Chevron 2004 Annual Report Download

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2 0 0 4 A N N U A L R E P O R T
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Table of contents

  • Page 1
    ANEW EQUATION 2004 ANNUAL REPORT

  • Page 2
    ... care and economic growth. INSIDE FRONT COVER Downtown Shanghai at night reï¬,ects the growth in global demand for new energy supplies, particularly in China. ChevronTexaco's long-term strategies are focused on growing production to help meet new demand and fuel economic growth and human progress.

  • Page 3
    ...Reilly and other company executives discuss how ChevronTexaco is responding to a new energy equation. ChevronTexaco at a Glance 22 Glossary of Energy and Financial Terms 24 Financial Review 25 Five-Year Operating Summary 80 Five-Year Financial Summary 81 Board of Directors 93 Corporate Officers 94

  • Page 4
    ...฀against฀its฀strategic฀objectives.฀Specific฀achievements฀ included฀strong฀exploration฀results,฀with฀potentially฀significant฀new฀crude฀oil฀and฀natural฀gas฀discoveries฀in฀North฀America,฀Europe,฀Australia,฀Africa฀and฀Latin฀America.฀We฀also...

  • Page 5
    ...฀term.฀We฀are฀continuing฀to฀build฀on฀our฀efforts฀to฀be฀the฀partner฀of฀choice฀in฀strategic฀ energy฀regions฀of฀the฀world. A฀strong฀reï¬, ฀ection฀of฀our฀commitment฀to฀partnership฀occurred฀in฀2004฀when฀our฀Board฀of฀ Directors...

  • Page 6
    ...than฀$3฀billion. Chemicals & Other Crude Oil & Condensate, Natural Gas & Natural Gas Liquids Petroleum Products Chemicals & Other Refining, Marketing & Transportation Exploration & Production Higher฀earnings฀helped฀boost฀the฀ company's฀operating฀cash฀ï¬,ow฀by฀ 19฀percent...

  • Page 7
    ... (12)% 6% (8)% 34 % (11)% 11 % (7)% Includes equity in affiliates, except number of employees At the end of the year Excludes service station personnel ANNUAL CASH DIVIDENDS Dollars per share 2.00 CHEVRONTEXACO YEAR-END COMMON STOCK PRICE* Dollars per share 60 $52.51 RETURN ON CAPITAL EMPLOYED...

  • Page 8
    ..., and we are the largest natural gas resource holder in Australia. > Opposite page, left to right: Sanha condensate gas utilization and Bomboco oil project, Angola; Hamaca heavy-oil upgrader, Venezuela; Chevron "TOP TIER" gasoline, Hawaii service station. 6 STRATEGY + EXECUTION = Our downstream is...

  • Page 9
    2004 KEY RESULTS UPSTREAM > Achieved exploration success rate of 57 percent, compared with 10-year industry average of 32 percent > Brought on new production from Angola, China, U.K. North Sea, Thailand, Venezuela > Secured access to planned Sabine Pass regasification facility in Louisiana > ...

  • Page 10
    ...extended exploration rights in Angola. In an ongoing effort to move more resources into reserves, we are appraising recent high-potential discoveries in the deepwater Gulf of Mexico, Nigeria and Angola. NEW BUSINESS DEVELOPMENT We intend to build our reputation as a partner of choice to secure major...

  • Page 11
    ...of North America and have secured capacity in a planned regasification terminal in Louisiana. Gas-to-liquids (GTL) is the other important element of our natural gas strategy. Through our Sasol Chevron joint venture, we have a GTL project under way in Nigeria and are evaluating projects in Qatar and...

  • Page 12
    PEMBROKE REFINERY In 2004, we modified the Pembroke Refinery in the United Kingdom to process acidic, high-calcium crude oil from the Doba Field in the Republic of Chad. These modifications enable us to increase the value of the crude oil and turn it into highvalue petroleum products. AT ...

  • Page 13
    ... ChevronTexaco is part of the North West Shelf Venture, which supplies liquefied natural gas to markets in Japan and South Korea. Here, operator technicians Steve Blasedale (left) and Craig Baker help oversee a fourth gas-processing train, which was completed in 2004. Also in Australia, we are...

