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1999
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-368-2
Chevron Corporation
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(Exact name of registrant as specified in its charter)
575 Market Street,
Delaware 94-0890210 San Francisco, California 94105
- --------------- --------------- ------------------------- --------
(State or other (I.R.S. Employer (Address of principal (Zip Code)
jurisdiction of Identification executive offices)
incorporation Number)
or organization)
Registrant's telephone number, including area code (415) 894-7700
NONE
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(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
- -------------------------------------- -----------------------
Common stock par value $1.50 per share New York Stock Exchange, Inc.
Preferred stock purchase rights Chicago Stock Exchange
Pacific Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of February 29, 2000 - $48,732,596,074
Number of Shares of Common Stock outstanding
as of February 29, 2000 - 654,870,769
DOCUMENTS INCORPORATED BY REFERENCE
(To The Extent Indicated Herein)
Notice of Annual Meeting and Proxy Statement Dated March 22, 2000 (in Part III)
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TABLE OF CONTENTS
Item Page No.
PART I
1. Business............................................... 1
(a) General Development of Business................ 1
(b) Description of Business and Properties......... 2
Capital and Exploratory Expenditures........... 3
Petroleum - Exploration and Production......... 4
Liquids and Natural Gas Production......... 4
Acreage.................................... 5
Reserves and Contract Obligations.......... 7
Development Activities..................... 7
Exploration Activities..................... 8
Review of Ongoing Exploration and
Production Activities In Key Areas........ 9
Petroleum - Natural Gas Liquids................ 13
Petroleum - Refining........................... 13
Petroleum - Refined Products Marketing......... 14
Petroleum - Transportation..................... 16
Chemicals...................................... 17
Coal........................................... 18
Electronic Commerce and Technology............. 18
Research and Environmental Protection.......... 18
2. Properties............................................. 20
3. Legal Proceedings...................................... 20
4. Submission of Matters to a Vote of Security Holders.... 20
Executive Officers of the Registrant................... 21
PART II
5. Market for the Registrant's Common Equity
and Related Stockholder Matters........................ 22
6. Selected Financial Data................................ 22
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 22
8. Financial Statements................................... 22
8. Supplementary Data - Quarterly Results............... 22
- Oil and Gas Producing Activities 22
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................. 22
PART III
10. Directors and Executive Officers of the Registrant..... 23
11. Executive Compensation................................. 23
12. Security Ownership of Certain Beneficial Owners
and Management........................................ 23
13. Certain Relationships and Related Transactions......... 23
PART IV
14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K................................... 23
PART I
Item 1. Business
(a) General Development of Business
Summary Description of Chevron
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Chevron Corporation (1), a Delaware corporation, manages its investments in, and
provides administrative, financial and management support to, U.S. and foreign
subsidiaries and affiliates that engage in fully integrated petroleum
operations, chemicals operations and coal mining. The company operates in the
United States and approximately 100 other countries. Petroleum operations
consist of exploring for, developing and producing crude oil and natural gas;
refining crude oil into finished petroleum products; marketing crude oil,
natural gas and the many products derived from petroleum; and transporting crude
oil, natural gas and petroleum products by pipelines, marine vessels, motor
equipment and rail car. Chemicals operations include the manufacture and
marketing of commodity petrochemicals, plastics for industrial uses and fuel and
lube oil additives.
In this report, exploration and production of crude oil, natural gas liquids and
natural gas may be referred to as "E&P" or "upstream" activities. Refining,
marketing and transportation may be referred to as "RM&T" or "downstream"
activities. A list of the company's major subsidiaries is presented on page E-2
of this Annual Report on Form 10-K. As of December 31, 1999, Chevron had 36,490
employees, 74 percent of whom were employed in U.S. operations.
- --------------------------------------------------------------------------------
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This annual report on Form 10-K contains forward-looking statements relating to
Chevron's operations that are based on management's current expectations,
estimates and projections about the petroleum and chemicals industries. Words
such as "expects," "intends," "plans," "projects," "believes," "estimates" and
similar expressions are used to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecast in
such forward-looking statements.
Among the factors that could cause actual results to differ materially are crude
oil and natural gas prices; refining and marketing margins; chemicals prices and
competitive conditions affecting supply and demand for the company's aromatics,
olefins and additives products; potential failure to achieve expected production
from existing and future oil and gas development projects; potential delays in
the development, construction or start-up of planned projects; potential
disruption or interruption of the company's production or manufacturing
facilities due to accidents or political events; potential liability for
remedial actions under existing or future environmental regulations and
litigation (including, particularly, regulations and litigation dealing with
gasoline composition and characteristics); and potential liability resulting
from pending or future litigation. In addition, such statements could be
affected by general domestic and international economic and political
conditions. Unpredictable or unknown factors not discussed herein also could
have material adverse effects on forward-looking statements. Chevron undertakes
no obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
- --------------------------------------------------------------------------------
(1) Incorporated in Delaware in 1926 as Standard Oil Company of California, the
company adopted the name Chevron Corporation in 1984. As used in this
report, the term "Chevron" and such terms as "the company," "the
corporation," "our," "we," and "us" may refer to Chevron Corporation, one
or more of its consolidated subsidiaries, or to all of them taken as a
whole, but unless it is stated otherwise, does not include "affiliates" of
Chevron - i.e., those companies accounted for by the equity method
(generally owned 50 percent or less), or investments accounted for by the
cost method.
As used in this report, the term "Caltex" may refer to the Caltex Group
of companies, any one company of the group, any of their
consolidated subsidiaries, or to all of them taken as a whole and also
includes the "affiliates" of Caltex.
All of these terms are used for convenience only, and are not intended as a
precise description of any of the separate companies, each of which manages
its own affairs.
-1-
Overview of Petroleum Industry
- ------------------------------
Petroleum industry operations and profitability are influenced by many factors,
over some of which individual oil and gas companies have little control.
Governmental policies, particularly in the areas of taxation, energy and the
environment, have a significant impact on petroleum activities, regulating where
and how companies conduct their operations and formulate their products and, in
some cases, limiting their profits directly. Prices for crude oil and natural
gas, petroleum products and petrochemicals are determined by supply and demand
for these commodities. OPEC member countries are typically the world's swing
producers of crude oil, and their production levels are a major factor in
determining worldwide supply. Demand for crude oil and its products and natural
gas is largely driven by the condition of local, national and worldwide
economies, although weather patterns and taxation relative to other energy
sources also play a significant part. Natural gas is generally produced and
consumed on a country or regional basis.
Operating Environment
- ---------------------
Refer to page FS-2 of this Annual Report on Form 10-K in Management's Discussion
and Analysis of Financial Condition and Results of Operations for a discussion
on the company's current operating environment and outlook.
Chevron Strategic Priorities
- ----------------------------
Chevron's strategic objective is to exceed the financial performance of its
strongest industry competitors in terms of total stockholder return. The
company's overriding goal is to achieve the highest total stockholder return in
its peer group for the five-year period 2000 - 2004. To achieve its goal, the
company has targeted a 15 percent annual growth rate in earnings per share for
the three-year period 2000 - 2002, supported by worldwide liquids and natural
gas production growth of 4 to 4.5 percent per year, and a minimum 12 percent
return on capital employed.
To attain these financial and operational targets, the company has established
four key priorities:
o Operational Excellence: Safe, reliable and efficient operations
throughout are the top priority for the company. The company seeks to
ensure it achieves sustainable improvements in its operations.
o Cost Reduction: The company will continue to focus on ways of reducing
costs across its activities. As examples, the company has seen ongoing
successes in cost reduction in the areas of energy consumption and global
procurement.
o Capital Stewardship: The company is implementing work processes designed to
ensure that it employs capital funding most efficiently. This involves
decision-making tools aimed at selecting the most financially and
strategically attractive projects. Additionally, the company has developed
processes to ensure the execution of projects is efficient, bringing
projects to completion on time and within budgeted expenditures.
o Profitable Growth: The company will seek continued growth in its core
businesses - exploration and production, refining, marketing and
transportation, and chemicals. The company is also looking to capture new
opportunities, such as investing in new process technologies, and
information and Internet technologies.
Supporting these four priorities is a continued and improved focus on:
o Organizational Capability: The company has developed strategies to focus on
developing the skills of its employees, sharing best practices across the
organization, and applying systems and processes effectively to the four
priorities described above.
(b) Description of Business and Properties
The company's largest business segments are its exploration and production
operations and its refining, marketing and transportation operations. Chemicals
is also a significant operation. The petroleum activities of the company are
widely dispersed geographically, with upstream and downstream operations in the
United States and Canada and upstream operations in Nigeria, Angola, Republic of
Congo, Australia, the United Kingdom, Norway, China, Papua New Guinea, Thailand,
Argentina and Venezuela. The company's Caltex affiliate, through its
subsidiaries and affiliates, conducts exploration and production and geothermal
operations in Indonesia and refining and marketing
-2-
activities in Asia, Africa, the Middle East, Australia and New Zealand, with
major operations in Korea, Australia, Thailand, the Philippines, Singapore and
South Africa. The company's Tengizchevroil affiliate conducts production
activities in Kazakhstan. The company expects to expand its operations in the
Caspian Region by exploring for crude oil and natural gas, expanding the
production and transportation infrastructure, developing new crude oil and
natural gas markets, and identifying other business opportunities. The company's
Dynegy Inc. (Dynegy) affiliate is one of the leading marketers of energy
products and services in the United States with customers in the United States,
Canada and the United Kingdom. Its business activities include energy marketing,
independent power generation and gathering, processing, selling and
transportation of natural gas and natural gas liquids. In February 2000, Dynegy
merged with Illinova Corporation, an energy services holding company based in
Illinois. Chevron invested an additional $200 million to maintain a comparable
ownership interest in the merged company. The company expects that this merger
will accelerate Dynegy's growth in the power generation and marketing business.
