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Chevron Corporation – Company View

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A statement by David J. O’Reilly, Chairman and Chief Executive Officer of Chevron Corporation, is given below. The statement has been taken from the company’s 2007 annual report.

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 managing 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 potentially 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 geothermal plant in Indonesia.

Chevron’s track record as a successful partner helped us achieve a 10-year extension for producing 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 development 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 flexibility 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 several nonstrategic assets. Our 2007 safety performance showed significant 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 technology will build a sustainable competitive advantage.

Our technology strategies are centered on delivering superior performance in our core businesses and establishing leading positions in emerging and transformational technologies. To that end, we opened two new Global Technology Centers — in Aberdeen, Scotland, and Perth, Australia — to expand our research and development capability. In addition, we created a number of strategic alliances with universities to conduct advanced research into new energy sources and processes.

To build upon our organizational capability, in 2007 we restructured the upstream business into four operating companies — North America; Asia- Pacific; Africa and Latin America; and Eurasia, Europe and Middle East. This new structure will strengthen our focus on long-term growth, enhance business partnerships, and drive more efficiency, standardization and collaboration across the organization.

Human Energy and Ingenuity

In 2007, we launched a new global advertising campaign, “The Power of Human Energy.” It focuses on the realities of energy today — the challenge of meeting rising demand as the global economy expands, together with the imperative to manage the impact of energy consumption on the environment. These are huge challenges. But as the campaign makes clear, human ingenuity will discover solutions as it has throughout history. The people of Chevron are working every day to apply the kind of ingenuity that will create responsible, practical and sustainable solutions to these challenges.

Thank you for investing in our company. We look forward to another year of achievement as we continue to create value for our stockholders while working to meet the world’s growing demand for safe, reliable energy.