  • Page 14
    ... the gulf. RISING STAR The Texaco Star is hoisted atop this station in Rockwall, Texas. In 2004, we resumed marketing fuels under the Texaco brand in the United States. By the end of the year, we were supplying more than 1,000 Texaco retail sites, primarily in the Southeast, and had plans to supply...

  • Page 15
    ... America is an important part of our Atlantic Basin liquefied natural gas strategy. In 2004, we found significant quantities of natural gas in Venezuela's Plataforma Deltana. This confirmed our initial assessment of the region as a potential source of new and significant natural gas resources...

  • Page 16
    ... COMPREHENSIVE MANAGEMENT SYSTEMS TO ACHIEVE SUPERIOR PERFORMANCE IN ALL FOUR AREAS. WORLD-CLASS > Above: Gulzada Izbasarova, site safety officer, helps ensure a safe workplace for the Tengizchevroil second generation/ sour gas injection project in Kazakhstan, a "Big 5" development. > Below: James...

  • Page 17
    .... CHEVRON ENERGY SOLUTIONS (CES) This subsidiary helps external partners and internal business units find ways to save energy. For example, in 2004, the U.S. Postal Service (USPS) asked CES to complete major energy efficiency upgrades and a hybrid renewable power plant - including a fuel cell and...

  • Page 18
    ...HELPING US FIND AND DEVELOP NEW ENERGY RESOURCES FOR THE FUTURE. COMPETITIVE EDGE > Shown above is a 3-D model of well temperature data from the Kern River heavy oil field in Bakersfield, California. ChevronTexaco is a leader in heavy-oil production and processing, and in thermal management. 16

  • Page 19
    ...: A hydrogen fuel cell unit at our San Ramon, California, headquarters is the primary power source for a data center. Shown here (left to right), ChevronTexaco Technology Ventures' Jeffrey Jacobs and Ed Wisler. > Below: The first of up to six U.S. hydrogen energy service stations opened in 2005 in...

  • Page 20
    ... IS ESSENTIAL TO HEALTHY ECONOMIES AND QUALITY OF LIFE. WE ARE FORMING PARTNERSHIPS TO HELP BUILD ECONOMIC AND HUMAN CAPACITY IN THE COMMUNITIES WHERE WE OPERATE AND TO PROVIDE A PLATFORM FOR SUSTAINABLE BUSINESS DEVELOPMENT. PEOPLE + PARTNERSHIP = PROGRESS > An estimated 700,000 Angolans have...

  • Page 21
    ..., an arm of the World Bank. HEALTHY COMMUNITIES A number of the company's major operations are in countries threatened by HIV/AIDS. In early 2005, we began implementing a corporatewide policy to provide employees access to care and treatment where available. We also continue to build public-private...

  • Page 22
    ... OF THOSE STRATEGIES. CHEVRONTEXACO HAS A BROAD GRASP OF ALL THREE DIMENSIONS OF SUCCESS. HERE, CHAIRMAN AND CEO DAVE O'REILLY AND OTHER COMPANY EXECUTIVES DISCUSS THE NEW ENERGY EQUATION AND CHEVRONTEXACO'S STRATEGIC ROAD MAP. O'REILLY: When we talk about a new equation in the energy business, we...

  • Page 23
    ... of the Board Executive Vice President, Upstream and Gas Executive Vice President, Downstream the world, and we are making focused investments to test the practical applications of alternate energy sources. Finally, we enjoy a strong reputation as a partner of choice, which will increasingly...

  • Page 24
    ... GTL projects in Nigeria, Qatar and Australia. Our natural gas business also includes pipeline, shipping, natural gas marketing and trading, and power generation. OTHER > Clockwise from top right: Caltex station, Singapore; Hawaii Refinery, Oahu; San Diego, California, terminal; environmental...

  • Page 25
    ... manufacturing facilities in eight countries. Chevron Oronite markets more than 500 performance-enhancing products and supplies one-fourth of the world's fuel and lubricant additives. Chevron Energy Solutions develops and constructs energy-saving projects for external and internal customers. Global...

