Chevron Corporation

Capex

• Upstream spending estimated at $17.5 billion, reflecting an excellent queue of crude oil and natural gas projects
• Downstream budget of $4.1 billion includes a significant increase for investments at U.S. refineries

Chevron Corporation has announced a $22.9 billion capital and exploratory spending program for 2008, a 15 percent increase from estimated outlays of $20 billion in 2007. Included in the 2008 program are $2.6 billion of expenditures by affiliates, which do not require cash outlays by Chevron's consolidated companies.

About 75 percent of the 2008 spending program is for upstream oil and gas exploration and production projects worldwide. Another 20 percent is dedicated to the company's downstream businesses that manufacture, transport and sell gasoline, diesel fuel and other refined products. The total budget for expenditures in the United States is approximately $8 billion.

Highlights Of The 2008 Capital And Exploratory Spending Program ($ Billions)

U.S. Upstream: $4.8
International Upstream: 12.7
Total Upstream: 17.5
U.S. Downstream: 2.3
International Downstream: 1.8
Total Downstream: 4.1
Chemicals and Other: 1.3
TOTAL (Including Chevron's Share of Expenditures by Affiliated Companies): $22.9
Expenditures by Affiliated Companies: (2.6)
Cash Expenditures by Chevron Consolidated Companies: $20.3

Future Plans

Upstream - Exploration and Production

Spending of $17.5 billion is planned for exploration, production and natural gas-related projects. A significant portion relates to development projects that build on the company's successful and focused exploration results in recent years, including opportunities in the deepwater U.S. Gulf of Mexico and western Africa. Funding also is earmarked for further appraisal and evaluation of other prospective areas in the world's major hydrocarbon basins.

Major upstream spending in 2008 includes projects in the following areas:

• U.S. Gulf of Mexico - deepwater exploration and development, including Tahiti, Great White, Blind Faith, Jack and St. Malo.
• U.S Mid-Continent - gas development within the Piceance Basin.
• Nigeria - development of the Agbami and Usan deepwater fields.
• Angola - deepwater development of Tombua-Landana and construction of LNG facilities.
• Kazakhstan - expansion of production at the Tengiz Field.
• Western Australia - development of the offshore Gorgon Area natural gas resource.
• Thailand - development of the Platong Gas II project offshore Thailand.
• Canada - expansion of the Athabasca Oil Sands Project.
• Brazil - development of the Frade Field.
• Indonesia - northern expansion of the Duri Field steamflood project.

Downstream - Refining, Marketing and Transportation

Capital spending of $4.1 billion in 2008 is budgeted for global downstream operations, including $2.3 billion for projects in the United States. Included in the U.S. spending is $1.5 billion for improvements to the refinery network, representing an increase of more than 50 percent from expected outlays in 2007.

Downstream expenditures are aimed at enhancing the company's ability to safely and reliably manufacture transportation fuels from a variety of feedstocks, increasing energy efficiency and providing environmental benefits.

Outlays in 2008 include projects to upgrade the company's refineries in Mississippi and California. The company's 50 percent-owned GS Caltex affiliate will also continue development work on another potential major upgrading of its Yeosu refining complex in South Korea. In support of projects to commercialize the company's large natural gas resource base, downstream expenditures will be made in 2008 on gas-to-liquids manufacturing facilities.

Chemicals and Other

Expenditures of approximately $1.3 billion in 2008 are estimated for chemicals, technology, power generation and other corporate activities. Investments include projects related to unconventional hydrocarbon technologies, reservoir management, and gas-fired and renewable power generation.

Africa

Chevron plans to spend $20 billion over five years to boost production in Africa,  30 per cent more than was spent during the previous five years. Almost all of the money will be spent in the sub-Sahara's largest oil producers, Nigeria and Angola.

Up to $5 billion will be used for a plant in Escravos in Nigeria's Niger Delta region, which will convert gas-to-diesel. The facility, when completed in 2012, will have the capacity to produce about 30,000 barrels a day of a grade of diesel that will have fewer pollutants. Chevron also plans to start producing up to 125,000 barrels of oil a day in Tombua Landana, Angola in the next few years at a cost of $3 billion.

Production

Worldwide oil-equivalent production was 2.61 million barrels per day in the fourth quarter 2007, down 42,000 barrels per day from the corresponding 2006 period. Approximately 25,000 barrels per day of the decline was associated with the impact of higher prices on cost-recovery and variable-royalty volumes under provisions of certain production contracts outside the United States.

U.S. 4Q production - Net oil-equivalent production of 730,000 barrels per day declined 4 percent from the 2006 quarter. Net liquids production of 451,000 barrels per day was about 3 percent lower. Net natural gas production was down 6 percent to approximately 1.68 billion cubic feet per day, due mainly to normal field declines.

International 4Q production - Net oil-equivalent production of 1.88 million barrels per day in the 2007 fourth quarter was essentially flat from a year earlier. Increased output in Bangladesh, Trinidad and Tobago, and Thailand was offset by lower production in Canada, Nigeria and Indonesia. The net liquids component of production, including volumes produced from oil sands in Canada, declined about 5 percent to 1.32 million barrels per day, while net natural gas production increased 11 percent to 3.41 billion cubic feet per day.

Worldwide oil-equivalent production was 2.66 million barrels per day in the fourth quarter 2006, about the same as the corresponding 2005 period. Production for the full year 2006 averaged 2.67 million barrels per day, up from 2.52 million in 2005. The increase between years was mainly attributable to 2005 having included only five months of production associated with Unocal properties that were acquired in August of that year.

Reserves

At the end of 2007 Chevron reported total proved reserves of 7.08 billion boe.

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