Chevron 2005 Annual Report Download

Download and view the complete annual report

Please find the complete 2005 Chevron annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

Human Energy
2005 Annual Report

Table of contents

  • Page 1
    Human Energy 2005 Annual Report

  • Page 2
    ... gas production in the U.S. Gulf of Mexico and temporarily shut down one of our largest refineries. Chevron employees throughout the region responded to the storms with exceptional courage, compassion and commitment. They rescued neighbors, located colleagues and provided urgently needed food...

  • Page 3
    ... our joint-venture partner, we are applying leading-edge technology that turns natural gas into an ultraclean transportation fuel. Drilling for Success 17 The Unocal merger gave us excellent assets and talent. Human Energy - In Abundance 18 Human energy is evident everywhere at Chevron - take a look...

  • Page 4
    ... on capital employed for the year was a strong 21.9 percent. We increased our dividend in 2005 for the 18th consecutive year, completed the purchase of $5 billion of the company's shares in the open market under a program started in 2004 and initiated a new program to acquire up to an additional...

  • Page 5
    ...border projects. These are all core capabilities of Chevron. HUMAN ENERGY: THE HEART OF CHEVRON Our success in 2005 was defined by a number of factors - robust strategies, consistent execution, a safety record that is among the best in our business, innovative technology and strong commodity prices...

  • Page 6
    ...provided by operating activities Common shares outstanding at year-end (Thousands) Per-share data Net income - diluted Cash dividends Stockholders' equity Common stock price at year-end Total debt to total debt-plus-equity ratio Return on average stockholders' equity Return on capital employed (ROCE...

  • Page 7
    ... 10 % (6)% 13 % 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 CHEVRON YEAR-END COMMON STOCK PRICE* Dollars per share 60 RETURN ON CAPITAL EMPLOYED Percent E

  • Page 8
    ... PROJECT MANAGER BENGUELA BELIZE PROJECT > ANGOLA PROFESSIONAL : Mechanical Engineer, Tulane University (New Orleans, Louisiana); 26 years with Chevron. PERSONAL : Reading novels and travel books. "In Angola's deep water, which will be a key source of future energy supplies, we safely installed...

  • Page 9
    ... crude oil per day. A COMMITMENT TO AFRICA BBLT is more than one of our "Big 5" capital projects - it demonstrates our ongoing commitment to Africa. We are one of the largest U.S. private investors in sub-Saharan Africa, an area that holds enormous potential for adding to the world's energy supplies...

  • Page 10
    BILLY VARNADO PROJECT MANAGER TAHITI DEVELOPMENT > U.S. GULF OF MEXICO Petroleum Engineer, Louisiana State University (Baton Rouge); 28 years with Chevron. PROFESSIONAL : PERSONAL : Hunting and fishing. "We're applying new and extended technology to develop Tahiti. Drilling to depths up to fi...

  • Page 11
    ...Since 2002, Chevron has almost doubled its exploration discovery rate. In 2005 alone, the company drilled 31 successful exploration wells, achieving a success rate of 58 percent. Our exploration efforts have added significant new resources to our existing crude oil and natural gas resource base. We...

  • Page 12
    ... University (Almaty, Kazakhstan); 13 years with Tengizchevroil, 25 years at the Tengiz Field. PERSONAL : Reading, movies and dining out. "I have never seen a project with this kind of potential. We are taking technology to new levels of sophistication to produce a long-term increase in oil...

  • Page 13
    ... state-of-the-art injection technology is being developed that will increase crude oil production capacity from 300,000 barrels per day in 2005 to an estimated 460,000 to 550,000 barrels per day by the third quarter of 2007. Our "Big 5" $5.5 billion Sour Gas Injection/Second Generation Plant project...

  • Page 14
    ...GENERAL MANAGER GREATER GORGON AREA > OFFSHORE WESTERN AUSTRALIA Petroleum Engineer, University of Cambridge (England); 5 years with Chevron. PROFESSIONAL : PERSONAL : Golf and reading histori- cal novels. "I'm driven by a commitment to help deliver the promise of natural gas - a clean fuel that...

  • Page 15
    ... projects, Gorgon is a world-class asset with vast natural gas resources. It is well positioned to supply LNG to customers in Asia and North America, two of the world's fastest-growing markets. LNG MILESTONES ACHIEVED Two LNG milestones were reached in 2005. First, the Gorgon joint-venture partners...