  • Page 26
    ... of oil-equivalent and oilequivalent gas. Refinery utilization rate Represents average crude oil consumed in fuel and asphalt refineries for the year expressed as a percentage of the refineries' average annual crude unit capacity adjusted for refinery dispositions. Renewables Energy resources that...

  • Page 27
    ... York Stock Exchange corporate governance listing standards. The 302 certifications have been filed in the Form 10-K. CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Annual Report...

  • Page 28
    ... Remediation Provisions - Merger-Related Expenses - Total $ 1,162 BUSINESS ENVIRONMENT AND OUTLOOK $ 122 - - (340) 325 118 (146) (132) - $ (53) $ - - (57) (485) (2,306) 60 - (160) (386) $ (3,334) Income From Continuing Operations Upstream - Exploration and Production United States $ 3,868...

  • Page 29
    ... Gulf฀of฀Mexico฀and฀normal฀field฀ declines. Net฀liquids฀production฀declined฀ about฀5฀percent฀in฀2004,฀mainly฀ caused฀by฀asset฀sales฀and฀the฀ effects฀of฀storms. �Includes฀equity฀in฀affiliates CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT...

  • Page 30
    ...฀percent฀ of฀the฀company's฀net฀oil-equivalent฀production฀in฀2004,฀including฀ volumes฀produced฀from฀oil฀sands฀and฀under฀an฀operating฀service฀ agreement,฀was฀in฀the฀OPEC-member฀countries฀of฀Indonesia,฀ Nigeria฀and฀Venezuela฀and฀in฀the...

  • Page 31
    ... to฀examine฀GTL฀base฀oils฀opportunities฀in฀Qatar.฀Qatar฀Petroleum฀ and฀Sasol฀Chevron฀also฀agreed฀to฀pursue฀an฀opportunity฀to฀develop฀ a฀130,000-barrel-per-day฀integrated฀gas-to-liquids฀project. In฀Australia,฀the฀North฀West฀Shelf฀Venture...

  • Page 32
    ...States฀on฀ July฀1,฀2004,฀and฀resumed฀marketing฀gasoline฀under฀the฀Texaco฀ retail฀brand฀in฀the฀United฀States฀in฀mid-2004.฀By฀the฀end฀of฀the฀ 30 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT year,฀the฀company฀was฀supplying฀more฀than฀1,000...

  • Page 33
    ...the฀production฀level฀in฀2003฀and฀about฀3฀percent฀from฀2002.฀Excluding฀ the฀effects฀of฀property฀sales฀and฀lower฀cost-recovery฀volumes฀ under฀certain฀production-sharing฀agreements,฀2004฀net฀liquids฀ CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT...

  • Page 34
    ...฀the฀company's฀ operations฀in฀the฀Democratic฀Republic฀of฀the฀Congo฀and฀a฀Canadian฀natural-gas฀processing฀business.฀In฀2003,฀net฀special฀gains฀of฀ $98฀million฀included฀benefits฀of฀$150฀million฀related฀to฀income฀ taxes฀and฀property...

  • Page 35
    ...฀the฀company's฀share฀of฀losses฀from฀an฀asset฀sale฀and฀asset฀ impairment฀by฀an฀equity฀affiliate.฀The฀special฀charge฀in฀2002฀was฀ for฀a฀write-down฀of฀the฀company's฀investment฀in฀its฀publicly฀traded฀ Caltex฀Australia฀Limited฀af...

  • Page 36
    ... oil. 3 Includes natural gas consumed on lease: United States 50 65 64 International 293 268 256 4 Other produced volumes include: Athabasca Oil Sands - Net 27 15 - Boscan Operating Service Agreement 113 99 97 140 Includes volume for buy/sell contracts: 6 The company sold its interest in the El Paso...

  • Page 37
    ...฀percent฀equity฀interest฀in฀the฀common฀stock฀of฀Dynegy฀-฀an฀energy฀ provider฀engaged฀in฀power฀generation,฀gathering฀and฀processing฀ of฀natural฀gas,฀and฀the฀fractionation,฀storage,฀transportation฀ and฀marketing฀of฀natural฀gas฀liquids...

