Chevron 2006 Annual Report Download

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2006 Annual Report

Table of contents

  • Page 1
    2006 Annual Report

  • Page 2
    ... ENERGY UNCONVENTIONAL ENERGY 2 6 8 EMERGING ENERGY EFFICIENT ENERGY HUMAN ENERGY CHEVRON PERSPECTIVES 10 12 14 16 OPERATING HIGHLIGHTS GLOSSARY OF ENERGY AND FINANCIAL TERMS FINANCIAL REVIEW 18 24 25 FIVE-YEAR OPERATING SUMMARY FIVE-YEAR FINANCIAL SUMMARY BOARD OF DIRECTORS CORPORATE...

  • Page 3
    The energy portfolio CONVENTIONAL ENERGY UNCONVENTIONAL EMERGING ENERGY ENERGY EFFICIENT ENERGY HUMAN ENERGY 6 8 10 12 14

  • Page 4
    ... United Kingdom. Overall, we increased year-over-year production volumes by nearly 6 percent. DELIVERING RESULTS :: Our exploration program in 2006 was outstanding, reï¬,ecting the discipline and efficiency of our processes. We announced a number of discoveries, most notably in Australia, Nigeria...

  • Page 5
    .... We set a new safety record in 2006, our fifth consecutive year of improvement. However, we will never be satisfied until we reduce the number of safety-related incidents to zero. We expect global demand for energy to continue growing. At the same time, increased competition for resources and...

  • 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
    ...in affiliates, except number of employees 2005 conformed to 2006 presentation At the end of the year Excludes service station personnel Performance Graph The stock performance graph at right shows how an initial investment of $100 in Chevron stock would have compared with an equal investment in the...

  • Page 8
    ... SURFACE, TO DRILL DEEPER THAN EVER BEFORE, AND, IN THE PROCESS, TO DISCOVER SIGNIFICANT NEW VOLUMES OF CRUDE OIL AND NATURAL GAS. INNOVATIVE TECHNOLOGY AND HUMAN INGENUITY WILL CONTINUE TO EXPAND THE BOUNDARIES OF EXPLORATION." SEA LEVEL BOBBY RYAN VICE PRESIDENT GLOBAL EXPLORATION UPSTREAM 8,000...

  • Page 9
    ...management, a process that helps us maximize recovery from our crude oil and natural gas assets. Our steamï¬,ood technology has long been used to enhance production from older fields in California and Indonesia and is now being tested in the Partitioned Neutral Zone (right) between Kuwait and Saudi...

  • Page 10
    ... THAT EXPERTISE INTO OUR UPSTREAM OPERATIONS TO DEVELOP SOME OF THE MOST CHALLENGING CRUDES OF ALL - EXTRA-HEAVY OIL AND OIL SANDS. WITH OUR REFINING TECHNOLOGY, WE CAN TURN EVEN THE HEAVIEST OILS INTO GASOLINE AND OTHER HIGHDEMAND PRODUCTS FOR OUR CUSTOMERS." ASHOK KRISHNA GENERAL MANAGER...

  • Page 11
    ...ne them into high-demand products have a competitive advantage in today's marketplace. 2006 MILESTONES - Approved a net additional $2 billion investment to expand oil sands mining and upgrading facilities for Canada's Athabasca oil sands; acquired new leases in the area - Established a partnership...

  • Page 12
    ... long been involved in developing renewable energy and continue our strategy to evaluate and capture profitable positions in renewable technologies and businesses. > ULTRACLEAN FUELS FROM NATURAL GAS (PHOTO RIGHT): Chevron and Nigeria's national oil company are constructing a 34,000-barrel-per-day...

  • Page 13
    EMERGING ENERGY EFFICIENT ENERGY HUMAN ENERGY "CHEVRON HAS VAST NATURAL GAS RESOURCES. OUR GAS-TO-LIQUIDS BUSINESS COMPLEMENTS THE COMPANY'S LIQUEFIED NATURAL GAS AND PIPELINE BUSINESSES BY PROVIDING A UNIQUE OPPORTUNITY TO CONVERT NATURAL GAS INTO ULTRACLEAN LIQUID TRANSPORTATION FUELS TO MEET ...