  • Page 16
    OLUMUYIWA CHEVRON NIGERIA LTD. > NIGERIA AGBOOLA COMMERCIAL MANAGER Chartered Accountant, University of Lagos (Nigeria); 26 years with Chevron. PROFESSIONAL : PERSONAL : Writing and making improvements to his community. "Imagine ultraclean diesel fuel for markets around the world and a project ...

  • Page 17
    ... from Nigeria to be fueling cars and trucks in Europe by the end of the decade. In addition to Escravos, Sasol Chevron is pursuing other GTL opportunities. In Qatar, the company is evaluating a planned $6 billion slate of commercial-scale projects, and it is exploring GTL opportunities in Australia...

  • Page 18
    ... PRESIDENT CHEVRON THAILAND EXPLORATION AND PRODUCTION, LTD. > THAILAND Chemical Engineer, Stanford University (California) and Chulalongkorn University (Bangkok, Thailand); 25 years with Chevron. PROFESSIONAL : PERSONAL : Golf, jogging and reading. "The assets of Chevron and Unocal are...

  • Page 19
    ... Unocal brings to Chevron a strong record of applying the innovation of its people with leading-edge technologies. Its technical expertise and capabilities span the range of oil and gas activities - from advanced 3-D seismic imaging to reservoir surveillance to the design of world-class production...

  • Page 20
    ... Africa Strategic Business Unit Manager, Planning and Economics (Products) Singapore Refinery Lagos, Nigeria San Ramon, California SAVING LIVES THROUGH SAFETY ACCELERATING NEW FUELS "Something needed to be done and done fast. We were having too many driving incidents. Chevron's Project...

  • Page 21
    ... seeking hope and opportunity." MARGARITA ARANGO Manager, Policy, Government and Public Affairs Latin America Upstream "In Indonesia, we are expanding a geothermal power project that not only will provide additional electrical power but also will help Indonesia avoid more than 400,000 tons per...

  • Page 22
    ... than 53,000 employees, and our subsidiaries conduct business in approximately 180 countries. We are involved in virtually every aspect of the energy industry - from exploring for, producing, transporting and refining crude oil and natural gas; to marketing petroleum products; to manufacturing and...

  • Page 23
    ...2.5 million barrels of oil-equivalent per day, including volumes produced from oil sands and production under an operating service agreement. Major producing areas are Angola, Australia, Indonesia, Kazakhstan, Nigeria, the Partitioned Neutral Zone, Thailand, the United Kingdom, the United States and...

  • Page 24
    ... oil and improve yield of high-value products • • • • > Above, left to right: Pembroke Refinery, United Kingdom. > Caltex service station, Singapore. > Opposite page, left to right: Solar electric system, U.S. Postal Service facility, Sacramento, California. > Hydrogen energy station...

  • Page 25
    ... technology companies, universities and public agencies throughout the world. Global Power Generation develops and markets commercial power projects worldwide. For more information about the businesses of Chevron, visit our Web site: www.chevron.com. HELPING OTHERS IMPROVE ENERGY EFFICIENCY Chevron...

  • Page 26
    ... See barrels of oil-equivalent and oil-equivalent gas. Production-sharing contract A contractual agreement between a company and a host government whereby the company bears all exploration, development and production costs in return for an agreed-upon share of production. Renewables Energy resources...

  • Page 27
    ... of Chevron and Unocal Corporation; 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...

  • Page 28
    ... losses. In August 2005, the company acquired Unocal Corporation (Unocal), an independent oil and gas exploration and production company. The aggregate purchase price was $17.3 billion, which included $7.5 billion cash, approximately 169 million shares of Chevron common stock valued at $9.6 billion...

  • Page 29
    ...production. United States International Net liquids production declined about 2 percent in 2005, mainly due to the effects of storms, asset sales and natural field declines partially offset by the addition of Unocal production. *Includes equity in affiliates CHEVRON CORPORATION 2005 ANNUAL REPORT...

  • Page 30
    ... company's net oil-equivalent production in 2005, including net barrels from oil sands and production under an operating service agree28 CHEVRON CORPORATION 2005 ANNUAL REPORT ment, occurred in the OPEC-member countries of Indonesia, Nigeria and Venezuela and in the Partitioned Neutral Zone between...

