Chevron 2007 Annual Report Download - page 69

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 67
Contingent rentals are based on factors other than the
passage of time, principally sales volumes at leased service
stations. Certain leases include escalation clauses for adjusting
rentals to reflect changes in price indices, renewal options
ranging up to 25 years, and options to purchase the leased
property during or at the end of the initial or renewal lease
period for the fair market value or other specified amount at
that time.
At December 31, 2007, the estimated future minimum
lease payments (net of noncancelable sublease rentals) under
operating and capital leases, which at inception had a non-
cancelable term of more than one year, were as follows:
At December 31
Operating Capital
Leases Leases
Year: 2008 $ 513 $ 103
2009 478 106
2010 430 83
2011 347 85
2012 293 91
Thereafter 1,106 347
Total $ 3,167 $ 815
Less: Amounts representing interest
and executory costs (315)
Net present values 500
Less: Capital lease obligations
included in short-term debt (94)
Long-term capital lease obligations $ 406


In 2007, the company implemented a restructuring and
reorganization program in its downstream operations.
Approximately 1,000 employees were eligible for severance
payments. Most of the associated positions are located out-
side the United States. The majority of the terminations are
expected to occur in 2008, and the program is expected to be
complete by the end of 2009.
Shown in the table below is the activity for the com-
pany’s liability related to the downstream reorganization.
The associated charges against income were categorized as
“Operating expenses” or “Selling, general and administrative
expenses” on the Consolidated Statement of Income.
Amounts before tax 2007
Balance at January 1 $ –
Additions 85
Payments –
Balance at December 31 $ 85
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
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, is shown in the
table below. For certain equity affiliates, Chevron pays its share
of some income taxes directly. For such affiliates, the equity in
earnings does not include these taxes, which are reported on the
Consolidated Statement of Income as “Income tax expense.”
Investments and Advances Equity in Earnings
At December 31 Year ended December 31
2007 2006 2007 2006 2005
Upstream
Tengizchevroil $ 6,321 $ 5,507 $ 2,135 $ 1,817 $ 1,514
Hamaca 1,168 928 327 319 390
Petroboscan 762 712 185 31 –
Angola LNG Limited 574 – 21 – –
Other 765 682 204 123 139
Total Upstream 9,590 7,829 2,872 2,290 2,043
Downstream
GS Caltex Corporation 2,276 2,176 217 316 320
Caspian Pipeline Consortium 951 990 102 117 101
Star Petroleum Refining
Company Ltd. 944 787 157 116 81
Escravos Gas-to-Liquids 628 432 103 146 95
Caltex Australia Ltd. 580 559 129 186 214
Colonial Pipeline Company 546 555 39 34 13
Other 1,501 1,407 215 212 178
Total Downstream 7,426 6,906 962 1,127 1,002
Chemicals
Chevron Phillips Chemical
Company LLC 2,024 2,044 380 697 449
Other 24 22 6 5 3
Total Chemicals 2,048 2,066 386 702 452
All Other
Dynegy Inc. – 254 8 68 189
Other 449 586 (84) 68 45
Total equity method $ 19,513 $ 17,641 $ 4,144 $ 4,255 $ 3,731
Other at or below cost 964 911
Total investments and
advances $ 20,477 $ 18,552
Total United States $ 3,889 $ 4,191 $ 478 $ 955 $ 833
Total International $ 16,588 $ 14,361 $ 3,666 $ 3,300 $ 2,898
Descriptions of major affiliates are as follows:
TengizchevroilChevron has a 50 percent equity ownership
interest in Tengizchevroil (TCO), a joint venture formed in
1993 to develop the Tengiz and Korolev crude oil fields in
Kazakhstan over a 40-year period. At December 31, 2007, the
company’s carrying value of its investment in TCO was about
$210 higher than the amount of underlying equity in TCO
net assets.
Hamaca Chevron’s 30 percent interest in the Hamaca heavy oil
production and upgrading project located in Venezuela’s Ori-
noco Belt was converted to a 30 percent share-holding in a joint
stock company in January 2008, with a 25-year contract term.
 