  • Page 14
    ... the past three years, Chevron Energy Solutions has helped its clients reduce energy use at their facilities by nearly 30 percent on average. > SOLAR-POWERED MAIL (PHOTO RIGHT): At a U.S. Postal Service facility in Oakland, California, solar panels span a rooftop area nearly the size of two football...

  • Page 15
    EMERGING ENERGY EFFICIENT ENERGY HUMAN ENERGY "CHEVRON IS DEVELOPING INNOVATIVE SOLUTIONS TO HELP OUR CUSTOMERS USE ENERGY MORE EFFICIENTLY AND TO HELP THEM GENERATE POWER FROM RENEWABLE SOURCES SUCH AS SOLAR, WIND AND BIOMASS. WE BELIEVE THERE'S HUGE POTENTIAL FOR ENERGY EFFICIENCY AND THE ...

  • Page 16
    ... we form with other businesses, local communities and governments. Because human energy is infinite, so is the potential to meet the world's demand for safe, reliable energy. > HELPING STUDENTS LEARN (PHOTO RIGHT): In Venezuela, Chevron and the Discovery Channel Global Education Partnership...

  • Page 17
    ... IT'S BY TRAINING LOCAL EMPLOYEES, CONTRIBUTING TO A REGION'S SUSTAINABLE ECONOMIC DEVELOPMENT, USING LOCAL SUPPLIERS OR INVESTING IN BETTER EDUCATION. OUR LONG-TERM SUCCESS IS TIED DIRECTLY TO THE HEALTH OF THE COMMUNITIES WHERE WE DO BUSINESS." ALI MOSHIRI MANAGING DIRECTOR LATIN AMERICA UPSTREAM

  • Page 18
    ... TO RIGHT: RAJESH PAULOSE Global Product Line Manager - Biofuels and Hydrogen, Global Marketing LYNN CHOU General Manager, Global Technology and Strategy, Chevron Information Technology Company ROSS HILL Senior Geophysical Consultant/Chevron Fellow, Chevron Energy Technology Company ROBERT LESTZ Oil...

  • Page 19
    ... We created a Web site for our Global Lubricants group that allows its customers and partners, in just a few clicks, to see our products, pricing, safety and training materials, and other information. It makes doing business with Chevron a lot easier. LYNN :: Chevron's seismic imaging technology is...

  • Page 20
    ...companies. We have approximately 56,000 employees, and our subsidiaries conduct business in more than 180 countries. We operate across the entire energy spectrum - producing and transporting crude oil and natural gas; refining, marketing and distributing fuels and other energy products and services...

  • Page 21
    ... per day, including volumes produced from oil sands and production under an operating service agreement. Major producing areas include Angola, Australia, Indonesia, Kazakhstan, Nigeria, the Partitioned Neutral Zone, Thailand, the United Kingdom, the United States and Venezuela. Major exploration...

  • Page 22
    .... In 2006, we announced significant crude oil discoveries in deepwater Nigeria and the U.S. Gulf of Mexico. We also made two major natural gas discoveries offshore Western Australia, both within the giant Greater Gorgon Area, which we plan to develop. During the year, we acquired new exploration...

  • Page 23
    ... Africa, Kazakhstan, Latin America, North America and Thailand. Global Gas is highly integrated and brings together the key businesses involved in every aspect of developing natural gas - production, liquefaction, shipping, regasification, pipelines, marketing and trading, power generation, and GTL...

  • Page 24
    ... refineries operated close to their crude oil unit design capacity. MARKETING In the United States, the Chevron and Texaco brands have been ranked the two most powerful brands by the Oil Price Information Service, the leading source for petroleum pricing and news information. In 2006, we expanded...

  • Page 25
    ... and markets commercial power projects worldwide. Chevron Energy Solutions delivers energy-efficiency and power-system solutions to external and internal clients (see Page 12). For more information about the businesses of Chevron, visit our Web site: www.chevron.com. OPERATIONAL EXCELLENCE To help...

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

  • Page 27
    ... FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies 56 Note 2. Acquisition of Unocal Corporation 58 Note 3. Information Relating to the Consolidated Statement of Cash Flows 59 Note 4. Summarized Financial Data - Chevron U.S.A. Inc. 60 Note 5. Summarized Financial Data - Chevron...

