Chevron Announces $19.6 Billion Capital and Exploratory Budget for 2007

Chevron Corporation (NYSE: CVX - News) announced a $19.6 billion capital and exploratory spending program for 2007, a 20 percent increase from expected outlays of approximately $16 billion in 2006.

"Our 2007 capital and exploratory program is a record level of investment by our company," said Chairman and CEO Dave O'Reilly. "About 75 percent of next year's budget is for oil and gas exploration and production projects worldwide," O'Reilly added. "Another 20 percent is dedicated to the company's global refining, marketing and transportation businesses which manufacture and sell gasoline, clean diesel fuel, biofuels and other refined products in the company's marketing areas." O'Reilly said the 2007 budget includes $6.7 billion of total investment in the United States.

The majority of the planned increase is related to the company's exploration and production operations. The higher investment reflects the impact of several large, multiyear development projects being in their most capital-intensive phases and the effect of higher costs for materials and services currently experienced by the oil and gas industry worldwide. "Our long-range focus on capital discipline in executing our excellent project queue is critical in this environment," O'Reilly said.

    Highlights of the 2007 Capital and Exploratory Spending Program

    Chevron 2007 Planned Capital & Exploratory Expenditures      $ Billions
    U.S. Upstream                                                $4.0
    International Upstream                                       10.6
    U.S. Downstream                                               1.6
    International Downstream                                      2.2
    Chemicals and Other                                           1.2
    TOTAL (Including Chevron's Share of Expenditures
     by Affiliated Companies)                                   $19.6
    Expenditures by Affiliated Companies                         (2.4)
    Cash Expenditures by Chevron Consolidated Companies         $17.2

    Upstream - Exploration and Production

Capital and exploratory spending of $14.6 billion is budgeted for exploration, production and natural gas-related projects. A significant component of this spending relates to upstream development projects that are building 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 is also earmarked for further appraisal and evaluation of other prospective areas in the world's major hydrocarbon basins.

"Our upstream investments are aimed at finding and developing oil and gas resources to increase production and help supply the energy needs of world markets," said George Kirkland, Chevron's executive vice president of Upstream and Gas. "Our focus is both on improving the performance of existing fields and funding new projects that will provide this future production growth."

    Major upstream spending in 2007 includes projects in the following areas:

    * U.S. Gulf of Mexico - deepwater exploration and development, including
      Tahiti, Great White Perdido, Blind Faith and Jack.
    * Angola - deepwater developments, including Tombua Landana, and
      construction of liquefied natural gas (LNG) facilities.
    * Republic of the Congo - development of the Moho-Bilondo Field.
    * Nigeria - continued development of the deepwater Agbami Field, and
      additional deepwater exploration.
    * Kazakhstan - expansion of the Tengiz Field.
    * Australia - further development of the Greater Gorgon Area natural gas
      resource offshore Western Australia.
    * Canada - expansion of the Athabasca Oil Sands Project.
    * Brazil - development of the Frade Field.

    Downstream - Refining, Marketing and Transportation

Capital spending of $3.8 billion in 2007 is budgeted for downstream operations, of which $1.6 billion is for projects in the United States. These expenditures are aimed at allowing the company to produce cleaner and more sophisticated fuels, to increase production of transportation fuels globally, and to enhance the company's ability to manufacture fuels and other products from heavy and/or sour crude oils.

Outlays in 2007 include projects to upgrade the company's refineries in Mississippi and California. The company's 50 percent-owned GS Caltex affiliate is also in the process of a major upgrade to its Yeosu refining complex in South Korea. And in support of upstream projects to help commercialize the company's large natural gas resource base outside the United States, expenditures will be made in 2007 on the construction of LNG tankers and gas- to-liquids facilities.

Chemicals and Other

Expenditures of approximately $1.2 billion in 2007 are estimated for investments in chemicals, technology, and other corporate activities. Technology investments include projects related to molecular transformation, unconventional hydrocarbon technologies, reservoir management, and development of second-generation biofuel production technologies.

Common Stock Repurchase Program

The company also indicated board approval to acquire up to $5 billion of the company's common stock over a period of up to three years. This program follows two other $5 billion stock buyback programs that were initiated in April 2004 and December 2005, with the most recent program having been completed in 12 months.


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