  • Page 38
    ...Sea฀and฀the฀Gulf฀of฀Mexico,฀ spending฀for฀the฀Athabasca฀Oil฀Sands฀Project฀in฀western฀Canada,฀ and฀additional฀common฀stock฀investments฀in฀Dynegy. Including฀its฀share฀of฀spending฀by฀affiliates,฀the฀company฀ estimates฀2005฀capital฀and...

  • Page 39
    ...฀of฀capitalized฀ company฀marketing฀programs.฀No฀amounts฀of฀the฀company's฀ interest,฀divided฀by฀before-tax฀interest฀costs.฀The฀company's฀ obligations฀under฀these฀guarantees฀are฀recorded฀as฀liabilities.฀ interest฀coverage฀ratio฀was฀higher...

  • Page 40
    ... CORPORATION 2004 ANNUAL REPORT ments.฀The฀agreements฀typically฀provide฀goods฀and฀services,฀such฀ as฀pipeline฀and฀storage฀capacity,฀utilities,฀and฀petroleum฀products,฀to฀be฀used฀or฀sold฀in฀the฀ordinary฀course฀of฀the฀company's฀ business...

  • Page 41
    ...฀monitored฀and฀reported฀on฀a฀ daily฀basis฀by฀an฀internal฀risk฀control฀group฀to฀ensure฀compliance฀ with฀the฀company's฀risk฀management฀policy฀that฀has฀been฀approved฀ by฀the฀Audit฀Committee฀of฀the฀company's฀Board฀of฀Directors. The...

  • Page 42
    ...,฀with฀manufacturing฀ facilities฀in฀the฀United฀States,฀Puerto฀Rico,฀Singapore,฀China,฀ South฀Korea,฀Saudi฀Arabia,฀Qatar,฀Mexico฀and฀Belgium.฀ The฀company's฀operations,฀particularly฀exploration฀and฀ production,฀can฀be฀affected฀by฀changing...

  • Page 43
    ... In฀January฀and฀February฀2005,฀the฀Securities฀and฀Exchange฀Commission฀(SEC)฀issued฀ comment฀letters฀to฀ChevronTexaco฀and฀other฀companies฀in฀the฀oil฀ and฀gas฀industry฀requesting฀disclosure฀of฀information฀related฀to฀ the฀accounting฀for...

  • Page 44
    ... oil฀and฀products"฀on฀the฀Consolidated฀Statement฀of฀Income฀in฀ each฀period. Other฀Contingencies฀ ChevronTexaco฀receives฀claims฀from,฀ and฀submits฀claims฀to,฀customers,฀trading฀partners,฀U.S.฀federal,฀ 42 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT...

  • Page 45
    ...฀because฀of฀ unanticipated฀changes฀in฀the฀world's฀financial฀markets. In฀2004,฀the฀company's฀pension฀plan฀contributions฀totaled฀ $1.6฀billion฀(approximately฀$1.3฀billion฀to฀the฀U.S.฀plans).฀In฀ 43 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT

  • Page 46
    ...฀the฀ company's฀business฀plans฀and฀long-term฀investment฀decisions. The฀amount฀and฀income฀statement฀classification฀of฀major฀ impairments฀of฀PP&E฀for฀the฀three฀years฀ending฀December฀31,฀ 44 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT 2004,฀are...

  • Page 47
    ...฀ compensation฀cost฀relating฀to฀share-based฀payments฀be฀recognized฀ in฀the฀company's฀financial฀statements.฀The฀company฀currently฀ accounts฀for฀those฀payments฀under฀the฀recognition฀and฀measurement฀principles฀of฀Accounting฀Principles฀Board...

  • Page 48
    ...income for the period. 2 The฀company's฀common฀stock฀is฀listed฀on฀the฀New฀York฀Stock฀Exchange฀(trading฀symbol:฀CVX)฀and฀on฀the฀Pacific฀Exchange.฀As฀of฀February฀ 25,฀2005,฀stockholders฀of฀record฀numbered฀approximately฀227,000.฀There฀are...