  • Page 28
    ... in the upstream business, the company must develop and replenish an inventory of projects that offer adequate financial returns for the investment required. Identifying promising areas for exploration, acquiring the necessary rights to explore for and to produce crude oil and natural gas, drilling...

  • Page 29
    ... North Sea. (Refer to page 35 for the company's average U.S. and international crude oil prices.) In contrast to price movements in the global market for crude oil, price changes for natural gas are more closely aligned with regional supply and demand conditions. In the United States during 2006...

  • Page 30
    ... high-price conditions in the United States and other markets because of the lack of infrastructure to transport and receive liquefied natural gas. To help address this regional imbalance between supply and demand for natural gas, Chevron is planning increased investments in long-term projects...

  • Page 31
    ... offshore Frade Field. Initial production is targeted by early 2009, with a maximum annual rate estimated at 90,000 oil-equivalent barrels per day in 2011. Canada The company acquired heavy oil leases in the Athabasca region of northern Alberta, Canada, in 2005 and 2006. The leases comprise more...

  • Page 32
    ... a company formed by Reliance Industries Limited to construct, own and operate a refinery in Jamnagar, India. The new refinery would be the world's sixth largest, designed for a crude oil processing capacity of 580,000 barrels per day. Chevron and Reliance 30 CHEVRON CORPORATION 2006 ANNUAL REPORT...

  • Page 33
    ...-equivalent production was 1.4 million barrels per day in 2006, an increase of approximately 2 percent from 2005 and 2004. Net natural gas production of 3.1 billion cubic feet per day in 2006 was up 21 percent and 51 percent from 2005 and 2004, respectively. CHEVRON CORPORATION 2006 ANNUAL REPORT...

  • Page 34
    ... Mexico. The company's marketing and pipeline operations along the Gulf Coast were also disrupted for an extended period due to the hurricanes. Fuel costs were also higher in 2005 than in 2004. Sales volumes of refined products in 2006 were approximately 1.5 million barrels per day, an increase of...

  • Page 35
    ... in April 2006 for buy/sell contracts. Purchase costs increased 35 percent in 2005 from the prior year as a result of higher prices for crude oil, natural gas and refined products, as well as to the inclusion of Unocal-related amounts for five months. CHEVRON CORPORATION 2006 ANNUAL REPORT 33

  • Page 36
    ...by higher average interest rates on commercial paper and other variable-rate debt. The increase in 2005 over 2004 was mainly due to the inclusion of debt assumed with the Unocal acquisition and higher average interest rates for commercial paper borrowings. 34 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 37
    ... assets and operations with LS Power Group's power-generation portfolio and for Dynegy to acquire a 50 percent ownership interest in a development joint venture with LS Power. Upon close of the transaction, Chevron will receive the same number of shares of the new company's Class A common stock that...

  • Page 38
    ... matured, and Union Oil Company bonds of $196 million were redeemed prior to maturity. Commercial paper balances at the end of 2006 were reduced $626 million from year-end 2005. In February 2007, a $144 million Texaco Capital Inc. bond matured. The company's debt and capital lease obligations due...

  • Page 39
    ...company has outstanding public bonds issued by Chevron Corporation Profit Sharing/Savings Plan Trust Fund, Chevron Canada Funding Company (formerly Chevron Texaco Capital Company), Texaco Capital Inc. and Union Oil Company of California. All of these securities are guaranteed by Chevron Corporation...

  • Page 40
    ...increases in plan obligations. Refer also to the discussion of pension accounting in "Critical Accounting Estimates and Assumptions," beginning on page 44. FINANCIAL RATIOS Financial Ratios At December 31 2006 2005 2004 and the capital stock that was issued in connection with the Unocal acquisition...

  • Page 41
    ... was scheduled for payment on the fi rst business day of January 2007, was paid in late December 2006. FINANCIAL AND DERIVATIVE INSTRUMENTS Commodity Derivative Instruments Chevron is exposed to market risks related to the price volatility of crude oil, refined products, natural gas, natural gas...

  • Page 42
    ... Part I, Item 1A, of the company's 2006 Annual Report on Form 10-K. TRANSACTIONS WITH RELATED PARTIES Chevron enters into a number of business arrangements with related parties, principally its equity affiliates. These arrangements include long-term supply or offtake agreements. Long-term purchase...

