Chevron 2007 Annual Report Download - page 4

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To Our Stockholders
2007 was a year of significant achievement for our company. We reported record
earnings, led our peer group in total stockholder return and advanced our robust
queue of major capital projects, which are creating a strong foundation for
long-term growth. Most important, the people of Chevron performed superbly,
demonstrating the values and ingenuity that distinguish our company.
Net income of $18.7 billion represented a fourth
consecutive year of record earnings. Capital
and exploratory expenditures for the year were
$20 billion, and return on capital employed was
23.1 percent. We increased the annual dividend for
the 20th consecutive year and achieved a total
stockholder return of 30.5 percent, approximately
25 percentage points higher than the return
delivered by the S&P 500. We continued to return
cash to our stockholders through stock buyback
programs, purchasing $7 billion of our common
shares during 2007. In September, we initiated a
new program to acquire up to $15 billion of our
common shares over a period of up to three
years. We are committed to the capital discipline
necessary to create sustainable, long-term value
for our stockholders.
Achieving Milestones
In the upstream, we executed our strategy of man-
aging our base business profitably while advancing
new projects for future growth and returns. Our
base business, which is our daily crude oil and
natural gas production activities around the world,
generates the cash to fund our long-term growth.
We manage these assets with a strong focus on
world-class reservoir management, improved
recovery rates and continual innovation. Nowhere
is this more evident than in California’s San Joaquin
Valley, where the Kern River Field celebrated its
2 billionth barrel of production in late 2007. Kern
River began production in 1899 and through the
consistent application of innovative technology
continues to be a world-class asset.
Our exploration program, which is centered on
high-impact prospects in key basins, had a highly
successful year. We posted a 41 percent success
rate, adding approximately 1 billion barrels of poten-
tially recoverable oil and natural gas resources.
Major capital projects in the upstream reached
several milestones. The Agbami floating production,
storage and offloading vessel was completed and
was positioned in the deep water off Nigeria in early
2008. In 2007, the Bibiyana gas field in Bangladesh
began production, and we launched commercial
production from the 110-megawatt Darajat III geo-
thermal plant in Indonesia.
Chevron’s track record as a successful partner
helped us achieve a 10-year extension for produc-
ing natural gas in the Gulf of Thailand, which will
help realize our goal of increasing production
from this area to more than 1 billion cubic feet per
day. Our expertise in producing sour gas at the
Tengizchevroil project in Kazakhstan was a key
factor in our selection as a partner by the China
National Petroleum Corporation for the develop-
ment of the Chuandongbei natural gas area in
central China.
Our global downstream operations continue to
focus on increasing refinery flexibility, improving
reliability and creating new business opportunities.
We completed projects to increase the flexibil-
ity and capacity of two major refineries — in El
Segundo, California, and at our 50 percent-owned
Yeosu refinery complex in South Korea. The
downstream business also enhanced its focus on
profitable growth through the divestiture of sev-
eral nonstrategic assets.
Our 2007 safety performance showed signifi-
cant improvement, but we will never be satisfied
until we have reduced the number of safety-related
incidents to zero. We are absolutely committed to
achieving this goal.
Enhancing Technology and Capability
In the current business environment, companies
with superior ability to source and deploy technol-
ogy will build a sustainable competitive advantage.