Chevron 2003 Annual Report Download - page 4

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Last year, I wrote of the challenge ChevronTexaco faced to improve its
fi nancial performance. I am pleased to report that we are succeeding.
Not only was 2003 one of our best years ever, but we also built a
solid foundation that should enable us to deliver sustained, strong
performance into the future and continue to achieve our long-stated
goal to be No. 1 in total stockholder return among our peer group.
In 2003, net income was $7.2 billion, resulting in a 15.7 percent annual return on capital employed. Our strong cash
fl ow enabled us to reduce debt $3.7 billion, ending the year with a total debt to total debt-plus-equity ratio of
25.8 percent. For the 16th consecutive year, we increased our annual dividend payment. Our fi nancial performance
was refl ected in our total stockholder return of 35.2 percent in 2003. Since 2000, we have led our largest three com-
petitors in total stockholder return.
Other signifi cant achievements included:
• continuing successes in exploration, with major new discoveries in the deepwater U.S. Gulf of Mexico and Nigeria;
• replacing more than 100 percent of production for the 11th consecutive year;
• achieving signifi cant progress in major upstream projects in Angola, Canada, Chad, Kazakhstan, Nigeria and Venezuela;
• establishing a global natural gas business and achieving milestones in the commercialization of our vast Australian
and West African gas resources;
• signifi cantly improving performance in refi ning and marketing.
OUR STRATEGIES – STEPPING UP THE PACE Our global upstream strategy is to grow profi tability in our core
areas and build new legacy positions. We are well positioned to do both. Our crude oil and natural gas production
is located in large basins around the globe where we have existing infrastructure and are typically one of the top
three producers. We have a queue of projects that will add to production throughout the decade and beyond. We
hold exploratory acreage in some of the most promising regions of the world, and we are confi dent we can build on
an already successful exploratory program. In 2003, we established a business development group responsible for
identifying and developing new, large-scale resource opportunities throughout the world.
Our global natural gas strategy is to commercialize our large equity resource base by targeting the rapidly growing
North American and Asian markets. In the Atlantic Basin, we are pursuing several liquefi ed natural gas (LNG) projects
that would supply the fi rst offshore LNG regasifi cation terminal in the United States. In the Pacifi c Basin, we are
expanding our successful LNG business in Australia to supply markets in North America and Asia. We also are moving
forward on a gas-to-liquids project in Nigeria.
Our global downstream strategy is to improve future returns by focusing on areas of market and supply strength.
Our core areas of operation include the U.S. West Coast, U.S. Gulf of Mexico, Asia and Latin America. In 2003, we
initiated a major restructuring of our global downstream operations. We are committed to achieving before-tax
profi t improvements of $500 million by the end of 2005 through cost reductions, effi ciency improvements and the
standardization of key work processes.
DELIVERING TOP PERFORMANCE While we are proud of the value we have created, we recognize that the confi -
dence of stockholders rests in their expectation of future performance, not in past accomplishments.
TOOUR STOCKHOLDERS