  • Page 43
    .... Of the remaining year-end 2006 environmental reserves balance of $1,319 million, $834 million related to approximately 2,250 sites for the company's U.S. downstream operations, including refineries and other plants, marketing locations (i.e., service stations and terminals), and pipelines. The...

  • Page 44
    ..., Nigeria, Norway, the Partitioned Neutral Zone between Kuwait and Saudi Arabia, the Philippines, Republic of the Congo, Singapore, South Africa, South Korea, Thailand, Trinidad and Tobago, the United Kingdom, Venezuela, and Vietnam. The company's operations, particularly exploration and production...

  • Page 45
    ... December 31, 2004 through 2006, which were based on year-end prices at the time. Note 1 to the Consolidated Financial Statements, beginning on page 56, includes a description of the "successful efforts" method of accounting for oil and gas exploration and production activities. The estimates of...

  • Page 46
    ... long-term rate of return on U.S. pension plan assets, which account for 70 percent of the company's pension plan assets, has remained at 7.8 percent since 2002. For the 10 years ending December 31, 2006, actual asset returns averaged 9.7 percent for this plan. The year-end market-related value...

  • Page 47
    ...outlook for global or regional market supply and demand conditions for crude oil, natural gas, commodity chemicals and refined products. However, the impairment reviews and calculations are based on assumptions that are consistent with the company's business plans and long-term investment decisions...

  • Page 48
    ... and the estimated proceeds from the sale, less costs to sell, are less than the assets' associated carrying values. Business Combinations - Purchase-Price Allocation Accounting for business combinations requires the allocation of the company's purchase price to the various assets and liabilities...

  • Page 49
    ...assets and liabilities at that time that are required to be measured at fair value. FASB Statement No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106 and 132(R) (FAS 158) In September 2006, the FASB issued FAS...

  • Page 50
    ...$ 2,116 $ 5,375 The company's common stock is listed on the New York Stock Exchange (trading symbol: CVX). As of February 23, 2007, stockholders of record numbered approximately 223,000. There are no restrictions on the company's ability to pay dividends. 48 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 51
    ... of Chevron Corporation Management of Chevron is responsible for preparing the accompanying Consolidated Financial Statements and the related information appearing in this report. The statements were prepared in accordance with accounting principles generally accepted in the United States of America...

  • Page 52
    ... of accounting for buy/sell contracts on April 1, 2006. As Discussed in Note 21 to the Consolidated Financial Statements, the Company changed its method of accounting for defined benefit pension and other postretirement plans on December 31, 2006. INTERNAL CONTROL OVER FINANCIAL REPORTING Also...

  • Page 53
    ... are in "Purchased crude oil and products." Refer also to Note 14, on page 67. 3All periods reï¬,ect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. See accompanying Notes to the Consolidated Financial Statements. CHEVRON CORPORATION 2006 ANNUAL REPORT 51

  • Page 54
    ... (LOSS) GAIN, NET OF TAX COMPREHENSIVE INCOME See accompanying Notes to the Consolidated Financial Statements. 2 6 95 (36) 67 (88) 50 (38) (4) $ 17,134 (242) 89 34 (12) (131) 89 (31) 58 (110) $ 13,989 (8) (1) - - (9) 719 (247) 472 490 $ 13,818 52 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 55
    ... 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 par value...

  • Page 56
    ... retirements and sales Net foreign currency effects Deferred income tax provision Net decrease (increase) in operating working capital Minority interest in net income Increase in long-term receivables Decrease (increase) in other deferred charges Cash contributions to employee pension plans Other...

  • Page 57
    ...BALANCE AT DECEMBER 31 TOTAL STOCKHOLDERS' EQUITY AT DECEMBER 31 See accompanying Notes to the Consolidated Financial Statements. $ (7,870) (5,033) 508 $ (12,395) $ 68,935 $ (5,124) (3,029) 283 $ (7,870) $ 62,676 $ (3,317) (2,122) 315 $ (5,124) $ 45,230 CHEVRON CORPORATION 2006 ANNUAL REPORT 55

  • Page 58
    ... CONSOLIDATED FINANCIAL STATEMENTS Millions of dollars, except per-share amounts NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Exploration and production (upstream) operations consist of exploring for, developing and producing crude oil and natural gas and also marketing natural gas...