The company's chemicals operations are concentrated in the United States, but
also include manufacturing facilities in France, Japan, Brazil, Singapore, Saudi
Arabia and Mexico. Chemicals manufacturing facilities are under construction in
China. In February 2000, Chevron and Phillips Petroleum Company signed a letter
of intent and exclusivity agreement to combine most of their chemicals
businesses into a joint venture. Each company will own 50 percent of the joint
venture, which is subject to final approval of the companies' board of directors
and regulatory review. Final approvals are expected to be completed by mid-2000.
Tabulations of segment sales and other operating revenues, earnings, income
taxes and assets, by United States and International geographic areas, for the
years 1997 to 1999, may be found in Note 9 to the Consolidated Financial
Statements beginning on page FS-21 of this Annual Report on Form 10-K. In
addition, similar comparative data for the company's investments in and income
from equity affiliates and property, plant and equipment are contained in Notes
12 and 13 on pages FS-23 to FS-25.
The company's worldwide operations can be affected significantly by changing
economic, tax, regulatory and political environments in the various countries,
including the United States, in which it operates. Environmental regulations and
government policies concerning economic development, energy and taxation may
have a significant effect on the company's operations. Management evaluates the
economic and political risk of initiating, maintaining or expanding operations
in any geographical area. The company closely monitors political events
worldwide and the possible threat these may pose to its activities, particularly
the company's oil and gas exploration and production operations, and the safety
of the company's employees.
The company attempts to avoid unnecessary involvement in partisan politics in
the communities in which it operates but participates in the political process
to safeguard its assets and to ensure that the community benefits from its
operations and remains receptive to its continued presence.
A discussion of the company's use of derivative financial instruments to manage
its exposure to price risk stemming from its integrated petroleum activities is
contained on page FS-5 of this Annual Report on Form 10-K in Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Capital and Exploratory Expenditures
------------------------------------
Worldwide capital and exploratory (C&E) expenditures totaled $6.133 billion in
1999, compared with $5.314 billion in 1998. Expenditures for consolidated
worldwide exploration and production increased by 45 percent between years. This
increase was driven by two significant international exploration and production
acquisitions in 1999: the Rutherford-Moran Oil Corporation in Thailand and
Petrolera Argentina San Jorge S.A. in Argentina. U.S. refining, marketing and
transportation expenditures decreased in 1999 after having increased in 1998
with the acquisition of Amoco's North American lubricants operations.
International refining, marketing and transportation expenditures doubled to
$183 million as the Caspian Pipeline Consortium began construction of pipeline
facilities linking the Tengiz Field in Kazakhstan with the Russian Black Sea.
Chemicals expenditures were 22 percent lower in 1999 as the company completed
major expansion and construction projects begun in earlier years and constrained
new capital spending in this segment.
The company's share of upstream and downstream expenditures by its Caltex
affiliate accounted for about 53 percent of affiliates' expenditures in 1999,
although at lower absolute levels than in 1998. Caltex expenditures
-3-
continued to be curtailed as a result of economic conditions in the Asia-Pacific
region. Expenditures by the company's chemicals affiliates were $169 million
lower in 1999 as the construction of a new manufacturing facility in Saudi
Arabia was completed during the year.
Chevron's C&E expenditures during 1999 and 1998 are summarized in the following
table:
Capital and Exploratory Expenditures
(Millions of Dollars)
1999 1998 Change %
-------- ------- -------- ----
Exploration and Production - United States $ 900 $1,213 $ (313) (26)
International 3,242 1,647 1,595 97
-------- ------- --------
Sub-total 4,142 2,860 1,282 45
Refining, Marketing
and Transportation - United States 516 654 (138) (21)
International 183 92 91 99
------- ------- --------
Sub-total 699 746 (47) (6)
Chemicals - United States 326 385 (59) (15)
International 67 121 (54) (45)
------- ------- --------
Sub-total 393 506 (113) (22)
All Other 117 208 (91) (44)
------- ------- --------
Total Consolidated Companies 5,351 4,320 1,031 24
Chevron's Share in Affiliates 782 994 (212) (21)
------- ------- --------
Total Including Affiliates $6,133 $5,314 $ 819 15
======= ======= ========
The company's 2000 C&E expenditures, including its share of equity affiliates'
expenditures, are projected at $5.2 billion, 15 percent lower than 1999 spending
levels. Consolidated companies' expenditures are planned to decrease by 22
percent to $4.2 billion, while the company's share of equity affiliates'
expenditures is expected to increase by 33 percent to just over $1 billion. The
foregoing expenditure levels may change depending on the timing of a successful
formation of the proposed chemicals joint venture with Phillips Petroleum
Company. The company plans to devote the majority of its C&E expenditures to
worldwide upstream projects, while limiting capital spending in the
international chemicals and downstream businesses.
Petroleum - Exploration and Production
--------------------------------------
Liquids and Natural Gas Production
- ----------------------------------
In 1999, Chevron conducted its worldwide exploration and production operations
in the United States and approximately 25 other countries. Worldwide net crude
oil and natural gas liquids production, including that of affiliates, increased
in 1999 by nearly 2 percent - the seventh consecutive year of production
increases. Net liquids production in the United States fell about 3 percent.
International net liquids production, including affiliates, increased by about 4
percent in 1999 - the tenth consecutive year of production increases. This
increase was due primarily to new production in Argentina and Thailand following
acquisitions the company made in 1999; higher production from new fields in
Angola; and higher production in Kazakhstan, where the company's share of
production at the Tengiz Field increased as processing plant expansions
progressed. These increases were partially offset by production declines in
Australia, Indonesia (Caltex operations) and Nigeria.
Net production of natural gas, including affiliates, increased by 5 percent in
1999. United States production fell about six percent, as higher field declines
and property sales more than offset new production from the Gulf of Mexico shelf
and deepwater Gulf of Mexico. International volumes increased 34 percent in
1999. 1999 production volumes reflected a full year of production from the
Britannia Field in the U.K. North Sea, which began producing in August 1998; new
production in Thailand and Argentina; and higher production in Kazakhstan,
Canada, Nigeria and Australia. These increases were slightly offset by a decline
in production in Indonesia (Caltex operations). The company expects current
plans to expand the Escravos Gas Project in Nigeria, and the continued expansion
and
-4-
development of its projects in Australia, to contribute to natural gas
production increases from its international portfolio.
The following table summarizes the company's and its affiliates' net production
of crude oil, natural gas liquids and natural gas for 1999 and 1998.
Net Production* Of Crude Oil And Natural Gas Liquids And Natural Gas
Crude Oil & Natural Gas
Natural Gas Liquids (Millions of
(Thousands of Barrels per Day) Cubic Feet per Day)
------------------------------ -----------------------
1999 1998 1999 1998
---- ---- ---- ----
United States
-California 111.8 116.2 114.8 122.0
-Gulf of Mexico 104.7 93.5 790.0 820.1
-Texas 45.7 57.9 323.0 331.1
-Wyoming 10.0 9.1 170.3 181.2
-Other States 43.6 48.4 240.3 284.5
------------------------------------------------------------
Total United States 315.8 325.1 1,638.4 1,738.9
------------------------------------------------------------
Angola 145.6 133.1 - -
Congo 28.9 27.8 - -
Democratic Republic of Congo 8.8 10.1 - -
Nigeria 144.0 148.3 39.2 33.5
United Kingdom (North Sea) 42.2 39.2 218.8 73.9
Norway 15.8 13.0 0.4 0.4
Canada 65.0 63.0 193.6 180.3
Australia 30.4 38.4 227.1 223.4
Indonesia 17.0 17.5 - -
Papua New Guinea 15.2 14.5 - -
China 13.9 11.4 - -
Thailand 3.7 - 39.4 -
Argentina 13.4 - 8.8 -
Colombia 11.4 12.2 - -
Venezuela 2.5 1.4 - -
Netherlands - - 1.9 2.2
------------------------------------------------------------
Total International 557.8 529.9 729.2 513.7
------------------------------------------------------------
Total Consolidated Companies 873.6 855.0 2,367.6 2,252.6
Chevron's Share of Affiliates 253.4 252.3 145.0 140.0
------------------------------------------------------------
Total Including Affiliates 1,127.0 1,107.3 2,512.6 2,392.6
============================================================
* Net production excludes royalty interests owned by others.
Acreage
- -------
At December 31, 1999, the company owned or had under lease or similar agreements
undeveloped and developed oil and gas properties located throughout the world.
Undeveloped acreage includes undeveloped proved acreage. The geographical
distribution of the company's acreage is shown in the next table.
-5-
Acreage* At December 31, 1999
(Thousands of Acres)
Developed
Undeveloped Developed and Undeveloped
------------------- ------------------- -------------------
Gross Net Gross Net Gross Net
-------- -------- -------- --------- -------- --------
United States 5,359 3,798 2,770 1,701 8,129 5,499
-------- -------- -------- --------- --------- --------
Canada 21,207 11,496 1,386 532 22,593 12,028
Africa 12,075 6,470 193 72 12,268 6,542
Asia 15,588 7,407 84 35 15,672 7,442
Other International 34,424 15,730 359 148 34,783 15,878
--------- --------- --------- --------- --------- --------
Total International 83,294 41,103 2,022 787 85,316 41,890
-------- -------- --------- --------- --------- --------
Total Consolidated Companies 88,653 44,901 4,792 2,488 93,445 47,389
Chevron's Share in Affiliates 3,013 1,448 340 168 3,353 1,616
--------- --------- --------- --------- --------- --------
Total Including Affiliates 91,666 46,349 5,132 2,656 96,798 49,005
========= ========= ========= ========= ========= ========
* Gross acreage includes the total number of acres in all tracts in which the
company has an interest.
Net acreage is the sum of the company's fractional interests in gross
acreage.
Refer to Table III on pages FS-33 to FS-35 of this Annual Report on Form 10-K
for data about the company's average sales price per unit of oil and gas
produced, as well as the average production cost per unit for 1999, 1998 and
1997. The following table summarizes gross and net productive wells at year-end
1999 for the company and its affiliates.
