ------       ------        ------
           Total net
            production
            (MBOEPD)           524           550          530           581

      Natural gas
       sales (MMCFPD)        4,808         3,824        4,621         3,758

      Average U.S. crude
       (per bbl.)           $21.74        $28.11       $22.86        $25.79
      Average U.S.
       natural gas
       (per mcf)             $2.74         $4.01        $4.85         $3.23
      Average WTI (Spot)
       (per bbl.)           $26.70        $31.66       $27.77        $29.84
      Average Kern (Spot)
       (per bbl.)           $19.54        $26.54       $20.31        $24.17

    International
      Net production of
       crude oil and
       natural gas
       liquids (MBPD)
       Europe                  111           124          114           123
       Indonesia               125           122          127           123
       Partitioned Neutral
        Zone                   142           141          145           137
       Other                    41            60           48            64
                             ------        ------         ------       ------
        Total                  419           447          434           447

     Net production of
      natural gas available
      for sale (MMCFPD)
      Europe                   179           168          215           221
      Colombia                 197           183          203           193
      Other                    173           135          184           143
                             ------        ------         ------       ------
       Total                   549           486          602           557
       Total net production  ------        ------         ------       ------
        (MBOEPD)               511           528          534           540

    Natural gas sales
     (MMCFPD)                  558           509          616           586
    Average International
     crude (per bbl.)       $21.92        $26.69       $22.04        $24.60
    Average International
     natural gas (per mcf)   $1.80         $1.58        $1.87         $1.50
    Average U.K. natural
     gas (per mcf)           $2.57         $2.57        $3.06         $2.39
    Average Colombia
     natural gas (per mcf)   $1.31         $1.34        $1.40         $1.13

    Total worldwide net
     production (MBOEPD)     1,035         1,078        1,064         1,121


    Operating Data               Third Quarter                Nine Months
                                ---------------             --------------
                               2001         2000          2001          2000
                              ------       ------        ------        ------
	

Refining, marketing

and distribution

      United States
        Refinery input
         (MBPD)
        Equilon area           201           209          200           260
        Motiva area            311           281          312           275
                              ------        ------       ------        ------
         Total                 512           490          512           535

      Refined product
       sales (MBPD)
        Equilon area           708           671          687           707
        Motiva area            426           373          431           359
        Other                  471           285          402           306
                              ------        ------       ------        ------
         Total               1,605         1,329        1,520         1,372

    International
      Refinery input (MBPD)
       Europe                  342           355          361           368
       Caltex area             343           348          356           352
       Latin America/
        West Africa             77            70           72            62
                              ------        ------       ------        ------
         Total                 762           773          789           782

      Refined product
       sales (MBPD)
       Europe                  662           638          684           627
       Caltex area             522           509          521           540
       Latin America/
        West Africa            464           499          463           471
       Other                   254            88          214            89
                              ------        ------       ------        ------
        Total                1,902         1,734        1,882         1,727
	

Download earnings release (105 KB)

Updated: October 2001