  • Page 59
    ... its fair value less the cost to sell. If the net book value exceeds the fair value less cost to sell, the asset is considered impaired and adjusted to the lower value. As required under Financial Accounting Standards Board (FASB) Statement No. 143, Accounting for Asset Retirement Obligations (FAS...

  • Page 60
    ... split effected as a 100 percent stock dividend in September 2004. NOTE 2. ACQUISITION OF UNOCAL CORPORATION In August 2005, the company acquired Unocal Corporation (Unocal), an independent oil and gas exploration and production company. Unocal's principal upstream operations were in North America...

  • Page 61
    NOTE 2. ACQUISITION OF UNOCAL CORPORATION - Continued The acquisition was accounted for under the rules of FASB Statement No. 141, Business Combinations. The following table summarizes the final purchase-price allocation: Current assets Investments and long-term receivables Properties Goodwill ...

  • Page 62
    ...distribution of products derived from petroleum, other than natural gas liquids, excluding most of the regulated pipeline operations of Chevron. CUSA also holds Chevron's investments in the Chevron Phillips Chemical Company LLC (CPChem) joint venture and Dynegy Inc. (Dynegy), which are accounted for...

  • Page 63
    ... receivable," "Accounts payable," "Long-term receivables - net" and "Deferred credits and other noncurrent obligations." Gains and losses on the company's risk management activities are reported as either "Sales and other operating revenues" or "Purchased crude oil and products," whereas trading...

  • Page 64
    ...in Dynegy, mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels, and technology companies. The company's primary country of operation is the United...

  • Page 65
    ... and marketable securities, real estate, information systems, the company's investment in Dynegy, mining operations, power generation businesses, technology companies, and assets of the corporate administrative functions. Segment Sales and Other Operating Revenues Operating segment sales and...

  • Page 66
    ... 600 employees were eligible for severance payments. Most of the associated positions are in the United States and relate primarily to corporate and upstream executive and administrative functions. By year-end 2006, the program was substantially complete. 64 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 67
    ... tax 2006 2005 Equity in earnings, together with investments in and advances to companies accounted for using the equity method and other investments accounted for at or below cost, are shown in the table below. For certain equity affiliates, Chevron pays its share of some income taxes directly...

  • Page 68
    ... assets and operations with LS Power Group's power generation portfolio and for Dynegy to acquire a 50 percent ownership interest in a development joint venture with LS Power. Upon close of the transaction, Chevron will receive the same number of shares of the new company's Class A common stock that...

  • Page 69
    ... in 2004. 5 Primarily mining operations, power generation businesses, real estate assets and management information systems. 3 NOTE 14. ACCOUNTING FOR BUY/SELL CONTRACTS The company adopted the accounting prescribed by EITF Issue No. 04-13, Accounting for Purchases and Sales of Inventory with the...

  • Page 70
    ...) (246) (1,618) (1,145) (182) (240) (1,237) (9,114) 3,249 $ 9,824 In 2006, deferred tax liabilities increased by approximately $2,500 from the amount reported in 2005. The *Excludes income tax expense of $100 related to discontinued operations for 2004. 68 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 71
    ...800 in 2006. The increase related primarily to higher pension and other benefit obligations resulting from the implementation of FAS 158, increased foreign tax credits resulting from higher crude oil prices in tax jurisdictions with high income tax rates, and increased asset retirement obligations...

  • Page 72
    ... redeemed approximately $1,700 of Unocal debt and recognized a $92 before-tax gain. In October 2006, a $129 Texaco Capital Inc. bond matured. In November 2006, the company retired Union Oil Company bonds of $196. NOTE 19. NEW ACCOUNTING STANDARDS NOTE 18. LONG-TERM DEBT Chevron has three "shelf...

  • Page 73
    ...assets and liabilities at that time that are required to be measured at fair value. FASB Statement No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an Amendment of FASB Statements No. 87, 88, 106 and 132(R) (FAS 158) In September 2006, the FASB issued FAS...