  • Page 31
    ... of the Unocal acquisition.) 2.9 3.0 North America In September 2005, the 0.0 company sold Northrock 01 02 03 04 05 Resources Limited, a wholly owned Canadian Other International Asia-Pacific subsidiary of Unocal, for Indonesia $1.7 billion. The disposiAfrica tion was consistent with United States...

  • Page 32
    ... financial position or liquidity. Global Natural Gas Projects In Angola, the company awarded contracts in April 2005 for front-end engineering and design studies for a multibillion-dollar onshore LNG project located in northern Angola. This project will be designed to help reduce ï¬,aring of...

  • Page 33
    Downstream United States The company initiated a project to increase the capacity of the Pascagoula, Mississippi, refinery's ï¬,uid catalytic cracking unit by approximately 25 percent, from a current capacity of 63,000 barrels per day. This project is designed to enable the refinery to increase ...

  • Page 34
    ...-grading of the combined exploration portfolio. United States International Earnings increased in 2005 on higher prices for crude oil and natural gas. *Before the cumulative effect of changes in accounting principles but including discontinued operations International upstream income of more than...

  • Page 35
    ... Jet Fuel Gas Oils & Kerosene Residual Fuel Oil Other Refined products sales volumes declined about 2 percent from 2004, with lower sales of fuel oils and other products. *Includes equity in affiliates United States International Downstream earnings declined due to lower international margins for...

  • Page 36
    ... functions, insurance operations, real estate activities and technology companies. The net charges of $689 million in 2005 increased significantly from $20 million in 2004. Approximately $400 million of the change related to larger benefits in 2004 from 34 CHEVRON CORPORATION 2005 ANNUAL REPORT

  • Page 37
    ... services, fuel costs for plant operations and a number of corporate items that individually were not significant. Total expenses increased from 2003 to 2004 due mainly to costs for chartering crude oil tankers and other transportation expenses. Millions of dollars 2005 2004 2003 Exploration...

  • Page 38
    ...barrel of oil. 3 Includes net production from August 1, 2005, related to former Unocal properties. 4 Includes natural gas consumed on lease (MMCFPD): United States 48 50 65 International 332 293 268 5 Includes other produced volumes (MBPD): Athabasca Oil Sands - Net 32 27 15 Boscan Operating Service...

  • Page 39
    ... sales during 2005 was sufficient to fund the company's $8.7 billion capital and exploratory program, pay $3.8 billion of dividends to stockholders, repay approximately $970 million in long-term debt, and repurchase $3 billion of common stock. Partial consideration for the acquisition of Unocal...

  • Page 40
    ... mid-February 2006 increased the total shares acquired to 8.3 million at a cost of $481 million. Capital and exploratory expenditures Excluding the $17.3 billion acquisition of Unocal Corporation, total reported expenditures for 2005 were $11.1 billion, including $1.7 billion for the company's share...

  • Page 41
    ...States. Investments in chemicals businesses in 2006 are budgeted at $250 million. Estimates for energy technology, information technology and facilities, real estate activities, power-related businesses, and other businesses total approximately $460 million. Pension Obligations In 2005, the company...

  • Page 42
    ...of approximately $150 million related to construction loans to host governments in the company's international upstream operations. The remaining guarantees of $144 million were provided principally as con40 CHEVRON CORPORATION 2005 ANNUAL REPORT ditions of sale of the company's interest in certain...

  • Page 43
    ... relating to contingent environmental liabilities associated with assets of Unocal's 76 Products Company business that existed prior to its sale in 1997. Under the terms of these indemnities, there is no maximum limit on the amount of potential future payments by the company; however, the purchaser...

  • Page 44
    ... operating, closed or divested. The following table displays the annual changes to the company's before-tax environmental remediation reserves, including those for federal Superfund sites and analogous sites under state laws. Millions of dollars 2005 2004 2003 Balance at January 1 Net Additions...

  • Page 45
    ... gas fields and mining operations, as well as active mining operations. Other liability additions during 2005 for heritage-Chevron related primarily to refined-product marketing sites and various operating, closed or divested facilities in the United States. The company manages environmental...