Productive Oil And Gas Wells At December 31, 1999
Productive(1) Productive(1)
Oil Wells Gas Wells
------------------- --------------------
Gross(2) Net(2) Gross(2) Net(2)
-------- -------- --------- ---------
United States 23,190 12,378 4,495 2,173
-------- -------- --------- ---------
Canada 1,320 905 211 153
Africa 1,223 467 12 4
Other International 1,774 737 152 61
-------- -------- --------- ---------
Total International 4,317 2,109 375 218
-------- -------- --------- ---------
Total Consolidated Companies 27,507 14,487 4,870 2,391
Chevron's Share of Affiliates 5,559 2,882 341 188
-------- -------- --------- ---------
Total Including Affiliates 33,066 17,369 5,211 2,579
======== ======== ========= =========
Multiple completion wells
included above: 649 358 353 197
(1) Includes wells producing or capable of producing and injection wells
temporarily functioning as producing wells. Wells that produce both oil and
gas are classified as oil wells.
(2) Gross wells include the total number of wells in which the company has an
interest. Net wells are the sum of the company's fractional interests in
gross wells.
-6-
Reserves and Contract Obligations
- ---------------------------------
Table IV on pages FS-35 and FS-36 of this Annual Report on Form 10-K sets forth
the company's net proved oil and gas reserves, by geographic area, as of
December 31, 1999, 1998 and 1997. During 2000, the company will file estimates
of oil and gas reserves with the Department of Energy, Energy Information
Agency. Those estimates are consistent with the reserve data reported on page
FS-36 of this Annual Report on Form 10-K.
In 1999, Chevron's worldwide oil and equivalent-gas (OEG) barrels of net proved
reserves additions exceeded production for the seventh consecutive year with a
replacement rate of 108 percent of net production, including sales and
acquisitions. Excluding sales and acquisitions, the replacement rate was 67
percent of net production. The following table summarizes the company's net
additions to net proved reserves of crude oil and natural gas liquids and
natural gas, compared with net production during 1999.
Reserves Replacement - 1999
Additions to Net OEG Reserves Memo:
Reserves Production Replacement % Including
------------------- --------------- ------------- Sales and
Liquids Gas Liquids Gas Acquisitions
(mmbbls) (bcf) (mmbbls) (bcf)
--------- ------ ------ ------ ------------
United States 70.9 (71.6) 115.3 598.2 27% 10%
Africa 110.8 49.4 119.5 15.0 97% 97%
Other international(1) 137.3 355.6 176.2 299.6 87% 111%
--------- ------ ------ ------
Total Worldwide 319.0 333.4 411.0 912.8 67% 108%
========= ====== ====== ======
(1) Includes equity in affiliates
mmbbls = millions of barrels
bcf = billions of cubic feet
The company sells crude oil and gas from its producing operations under a
variety of contractual arrangements. Most contracts generally commit the company
to sell quantities based on production from specified properties but certain gas
sales contracts specify delivery of fixed and determinable quantities. In the
United States, the company is obligated to sell substantially all of the natural
gas produced and owned or controlled by the company in the lower 48 states to
Dynegy Inc. Outside the United States, the company is contractually committed to
deliver approximately 430 billion cubic feet of natural gas through 2020 and 140
billion cubic feet of natural gas through 2002 from Australian and U.K.
reserves. Pricing terms for substantially all of these contracts are
market-based. The company believes it can satisfy these contracts from
quantities available from production of the company's proved developed
Australian and U.K. natural gas reserves.
Development Activities
- ----------------------
Details of the company's development expenditures and costs of proved property
acquisitions for 1999, 1998 and 1997 are presented in Table I on page FS-32 of
this Annual Report on Form 10-K.
The table below summarizes the company's net interest in productive and dry
development wells completed in each of the past three years and the status of
the company's development wells drilling at December 31, 1999. A "development
well" is a well drilled within the proved area of an oil or gas reservoir to the
depth of a stratigraphic horizon known to be productive. "Wells drilling"
include wells temporarily suspended.
-7-
Development Well Activity
Net Wells Completed (1)
Wells Drilling -----------------------------------------------
At 12/31/99 1999 1998 1997
----------------- ------------ ------------ ------------
Gross(2) Net(2) Prod. Dry Prod. Dry Prod. Dry
------- ------ ----- ---- ----- ---- ----- ----
United States 272 152 411 7 324 5 617 6
------- ------ ----- ---- ----- ---- ------ ----
Africa 10 4 18 - 38 1 22 1
Other International 27 16 42 - 33 2 67 -
------- ----- ----- ---- ----- ----- ------ ----
Total International 37 20 60 - 71 3 89 1
------- ----- ----- ---- ----- ----- ------ ----
Total Consolidated Companies 309 172 471 7 395 8 706 7
Equity in Affiliates 37 14 220 - 272 - 150 -
------- ----- ----- ---- ----- ----- ------ ----
Total Including Affiliates 346 186 691 7 667 8 856 7
======= ===== ===== ==== ===== ===== ====== ====
(1) Indicates the number of wells completed during the year regardless of when
drilling was initiated. Completion refers to the installation of permanent
equipment for the production of oil or gas or, in the case of a dry well,
the reporting of abandonment to the appropriate agency.
(2) Gross wells include the total number of wells in which the company has an
interest. Net wells are the sum of the company's fractional interests in
gross wells.
Exploration Activities
- ----------------------
The following table summarizes the company's net interests in productive and dry
exploratory wells completed in each of the last three years and the number of
exploratory wells drilling at December 31, 1999.
Exploratory Well Activity
Net Wells Completed (1)
Wells Drilling -----------------------------------------------
At 12/31/99 1999 1998 1997
----------------- ------------ ------------ ------------
Gross(2) Net(2) Prod. Dry Prod. Dry Prod. Dry
------- ----- ------ ---- ----- ----- ------ ----
United States 50 26 72 30 46 12 56 31
------- ----- ------ ---- ----- ----- ------ ----
Africa 2 1 1 2 7 2 5 1
Other International 18 3 7 9 9 8 12 6
------- ----- ------ ---- ----- ----- ------ --
Total International 20 4 8 11 16 10 17 7
------- ----- ------ ---- ----- ----- ------ --
Total Consolidated Companies 70 30 80 41 62 22 73 38
Chevron's Share in Affiliates 8 4 1 - 2 - 3 -
------- ----- ------ ---- ----- ----- ------ ---
Total Including Affiliates 78 34 81 41 64 22 76 38
======= ===== ====== ==== ===== ===== ====== ===
(1) Indicates the number of wells completed during the year regardless of when
drilling was initiated. Completion refers to the installation of permanent
equipment for the production of oil or gas or, in the case of a dry well,
the reporting of abandonment to the appropriate agency.
(2) Gross wells include the total number of wells in which the company has an
interest. Net wells are the sum of the company's fractional interests in
gross wells.
"Exploratory wells" are wells drilled to find and produce oil or gas in unproved
areas and include delineation wells, which are wells drilled to find a new
reservoir in a field previously found to be productive of oil or gas in another
reservoir or to extend a known reservoir beyond the proved area. "Wells
drilling" include wells temporarily suspended. The company had $374 million of
suspended exploratory wells included in properties, plant and equipment at
year-end 1999, an increase of $181 million from 1998. The increase between years
is primarily due to extensive drilling in Angola and the deepwater Gulf of
Mexico during 1999. The wells are suspended pending a final determination of the
commercial potential of the related oil and gas fields. The ultimate disposition
of these well costs is dependent on the results of future exploratory drilling
activity and development decisions.
-8-
Details of the company's exploration expenditures and costs of unproved property
acquisitions for 1999, 1998 and 1997 are presented in Table I on page FS-32 of
this Annual Report on Form 10-K.
Review of Ongoing Exploration and Production Activities in Key Areas
- --------------------------------------------------------------------
Chevron's 1999 key upstream activities not discussed in Management's Discussion
and Analysis of Financial Condition and Results of Operations beginning on page
FS-2 of this Annual Report on Form 10-K are presented below. In addition to the
activities discussed, Chevron was active in other geographic areas, but these
activities were of less significance.
A) United States
United States exploration and production activities are concentrated in over 300
fields located in the Gulf of Mexico, Texas, Rocky Mountains, California and
Alaska. Some of the company's more significant activities in the United States
are described below.
Chevron has interests in three deepwater developments in the Gulf of Mexico.
Genesis, Chevron's first deepwater operation, located in 2,600 feet of water,
began production in January 1999. Chevron is operator and has a 57 percent
interest in Genesis. Peak total production is expected to reach 55,000 barrels
of oil and 65 million cubic feet of gas per day in mid-2000. Chevron has a 40
percent interest in the Gemini deepwater development located in Mississippi
Canyon Block 292 in 3,400 feet of water. Initial production occurred in June
1999 and peak production rates of 200 million cubic feet of gas and 3,000
barrels of condensate per day were achieved in late 1999. Typhoon is Chevron's
third deepwater development, in 2,000 feet of water, in the Gulf of Mexico.
Under current development plans, initial production from Typhoon is scheduled
for third quarter 2001 and will support production of 40,000 barrels of oil and
60 million cubic feet of gas per day. Chevron is the operator with a 50 percent
interest.
Chevron has interests in the Viosca Knoll Trend in the Gulf of Mexico shelf and
in 1999 continued to focus on establishing production from additional gas
reservoirs. Total production is currently 80 million cubic feet of gas per day
from four wells and is expected to approach 200 million cubic feet of gas per
day once an infrastructure is completed in late 2000, with further development
planned for 2001 and 2002. Chevron's share of average 1999 total production of
40 million cubic feet of gas per day was 80 percent. Development of the Destin
Dome area of the Norphlet trend offshore Florida continues to be subject to
obtaining regulatory approvals. A draft environmental impact statement (EIS) was
issued August 1999 by the governing agencies indicating no significant
environmental impacts had been found. Issuance of the final EIS and a regulatory
ruling on the Development and Production Plan is expected in late 2000.
