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Delaware | 94-0890210 | 6001 Bollinger Canyon Road, San Ramon, California 94583-2324 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | (Address of principal executive offices) (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common stock, par value $.75 per share | New York Stock Exchange, Inc. Pacific Exchange |
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Item 1. | Business |
(a) | General Development of Business |
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• | Upstream —grow profitability in core areas, build new legacy positions and commercialize the company’s natural gas equity resource base by targeting North American and Asian markets | |
• | Downstream —improve returns by focusing on areas of market and supply strength |
• | Invest in peopleto achieve the company’s strategies | |
• | Leverage technologyto deliver superior performance and growth | |
• | Build organizational capabilityto deliver world-class performance in operational excellence, cost reduction, capital stewardship and profitable growth |
(b) | Description of Business and Properties |
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Crude Oil & Natural Gas | Memo: Oil-Equivalent | ||||||||||||||||||||||||
Liquids (Thousands of | Natural Gas (Millions of | (Thousands of | |||||||||||||||||||||||
Barrels per Day) | Cubic Feet per Day) | Barrels per Day)2 | |||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | ||||||||||||||||||||
United States: | |||||||||||||||||||||||||
California | 217 | 221 | 106 | 108 | 235 | 239 | |||||||||||||||||||
Gulf of Mexico3 | 112 | 154 | 579 | 815 | 208 | 290 | |||||||||||||||||||
Texas3 | 61 | 62 | 380 | 382 | 124 | 125 | |||||||||||||||||||
Wyoming | 9 | 10 | 161 | 166 | 36 | 38 | |||||||||||||||||||
Other States3 | 56 | 58 | 408 | 402 | 124 | 125 | |||||||||||||||||||
Total United States3 | 455 | 505 | 1,634 | 1,873 | 727 | 817 | |||||||||||||||||||
Africa: | |||||||||||||||||||||||||
Angola | 139 | 140 | 36 | 26 | 145 | 144 | |||||||||||||||||||
Nigeria | 125 | 119 | 68 | 59 | 136 | 129 | |||||||||||||||||||
Chad | 38 | 37 | 3 | — | 39 | 37 | |||||||||||||||||||
Republic of the Congo | 11 | 12 | 8 | — | 12 | 12 | |||||||||||||||||||
Democratic Republic of the Congo3,4 | 1 | 4 | — | — | 1 | 4 | |||||||||||||||||||
Asia-Pacific: | |||||||||||||||||||||||||
Partitioned Neutral Zone (PNZ)5 | 112 | 117 | 22 | 20 | 116 | 120 | |||||||||||||||||||
Thailand3 | 43 | 20 | 409 | 93 | 111 | 35 | |||||||||||||||||||
Australia | 42 | 43 | 362 | 305 | 102 | 93 | |||||||||||||||||||
Kazakhstan | 37 | 31 | 142 | 125 | 61 | 52 | |||||||||||||||||||
China | 26 | 18 | — | — | 26 | 18 | |||||||||||||||||||
Azerbaijan3 | 13 | — | 1 | — | 13 | — | |||||||||||||||||||
Philippines | 8 | 7 | 163 | 131 | 35 | 28 | |||||||||||||||||||
Bangladesh3 | — | — | 59 | — | 10 | — | |||||||||||||||||||
Myanmar3 | — | — | 32 | — | 5 | — | |||||||||||||||||||
Indonesia3 | 202 | 215 | 211 | 149 | 237 | 240 | |||||||||||||||||||
Other International: | |||||||||||||||||||||||||
United Kingdom | 83 | 106 | 300 | 340 | 133 | 163 | |||||||||||||||||||
Canada3 | 54 | 62 | 19 | 51 | 57 | 71 | |||||||||||||||||||
Denmark | 47 | 46 | 146 | 130 | 71 | 68 | |||||||||||||||||||
Argentina | 43 | 45 | 55 | 64 | 52 | 56 | |||||||||||||||||||
Norway | 8 | 11 | 2 | 2 | 9 | 11 | |||||||||||||||||||
Venezuela | 4 | 5 | 35 | 34 | 10 | 11 | |||||||||||||||||||
Netherlands3 | 2 | — | 4 | — | 3 | — | |||||||||||||||||||
Colombia | — | — | 185 | 210 | 31 | 35 | |||||||||||||||||||
Trinidad and Tobago | — | — | 115 | 135 | 19 | 23 | |||||||||||||||||||
Total International3 | 1,038 | 1,038 | 2,377 | 1,874 | 1,434 | 1,350 | |||||||||||||||||||
Total Consolidated Operations3 | 1,493 | 1,543 | 4,011 | 3,747 | 2,161 | 2,167 | |||||||||||||||||||