  • Page 74
    ...after July 1, 2006, received recognition for Unocal pay and service history toward benefits to be paid under the Chevron pension and postretirement benefit plans. Unocal employees who retired before July 1, 2006, and were participating in the Unocal postretirement medical plan were merged into the...

  • Page 75
    ... pension plans, respectively. other comprehensive loss" in 2005 includes deferred income taxes of $148 and $22 for U.S. and international plans, respectively. This amount is presented net of those taxes in the Consolidated Statement of Stockholders' Equity. CHEVRON CORPORATION 2006 ANNUAL REPORT...

  • Page 76
    ... of $46 and $17 will be amortized from accumulated other comprehensive income for U.S. and international pension plans, and prior service credits of $81 will be amortized from accumulated other comprehensive income for other postretirement benefit plans. 74 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 77
    ... the acquisition of Unocal. 3 The 2006 U.S. discount rate reï¬,ects remeasurement on July 1, 2006, due to plan combinations and changes, primarily merging benefits under several Unocal plans into related Chevron plans. Expected Return on Plan Assets The company's estimates of the long-term rate of...

  • Page 78
    ...Financial Statements Millions of dollars, except per-share amounts NOTE 21. EMPLOYEE BENEFIT PLANS - Continued measured. To assess the plans' investment performance, longterm asset allocation policy benchmarks have been established. For the primary U.S. pension plan, the Chevron Board of Directors...

  • Page 79
    ... 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 80
    ... price is the market value of the common stock on the day the restored option is granted. Apart from the restored options, no further awards may be granted under the former Texaco plans. Unocal Share-Based Plans (Unocal Plans) On the closing of the acquisition of Unocal in August 2005, outstanding...

  • Page 81
    ... 31, 2006, units outstanding were 2,110,196, and the fair value of the liability recorded for these instruments was $113. In addition, outstanding stock appreciation rights that were awarded under various LTIP and former Texaco and Unocal programs totaled approximately 700,000 equivalent shares as...

  • Page 82
    ...company or other parties. Such contingencies may exist for various sites, including, but not limited to, federal Superfund sites and analogous sites under state laws, refineries, crude oil fields, service stations, terminals, land development areas, and mining operations, whether operating, closed...

  • Page 83
    ..., Nigeria, Norway, the Partitioned Neutral Zone between Kuwait and Saudi Arabia, the Philippines, Republic of the Congo, Singapore, South Africa, South Korea, Thailand, Trinidad and Tobago, the United Kingdom, Venezuela and Vietnam. The company's operations, particularly exploration and production...

  • Page 84
    ...this action. All per-share amounts in the financial statements reï¬,ect the stock split for all periods presented. The effect of the common stock split is reï¬,ected on the Consolidated Balance Sheet in "Common stock" and "Capital in excess of par value." 82 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 85
    ... deferrals of salary and other compensation awards that are invested in Chevron stock units by certain officers and employees of the company and the company's share of stock transactions of affiliates, which, under the applicable accounting rules, may be recorded directly to the company's retained...

  • Page 86
    ... - Diluted Weighted-average number of common shares outstanding* Add: Deferred awards held as stock units Add: Dilutive effect of employee stock-based awards Total weighted-average number of common shares outstanding Per share of common stock Income from continuing operations available to common...

  • Page 87
    ...-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 2006 2005 2004 2003 2002 Gross production of crude oil and natural gas liquids1 Net production of crude oil and...

  • Page 88
    ... in 2003 includes a benefit of $0.08 for the company's share of a capital stock transaction of its Dynegy affi liate, which, under the applicable accounting rules, was recorded directly to retained earnings and not included in net income for the period. 86 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 89
    ... information on oil and gas exploration and producing activities of the company in seven separate tables. Tables I through IV provide historical cost information pertaining to costs incurred in exploration, property acquisitions and development; capitalized costs; and results of operations...

  • Page 90
    ... 30 percent equity share of Hamaca, an exploration and production partnership in Venezuela and, effective October 2006, Chevron's 39 percent interest and 25 percent interest in Petroboscan and Petroindependiente, respectively. These joint stock companies are involved in the development of the Boscan...