Onshore California, Chevron continued to expand its use of thermal enhanced
recovery techniques to increase the production rate and the amount of oil
ultimately recoverable from fields in the San Joaquin Valley, with efforts
focused on the Cymric Field. Average 1999 production from the San Joaquin Valley
fields was 103,000 barrels of oil and 114 million cubic feet of gas per day.
In Alaska, Chevron continued to participate in appraisal and delineation
drilling in the Prudhoe Bay satellite developments. First oil from these
developments is planned for 2002. Chevron holds working interests of between 6
and 41 percent in these prospects. In 1999, Chevron, along with BP Amoco and
Phillips Petroleum, acquired 33 leases totaling 233,000 acres in the National
Petroleum Reserve of Alaska.
B) Africa
Nigeria: Chevron's principal subsidiary in Nigeria, Chevron Nigeria Limited
(CNL), operates and holds a 40 percent interest in 11 concessions totaling 2.3
million acres, predominantly in the swamp and near offshore regions of the Niger
Delta. During 1999, CNL's onshore and swamp area concessions were renewed for a
second 30-year term. CNL's offshore concessions expire in 2008, and renewal
efforts will begin soon. Chevron Oil Company Nigeria Limited (COCNL) holds a 20
percent interest in six concessions, covering 600,000 acres, operated by Texaco.
Chevron Petroleum Nigeria Limited (CPNL) oversees and manages new venture
projects in Nigeria. CPNL has a 30 percent interest in one deepwater Niger Delta
block and three inland Benue Basin blocks operated by Elf. A sole interest is
also held by CPNL in six other Benue Basin blocks through a production-sharing
contract.
-9-
Production from the 33 CNL-operated fields averaged about 420,000 barrels of
liquids per day in 1999, slightly higher than 1998. Production from the COCNL
fields averaged approximately 45,000 barrels of oil per day in 1999.
Construction of Escravos Gas Project Phase 2 is scheduled for completion in
second quarter 2000. Phase 2 will expand the gas processing capacity of the
facility to 285 million cubic feet per day. Preliminary design is under way for
Phase 3 of the gas plant, which will add a second train and expand gas
processing to 680 million cubic feet per day, once the necessary approvals are
obtained. Feasibility engineering and technical evaluations are nearing
completion for a Gas-To-Liquids (GTL) plant proposed for construction in
Escravos. Promising results would lead to continued development during 2000. The
proposed 30,000-barrels-per-day Escravos project is expected to be the first of
a previously announced GTL globalization effort by Chevron and SASOL.
In 1999, CNL was appointed the Managing Sponsor of a consortium of six energy
companies, which was granted development rights by the governments of Benin,
Ghana, Nigeria and Togo to construct and operate a gas transmission pipeline
between these countries. Subject to successful negotiation of concession
conditions with the governments, commercial operations may commence by late
2002.
Angola: The company is the operator of two concessions, Blocks 0 and 14, off the
coast of Angola's Cabinda Province. Block 0 is a 2,100-square-mile concession
adjacent to the Cabinda coastline in which Chevron has an approximate 39 percent
interest. Block 14 is a 1,560-square-mile deepwater concession located west of
Block 0, in which Chevron has a 31 percent interest.
Block 0 crude oil production during 1999 averaged 460,000 barrels per day up
from an average of 421,000 in 1998. Area A of Block 0 includes 23 major fields,
13 in the Malongo Area and 10 in the Takula Area. Fifteen of the Area A fields
are currently producing. The Banzala Field achieved first production in August
1999 and is producing at a rate of over 20,000 barrels of oil per day.
Installation of new waterflood projects in the Kungulo and Vuko fields
progressed. Area B includes six major fields. The Kokongo and Lomba fields and
the southern part of the Nemba Field have undergone the initial stages of
development and are currently on production with additional infill well
opportunities envisioned for the Kokongo and Nemba fields in 2000. Future
development plans also include installation of the North Nemba production and
gas injection platform in 2001. During 1999, a vessel carrying the production
deck for the North Nemba facility capsized and the deck was lost. As a result,
the start of production from North Nemba will be delayed from 2000 to 2001.
This is not expected to have a significant impact on overall 2000 or 2001
production levels. Area C includes seven major fields. The Ndola and Sanha
fields are currently on production.
Four fields have been discovered in Block 14 - Kuito, Landana, Benguela and
Belize. First production from the Kuito Field commenced in December 1999.
Production rates in early 2000 average 30,000 barrels of oil per day. Kuito is
being developed using a phased approach, with Phase One production expected to
average over 70,000 barrels per day in 2000 and to peak at a rate of 100,000
barrels per day during the first half of 2000. The Benguela and Belize fields,
discovered in 1998, are located near the Kuito Field. Development planning is in
progress for the two fields with project authorization targeted for the first
half of 2001. For the Landana Field, further appraisal and study is required
prior to development planning.
Republic of Congo: Chevron has interests in three license areas - Haute Mer,
Marine VII and Mer Profonde Sud - in offshore Congo, adjacent to Chevron's
concessions in Angola. All licenses are partner-operated. Net production from
Chevron's concessions in the Republic of Congo averaged about 29,000 barrels per
day in 1999. In the Marine VII permit area, where Chevron has an interest of
about 29 percent in the Kitina and Sounda Exploitation Permits, development of
the Kitina Field continued and total production averaged about 36,000 barrels of
oil per day. Further development work, including gas injection facilities and an
infill well, are planned for 2000. In Haute Mer, where Chevron has a 30 percent
interest, development of the Nkossa Field continued with the drilling of
additional production and gas injection wells. Total production in the field,
operated by Elf Congo, averaged about 74,000 barrels of oil and liquefied
petroleum gas per day in 1999. Development planning for the Moho and Bilondo
fields in the Haute Mer license continues. Chevron obtained a 15 percent
interest in the Mer Profonde Sud license at the end of 1999.
-10-
C) Other International Areas
Caspian Region: The Tengizchevroil (TCO) partnership formed in 1993 covers the
Tengiz and Korolev oil fields in western Kazakhstan. Chevron has a 45 percent
interest in TCO. In 1999, total liquids production from the Tengiz Field
increased for the sixth straight year, averaging 214,000 barrels per day. TCO is
nearing completion of a three-year plant expansion project. The project provides
TCO with additional processing and export facilities that will permit production
to increase to approximately 260,000 barrels per day by the fourth quarter of
2000. TCO plans to initiate production from the Korolev Field in 2001. The
Caspian Pipeline Consortium (CPC) was formed to build a crude oil export
pipeline from the Tengiz oil field to the Russian Black Sea coast at a projected
total cost of $2.5 billion. When completed, the CPC pipeline will allow for the
export of an initial capacity of 600,000 barrels of oil per day, expandable to
1.5 million barrels per day with additional pump stations, tankage and marine
loading facilities. Chevron has a 15 percent ownership interest in CPC.
Construction at the marine terminal and tank farm commenced in May 1999, while
pipe laying began in November 1999. CPC remains on schedule to deliver first oil
by July 2001.
Europe: Chevron holds interests in four producing fields off-shore United
Kingdom and Norway: the Alba oil field, the Britannia gas condensate field, and
non-operated interests in Statfjord and Draugen. Total production from the Alba
Field averaged 74,000 barrels of crude oil per day in 1999. Chevron's interest
in the Alba Field is approximately 21 percent. 1999 was the first full year of
production for the Britannia Field. At peak demand, the field produced 740
million cubic feet of gas per day and in excess of 45,000 barrels per day of
condensate. Chevron has an approximate 30 percent interest in Britannia and
shares operatorship with Conoco. In Norway, production from the Draugen Field
averaged 209,000 barrels of crude oil per day. Chevron's interest in the Draugen
Field is about 8 percent.
Canada: In 1999, Chevron continued to increase its offshore lease position in
Canada's East Coast and maintained focus on core areas in Western Canada.
Production from the Hibernia Field, in which Chevron holds an interest of about
27 percent, averaged approximately 100,000 barrels of crude oil per day in 1999,
with rates up to 150,000 barrels per day achieved during the latter part of the
year. Delineation drilling of the Hebron Field continued during the year with
encouraging results. Chevron was appointed operator of the Hebron Field and has
an approximate 30 percent interest. Chevron also acquired interests in three
deepwater parcels totaling approximately 1.2 million acres at the Nova Scotia
lease sale in April 1999. Chevron's interest in these blocks is approximately 33
percent, and supplements the 740,000-acre deepwater Nova Scotia parcel acquired
in 1998. Chevron's Western Canadian operations produced 44,500 barrels per day
of crude oil and natural gas liquids in 1999. Chevron's major development
efforts in 1999 focused on natural gas, primarily in the area west of Kaybob in
Alberta, and Fort Liard in the Northwest Territories. During 1999, a significant
natural gas discovery was made northwest of Fort Liard. Plans are being
developed for the construction of production and transportation facilities and
additional wells to permit first production by May 2000. A second successful
well was completed in January 2000 and is expected to begin production in the
fourth quarter 2000.
Australia: Chevron's primary interests in Australia involve two major joint
ventures. Average total field production during 1999 from the North Rankin and
Goodwyn fields in the North West Shelf (NWS) project, where Chevron has an
approximate 17 percent interest, was 1.5 billion cubic feet of gas per day.
Total condensate production averaged 100,000 barrels per day. Additionally in
1999, total production from the Wanaea/Cossack oil development averaged 35,000
barrels per day. The second joint venture is in permit areas, which include the
Barrow Island and Thevenard Island oil fields and the undeveloped Gorgon gas
field formerly operated by West Australian Petroleum Pty. Ltd. (WAPET). Chevron
assumed operatorship of these areas from WAPET in February 2000 and has
interests varying between 25 and 50 percent. During 1999, total oil production
from the WAPET area averaged 30,000 barrels per day with Chevron's share about
8,000 barrels per day. The WAPET joint venture made two significant natural gas
discoveries in the offshore permit area WA-267-P where Chevron has a 25 percent
interest - Geryon and Orthrus. In addition to the two major joint ventures
above, Chevron has interests in the northern Browse Basin, and three new
deepwater exploration permits recently awarded in the offshore Canning Basin,
near the NWS joint venture acreage. Chevron's interests vary from about 17
percent to 25 percent.