Equity Affiliates6 | 176 | 167 | 222 | 211 | 213 | 202 | |||||||||||||||||||
Total Including Affiliates3,7,8 | 1,669 | 1,710 | 4,233 | 3,958 | 2,374 | 2,369 | |||||||||||||||||||
1 | Net production excludes royalty interests owned by others. | |
2 | Barrels of oil-equivalent is crude oil and natural gas liquids plus natural gas converted to oil-equivalent gas (OEG) barrels at 6,000 cubic feet = 1 OEG barrel. | |
3 | Includes net production of the former Unocal properties from August 1, 2005. | |
4 | Chevron sold its interest in the Democratic Republic of the Congo in mid-2004 but acquired another interest as a result of the Unocal merger. | |
5 | Located between the Kingdom of Saudi Arabia and the State of Kuwait. | |
6 | Represents Chevron’s share of production by affiliates. Affiliates include Tengizchevroil (TCO) in Kazakhstan and Hamaca in Venezuela. | |
7 | Includes natural gas consumed on lease of 380 and 343 million cubic feet per day in 2005 and 2004, respectively. | |
8 | Does not include other produced volumes: |
Athabasca Oil Sands — net | 32 | 27 | — | — | 32 | 27 | ||||||||||||||||||
Boscan Operating Service Agreement | 111 | 113 | — | — | 111 | 113 |
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Productive2 | Productive2 | ||||||||||||||||
Oil Wells | Gas Wells | ||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||
United States: | |||||||||||||||||
California | 24,899 | 22,804 | 285 | 80 | |||||||||||||
Gulf of Mexico | 2,874 | 2,085 | 1,793 | 1,333 | |||||||||||||
Other U.S. | 24,947 | 9,248 | 10,684 | 4,953 | |||||||||||||
Total United States | 52,720 | 34,137 | 12,762 | 6,366 | |||||||||||||
Africa | 2,520 | 723 | 10 | 4 | |||||||||||||
Asia-Pacific | 2,846 | 1,430 | 1,703 | 1,072 | |||||||||||||
Indonesia | 7,986 | 7,843 | 186 | 148 | |||||||||||||
Other International | 1,700 | 895 | 295 | 115 | |||||||||||||
Total International | 15,052 | 10,891 | 2,194 | 1,339 | |||||||||||||
Total Consolidated Companies | 67,772 | 45,028 | 14,956 | 7,705 | |||||||||||||
Equity in Affiliates | 522 | 182 | — | — | |||||||||||||
Total Including Affiliates | 68,294 | 45,210 | 14,956 | 7,705 | |||||||||||||
Multiple completion wells included above: | 656 | 404 | 248 | 172 |
1 | Includes wells producing or capable of producing and injection wells temporarily functioning as producing wells. Wells that produce both oil and gas are classified as oil wells. | |
2 | Gross wells include the total number of wells in which the company has an interest. Net wells include wholly owned and the sum of the company’s fractional interests in gross wells. |
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Developed | |||||||||||||||||||||||||
and | |||||||||||||||||||||||||
Undeveloped2 | Developed2 | Undeveloped | |||||||||||||||||||||||
Gross | Net | Gross | Net | Gross | Net | ||||||||||||||||||||
United States: | |||||||||||||||||||||||||
California | 146 | 125 | 204 | 172 | 350 | 297 | |||||||||||||||||||
Gulf of Mexico | 4,726 | 3,277 | 2,115 | 1,425 | 6,841 | 4,702 | |||||||||||||||||||
Other U.S. | 5,023 | 3,546 | 5,845 | 2,664 | 10,868 | 6,210 | |||||||||||||||||||
Total United States | 9,895 | 6,948 | 8,164 | 4,261 | 18,059 | 11,209 | |||||||||||||||||||
Africa | 18,048 | 6,045 | 972 | 289 | 19,020 | 6,334 | |||||||||||||||||||
Asia-Pacific | 53,585 | 25,092 | 2,854 | 1,294 | 56,439 | 26,386 | |||||||||||||||||||
Indonesia | 12,678 | 7,171 | 388 | 348 | 13,066 | 7,519 | |||||||||||||||||||
Other International | 32,270 | 18,290 | 3,807 | 2,026 | 36,077 | 20,316 | |||||||||||||||||||
Total International | 116,581 | 56,598 | 8,021 | 3,957 | 124,602 | 60,555 | |||||||||||||||||||
Total Consolidated Companies | 126,476 | 63,546 | 16,185 | 8,218 | 142,661 | 71,764 | |||||||||||||||||||
Equity in Affiliates | 863 | 407 | 136 | 60 | 999 | 467 | |||||||||||||||||||