  • Page 49
    ...the฀independent฀registered฀public฀accounting฀fi ฀rm฀have฀free฀and฀direct฀access฀to฀the฀Audit฀Committee฀without฀the฀presence฀of฀management. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The฀company's฀management฀is฀responsible฀for...

  • Page 50
    ...We฀conducted฀our฀audit฀of฀internal฀control฀over฀financial฀reporting฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀ Accounting฀Oversight฀Board฀(United฀States).฀Those฀standards฀require฀that฀we฀plan฀and฀perform฀the฀audit฀to...

  • Page 51
    ... Purchased crude oil and products2 Operating expenses Selling, general and administrative expenses Exploration expenses Depreciation, depletion and amortization Taxes other than on income1 Interest and debt expense Minority interests Write-down of investments in Dynegy Inc. Merger-related expenses...

  • Page 52
    ... on securities Net gain (loss) arising during period Before income taxes Income taxes Reclassification to net income of net realized (gain) loss Before income taxes Income taxes Total Net derivatives (loss) gain on hedge transactions Before income taxes Income taxes Total Minimum pension liability...

  • Page 53
    ... Millions฀of฀dollars,฀except฀per-share฀amounts At December 31 ASSETS 2004 2003 Cash and cash equivalents Marketable securities Accounts and notes receivable (less allowance: 2004 - $174; 2003 - $179) Inventories: Crude oil and petroleum products Chemicals Materials, supplies and other...

  • Page 54
    ... of loans by equity affiliates Proceeds from asset sales Net (purchases) sales of marketable securities NET CASH USED FOR INVESTING ACTIVITIES FINANCING ACTIVITIES Net borrowings (payments) of short-term obligations Proceeds from issuances of long-term debt Repayments of long-term debt and other...

  • Page 55
    ...stock Tax benefit from dividends paid on unallocated ESOP shares and other Exchange of Dynegy securities... 100 (412) (240) (652) Balance at January 1 Purchases Issuances - mainly employee benefit plans BALANCE AT DECEMBER 31 TOTAL STOCKHOLDERS' EQUITY AT DECEMBER 31 $ (3,317) (2,122) 315 $ (5,124)...

  • Page 56
    ...costs฀are฀below฀market.฀"Materials,฀supplies฀ and฀other"฀inventories฀generally฀are฀stated฀at฀average฀cost. Properties,฀Plant฀and฀Equipment฀ The฀successful฀efforts฀method฀ is฀used฀for฀crude฀oil฀and฀natural฀gas฀exploration฀and฀production...

  • Page 57
    ...฀on฀page฀65฀for฀a฀discussion฀of฀the฀accounting฀ for฀buy/sell฀arrangements. Stock฀Compensation฀ At฀December฀31,฀2004,฀the฀company฀had฀ stock-based฀employee฀compensation฀plans,฀which฀are฀described฀ 55 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT

  • Page 58
    ...Dynegy฀and฀Caltex฀Australia. Also฀in฀2002,฀impairments฀of฀$183฀were฀recorded฀for฀various฀ U.S.฀exploration฀and฀production฀properties฀and฀$100฀for฀international฀projects.฀ Year ended December 31 2004 2003 2002 Net income, as reported $ 13,328 Add: Stock...

  • Page 59
    ... Gain from exchange of Dynegy preferred stock - Total revenues and other income 1,281 Costs and other deductions Operating expenses 85 Selling, general and administrative expenses - Depreciation, depletion and amortization - Write-down of investments in Dynegy Inc. - Merger-related expenses - Total...

  • Page 60
    ...฀manage฀and฀ operate฀most฀of฀ChevronTexaco's฀U.S.฀businesses.฀Assets฀include฀ those฀related฀to฀the฀exploration฀and฀production฀of฀crude฀oil,฀ natural฀gas฀and฀natural฀gas฀liquids฀and฀those฀associated฀with฀the฀ refining,฀marketing...

  • Page 61
    ...฀from฀the฀800,000฀shares฀of฀the฀company's฀common฀ stock฀that฀were฀reserved฀for฀awards฀under฀the฀ChevronTexaco฀ Corporation฀Non-Employee฀Directors'฀Equity฀Compensation฀ and฀Deferral฀Plan฀(Non-Employee฀Directors'฀Plan),฀which฀was฀ approved...