  • Page 46
    ... and LL-652 operating service agreements into an Empresa Mixta. Suspended Wells The company suspends the costs of exploratory wells pending a final determination of the commercial potential of the related crude oil and natural gas 44 CHEVRON CORPORATION 2005 ANNUAL REPORT fields. The ultimate...

  • Page 47
    ...federal, state and local environmental, health and safety laws and regulations. These regulatory requirements continue to increase in both number and complexity over time and govern not only the manner in which the company conducts its operations, but also the products it sells. Most of the costs of...

  • Page 48
    ... assumptions are the expected long-term rate of return on plan assets and the discount rate applied to pension plan obligations. For other postretirement employee benefit (OPEB) plans, which provide for certain health care and life insurance benefits for qualifying retired employees and which are...

  • Page 49
    ... For current retirees, the increase in company contribution is capped at 4 percent each year. For future retirees, the 4 percent cap will be effective at retirement. For active employees and retirees below age 65 whose claims experiences are combined for rating purposes, the assumed health care cost...

  • Page 50
    ... of the company's purchase price to the various assets and liabilities of the acquired business at their respective fair values. The company uses all available information to make these fair value determinations, and for major acquisitions, may hire an independent appraisal firm to assist in making...

  • Page 51
    .... 43, "Restatement and Revision of Accounting Research Bulletins." Adoption of this accounting for its coal, oil sands and other mining operations will not have a significant effect on the company's results of operations, financial position or liquidity. CHEVRON CORPORATION 2005 ANNUAL REPORT 49

  • Page 52
    ... common stock is listed on the New York Stock Exchange (trading symbol: CVX) and on the Pacific Exchange. As of February 23, 2006, stockholders of record numbered approximately 230,000. There are no restrictions on the company's ability to pay dividends. 50 CHEVRON CORPORATION 2005 ANNUAL REPORT

  • Page 53
    ... standards of the Public Company Accounting Oversight Board (United States). The Board of Directors of Chevron has an Audit Committee composed of directors who are not officers or employees of the company. The Audit Committee meets regularly with members of management, the internal auditors and the...

  • Page 54
    ... Corporation's 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States...

  • Page 55
    ... - DILUTED consumer excise taxes: Includes amounts in revenues for buy/sell contracts associated costs are in "Purchased crude oil and products." See Note 15, on page 70: 3 All periods reï¬,ect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. 2 1 Includes $ 6.58...

  • Page 56
    ...COMPREHENSIVE (LOSS) GAIN, NET OF TAX COMPREHENSIVE INCOME See accompanying Notes to the Consolidated Financial Statements. (242) 89 34 (12) (131) 89 (31) 58 (110) $ 13,989 (8) (1) - - (9) 719 (247) 472 490 $ 13,818 115 (40) - - 75 12 (10) 2 189 $ 7,419 54 CHEVRON CORPORATION 2005 ANNUAL REPORT

  • Page 57
    ... Other taxes payable TOTAL CURRENT LIABILITIES Long-term debt Capital lease obligations Deferred credits and other noncurrent obligations Noncurrent deferred income taxes Reserves for employee benefit plans Minority interests TOTAL LIABILITIES Preferred stock (authorized 100,000,000 shares, $1.00...

  • Page 58
    ... in operating working capital Minority interest in net income (Increase) decrease in long-term receivables Decrease (increase) in other deferred charges Cumulative effect of changes in accounting principles Gain from exchange of Dynegy preferred stock Cash contributions to employee pension plans...

  • Page 59
    ... 45,230 $ (3,374) (3) 60 $ (3,317) $ 36,295 restated to reï¬,ect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. Unocal balances at December 31, 2005. See accompanying Notes to the Consolidated Financial Statements. CHEVRON CORPORATION 2005 ANNUAL REPORT 57

  • Page 60
    ... operations. In addition, Chevron holds investments in businesses involving power generation, geothermal production, and the mining of coal and other minerals. Collectively, these companies conduct business activities in approximately 180 countries. Exploration and production (upstream) operations...

  • Page 61
    NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued any unrealized gains or losses included in "Other comprehensive income." Inventories Crude oil, petroleum products and chemicals are generally stated at cost, using a Last-In, First-Out (LIFO) method. In the aggregate, these costs are ...

