Chevron: 3Q11 Results Comparable to 2Q11

Chevron reported in its interim update that earnings for the third quarter 2011 are expected to be comparable with second quarter 2011 results. Lower crude oil realizations and lower liftings are expected to reduce upstream earnings. Downstream earnings in the third quarter are expected to be higher, largely reflecting an asset sale gain. Earnings in both operating segments are expected to benefit from favorable non-cash foreign currency effects due to the strengthening of the U.S. dollar in the third quarter against other major currencies.

Basis for Comparison in Interim Update

The interim update contains certain industry and company operating data for the third quarter 2011. The production volumes, realizations, margins and certain other items in the report are based on a portion of the quarter and are not necessarily indicative of Chevron's full quarterly results to be reported on October 28, 2011. The reader should not place undue reliance on this data.

Readers should be advised that portions of the commentary below compare results for the first two months of the third quarter 2011 to full second quarter 2011 results, as indicated.

UPSTREAM

The table that follows includes information on production and price indicators for crude oil and natural gas for specific markets. Actual realizations may vary from indicative pricing due to quality and location differentials and the effect of pricing lags. International earnings are driven by actual liftings, which may differ from production due to the timing of cargoes and other factors.

U.S. net oil-equivalent production decreased 18,000 barrels per day during the first two months of the third quarter, due to increased maintenance activity across multiple assets in the Gulf of Mexico. International net oil-equivalent production declined 74,000 barrels per day during the first two months of the third quarter, largely reflecting impacts related to a third party pipeline incident in Thailand, now remediated, and planned turnaround activity in Kazakhstan and the U.K. The company expects increased production in the fourth quarter 2011 compared to the third quarter 2011, reflecting the completion of these repairs and planned turnarounds, as well as new production.

U.S. crude oil realizations decreased nearly $8 per barrel to $100.87 during the first two months of the third quarter. International liquids realizations declined $3.40 to $103.44 per barrel during the same period. U.S. natural gas realizations decreased $0.19 to $4.16 per thousand cubic feet, while international natural gas realizations increased $0.11 to $5.60 per thousand cubic feet during the first two months of the third quarter.

As a consequence of the recently enacted tax increase on U.K. oil and gas producers, international upstream third quarter results are expected to include a catch-up charge of about $150 million and an increase in current period tax effects of about $40 million.

ALL OTHER

The company's general guidance for the quarterly net after-tax charges related to corporate and other activities is between $250 million and $350 million. Due to foreign currency effects and the potential for irregularly occurring accruals related to income taxes and other matters, actual results may significantly differ from the guidance range.

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