Indonesia: Chevron's interests in Indonesia are managed by two affiliate
companies, P.T. Caltex Pacific Indonesia (CPI) and Amoseas Indonesia (AI).
Chevron owns 50 percent of both companies. CPI manages all of Chevron's
interests in four production sharing contracts in Indonesia. Chevron's net share
of total production of 745,000
-11-
barrels per day in 1999 was 182,000 barrels per day. The Duri Field, under
steamflood since 1985, is the largest steamflood in the world. AI is a power
generation company, which operates the Darajat geothermal contract area in
central Java and is constructing a cogeneration facility to support CPI's Duri
steamflood. AI's geothermal field continued to provide steam to the national
power company plant that produces electricity for the Java power grid. Further
expansion of the Darajat geothermal reservoir complex is planned. The Darajat
reservoir has proved reserves of steam to generate 350 megawatts for 30 years.
China: Chevron has an interest in two blocks (16/08 and 16/19) in the South
China Sea and three blocks (02/31, 06/17 and Zhanhuadong) in the Bohai Gulf area
of the North China Basin. Chevron has an interest of about 16 percent in the
producing Block 16/08, which produced an average of 101,600 barrels of oil per
day in 1999. The newest field in the group, HZ/32-5, was brought on stream early
in 1999 with three wells producing at a combined rate in excess of 30,000
barrels of oil per day. Chevron plans to complete its current exploration
contractual commitments in 2000 by drilling two more exploration wells on Block
02/31, one on Block 06/17, two in Zhanhuadong, and one on Block 16/19.
Thailand: Chevron acquired Rutherford-Moran Oil Corporation and its approximate
46 percent interest in Gulf of Thailand Block B8/32 in March 1999. This,
combined with acquisition of a majority interest in Palang Sophon Limited, gave
Chevron an approximate 52 percent interest Block B8/32. Chevron assumed
operatorship of Block B8/32 in October 1999. Chevron also holds a 33 percent
interest in three adjacent exploration blocks, which are currently inactive
pending resolution of a Thailand-Cambodia border dispute. Block B8/32 is
currently producing oil and natural gas from two fields, Tantawan and Benchamas.
In December 1999, the Tantawan Field was producing at a rate of 65 million cubic
feet of gas per day and 9,600 barrels of oil per day. Benchamas Field was
brought on-stream in June 1999 and was producing at a rate of 77 million cubic
feet of gas per day and 13,000 barrels of oil per day as of December 1999.
Production from the Benchamas Field reached 25,000 barrels of oil per day and 85
million cubic feet of gas per day during the first quarter 2000.
Argentina: Chevron acquired Petrolera Argentina San Jorge, S.A. in September
1999 establishing its first exploration and production position in Argentina. At
year-end 1999, properties in the Neuquen and Austral Basins were producing at
combined gross rates of 85,000 barrels of oil equivalent per day. New oil and
gas discoveries in 1999 increased proved reserves to over 200 million barrels
oil equivalent. In addition to the Argentina acreage, San Jorge's interests
included five million acres of exploration licenses in key petroleum basins in
Colombia, Ecuador, Peru, Bolivia, and Chile. Included in the acquisition was a
14 percent interest in Oldeval, a major export pipeline to the Argentine
Atlantic coast. Additional sales through the Transandino pipeline to the Pacific
coast make San Jorge Argentina's second largest petroleum exporter.
Venezuela: Chevron is the operator and has a 27 percent interest in the LL-652
Field in Lake Maracaibo. The LL-652 Field objective is to substantially increase
production over the next few years though the application of secondary recovery
technologies. The field was producing 12,500 barrels of oil per day at the end
of 1999. Chevron holds a 27 percent interest in the LL-652 project. Chevron and
Petroleos de Venezuela, S.A. (PDVSA) formed an alliance in 1995 to further
develop the Boscan oil field and provide heavy crude oil to Chevron in the
United States through several independent supply agreements. Chevron took over
operations and production of the Boscan Field in 1996 under an operating
services agreement. Chevron receives operating expense reimbursement and capital
recovery, plus interest and an incentive fee. Due to Venezuela's OPEC
restrictions, production was constrained to 92,000 barrels per day for much of
1999, down from 105,000 barrels per day at the start of the year. Chevron has
not recorded any reserve quantities related to the service agreement involving
the Boscan Field.
-12-
Petroleum - Natural Gas Liquids
-------------------------------
The company sells natural gas liquids from its producing operations under a
variety of contractual arrangements. In the United States, the majority of sales
are to the company's Dynegy Inc. affiliate, in which it has a 28 percent equity
interest. Dynegy and Chevron have entered into long-term strategic alliances
whereby Dynegy purchases substantially all natural gas and natural gas liquids
produced by Chevron in the United States, excluding Alaska, and supplies natural
gas and natural gas liquids feedstocks to Chevron's U.S. refineries and chemical
plants. Outside the United States, natural gas liquids sales take place in the
company's Canadian upstream operations, with lower sales levels in Africa,
Australia and Europe. In 1999, U.S. sales volumes, including the company's share
of Dynegy sales, comprised about 70 percent of the company's total worldwide
natural gas liquids sales volume.
Chevron's total third-party natural gas liquids sales volumes over the last
three years are reported in the following table:
Natural Gas Liquids Sales Volumes
(Thousands of Barrels per Day)
1999 1998 1997
------- ------ ------
United States 65 63 64
Canada 24 26 30
Other International 10 7 13
------- ------- ------
Total Consolidated Companies 99 96 107
Share of Dynegy Affiliate 91 87 95
------- ------- ------
Total including Affiliate 190 183 202
======= ======= ======
Petroleum - Refining
--------------------
Based on refinery statistics published in the December 20, 1999 issue of The Oil
and Gas Journal, Chevron had the third largest U.S. refining capacity. The
company's 50 percent owned Caltex Corporation affiliate owned or had interests
in 11 operating refineries: Australia (2), Thailand (2), Korea, the Philippines,
New Zealand, Singapore, Pakistan, Kenya and South Africa. In 1999, Caltex sold
its interest in two Japanese refineries owned by Koa Oil Company Limited.
Distillation operating capacity utilization in 1999, adjusted for sales and
closures, averaged 91 percent in both the United States (including asphalt
plants) and worldwide (including affiliate), compared with 83 percent in the
United States and 86 percent worldwide in the prior year. Chevron's capacity
utilization at its U.S. fuels refineries averaged 96 percent in 1999, up from 86
percent in 1998. Chevron's capacity utilization of its U.S. cracking and coking
facilities, which are the primary facilities used to convert heavier products to
gasoline and other light products, averaged 78 percent in 1999, up from 75
percent in the year earlier. The company processed imported and domestic crude
oil in its U.S. refining operations. Imported crude oil accounted for 66 percent
of Chevron's U.S. refinery inputs in 1999.
-13-
The daily refinery inputs over the last three years for the company's and its
Caltex affiliate's refineries are shown in the following table:
Petroleum Refineries: Locations, Capacities And Inputs
(Inputs and Capacities are in Thousands of Barrels Per Day)
December 31, 1999
-------------------
Refinery Inputs
Operable ---------------------------
Locations Number Capacity 1999 1998 1997
--------------------------------------------------- ------ -------- ------ ------ -----
Pascagoula, Mississippi 1 295 328 246 312
El Segundo, California 1 260 211 218 203
Richmond, California 1 225 207 201 220
El Paso,(1) Texas 1 65 65 62 60
Honolulu, Hawaii 1 54 51 49 53
Salt Lake City, Utah 1 45 43 40 41
Other(2) 3 102 50 52 44
--- ------ ------ ------ -----
Total United States 9 1,046 955 868 933
--- ------ ------ ------ -----
Burnaby, B.C., Canada 1 52 52 50 48
Milford Haven, Wales,(3) United Kingdom - - - - 101
--- ------ ------ ------ -----
Total International 1 52 52 50 149
--- ------ ------ ------ -----
Total Consolidated Companies 10 1,098 1,007 918 1,082
Equity in Caltex Affiliate(4) Various Locations 11 426 417 425 416
--- ------ ------ ------ -----
Total Including Affiliate 21 1,524 1,424 1,343 1,498
=== ====== ====== ====== =====
(1) Capacity and input amounts for El Paso represent Chevron's share.
(2) Refineries in Perth Amboy, New Jersey; Portland, Oregon; and Richmond
Beach, Washington, which are primarily asphalt plants.
(3) Ceased processing operations December, 1997.
(4) Inputs include Koa Oil Co. Ltd. refineries. Interests sold in 1999. All
capacities and inputs represent Chevron's share of Caltex's equity
interests in its affiliates.
Petroleum - Refined Products Marketing
--------------------------------------
Product Sales: The company and its Caltex Corporation affiliate market petroleum
products throughout much of the world. The principal trademarks for identifying
these products are "Chevron" and "Caltex."
The following table shows the company's and its affiliates' refined product
sales volumes, excluding intercompany sales, over the past three years. The
company's Canadian sales volumes consist of refined product sales primarily in
British Columbia by the company's Chevron Canada Limited subsidiary. The 1999
volumes reported for "Other International" relate to international sales of
aviation and marine fuels, lubricants, gas oils and other refined products,
primarily in Latin America, Asia and Europe. The equity in affiliates' sales
consists of (1) the company's interest in Caltex Corporation, which maintains an
interest in about 7,800 service stations (of which about 4,700 are branded
Caltex), operating in more than 60 countries in the Asia-Pacific region, Africa
and the Middle East, and (2) the company's interest in Fuel and Marine Marketing
LLC, which was established in late 1998 and markets marine fuel and lubricating
oils in approximately 100 countries worldwide.
