Chevron 2007 Annual Report Download - page 30

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Glossary of Energy and Financial Terms
Additives Chemicals to control engine deposits
and improve lubricating performance.
Barrels of oil-equivalent (BOE) A meas ure to
quantify crude oil, natural gas liquids and natural
gas amounts using the same basis. Natural
gas volumes are converted to barrels on the
basis of energy content. See oil-equivalent gas
and production.
Biofuel Any fuel that is derived from biomass —
recently living organisms or their metabolic
byproducts — from sources such as farming, for-
estry, and biodegradable industrial and municipal
waste. See renewables.
Condensate Hydrocarbons that are in a gaseous
state at reservoir conditions but condense into
liquid as they travel up the wellbore and reach
surface conditions.
Development Drilling, construction and related
activities following discovery that are necessary
to begin production of crude oil and natural gas.
Enhanced recovery Techniques used to increase
or prolong production from crude oil and natural
gas fields.
Exploration Searching for crude oil and/or natu-
ral gas by utilizing geologic and topographical
studies, geophysical and seismic surveys, and
drilling of wells.
Gas-to-liquids (GTL) A process that converts
natural gas into high-quality transportation fuels
and other products.
Greenhouse gases Gases that trap heat in the
Earth’s atmosphere (e.g., water vapor, ozone,
carbon dioxide, methane, nitrous oxide, hydro-
fluorocarbons, perfluorocarbons and sulfur
hexafluoride).
Integrated energy company A company en gaged
in all aspects of the energy industry: exploring
for and producing crude oil and natural gas
(upstream); refining, marketing and transporting
crude oil, natural gas and refined products
(downstream); manufacturing and distributing
petrochemicals (chemicals); and generating power.
Liquefied natural gas (LNG) Natural gas that is
liquefied under extremely cold temperatures to
facilitate storage or transportation in specially
designed vessels.
Liquefied petroleum gas (LPG) Light gases, such
as butane and propane, that can be maintained as
liquids while under pressure.
Natural gas liquids (NGL) Separated from natural
gas, these include ethane, propane, butane and
natural gasoline.
Oil-equivalent gas (OEG) The volume of natural
gas needed to generate the equivalent amount of
heat as a barrel of crude oil. Approximately 6,000
cubic feet of natural gas is equivalent to one bar-
rel of crude oil.
Oil sands Naturally occurring mixture of
bitumen (a heavy, viscous form of crude oil),
water, sand and clay. Using hydroprocessing
technology, bitumen can be refined to yield
synthetic crude oil.
Petrochemicals Chemicals derived from petro-
leum; used principally for the manufacture of
chemicals, plastics and resins, synthetic fibers,
detergents, adhesives, and synthetic motor oils.
Production Total production refers to all the
crude oil, natural gas liquids and natural gas
produced from a property. Gross production is
the company’s share of total production before
deducting both royalties paid to landowners and
a government’s agreed-upon share of production
under a production-sharing contract. Net produc-
tion is gross production minus both royalties paid
to landowners and a government’s agreed-upon
share of production under a production-sharing
contract. Oil-equivalent production is the sum
of the barrels of liquids and the oil-equivalent
barrels of natural gas produced. See barrels of oil-
equivalent and oil-equivalent gas.
Production-sharing contract (PSC) An agree-
ment between a government and a contractor
(generally an oil and gas company) where
production is shared between the parties in a pre-
arranged manner. The contractor typically incurs
all exploration, development and production
costs that are subsequently recoverable out of
an agreed-upon share of any future PSC produc-
tion, referred to as cost recovery oil and/or gas.
Any remaining production, referred to as profit
oil and/or gas, is shared between the parties on
an agreed-upon basis as stipulated in the PSC.
The government also may retain a share of PSC
production as a royalty payment, and the contrac-
tor may owe income taxes on its portion of the
profit oil and/or gas. The contractor’s share of
PSC oil and/or gas production and reserves varies
over time as it is dependent on prices, costs and
on specific PSC terms.
Renewables Energy resources that are not
depleted when consumed or converted into other
forms of energy (e.g., solar, geothermal, ocean
and tide, wind, hydroelectric power, and biofuels).
Reserves Crude oil, natural gas liquids and
natural gas contained in under ground rock
forma tions called reservoirs. Proved reserves
are the estimated quantities that geologic and
engineering data demonstrate can be produced
with reasonable certainty from known reservoirs
under existing economic and oper ating condi-
tions. Esti mates change as additional information
becomes available. Oil-equivalent reserves are the
sum of the liquids reserves and the oil-equivalent
gas reserves. See barrels of oil-equivalent and oil-
equivalent gas.
The rules of the United States Securities and
Exchange Commission (SEC) permit oil and gas
companies to disclose in their filings with the
SEC only proved reserves. Certain terms, such
as “probable” or “possible” reserves, “potentially
recoverable” volumes, or “resources,” among
others, may be used to describe certain oil and
gas properties in sections of this document that
are not filed with the SEC. We use these other
terms, which are not approved for use in SEC
filings, because they are commonly used in the
industry, are measures considered by manage-
ment to be important in making capital investment
and operating decisions, and provide some indica-
tion to our stockholders of the potential ultimate
recovery of oil and gas from properties in which
we have an interest. In that regard, potentially
recoverable volumes are those that can be pro-
duced using all known primary and enhanced
recovery methods.
Synthetic crude oil A marketable and transport-
able hydrocarbon liquid, resembling crude oil,
that is produced by upgrading highly viscous or
solid hydrocarbons, such as extra-heavy crude oil
or oil sands.
Cash flow from operating activities Cash gener-
ated from the company’s businesses; an indicator
of a company’s ability to pay dividends and fund
capital and common stock repurchase programs.
Excludes cash flows related to the company’s
financing and investing activities.
Cumulative effect of change in accounting prin-
ciple The effect in the financial statements in the
period of change of a retroactive application of a
new accounting principle.
Goodwill The excess of the purchase price of an
acquired entity over the total fair value assigned to
assets acquired and liabilities assumed.
Margin The difference between the cost of pur-
chasing, producing and/or marketing a product
and its sales price.
Net income The primary earnings measure for
a company, as determined under United States
Generally Accepted Accounting Principles (GAAP),
and detailed on a separate financial statement.
Return on capital employed (ROCE) Ratio calcu-
lated by dividing net income (adjusted for after-tax
interest expense and minority interest) by the
average of total debt, minority interest and stock-
holders’ equity for the year.
Stockholders’ equity The owners’ share of the
company; the dif ference between total assets and
total liabilities.
Total stockholder return (TSR) The return to
stockholders as measured by stock price appre-
ciation and reinvested dividends for a period
of time.
Financial Terms
Energy Terms