  • Page 62
    ...reportable฀segment฀level฀and฀also฀approves฀ capital฀and฀exploratory฀funding฀for฀major฀projects฀and฀major฀ changes฀to฀the฀annual฀capital฀and฀exploratory฀budgets.฀However,฀ business-unit฀managers฀within฀the฀operating฀segments฀are฀directly...

  • Page 63
    ... primarily of worldwide cash, cash equivalents and marketable securities, real estate, information systems, the company's investment in Dynegy, coal mining operations, power generation businesses, technology companies, and assets of the corporate administrative functions. Segment฀Sales฀and...

  • Page 64
    ...฀leased฀assets฀are฀included฀as฀part฀of฀"Properties,฀plant฀and฀ equipment,฀at฀cost."฀Such฀leasing฀arrangements฀involve฀tanker฀ charters,฀crude฀oil฀production฀and฀processing฀equipment,฀service฀ stations,฀and฀other฀facilities.฀Other฀leases...

  • Page 65
    ...Other 1,177 Total Exploration and Production 5,902 Downstream - Refining, Marketing and Transportation LG-Caltex Oil Corporation 1,820 Caspian Pipeline Consortium 1,039 Star Petroleum Refining Company Ltd. 663 Caltex Australia Ltd. 263 Other 1,125 Total Refining, Marketing and Transportation 4,910...

  • Page 66
    ...*The company's share of income and underlying equity in the net assets of its investments includes the effects of write-downs of certain investments, largely related to Dynegy Inc. and Caltex Australia Limited, as described in the preceding section. 64 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT

  • Page 67
    ... management information systems. NOTE 16. ACCOUNTING FOR BUY/SELL CONTRACTS In฀January฀and฀February฀2005,฀the฀SEC฀issued฀comment฀letters฀to฀ ChevronTexaco฀and฀other฀companies฀in฀the฀oil฀and฀gas฀industry฀ requesting฀disclosure฀of฀information฀related...

  • Page 68
    ... benefit Prior-year tax adjustments Tax credits Effects of enacted changes in tax laws Impairment of investments in equity affiliates Capital loss tax benefit Other Consolidated companies Effect of recording income from certain equity affiliates on an after-tax basis Effective tax rate 35.0% 35...

  • Page 69
    ...taxes฀that฀might฀be฀payable฀on฀the฀ eventual฀remittance฀of฀such฀earnings.฀The฀company฀does฀not฀ United States Excise taxes on products and merchandise Import duties and other levies Property and other miscellaneous taxes Payroll taxes Taxes on production Total United...

  • Page 70
    ...฀use฀ of฀working฀capital฀in฀2005,฀as฀the฀company฀has฀both฀the฀intent฀ and฀the฀ability฀to฀refinance฀this฀debt฀on฀a฀long-term฀basis. Guarantee of ESOP debt. assumed from ESOP in 1999. than $150 individually; weighted-average interest rates at December...

  • Page 71
    ...are฀reviewed฀in฀this฀context฀on฀a฀quarterly฀basis. The฀SEC฀issued฀comment฀letters฀during฀2004฀and฀in฀February฀2005฀to฀a฀number฀of฀companies฀in฀the฀oil฀and฀gas฀industry฀ related฀to฀the฀accounting฀for฀suspended฀exploratory฀wells...

  • Page 72
    ...฀United฀States,฀this฀includes฀all฀qualified฀ tax-exempt฀plans฀subject฀to฀the฀Employee฀Retirement฀Income฀ Security฀Act฀(ERISA)฀minimum฀funding฀standard.฀The฀company฀ typically฀does฀not฀fund฀domestic฀nonqualified฀tax-exempt฀pension฀plans...

  • Page 73
    ...฀as฀follows: Pension Benefits 2004 2003 U.S. Int'l. Other Benefits 2004 2003 U.S. CHANGE IN BENEFIT OBLIGATION Int'l. Benefit obligation at January 1 Service cost Interest cost Plan participants' contributions Plan amendments Actuarial loss1 Foreign currency exchange rate changes Benefits...