-14-
Refined Products Sales Volumes
(Thousands of Barrels Per Day)
1999 1998 1997
--------- --------- --------
United States
Gasolines 667 653 591
Jet Fuel 234 247 249
Gas Oils and Kerosene 236 198 204
Residual Fuel Oil 64 56 60
Other Petroleum Products(1) 101 89 89
--------- --------- --------
Total United States 1,302 1,243 1,193
--------- --------- --------
International
United Kingdom(2) - 3 103
Canada 60 58 61
Other International 36 127 145
--------- --------- --------
Total International 96 188 309
--------- --------- --------
Total Consolidated Companies 1,398 1,431 1,502
Chevron's Share in Affiliates 796 597 577
--------- --------- --------
Total Including Affiliates 2,194 2,028 2,079
========= ========= ========
(1) Principally naphtha, lubes, asphalt and coke.
(2) Retail marketing assets in the United Kingdom were
sold in December 1997.
Retail Outlets: In the United States, the company supplies, directly or through
jobbers, more than 7,900 motor vehicle retail outlets, of which about 1,500 are
company-owned or -leased motor vehicle stations, and about 560 aircraft and
marine retail outlets. The company's gasoline market area is concentrated in the
southern, southwestern and western states. According to the Lundberg Share of
Market Report, Chevron ranks among the top three gasoline marketers in 15
states, and is the top marketer of aviation fuel in the western United States.
During 1999, the company continued to rationalize its marketing network by
divesting small, lower-performing sites and investing in larger, higher-volume
facilities.
The company has continued to focus on a growing demand for convenience goods and
services. In 1999, the company experienced an overall company-operated gross
revenue growth from these areas of nearly 28 percent.
In Canada - primarily British Columbia - the company's branded products are sold
in nearly 200 stations (all owned or leased).
-15-
Petroleum - Transportation
--------------------------
Tankers: Chevron's controlled seagoing fleet at December 31, 1999, is summarized
in the following table. All controlled tankers were utilized in 1999. In
addition, at any given time, the company has 30 to 40 vessels under charter on a
term or voyage basis.
Controlled Tankers At December 31, 1999
U.S. Flag Foreign Flag
-------------------------------- ------------------------------
Cargo Capacity Cargo Capacity
Number (Millions of Barrels) Number (Millions of Barrels)
------- --------------------- ------ ---------------------
Owned 2 0.8 15 21.1
Bareboat Charter 2 0.5 13 16.1
Time-Charter - - 1 0.5
---- ----- ---- -------
Total 4 1.3 29 37.7
==== ===== ==== =======
Federal law requires that cargo transported between U.S. ports be carried in
ships built and registered in the United States, owned and operated by U.S.
entities and manned by U.S. crews. At year-end 1999, the company's U.S. flag
fleet was engaged primarily in transporting crude oil from Alaska to refineries
on the West Coast and Hawaii, refined products between the Gulf Coast and East
Coast, and refined products from California refineries to terminals on the West
Coast, Alaska and Hawaii.
The Federal Oil Pollution Act of 1990 requires the scheduled phase-out, by
year-end 2010, of all single hull tankers trading to U.S. ports or transferring
cargo in waters within the U.S. Exclusive Economic Zone. This has resulted in
the utilization of more costly double-hull tankers. By the end of 1999, Chevron
was operating a total of 13 double hull tankers. Chevron has been actively
involved in the Marine Preservation Association, a non-profit organization that
funds the Marine Spill Response Corporation (MSRC). MSRC owns the largest
inventory of oil spill response equipment in the nation and operates five
strategically located U.S. coastal regional centers. In addition, the company is
a member of many oil-spill response cooperatives in areas in which it operates
around the world.
At year-end 1999, two of the company's controlled international flag vessels
were assigned for use as floating storage vessels. The remaining international
flag vessels were engaged primarily in transporting crude oil from the Middle
East, Indonesia, Mexico and West Africa to ports in the United States, Europe,
and Asia. Refined products also were transported by tanker worldwide.
During 1999, the company completed the sale of seven vessels and chartered back
three. Additionally, in 1999 the company took delivery of two new 308,500
deadweight ton, double-hull tankers. These tankers are the second and third in a
series of four new double-hull tankers being built in Korea. The last vessel was
delivered in February 2000. Chevron will operate these tankers under long-term
bareboat charters.
Pipelines: Chevron owns and operates an extensive system of crude oil, refined
products, chemicals, natural gas liquids and natural gas pipelines in the United
States. The company also has direct or indirect interests in other U.S. and
international pipelines. The company's ownership interests in pipelines are
summarized in the following table:
-16-
Pipeline Mileage At December 31, 1999
Wholly Partially
Owned Owned(1) Total
--------- --------- --------
United States:
Crude oil(2) 2,768 460 3,228
Natural gas 477 159 636
Petroleum products 2,084 1,958 4,042
--------- --------- --------
Total United States 5,329 2,577 7,906
--------- --------- --------
International:
Crude oil - 950 950
Natural gas - 325 325
Petroleum products - 587 587
--------- --------- --------
Total International - 1,862 1,862
--------- --------- --------
Worldwide 5,329 4,439 9,768
========= ========= ========
(1) Reflects equity interest in lines, except Dynegy Inc..
(2) Includes gathering lines related to the transportation function.
Excludes gathering lines related to the U.S. production function.
Chemicals
---------
The company's chemicals operations manufacture and market petrochemicals and
petrochemical-based products for industrial use and chemical additives for fuels
and lubricants. At year-end 1999, Chevron owned and operated 15 U.S.
manufacturing facilities in nine states, owned manufacturing facilities in
Brazil, France, Singapore and Mexico, and owned a majority interest in a
manufacturing facility in Japan. Additionally, Chevron has a 50 percent equity
interest in a petrochemicals facility in Saudi Arabia.
In February 2000, Chevron and Phillips Petroleum Co. signed a letter of intent
and exclusivity agreement to combine most of their chemicals businesses into a
joint venture. Each company will own 50 percent of the joint venture, which will
have assets of more than $6 billion and would have had 1999 sales of about $6
billion. The combination is subject to final approval of the companies' boards
of directors, signing of definitive agreements and regulatory review, which are
expected to be complete by mid-2000.
In 1999, the company commenced commercial operation of a fuel and lube oil
additives manufacturing facility in Singapore. The plant has an annual capacity
of approximately 100,000 metric tons of additives. In Saudi Arabia, the company
and its joint venture partner, the Saudi Industrial Venture Capital Group,
completed construction of a petrochemicals complex expected to produce annually
approximately 480,000 tons of benzene, using the company's proprietary Aromax
technology, and 220,000 tons of cyclohexane.
In 2000, the company plans to complete a grass roots normal alpha olefins plant
at Cedar Bayou, Texas. In China, start-up of a 100,000 tons per year polystyrene
plant is planned for mid-2000. This plant represents the company's entry into
the chemicals business in China.
The following table shows 1999 revenues and the number of owned or
majority-owned chemicals manufacturing facilities and combined operating
capacities as of December 31, 1999.
-17-
Chemicals Operations
--------------------
Annual 1999
Manufacturing Capacity Production Revenue*
Facilities (Million lbs.) (Million lbs) ($ Millions)
---------------- -------------- ------------- -------------
U.S. 15 16,657 15,498 $2,958
International 5 951 685 779
--- ------- ------------ -------------
Total 20 17,608 16,183 $3,737
== ======= ============ =============
*Includes intercompany sales.
Coal
----
Coal: The Company's wholly owned coal mining and marketing subsidiary, The
Pittsburg & Midway Coal Mining Co. (P&M), owned four surface and two underground
mines at year-end 1999. All mines were operating at that time with the exception
of the Sebree Mine in Kentucky, which was idled in November 1998. P&M also owns
an approximate 30 percent interest in Inter-American Coal Holding N.V., which
has interests in mining operations in Venezuela.
In the second half of 1998, the company began actively marketing its entire coal
business for sale. In the first quarter 1999, P&M sold its 33 percent interest
in the Black Beauty Coal Company. In the fourth quarter 1999, the Company
discontinued negotiations to sell the Company's remaining coal operations, and
the assets are no longer held for sale.
Sales and other operating revenues in 1999 were $366 million, a decrease of 9
percent from 1998. Sales of coal from P&M's wholly owned mines and from its
affiliates were 16.0 million tons, a decrease of 31 percent from 1998. The
average selling price for coal from mines owned and operated by P&M was $22.73
per ton in 1999, compared with $23.21 per ton in 1998. At year-end 1999, P&M
controlled approximately 398 million tons of developed and undeveloped coal
reserves, including significant reserves of environmentally desirable low-sulfur
fuel.
Electronic Commerce and Technology
----------------------------------
Electronic Business: During 1999, Chevron implemented a new growth initiative
aimed at developing business opportunities capitalizing on Internet Web
technology. The company established a subsidiary to leverage electronic
opportunities in Chevron's business units. Additionally, the new subsidiary
plans to develop new Internet "business to business" (B2B) ideas for use in the
company's own operations and for potential development with other outside
investors. During the first quarter 2000, the company announced its
participation in a number of B2B joint ventures. These include Internet
marketplaces of goods and services for the oil and gas industry, and convenience
store and small business retailers. The company plans to develop additional
Internet commerce opportunities in the future, for use in its own operations and
for offer to third party investors.
New Technology: Chevron also established a technology ventures unit during 1999.
The company plans to focus on making equity investments in a broad portfolio of
emerging technology companies with expertise in information technology,
materials sciences and biotechnology. These investments will be directed toward
areas where the company will potentially be a customer.