  • Page 62
    ... Per-share NOTE 2. ACQUISITION OF UNOCAL CORPORATION On August 10, 2005, the company acquired Unocal Corporation (Unocal), an independent oil and gas exploration and production company. Unocal's principal upstream operations are in North America and Asia, including the Caspian region. Also located...

  • Page 63
    ... that are complementary to Chevron's, and the acquisition is consistent with Chevron's long-term strategies to grow profitability in its core upstream areas, build new legacy positions and commercialize the company's large undeveloped natural gas resource base. • Cost savings that can be obtained...

  • Page 64
    ... in accounting principles. At December 31 2005 2004 Additions to properties, plant and equipment1 Additions to investments Current-year dry hole expenditures Payments for other liabilities and assets, net Capital expenditures Expensed exploration expenditures Assets acquired through capital lease...

  • Page 65
    ... the Chevron Corporation Long-Term Incentive Plan (LTIP), as amended and restated, which was approved by the stockholders in 2004. In addition, approximately 561 thousand shares remain available for issuance from the 800 thousand shares of the company's common stock that were reserved for awards...

  • Page 66
    ... minerals, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, and technology companies. The company's primary country of operation is the United States of America, its country of...

  • Page 67
    ... businesses, technology companies, and assets of the corporate administrative functions. Segment Sales and Other Operating Revenues Operating segment sales and other operating revenues, including internal transfers, for the years 2005, 2004 and 2003 are presented in the following table. Products...

  • Page 68
    ..., plant and equipment, at cost." Such leasing arrangements involve tanker charters, crude oil production and processing equipment, service stations, and other facilities. Other leases are classified as operating leases and are not capitalized. The pay- 66 CHEVRON CORPORATION 2005 ANNUAL REPORT

  • Page 69
    ... are in the United States and relate primarily to corporate and upstream executive and administrative functions. By year-end 2005, approximately 250 of these employees had been terminated. An accrual of $106 was established as part of the purchase-price allocation for Unocal. Payments against the...

  • Page 70
    ..., plant and equipment as "Assets held for sale" on the Consolidated Balance Sheet. Assets in this category related to a group of service stations outside the United States. Summarized income statement information relating to discontinued operations is as follows: Year ended December 31 2005 2004...

  • Page 71
    ...net assets. Colonial Pipeline Company Chevron owns an approximate 23 percent equity interest as a result of the Unocal acquisition. The Colonial Pipeline system runs from Texas to New Jersey and transports petroleum products in a 13-state market. Chevron Phillips Chemical Company LLC Chevron owns 50...

  • Page 72
    ... dollars, except per-share amounts NOTE 14. PROPERTIES, PLANT AND EQUIPMENT1,2 At December 31 Gross Investment at Cost 2005 2004 2003 2005 Net Investment 2004 2003 2005 Additions at Cost 3 2004 2003 2005 Year ended December 31 Depreciation Expense 4,5 2004 2003 Upstream United States International...

  • Page 73
    ... allowance also increased approximately the same amount. The change in both categories reï¬,ected the addition of Unocal amounts as well as the effect of the company's tax election in 2005 for certain heritageChevron international upstream operations. CHEVRON CORPORATION 2005 ANNUAL REPORT 71

  • Page 74
    .... In the long term, the company expects that the new deduction will result in a decrease of the annual effective tax rate to about 32 percent for that category of income, based on current earnings levels. NOTE 17. SHORT-TERM DEBT At December 31 2005 2004 Commercial paper* Notes payable to banks...

  • Page 75
    ...-term debt, excluding capital leases, at December 31, 2005, was $11,807, which included $1,861 assumed in connection with the acquisition of Unocal. The company's long-term debt outstanding at year-end 2005 and 2004 was as follows: At December 31 2005 2004 FASB Statement No. 151, "Inventory Costs...

  • Page 76
    ... $313 (20 projects) related to projects that had drilling activities under way or firmly planned for the near future. An additional $63 (four projects) had drilling activity dur74 CHEVRON CORPORATION 2005 ANNUAL REPORT The company has defined-benefit pension plans for many employees. The company...

  • Page 77
    ... costs. For retiree medical coverage in the company's main U.S. plan, the increase to the company contributions for retiree medical coverage is limited to no more than 4 percent each year, effective at retirement, beginning in 2005. Certain life insurance benefits are paid by the company and annual...