  • Page 74
    ... *Discount rate and expected rate of return on plan assets were reviewed and updated as needed on a quarterly basis for the main U.S. pension plan. Expected฀Return฀on฀Plan฀Assets฀ The฀company฀employs฀a฀rigorous฀ process฀to฀determine฀the฀estimates฀of฀long-term฀rate...

  • Page 75
    ...฀Caltex฀ Corporation),฀Stock฀Plan฀of฀ChevronTexaco฀Global฀Energy,฀Inc.,฀ and฀Employees฀Thrift฀Plan฀of฀Fuel฀and฀Marine฀Marketing฀LLC฀ were฀merged฀into฀the฀ChevronTexaco฀ESIP. Charges฀to฀expense฀for฀the฀ESIP฀represent฀the฀company...

  • Page 76
    ...stock฀units฀or฀other฀investment฀fund฀ alternatives.฀Awards฀under฀the฀LTIP฀may฀take฀the฀form฀of,฀but฀ are฀not฀limited฀to,฀stock฀options,฀restricted฀stock,฀stock฀units฀ and฀nonstock฀grants.฀Texaco฀also฀had฀a฀cash฀incentive฀program...

  • Page 77
    ...to฀ChevronTexaco฀shares฀at฀the฀merger฀exchange฀ratio฀of฀0.77.฀Apart฀from฀ the฀restored฀options,฀no฀further฀awards฀may฀be฀granted฀under฀the฀ former฀Texaco฀plans.฀No฀amount฀for฀these฀plans฀was฀charged฀to฀ compensation฀expense฀in...

  • Page 78
    ...for฀any฀applicable฀incident. Securitization฀ The฀company฀securitizes฀certain฀retail฀and฀trade฀ accounts฀receivable฀in฀its฀downstream฀business฀through฀the฀use฀ 76 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT of฀qualifying฀SPEs.฀At฀December฀31,฀2004...

  • Page 79
    ...,฀with฀manufacturing฀facilities฀in฀the฀United฀ States,฀Puerto฀Rico,฀Singapore,฀China,฀South฀Korea,฀Saudi฀Arabia,฀ Qatar,฀Mexico฀and฀Belgium.฀ The฀company's฀operations,฀particularly฀exploration฀and฀ production,฀can฀be฀affected฀by฀changing...

  • Page 80
    ...฀ of฀deferrals฀of฀salary฀and฀other฀compensation฀awards฀that฀are฀ invested฀in฀ChevronTexaco฀stock฀units฀by฀certain฀officers฀and฀ employees฀of฀the฀company฀and฀the฀company's฀share฀of฀stock฀ transactions฀of฀affiliates,฀which,฀under...

  • Page 81
    ... the adoption of FAS 143 and a net gain of $4 for the company's share of Dynegy's cumulative effect of adoption of EITF 02-3. Share amounts in all period reï¬,ect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT 79

  • Page 82
    ... gas2 Net production of oil equivalents Refinery input3 Sales of refined products3 Sales of natural gas liquids Total sales of petroleum products Sales of natural gas Worldwide - Excludes Equity in Affiliates Number of wells completed (net)4 Oil and gas Dry Productive oil and gas wells (net...

  • Page 83
    ... company's share of a capital stock transaction of its Dynegy Inc. affiliate, which, under the applicable accounting rules, was recorded directly to retained earnings and not included in net income for the period. 3 Chevron Corporation dividend pre-merger. Supplemental Information on Oil and Gas...

  • Page 84
    ...฀25฀on฀page฀77. TABLE I - COSTS INCURRED IN EXPLORATION, PROPERTY ACQUISITIONS AND DEVELOPMENT1 Consolidated Companies United States International Africa AsiaPacific Indonesia Other Total Int'l. Affiliated Companies Total TCO Hamaca Gulf of Mexico Total U.S. Millions฀of฀dollars YEAR...

