Fitch Affirms Chevron's IDR at 'AA'; Outlook Stable

Fitch Ratings has affirmed Chevron Corporation (NYSE:CVX) and its subsidiary Chevron Funding Corp., as follows:

Chevron Corporation:

Issuer Default Rating (IDR) 'AA';

Senior unsecured 'AA';

Short-term IDR 'F1+';

Commercial paper 'F1+'.

Chevron Funding Corp.

Commercial Paper 'F1+'

The Rating Outlook is Stable.

The ratings reflect the size and quality of the company's large, worldwide asset base, its strong cash flow generating capability and its conservative financial strategy. Worldwide, Chevron is the fourth largest publicly traded company in terms of proven oil and gas reserves, with some 11.6 billion barrels of oil and gas equivalent (boe), as of Dec. 31, 2006. It is also the fourth largest producer, with daily production of approximately 2.6 million boe. The large reserve base coupled with current production levels result in a lengthy reserve life of slightly over 12 years. Downstream, the company has 20 refineries globally with a combined refining capacity of approximately 2 million b/d and 25,800 branded retail outlets worldwide. In 2006, Chevron has produced $24.3 billion in operating cash flow while spending $18.2 billion in capital expenditures and dividends. Currently, the company's cash and marketable securities balance of approximately $12 billion exceed it balance sheet debt of $8.2 billion. So far in 2007, the company has produced $10.1 billion in NIAT of which upstream constituted approximately 65% and downstream made of 30%.

Like many in the industry, Chevron has found it hard in the last few years replacing its proven reserves at economic costs. Proven reserve replacement from all sources last year was only slightly over 70% although if one includes the company's additions from oil sands that number jumps approximately 101%. A key challenge to the company in the future is to replace its reserve base at reasonable costs. Absent success in organically replacing reserves, Chevron may turn to purchasing reserves in the marketplace.