  • Page 78
    ... for the main U.S. pension plan. The 2005 discount rate, expected return on plan assets and rate of compensation increase reï¬,ect the remeasurement of the Unocal benefit plans at July 31, 2005, due to the acquisition of Unocal. Expected Return on Plan Assets The company employs a rigorous process...

  • Page 79
    ... in 2005 and gradually declined to 4.8 percent for 2010 and beyond. In both measurements, increases in the company's contributions are capped at 4 percent effective at retirement. Assumed health care cost-trend rates have a significant effect on the amounts reported for retiree health care costs...

  • Page 80
    ... and safety goals. Additionally, in August 2005, the company assumed responsibility for the remaining pro-rated cash bonuses under the Unocal Annual Incentive Plan. Charges for the programs were $324, $339 and $151 in 2005, 2004 and 2003, respectively. NOTE 21. EMPLOYEE BENEFIT PLANS - Continued...

  • Page 81
    ... to share price and number of shares have been adjusted for the two-for-one stock split in September 2004. Chevron Long-Term Incentive Plan (LTIP) Awards under the LTIP may take the form of, but are not limited to, stock options, restricted stock, restricted stock units, stock appreciation rights...

  • Page 82
    ...at the acquisition date. A summary of option activity under the LTIP as well as former Texaco and Unocal plans is presented below: WeightedAverage Exercise Price WeightedAverage Remaining Contractual Term Shares (Thousands) Aggregate Intrinsic Value Outstanding at January 1, 2005 Granted Granted...

  • Page 83
    ... relating to contingent environmental liabilities associated with assets of Unocal's 76 Products Company business that existed prior to its sale in 1997. Under the terms of these indemnities, there is no maximum limit on the amount of potential future payments by the company; however, the purchaser...

  • Page 84
    ... was associated with various sites in the international downstream ($101), upstream ($257), chemicals ($50) and other ($67). Liabilities at all sites, whether operating, closed or divested, were primarily associated with the company's plans and activities to CHEVRON CORPORATION 2005 ANNUAL REPORT

  • Page 85
    ... United States. As has occurred in the past, actions could be taken by host governments to increase public ownership of the company's partially or wholly owned businesses or assets or to impose additional taxes or royalties on the company's operations or both. In certain locations, host governments...

  • Page 86
    ... Financial Statements Millions of dollars, except per-share amounts NOTE 24. ASSET RETIREMENT OBLIGATIONS - Continued The following table indicates the changes to the company's before-tax asset retirement obligations in 2005, 2004 and 2003: 2005 2004 2003 obligations," $2,674. "Noncurrent...

  • Page 87
    ... for 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. 3 Share amounts in all periods reï¬,ect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. CHEVRON CORPORATION 2005 ANNUAL REPORT 85

  • Page 88
    ... billion relating to the sale of nonstrategic upstream properties. Other financial information is as follows: Year ended December 31 2005 2004 2003 On July 28, 2004, the company's Board of Directors approved a two-for-one stock split in the form of a stock dividend to the company's stockholders...

  • Page 89
    ...-YEAR OPERATING SUMMARY1 Unaudited Worldwide - Includes Equity in Affiliates Thousands of barrels per day, except natural gas data, which is millions of cubic feet per day UNITED STATES 2005 2004 2003 2002 2001 Gross production of crude oil and natural gas liquids Net production of crude oil and...

  • Page 90
    ...2003 includes a benefit of $0.08 for the company's share of a capital stock transaction of its Dynegy Inc. affi liate, which, under the applicable accounting rules, was recorded directly to retained earnings and not included in net income for the period. 88 CHEVRON CORPORATION 2005 ANNUAL REPORT

  • Page 91
    ..., Myanmar, the TABLE I - COSTS INCURRED IN EXPLORATION, PROPERTY ACQUISITIONS AND DEVELOPMENT 1 Consolidated Companies United States International Africa AsiaPacific Indonesia Other Total Int'l. Affi liated Companies Total TCO Hamaca Millions of dollars YEAR ENDED DEC. 31, 2005 Calif. Gulf of...

  • Page 92
    ... on page 83. TABLE II - CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES1 Consolidated Companies United States International Africa AsiaPacific Indonesia Other Total Int'l. Affi liated Companies Total TCO Hamaca Millions of dollars AT DEC. 31, 2005 Calif. Gulf of Mexico Other...