  • Page 91
    ...RELATED TO OIL AND GAS PRODUCING ACTIVITIES - Continued Consolidated Companies United States International Africa AsiaPacific Indonesia Other Total Int'l. Affi liated Companies... $ 30,144 Includes assets held for sale. 2 Conformed to 2006 presentation. CHEVRON CORPORATION 2006 ANNUAL REPORT 89

  • Page 92
    ... 1 The company's results of operations from oil and gas producing activities for the years 2006, 2005 and 2004 are shown in the following table. Net income from exploration and production activities as reported on page 62 reï¬,ects income taxes computed on an effective rate basis. United States In...

  • Page 93
    ...264 $ 8,300 $ 1,199 $ 495 The value of owned production consumed in operations as fuel has been eliminated from revenues and production expenses, and the related volumes have been deducted from net production in calculating the unit average sales price and production cost. This has no effect on...

  • Page 94
    ...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 activities. All of the RAC members are knowledgeable in SEC guidelines for proved...

  • Page 95
    ... trends. Apart from acquisitions, the company's ability to add proved reserves is affected by, among other things, events and circumstances that are outside the company's control, such as delays in government permitting, partner approvals of development plans, declines in oil and gas prices, OPEC...

  • Page 96
    ... in Canada associated with the Athabasca project. For internal management purposes, Chevron views these reserves and their development as an integral part of total upstream operations. However, SEC regulations defi ne these reserves as mining-related and not a part of conventional oil and gas...

  • Page 97
    ..." international area related to the disposition of the former Unocal operations onshore in Canada. In 2006, sales decreased reserves by 15 million barrels due to the conversion of the LL-652 risked service agreement to a joint stock company in Venezuela. CHEVRON CORPORATION 2006 ANNUAL REPORT 95

  • Page 98
    ...reviews, development drilling and lease fuel calculations. The 236 BCF addition in the Asia-Pacific region was related primarily to reservoir analysis for a single field. Most of the 325 BCF in the "Other" international area was 96 CHEVRON CORPORATION 2006 ANNUAL REPORT related to a new gas sales...

  • Page 99
    ...2006, acquisition of natural gas reserves were 35 BCF for consolidated companies, about evenly divided between the company's United States and international operations. Affiliated companies added 54 BCF of reserves, the result of conversion of an operating service agreement to a joint stock company...

  • Page 100
    ... and should not be relied upon as an indication of the company's future cash ï¬,ows or value of its oil and gas reserves. In the following table, "Standardized Measure Net Cash Flows" refers to the standardized measure of discounted future net cash ï¬,ows. 98 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 101
    ... 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 Other Gulf of Mexico Total U.S. Millions of dollars AT DECEMBER 31, 2006 Calif. Other Future...

  • Page 102
    ..., discoveries and improved recovery less related costs Revisions of previous quantity estimates Net changes in prices, development and production costs Accretion of discount Net change in income tax Net change for the year PRESENT VALUE AT DECEMBER 31 100 CHEVRON CORPORATION 2006 ANNUAL REPORT

  • Page 103
    ..., 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, the U.S.-Saudi Arabian Business Council and the...

  • Page 104
    ... San Joaquin Valley Business Unit, Chevron North America Exploration and Production Company. Joined Chevron in 1978. John W. McDonald, 55 Vice President, Strategic Planning, since 2002. Responsible for advising senior management in setting the company's strategic direction, mergers and acquisitions...

  • Page 105
    ...-largest U.S.-based energy company. Relocated corporate headquarters from San Francisco, California, to San Ramon, California. Acquired Unocal Corporation, an independ dent crude oil and natural gas exploration an nd production company. Unocal's upstream m assets bolstered Chevron's already-stron...

  • Page 106
    ... of financial institutions may contact: Investor Relations Chevron Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 925 842 5690 Email: [email protected] Publications and Other News Sources The Annual Report, published in March, summarizes the company's financial performance in the...

  • Page 107
    ... Road, A2181 San Ramon, CA 94583-2324 Details of the company's political contributions for 2006 are available on the company's Web site, www.chevron.com, or by writing to: Policy, Government and Public Affairs Chevron Corporation 6001 Bollinger Canyon Road, A2108 San Ramon, CA 94583-2324 Information...

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    Chevron Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 www.chevron.com 912-0927