Research and Environmental Protection
-------------------------------------
Research: The company's principal research laboratories are at Richmond and San
Ramon, California and Houston, Texas. In February 1999, the company relocated
most of the research activities previously carried out at La Habra, California
to the San Francisco Bay Area. The Richmond facility engages in research on new
and improved refinery processes, develops petroleum and chemicals products, and
provides technical services for the company and its customers. The San Ramon and
Houston facilities conduct research and provide technical support
-18-
in geology, geophysics, and oil production methods such as hydraulics, assisted
recovery programs and drilling, including offshore drilling. Employees in
subsidiaries engaged primarily in research activities at year-end 1999 numbered
more than 900, with approximately 500 additional employees working on research
activities in the company's other operating units.
Chevron's research and development expenses were $182 million, $187 million and
$179 million for the years 1999, 1998 and 1997, respectively.
Licenses under the company's patents are generally made available to others in
the petroleum and chemicals industries, but the company does not derive
significant income from licensing patents.
Environmental Protection: Virtually all aspects of the company's businesses are
subject to various federal, state and local environmental, health and safety
laws and regulations. These regulatory requirements continue to change and
increase in both number and complexity, and govern not only the manner in which
the company conducts its operations, but also the products it sells. Chevron
expects more environmental-related regulations in the countries where it has
operations. Most of the costs of complying with the myriad laws and regulations
pertaining to its operations are embedded in the normal costs of conducting its
business.
In 1999, the company's U.S. capitalized environmental expenditures were $121
million, representing approximately 7 percent of the company's total
consolidated U.S. capital and exploratory expenditures. The company's U.S.
capitalized environmental expenditures were $192 million and $177 million in
1998 and 1997, respectively. These environmental expenditures include capital
outlays to retrofit existing facilities, as well as those associated with new
facilities. The expenditures are predominantly in the petroleum segment and
relate mostly to air and water quality projects and activities at the company's
refineries, oil and gas producing facilities and marketing facilities. For 2000,
the company estimates U.S. capital expenditures for environmental control
facilities will be $137 million. The future annual capital costs of fulfilling
this commitment are uncertain and will be governed by several factors including
future changes to regulatory requirements.
Further information on environmental matters and their impact on Chevron are
contained in Management's Discussion and Analysis of Financial Condition and
Results of Operation on page FS-4 of this Annual Report on Form 10-K. The
company's 1999 environmental expenditures, remediation provisions and year-end
environmental reserves are discussed on page FS-4 of this Annual Report on Form
10-K.
-19-
Item 2. Properties
The location and character of the company's oil, natural gas and coal properties
and its refining, marketing, transportation and chemicals facilities are
described above under Item 1. Business. Information in response to the
Securities Exchange Act Industry Guide No. 2 ("Disclosure of Oil and Gas
Operations") is also contained in Item 1 and in Tables I through VI on pages
FS-32 to FS-37 of this Annual Report on Form 10-K. Note 13, "Properties, Plant
and Equipment," to the company's financial statements contained on page FS-25 of
this Annual Report on Form 10-K presents information on the company's gross and
net properties, plant and equipment, and related additions and depreciation
expense, by geographic area and operating segment for 1999, 1998 and 1997.
Item 3. Legal Proceedings
A. Cities Service Co. v. The Gulf Oil Corporation
Oklahoma State District Court for the District of Tulsa.
This matter, previously reported as Item 3A of company's Annual Report on Form
10-K for the year ended December 31, 1998, and amended in Item 1 of the
company's Amended Quarterly Report for the period ended June 30, 1999 and its
Quarterly Report for the period ended September 30, 1999, was resolved pursuant
to a settlement agreement entered into on November 18, 1999. OXY USA agreed to
accept $775 million in full satisfaction of all liability related to the
judgment and the claims asserted in the lawsuit. In accord with the settlement,
Chevron's certiorari petition was dismissed on November 18, 1999. Chevron made
the settlement payment on December 1, 1999, and OXY USA executed a formal
satisfaction of the judgment that same day. Also on December 1, 1999, the Tulsa
District Court entered an order exonerating and releasing the supersedeas bond.
B. Rangely Field - Clean Water Act.
In 1999, EPA made a civil penalty demand of $1.5 million under the Clean Water
Act concerning spills that have occurred at the company's operations at the
Rangely Field, Colorado.
C. El Segundo Refinery - Clean Air Act.
In 1998, EPA issued a Notice of Violation alleging Clean Air Act violations at
the company's El Segundo, California, refinery.
D. Richmond Refinery - VOC emissions.
The Bay Area Air Quality Management District has initiated an enforcement action
against the company's Richmond, California, refinery associated with alleged
violations of the District's rules relating to fugitive VOC emissions from
connections.
E. Hawaii Refining and Marketing Facilities - Clean Air Act.
The Department of Justice has made civil penalty demands totaling approximately
$1.5 million alleging violations of the Clean Air Act by the company's Hawaii
refinery and its associated Hilo and Kahului terminals.
F. Perth Amboy Refinery - Clean Air Act.
The company has agreed to pay $145,000 to settle allegations that it failed to
monitor certain emissions as required by the Clean Air Act at its Perth Amboy,
New Jersey, refinery.
Other previously reported legal proceedings have been settled, not pursued, or
the issues resolved as not to merit further reporting.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of 1999 to a vote of security
holders through the solicitation of proxies or otherwise.
-20-
Executive Officers of the Registrant at March 1, 2000
Name and Age Executive Office Held Major Area of Responsibility
- ------------------ ---------------------------- ----------------------------
D.J. O'Reilly 53 Chairman of the Board since Chief Executive Officer
2000 Human Resources
Director since 1998
Executive Committee Member
since 1994
R.H. Matzke 63 Vice-Chairman of the Board Worldwide Exploration and
since 2000 Production Activities
Director since 1997
President of Chevron Overseas
Petroleum Inc.from 1989 to 2000
Executive Committee Member
since 1993
J.N. Sullivan 62 Vice-Chairman of the Board Worldwide Refining,Marketing
since 1989 and Transportation
Director since 1988 Activities,
Executive Committee Member Chemicals, Real Estate,
since 1986 Environmental, Coal,
Administrative Services,
Aircraft Services
D.W. Callahan 57 Vice-President since 1999 Chemicals
President of Chevron Chemical
Company since 1999
Executive Committee Member
since 1999
H.D. Hinman 59 Vice-President and General Law
Counsel since 1993
Executive Committee Member
since 1993
G.L. Kirkland 49 President of Chevron U.S.A. North American
Production Company since 2000 Exploration and Production
Executive Committee Member
since 2000
M.R. Klitten 55 Vice-President and Chief Finance
Financial Officer since 1989
Executive Committee Member
since 1989
P.J. Robertson 53 Vice-President since 1994 Overseas Exploration and
President of Chevron Overseas Production
Petroleum Inc. since 2000
Executive Committee Member
since 1997
P.A. Woertz 46 Vice-President since 1998 U.S. Refining, Marketing,
President of Chevron Products Logistics and Trading
Company since 1998
Executive Committee Member
since 1998
The Executive Officers of the Corporation consist of the Chairman of the Board,
the Vice-Chairmen of the Board, and such other officers of the Corporation who
are either Directors or members of the Executive Committee, or are chief
executive officers of principal business units. Except as noted below, all of
the Corporation's Executive Officers have held one or more of such positions for
more than five years.
D.W. Callahan - Senior Vice President, Chevron Chemical Company - 1991
- President, Chevron Chemical Company - 1999
-21-
G.L. Kirkland - General Manager, Production, Chevron Nigeria Limited - 1992
- General Manager, Asset Management,
Chevron Nigeria Limited - 1996
- Chairman and Managing Director, Chevron Nigeria Limited - 1996
- President, Chevron USA Production Company - 2000
P.J. Robertson - Vice-President for Strategic Planning and Quality,
Chevron Corporation - 1994
- Executive Vice-President of Chevron U.S.A. Production
Company - 1996
- Vice-President, Chevron Corporation and
President of Chevron U.S.A. Production Company - 1997
P.A. Woertz - President, Chevron Canada Limited - 1993
- President, Chevron International Oil Company - 1996
- Vice President, Logistics and Trading, Chevron
Products Company - 1996
- President, Chevron Products Company - 1998
K.T. Derr, Chairman of the Board and Chief Executive Officer since 1989, retired
on December 31, 1999.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The information on Chevron's common stock market prices, dividends, principal
exchanges on which the stock is traded and number of stockholders of record is
contained in the Quarterly Results and Stock Market Data tabulations, on page
FS-11 of this Annual Report on Form 10-K.
Item 6. Selected Financial Data
The selected financial data for years 1995 through 1999 are presented on page
FS-38 of this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The index to Financial Statements, Supplementary Data and Management's
Discussion and Analysis of Financial Condition and Results of Operations is
presented on page FS-1 of this Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data
The index to Financial Statements, Supplementary Data and Management's
Discussion and Analysis of Financial Condition and Results of Operations is
presented on page FS-1 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
-22-
PART III
Item 10. Directors and Executive Officers of the Registrant
The information on Directors appearing on pages 4 through 7 of the Notice of
Annual Meeting of Stockholders and Proxy Statement dated March 22, 2000, is
incorporated herein by reference in this Annual Report on Form 10-K. See
Executive Officers of the Registrant on pages 21 and 22 of this Annual Report on
Form 10-K for information about executive officers of the company.
Item 405 of Regulation S-K calls for disclosure of any known late filing or
failure by an insider to file a report required by Section 16 of the Exchange
Act. This disclosure is contained on page 11 of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated March 22, 2000 under the heading "Section
16(a) Beneficial Ownership Reporting Compliance," and is incorporated herein by
reference in this Annual Report on Form 10-K. Chevron believes all filing
requirements were complied with during 1999.