  • Page 93
    TABLE II - CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES 1 - Continued Consolidated Companies United States Gulf of Total Other U.S. Africa AsiaPacific Indonesia Other International Total Int'l. Total Affi liated Companies TCO Hamaca Millions of dollars AT DEC. 31, 20032 Calif....

  • Page 94
    ... GAS PRODUCING ACTIVITIES1 The company's results of operations from oil and gas producing activities for the years 2005, 2004 and 2003 are shown in the following table. Net income from exploration and production activities as reported on page 65 reï¬,ects income taxes computed on an effective rate...

  • Page 95
    ...from related oil and gas activities that do not have oil and gas reserves attributed to them (for example, net income from technical and operating service agreements) and items identified in the Management's Discussion and Analysis on pages 31 through 35. CHEVRON CORPORATION 2005 ANNUAL REPORT 93

  • Page 96
    ... the related volumes have been deducted from net production in calculating the 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 2005...

  • Page 97
    ... in oil and gas prices, OPEC constraints, geopolitical uncertainties and civil unrest. The company's estimated net proved underground oil and natural gas reserves and changes thereto for the years 2003, 2004 and 2005 are shown in the tables on pages 96 and 98. CHEVRON CORPORATION 2005 ANNUAL REPORT...

  • Page 98
    ... million barrels for consolidated companies and increased reserves 96 CHEVRON CORPORATION 2005 ANNUAL REPORT for affiliates by 204 million barrels. For consolidated companies, the decrease was composed of 161 million barrels for international areas and 57 million barrels for the United States. The...

  • Page 99
    ... the company's program to dispose of assets deemed nonstrategic to the portfolio of producing properties. In 2005, sales of 58 million barrels in the "Other" international area related to the disposition of the former Unocal operations onshore in Canada. CHEVRON CORPORATION 2005 ANNUAL REPORT 97

  • Page 100
    ... well performance and other data. In 2004, revisions increased reserves for consolidated companies by a net 248 BCF, composed of increases of 928 BCF internationally and decreases of 680 BCF in the United States. Internationally, about half of the 346 BCF 98 CHEVRON CORPORATION 2005 ANNUAL REPORT

  • Page 101
    ... BCF total purchases were associated with the Unocal acquisition. International reserve acquisitions were 4,488 BCF, with Thailand accounting for about half the volumes. Other significant volumes were added in Bangladesh and Myanmar. Sales In 2004, sales for consolidated companies totaled 547 BCF...

  • Page 102
    ... by applying year-end prices for oil and gas to year-end quantities of estimated net proved reserves. Future price changes are limited to those provided by contractual arrangements in existence at the end of each reporting year. Future development and production costs are those estimated future...

  • Page 103
    ... NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES - Continued Consolidated Companies United States International Africa AsiaPacific Indonesia Other Total Int'l. Affi liated Companies Total TCO Hamaca Gulf of Mexico Total U.S. Millions of dollars AT DECEMBER 31, 2005 Calif. Other Future...

  • Page 104
    ... Companies* Affiliated Companies 2005 2004 2003 Millions of dollars PRESENT VALUE AT JANUARY 1 2005 2004 2003 $ 48,134 $ 50,805 $ 48,585 $ 14,920 $ 13,118 $ 12,606 Sales and transfers of oil and gas produced net of production costs Development costs incurred Purchases of reserves Sales...

  • Page 105
    .... 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 of the American Petroleum Institute...

  • Page 106
    ... company's strategic direction. Previously President and Managing Director, Chevron Upstream Europe, Chevron Overseas Petroleum Inc., and Vice President, Gulf of Mexico Offshore Division, Texaco Exploration and Production Inc. Joined the company in 1975. Thomas R. Schuttish, 58 General Tax Counsel...

  • Page 107
    .... For information, contact Mellon Investor Services. (See Stockholder Information.) CORPORATE HEADQUARTERS 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 925 842 1000 THIS ANNUAL REPORT CONTAINS FORWARD-LOOKING STATEMENTS - IDENTIFIED BY WORDS SUCH AS "EXPECTS," "INTENDS," "PROJECTS," ETC...

  • Page 108
    Chevron Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 www.chevron.com 912-0922