  • Page 85
    ... COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES1 Consolidated Companies United States International Africa AsiaPacific Indonesia Other Total Int'l. Affiliated Companies Total TCO Hamaca Gulf of Mexico Total U.S. Millions฀of฀dollars AT DEC. 31, 2004 Calif. Other Unproved properties...

  • Page 86
    ... Information on Oil and Gas Producing Activities - Continued TABLE II - CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES1 - Continued Consolidated Companies United States Gulf of Total Other U.S. Africa AsiaPacific Indonesia Other International Total Int'l. Total Affiliated Companies...

  • Page 87
    ... the฀following฀table.฀Net฀income฀from฀exploration฀and฀production฀activities฀as฀reported฀on฀page฀31฀reï¬,ects฀income฀taxes฀ computed฀on฀an฀effective฀rate฀basis.฀In฀accordance฀with฀FAS฀69,฀ income฀taxes฀in฀Table฀III฀are฀based฀on...

  • Page 88
    ...unit average sales price and production cost. This has no effect on the results of producing operations. 2 Natural gas converted to oil-equivalent gas (OEG) barrels at a rate of 6 MCF = 1 OEG barrel. 3 Conformed to 2004 presentation to exclude taxes. 86 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT

  • Page 89
    ...Committee฀(RAC)฀that฀ is฀chaired฀by฀the฀corporate฀reserves฀manager,฀who฀is฀a฀member฀ of฀a฀corporate฀department฀that฀reports฀directly฀to฀the฀executive฀ vice฀president฀responsible฀for฀the฀company's฀worldwide฀exploration฀and฀production...

  • Page 90
    ... in Canada associated with the Athabasca project. For internal management purposes, ChevronTexaco views these reserves and their development as an integral part of total upstream operations. However, SEC regulations define these reserves as mining-related and not a part of conventional oil and gas...

  • Page 91
    ...฀ prices฀on฀the฀calculation฀of฀reserves฀for฀cost-oil฀recovery฀under฀ a฀production-sharing฀contract.฀In฀the฀United฀States,฀the฀68-million-barrel฀net฀downward฀revision฀in฀the฀Gulf฀of฀Mexico฀area฀was฀ across฀several฀fields฀and฀based...

  • Page 92
    ...฀ related฀to฀properties฀in฀Nigeria,฀for฀which฀changes฀were฀associated฀with฀well฀performance฀reviews,฀development฀drilling฀and฀ lease฀fuel฀calculations.฀The฀236฀BCF฀addition฀in฀the฀Asia-Pacific฀ 90 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT...

  • Page 93
    ..."฀refers฀ to฀the฀standardized฀measure฀of฀discounted฀future฀net฀cash฀ï¬,ows. Consolidated Companies United States International Africa AsiaPacific Indonesia Other Total Int'l. Total Gulf of Mexico Total U.S. Affiliated Companies TCO Hamaca Millions฀of฀dollars AT DECEMBER...

  • Page 94
    ...917 6,722 895 (2,295) 6,210 $ 12,606 Sales and transfers of oil and gas produced net of production costs Development costs incurred Purchases of reserves Sales of reserves Extensions, discoveries and improved recovery less related costs Revisions of previous quantity estimates Net changes in prices...

  • Page 95
    ...Board since 2002. Since January 2005, in addition to a broad sharing of the CEO's responsibilities, he is directly responsible for Strategic Planning; Policy, Government and Public Affairs; and Human Resources. Previously he was responsible for worldwide upstream and gas operations. He is a Director...

  • Page 96
    ... Exploration and Production Company, since 2002. Responsible for exploration and production activities in North America. Director of Dynegy Inc. Previously ChevronTexaco Managing Director, Nigeria/Mid-Africa Strategic Business Unit, and Chairman and Managing Director, Chevron Nigeria Limited...

  • Page 97
    ... ADP at: www.icsdelivery.com/cvx/index.html. INVESTOR INFORMATION Securities analysts, portfolio managers and representatives of financial institutions may contact: Investor Relations ChevronTexaco Corporation 6001 Bollinger Canyon Road, Bldg. A San Ramon, CA 94583-2324 925 842 5690 Email: invest...

  • Page 98
    ChevronTexaco Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 www.chevrontexaco.com 912-0919