Item 11. Executive Compensation
The information on pages 12 through 19 of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated March 22, 2000, is incorporated herein by
reference in this Annual Report on Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information on page 11 of the Notice of Annual Meeting of Stockholders and
Proxy Statement dated March 22, 2000 appearing under the heading "Directors' and
Executive Officers' Stock Ownership," is incorporated herein by reference in
this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions
There were no relationships or related transactions requiring disclosure under
Item 404 of Regulation S-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements: Page (s)
Report of Independent Accountants FS-12
Consolidated Statement of Income
for the three years ended December 31, 1999 FS-13
Consolidated Statement of Comprehensive Income
for the three years ended December 31, 1999 FS-13
Consolidated Balance Sheet at December 31,
1999 and 1998 FS-14
Consolidated Statement of Cash Flows
for the three years ended December 31, 1999 FS-15
Consolidated Statement of Stockholders' Equity
for the three years ended December 31, 1999 FS-16
Notes to Consolidated Financial Statements FS-17 to FS-31
-23-
(2) Financial Statement Schedules:
Caltex Group of Companies Combined
Financial Statements C-1 to C-24
The Combined Financial Statements of the Caltex Group of Companies
are filed as part of this report. All schedules are omitted because
they are not applicable or the required information is included in
the combined financial statements or notes thereto.
(3) Exhibits:
The Exhibit Index on pages 26 and 27 of this Annual Report on Form
10-K lists the exhibits that are filed as part of this report.
(b) Reports on Form 8-K:
(1) A Current Report on Form 8-K, dated November 18, 1999, was filed by
the company on November 18, 1999. In this report, Chevron announced
that it had reached an agreement with Occidental Petroleum to
settle the Cities Service litigation.
(2) A Current Report on Form 8-K, dated January 18, 2000, was filed by
the company on January 18, 2000. In this report Chevron filed
restated financial statements for the three- and six-month periods
ended June 30, 1999 and the three- and nine- month periods ended
September 30, 1999. These statements were restated to recognize the
initial ownership of certain marketable equity securities and
subsequent unrealized gains on these securities.
(3) A Current Report on Form 8-K, dated March 6, 2000, was filed by the
company on March 6, 2000. In this report, Chevron filed the company's
1999 audited financial statements.
(4) An amended current report on Form 8-K, dated March 7, 2000 was
filed by the company on March 7, 2000. In this amended report,
Chevron re-filed the company's 1999 audited financial statements
previously filed in a Current Report on Form 8-K, dated March 6,
2000, filed on March 6, 2000.
-24-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 29th day of March
2000.
Chevron Corporation
By DAVID J. O'REILLY*
----------------------------------------
David J. O'Reilly, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 29th day of March 2000.
Principal Executive Officers (And Directors) Directors
DAVID J. O'REILLY* SAMUEL H. ARMACOST*
- --------------------------------------------- -------------------------
David J. O'Reilly, Chairman of the Board Samuel H. Armacost
RICHARD H. MATZKE* SAM GINN *
- --------------------------------------------- -------------------------
Richard H. Matzke, Vice-Chairman of the Board Sam Ginn
JAMES N. SULLIVAN* CARLA A. HILLS *
- --------------------------------------------- -------------------------
James N. Sullivan, Vice-Chairman of the Board Carla A. Hills
J. BENNETT JOHNSTON*
-------------------------
J. Bennett Johnston
CHARLES M. PIGOTT*
-------------------------
Principal Financial Officer Charles M. Pigott
MARTIN R. KLITTEN* CONDOLEEZZA RICE*
- --------------------------------------------- -------------------------
Martin R. Klitten, Vice-President Condoleezza Rice
and Chief Financial Officer
FRANK A. SHRONTZ*
-------------------------
Principal Accounting Officer Frank A. Shrontz
STEPHEN J. CROWE* CHANG-LIN TIEN *
- --------------------------------------------- -------------------------
Stephen J. Crowe, Comptroller Chang-Lin Tien
JOHN A. YOUNG*
-------------------------
John A. Young
*By: /s/ LYDIA I. BEEBE
--------------------------------------
Lydia I. Beebe, Attorney-in-Fact
-25-
EXHIBIT INDEX
Exhibit
No. Description
- -------- ----------------------------------------------------------------------
3.1 Restated Certificate of Incorporation of Chevron Corporation,
dated November 23, 1998, filed as Exhibit 3.1 to Chevron
Corporation's Annual Report on Form 10-K for 1998 dated March 31,
1999, and incorporated by reference herein.
3.2 By-Laws of Chevron Corporation, as amended November 23, 1998, filed as
Exhibit 3.2 to Chevron Corporation's Annual Report on Form 10-K for
1998 dated March 31, 1999, and incorporated by reference herein.
4.1 Rights Agreement dated as of November 23, 1998, between Chevron
Corporation and ChaseMellon Shareholder Services L.L.C., as Rights
Agent, filed as Exhibit 4.1 to Chevron Corporation's Current Report on
Form 8-K dated November 23, 1998, and incorporated herein by
reference.
Pursuant to the Instructions to Exhibits, certain instruments defining
the rights of holders of long-term debt securities of the corporation
and its consolidated subsidiaries are not filed because the total
amount of securities authorized under any such instrument does not
exceed 10 percent of the total assets of the corporation and its
subsidiaries on a consolidated basis. A copy of such instrument will
be furnished to the Commission upon request.
10.1 Management Incentive Plan of Chevron Corporation, as amended and
restated effective October 30, 1996, filed as Appendix B to Chevron
Corporation's Notice of Annual Meeting of Stockholders and Proxy
Statement dated March 21, 1997, and incorporated herein by reference.
10.2 Chevron Corporation Excess Benefit Plan, amended and restated as of
July 1, 1996, filed as Exhibit 10 to Chevron Corporation's Report on
Form 10-Q for the quarterly period ended March 31, 1997, and
incorporated herein by reference.
10.3 Supplemental Pension Plan of Gulf Oil Corporation, amended as
of June 30, 1986, filed as Exhibit 10.4 to Chevron
Corporation's Annual Report on Form 10-K for 1986 and incorporated
herein by reference.
10.4 Chevron Restricted Stock Plan for Non-Employee Directors, as amended
and restated effective April 30, 1997, filed as Appendix A to Chevron
Corporation's Notice of Annual Meeting of Stockholders and Proxy
Statement dated March 21, 1997, and incorporated herein by reference.
10.5 Chevron Corporation Long-Term Incentive Plan, as amended and restated
effective October 30, 1996, filed as Appendix C to Chevron
Corporation's Notice of Annual Meeting of Stockholders and Proxy
Statement dated March 21, 1997, and incorporated herein by reference.
10.6 Chevron Corporation Salary Deferral Plan for Management Employees,
effective January 1, 1997, filed as Exhibit 10 to Chevron
Corporation's Report on Form 10-Q for the quarterly period ended June
30, 1997, and incorporated herein by reference.
-26-
EXHIBIT INDEX
(continued)
Exhibit
No. Description
- -------- --------------------------------------------------------------------
12.1 Computation of Ratio of Earnings to Fixed Charges (page E-1).
21.1 Subsidiaries of Chevron Corporation (page E-2).
23.1 Consent of PricewaterhouseCoopers LLP (page E-3).
23.2 Consent of KPMG (page E-4).
24.1 Powers of Attorney for directors and certain officers of
to Chevron Corporation, authorizing the signing of the Annual Report
24.14 on Form 10-K on their behalf.
27.1 Financial Data Schedule
99.1 Definitions of Selected Financial Terms (page E-5).
Copies of above exhibits not contained herein are available, at a fee of $2 per
document, to any security holder upon written request to the Secretary's
Department, Chevron Corporation, 575 Market Street, San Francisco, California
94105.
-27-
INDEX TO MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page(s)
-------------
Management's Discussion and Analysis FS-2 to FS-11
Quarterly Results and Stock Market Data FS-11
Report of Management FS-12
Report of Independent Accountants FS-12
Consolidated Statement of Income FS-13
Consolidated Statement of Comprehensive Income FS-13
Consolidated Balance Sheet FS-14
Consolidated Statement of Cash Flows FS-15
Consolidated Statement of Stockholders' Equity FS-16
Notes to Consolidated Financial Statements FS-17 to FS-31
Supplemental Information on Oil and Gas Producing Activities FS-32 to FS-37
Five-Year Financial Summary FS-38
FS-1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1999 KEY INDICATORS
* Net income increased 55 percent to $2.070 billion
* Exploration and production operational earnings rose 80 percent
* Average U.S. crude oil realizations increased 41 percent to $16.11 per
barrel
* Average U.S. natural gas realizations were up 7 percent to $2.16 per
thousand cubic feet
* International liquids production increased for the 10th consecutive year
- up 4 percent
* Refining, marketing and transportation operational earnings declined 44
percent on lower margins
* Worldwide net oil and gas reserves additions exceeded production for the
seventh consecutive year
* Annual dividends increased for the 12th consecutive year
KEY FINANCIAL RESULTS
Millions of dollars,
except per-share amounts 1999 1998 1997
- -----------------------------------------------------------------
Net Income ...................... $ 2,070 $ 1,339 $ 3,256
Special (Charges) Credits
Included in Net Income (216) (606) 76
- -----------------------------------------------------------------
Earnings, Excluding Special Items $ 2,286 $ 1,945 $ 3,180
- -----------------------------------------------------------------
Per Share:
Net Income - Basic $ 3.16 $ 2.05 $ 4.97
- Diluted .... $ 3.14 $ 2.04 $ 4.95
Dividends ..................... $ 2.48 $ 2.44 $ 2.28
Sales and
Other Operating Revenues ...... $35,448 $29,943 $40,596
Return on:
Average Capital Employed ...... 9.4% 6.7% 15.0%
Average Stockholders' Equity .. 11.9% 7.8% 19.7%
=================================================================
Chevron's net income for 1999 was $2.070 billion, up 55 percent from 1998 net
income of $1.339 billion, but 36 percent lower than record earnings of $3.256
billion in 1997. Net special charges of $216 million in 1999 included losses
from asset write-downs, environmental remediation provisions and restructuring
charges, partially offset by benefits from the sale of assets, net favorable
adjustments for prior years' taxes and litigation issues and net LIFO inventory
gains. Net special charges in 1998 included a loss provision of $637 million for
litiga