press release

Texaco Press Release - Texaco Reaches Agreement with Shell & Saudi Refining, Inc. for Sale of Interests


WHITE PLAINS, N.Y., Oct. 9 - Texaco announced today that it has signed a Memorandum of Understanding (MOU) with Shell Oil Company and Saudi Refining Inc. (SRI) for the sale of its interests in Equilon Enterprises LLC, its U.S. refining and marketing joint venture with Shell, and Motiva Enterprises LLC, its downstream joint venture with Shell and SRI.

Subject to federal and state regulatory review and completion of definitive agreements, Shell would have 100 percent interest in Equilon and Shell and SRI would each have a 50 percent interest in Motiva.

At present, through its subsidiaries Texaco holds 44 percent interest in Equilon and 35 percent interest in Motiva. Shell holds a 56 percent interest in Equilon and 30 percent interest in Motiva. Saudi Refining Inc.'s current interest in Motiva is 35 percent.

Under terms of the MOU, Texaco would receive approximately $2.4 billion in value, including proceeds of $2.15 billion, tax benefits and other considerations for the sale of Texaco Refining and Marketing Inc. (TRMI), its wholly owned subsidiary which holds the interests in Equilon and Motiva. Additionally, Shell and SRI will assume responsibility for approximately $1.4 billion in debt and $0.3 billion in other liabilities.

Commenting on the announcement, Texaco chairman and CEO Glenn F. Tilton said, "Since beginning discussions with Shell and SRI on the sale of our interests in the U.S. downstream businesses, we have focused on reaching an agreement that represents fair market value for Equilon and Motiva. That is the objective of this memorandum of understanding."

The MOU includes a protocol for the licensing and protection of the Texaco and Havoline brands. Shell would also waive its change-of-control purchase provision of Texaco's 45 percent interest in the Malampaya Deep Water Natural Gas Project in the Philippines. Shell is operator of that project.

Assuming shareholder approval of Texaco's merger with Chevron, Texaco will place its interests in Equilon and Motiva into a trust, as required under the FTC Consent Order approved for public comment on September 7. The Chairman and Divestiture Trustee, Robert A. Falise, will be empowered to complete the agreements with Shell and SRI, although the trust will still seek a third-party purchaser of Texaco's interests in the two companies.

Private Securities Litigation Reform Act Safe Harbor Statement

Except for the historical and present factual information contained herein, the matters set forth in this press release, including statements as to the expected value to be received by Texaco if the transactions described in this press release are consummated, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the possibility that the anticipated benefits from these transactions cannot be fully realized, the possibility that the transactions will not be consummated and other risk factors relating to our industry as detailed from time to time in each of Chevron's and Texaco's reports filed with the SEC.

Updated: October 2001