press release

Major Projects to Bolster Chevron's Growth

  • Upstream projects will add crude oil and natural gas production capacity in 2008 and beyond.
  • Downstream investments aim at upgrading refineries and improving reliability.
  • Exploration success is building the foundation for long-term reserves replacement.

NEW YORK, N.Y., MAR. 11, 2008 - Chevron Corporation (NYSE:CVX) told financial analysts at a meeting in New York City today that major upstream capital projects in the U.S. Gulf of Mexico, offshore Nigeria and in Kazakhstan will produce additional crude oil and natural gas this year. In the downstream business, company executives said projects to increase refining scale and flexibility are under way in areas of market strength in the United States and Asia.

"We are focused on execution as a top priority for 2008 and 2009," Dave O'Reilly, Chevron's chairman and CEO, said at the company's annual analyst meeting. "This entails excelling at operational performance, executing our capital projects well and effectively managing costs."

O'Reilly's presentation outlined the momentum Chevron has developed in key areas of its business plan:

  • Significant upstream and downstream presence in the highest-growth regions of the world.
  • Outstanding queue of upstream projects in all phases of engineering and construction.
  • Successful exploration program that provides resources for oil and gas development projects.
  • Improved refinery capabilities to process heavier, higher-sulfur crudes.

UPSTREAM – EXPLORATION AND PRODUCTION

George Kirkland, executive vice president for Global Upstream and Gas, said a track record of exploration success and project execution is expected to grow Chevron's production capacity and boost proved reserves of crude oil and natural gas.

The company has approximately 40 major capital projects with a net Chevron investment of $1 billion or more each. Of those, important projects – including Blind Faith in the Gulf of Mexico, the Sour Gas Injection/Second Generation Plant in Kazakhstan and Agbami in Nigeria – are planned to increase production capacity in 2008. In 2009, Tombua Landana in Angola, Frade in Brazil and Tahiti in the Gulf of Mexico are expected to come online and further grow production capacity.

Kirkland also explained that the company's exploration teams had another strong year in 2007. Each year from 2002 through 2007, Chevron's exploration program has added an average of 1 billion barrels to its resource base. The 2007 success rate for exploration wells was 41 percent, comparable with Chevron's average of 42 percent over the past six years. In addition, a recently released Wood MacKenzie report cited Chevron as the leader among its peers in exploration results from 2002 to 2006.

"Not only is our exploration success feeding our strong queue of major capital projects, it is also building the foundation for long-term reserves replacement as the discovered resources move to proved reserves," he said.

In regard to proved reserves, Kirkland said projects in Kazakhstan, Nigeria, Australia, Brazil, China, the United States and Angola will deliver strong reserves replacement for Chevron over the next three years.

"Our three-year business plan indicates we will have reserves of approximately 11.3 billion barrels of oil-equivalent at the end of 2010 – more proved reserves at the end of the decade than we have today," Kirkland explained.

DOWNSTREAM – REFINING, MARKETING AND TRANSPORTATION

Mike Wirth, executive vice president for Global Downstream, said the company continues to focus on improving returns by enhancing refinery reliability, selectively building refining scale and flexibility, rationalizing its asset portfolio, and streamlining its marketing business.

Refinery reliability is a top priority for Downstream. Wirth highlighted successes at the Richmond, Calif., and Pembroke, Wales, refineries as evidence of the good progress being made across the system to increase utilization performance and production through operational excellence.

Key refinery growth projects were also completed in 2007:

  • The company's joint-venture refinery in Yeosu, South Korea, completed a major upgrade that is expected to reduce crude oil costs by about $1 per barrel while increasing production of higher-value transportation fuels and lubricant base oils.
  • The El Segundo, Calif., refinery completed an upgrade that is expected to reduce crude oil costs by $1 per barrel.

"We anticipate sanctioning four more projects this year, all with 2010 startups," Wirth said. "These include the crude flexibility project at Richmond, yield improvement projects at El Segundo and in South Korea, and the heavy-oil pre-commercial project at Pascagoula, Mississippi."

The Pascagoula project advances a breakthrough proprietary heavy-oil upgrading technology that could provide a competitive advantage in increasing supplies of clean-burning fuels to the marketplace from heavy-oil resources, Wirth explained.

Wirth also highlighted efforts to drive down costs and improve marketing returns. He cited several asset divestments executed in 2007 as well as plans to pursue additional opportunities this year to shrink the marketing footprint. Important marketing initiatives under way will reduce complexity and streamline operations while maintaining sales volumes near current levels, he said.

Presentations delivered by O'Reilly, Kirkland, Wirth and Steve Crowe, chief financial officer, are available at Chevron.com, on the Investors page.

Chevron Corporation is one of the world's leading integrated energy companies with subsidiaries that conduct business across the globe. The company's success is driven by the ingenuity and commitment of approximately 59,000 employees who operate across the energy spectrum. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products and services; manufactures and sells petrochemical products; generates power and produces geothermal energy; and develops and commercializes the energy resources of the future, including biofuels and other renewables. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release of Chevron Corporation contains forward-looking statements relating to Chevron'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," "schedules," "estimates," "budgets" 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. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are crude oil and natural gas prices; refining margins and marketing margins; chemicals margins; actions of competitors; timing of exploration expenses; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company's joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company's net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude-oil production quotas that might be imposed by OPEC (Organization of Petroleum Exporting Countries); the potential liability for remedial actions under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from pending or future litigation; the company's acquisition or disposition of assets; gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading "Risk Factors" on pages 32 and 33 of the company's 2007 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this press release could also 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," "undeveloped gas resources," "oil in place," "recoverable reserves," and "recoverable resources," among others, may be used in this press release to describe certain oil and gas properties that are not permitted to be used in filings with the SEC. In addition, SEC regulations define mined oil-sands reserves as mining-related and not a part of conventional oil and gas reserves.

Updated: March 2008