Chevron 2004 Annual Report Download - page 4

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In฀2004,฀our฀company฀delivered฀the฀strongest฀financial฀performance฀in฀its฀125-year฀history.฀Net฀
income฀was฀$13.3฀billion.฀We฀outperformed฀our฀peers฀in฀return฀on฀capital฀employed,฀a฀key฀meas-฀
ure฀of฀overall฀company฀performance.฀We฀strengthened฀our฀balance฀sheet,฀reducing฀our฀debt฀level฀
by฀$1.3฀billion฀and฀ending฀the฀year฀with฀cash฀and฀marketable฀securities฀of฀$10.7฀billion.฀Most฀sig-
nificant,฀we฀achieved฀a฀total฀stockholder฀return฀for฀the฀year฀of฀25.5฀percent฀and฀accomplished฀our฀
five-year฀goal฀to฀be฀a฀leader฀among฀our฀three฀largest฀peers฀in฀this฀measure,฀posting฀an฀annualized฀
return฀of฀7.4฀percent฀for฀2000฀through฀2004.฀This฀was฀9.7฀percentage฀points฀higher฀than฀Standard฀
&฀Poor’s฀500฀return฀over฀the฀same฀five-year฀period.
We฀increased฀our฀annual฀dividend฀payments฀for฀the฀17th฀consecutive฀year฀and฀returned฀value฀to฀
stockholders฀through฀the฀launch฀of฀a฀common฀stock฀buyback฀program฀of฀up฀to฀$5฀billion฀by฀2007.฀
At฀the฀end฀of฀2004,฀we฀had฀repurchased฀shares฀in฀the฀open฀market฀totaling฀more฀than฀$2฀billion.
We฀accomplished฀all฀of฀this฀while฀having฀our฀safest฀year฀ever฀–฀a฀core฀value฀at฀ChevronTexaco.

Our฀performance฀was฀driven฀by฀executing฀well฀against฀the฀right฀strategies฀ at฀ the฀ right฀time.฀In฀฀
upstream,฀our฀strategic฀focus฀is฀on฀growing฀profitability฀in฀core฀areas฀and฀building฀new฀legacy฀
positions.฀Our฀natural฀gas฀strategy฀targets฀the฀commercialization฀of฀our฀significant฀international฀
resource฀base฀for฀delivery฀to฀North฀American฀and฀Asian฀markets.฀In฀downstream,฀our฀strategic฀
priority฀is฀to฀enhance฀returns฀by฀focusing฀on฀areas฀of฀market฀and฀supply฀strength.
Oil฀demand฀has฀been฀stronger฀than฀predicted,฀and฀spare฀capacity฀has฀been฀reduced.฀With฀almost฀
75฀percent฀of฀our฀production฀in฀crude฀oil,฀we฀are฀well฀positioned฀to฀benefit฀from฀higher฀prices.฀At฀
the฀same฀time,฀refining฀margins฀have฀been฀particularly฀strong฀in฀Asia฀and฀the฀U.S.฀West฀Coast฀and฀
Sun฀Belt,฀where฀the฀company฀has฀a฀majority฀of฀its฀refining฀capacity.฀

While฀the฀industry฀benefited฀from฀high฀commodity฀prices฀this฀past฀year,฀ChevronTexaco’s฀per-
formance฀was฀enhanced฀by฀strong฀execution฀against฀its฀strategic฀objectives.฀Specific฀achievements฀
included฀strong฀exploration฀results,฀with฀potentially฀significant฀new฀crude฀oil฀and฀natural฀gas฀dis-
coveries฀in฀North฀America,฀Europe,฀Australia,฀Africa฀and฀Latin฀America.฀We฀also฀continued฀our฀
portfolio฀ rationalization฀ through฀ the฀sale฀ of฀nonstrategic฀production฀assets฀ at฀a฀ time฀when฀ we฀
could฀take฀advantage฀of฀ high฀market฀prices.฀In฀2004,฀our฀downstream฀operations฀ were฀aligned฀
functionally฀across฀the฀globe.฀This฀resulted฀in฀operating฀and฀efficiency฀gains฀and฀produced฀sig-
nificant฀earnings฀improvements.฀We฀also฀made฀solid฀progress฀toward฀commercializing฀our฀equity฀
natural฀gas฀resource฀base,฀most฀notably฀by฀securing฀long-term฀regasification฀capacity฀in฀the฀U.S.฀
Gulf฀of฀Mexico฀and฀obtaining฀key฀permits฀for฀a฀planned฀Baja฀California,฀Mexico,฀liquefied฀natural฀
gas฀import฀terminal.฀
We฀continued฀to฀focus฀on฀integrating฀our฀operations฀across฀the฀enterprise฀to฀capture฀efficiencies฀
and฀create฀new฀value.฀For฀example,฀we฀modified฀our฀Pembroke฀Refinery฀in฀the฀United฀Kingdom฀to฀
TO OUR STOCKHOLDERS