Chevron Sees 2Q Earnings Benefiting from Increase in Crude Oil Prices

Chevron reported in its interim update that upstream earnings for the second quarter 2009 compared with the first quarter are expected to benefit from an increase in prices for crude oil, largely offset by substantial unfavorable foreign currency effects.

Basis for Comparison in Interim Update

The interim update contains certain industry and company operating data for the second quarter 2009. 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 quarterly results to be reported on July 31, 2009. The reader should not place undue reliance on this data.

Unless noted otherwise, all commentary is based on two months of the second quarter 2009 versus full first quarter 2009 results.

Upstream-- Exploration and Production

Total U.S. oil-equivalent production during the first two months of the second quarter increased 11,000 barrels per day mainly due to activities in the Gulf of Mexico that included ongoing restoration of operations damaged by hurricanes last September, the ramp-up of production at Blind Faith, and the start-up at Tahiti.

International net oil-equivalent production decreased 13,000 barrels per day. The liquids component of oil-equivalent production decreased 4,000 barrels per day as the effects of planned field maintenance in Kazakhstan and Canada more than offset increased volumes associated with the continued ramp-up at the Agbami Field offshore Nigeria. Natural gas production decreased about 60 million cubic feet per day, largely reflecting lower sales in Thailand.

U.S. crude oil realizations for the first two months of the second quarter increased $11.94 per barrel to $48.79. International liquids realizations increased $9.40 to $48.83 per barrel. U.S. natural gas realizations declined $0.88 to $3.26 per thousand cubic feet, while average international natural gas realizations decreased $0.57 per thousand cubic feet to $3.64.

International upstream results for the first two months of the second quarter included unfavorable foreign currency effects in excess of $400 million resulting from the weakening of the U.S. Dollar against most other major currencies, a trend that continued in June. Additionally, the international upstream segment is expected to reflect charges of approximately $100 million associated with well write-offs in the quarter. Worldwide upstream depreciation expense is currently forecast to be in line with first quarter 2009 results.