Total Including Affiliates | 127,339 | 63,953 | 16,321 | 8,278 | 143,660 | 72,231 | |||||||||||||||||||
1 | Gross acreage includes the total number of acres in all tracts in which the company has an interest. Net acreage is the sum of the company’s fractional interests in gross acreage. | |
2 | Developed acreage is spaced or assignable to productive wells. Undeveloped acreage is acreage where wells have not been drilled or completed to permit commercial production and that may contain undeveloped proved reserves. The gross undeveloped acres that will expire in 2006, 2007 and 2008 if production is not established by certain required dates are 5,130, 9,774 and 7,681, respectively. |
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Net Wells Completed1 | |||||||||||||||||||||||||||||||||
Wells | |||||||||||||||||||||||||||||||||
Drilling at | |||||||||||||||||||||||||||||||||
12/31/052 | 20053 | 2004 | 2003 | ||||||||||||||||||||||||||||||
Gross | Net | Prod. | Dry | Prod. | Dry | Prod. | Dry | ||||||||||||||||||||||||||
United States: | |||||||||||||||||||||||||||||||||
California | — | — | 661 | — | 636 | 1 | 418 | — | |||||||||||||||||||||||||
Gulf of Mexico | 5 | 4 | 29 | 3 | 43 | 3 | 47 | 6 | |||||||||||||||||||||||||
Other U.S. | 53 | 30 | 256 | 4 | 221 | 3 | 232 | 12 | |||||||||||||||||||||||||
Total United States | 58 | 34 | 946 | 7 | 900 | 7 | 697 | 18 | |||||||||||||||||||||||||
Africa | 4 | 1 | 38 | — | 36 | — | 24 | — | |||||||||||||||||||||||||
Asia-Pacific | 39 | 15 | 156 | — | 84 | — | 43 | — | |||||||||||||||||||||||||
Indonesia | — | — | 107 | — | 163 | — | 562 | — | |||||||||||||||||||||||||
Other International | 28 | 8 | 96 | — | 84 | — | 107 | — | |||||||||||||||||||||||||
Total International | 71 | 24 | 397 | — | 367 | — | 736 | — | |||||||||||||||||||||||||
Total Consolidated Companies | 129 | 58 | 1,343 | 7 | 1,267 | 7 | 1,433 | 18 | |||||||||||||||||||||||||
Equity in Affiliates | 8 | 3 | 23 | — | 20 | — | 18 | — | |||||||||||||||||||||||||
Total Including Affiliates | 137 | 61 | 1,366 | 7 | 1,287 | 7 | 1,451 | 18 | |||||||||||||||||||||||||
1 | Indicates the fractional number of wells completed during the year, regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for the production of crude oil or natural gas or, in the case of a dry well, the reporting of abandonment to the appropriate agency. | |
2 | Gross wells include the total number of wells in which the company has an interest. Net wells include wholly owned and the sum of the company’s fractional interests in gross wells. | |
3 | Includes completion of wells from August 1, 2005, related to the former Unocal operations. |
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Net Wells Completed1 | |||||||||||||||||||||||||||||||||
Wells | |||||||||||||||||||||||||||||||||
Drilling | |||||||||||||||||||||||||||||||||
at 12/31/052 | 20053 | 2004 | 2003 | ||||||||||||||||||||||||||||||
Gross | Net | Prod. | Dry | Prod. | Dry | Prod. | Dry | ||||||||||||||||||||||||||
United States: | |||||||||||||||||||||||||||||||||
California | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Gulf of Mexico | 10 | 6 | 14 | 8 | 13 | 8 | 25 | 9 | |||||||||||||||||||||||||
Other U.S. | 3 | 2 | 5 | 6 | 3 | 1 | 2 | 1 | |||||||||||||||||||||||||
Total United States | 13 | 8 | 19 | 14 | 16 | 9 | 27 | 10 | |||||||||||||||||||||||||
Africa | 1 | — | 4 | 1 | 3 | 1 | 3 | 1 | |||||||||||||||||||||||||
Asia-Pacific | 16 | — | 10 | — | 16 | — | 6 | 3 | |||||||||||||||||||||||||
Indonesia | — | — | 5 | — | 2 | — | 1 | — | |||||||||||||||||||||||||
Other International | 7 | 1 | 15 | 4 | 3 | 7 | 2 | 4 | |||||||||||||||||||||||||
Total International | 24 | 1 | 34 | 5 | 24 | 8 | 12 | 8 | |||||||||||||||||||||||||
Total Consolidated Companies | 37 | 9 | 53 | 19 | 40 | 17 | 39 | 18 | |||||||||||||||||||||||||
Equity in Affiliates | — | — | 7 | — | — | — | — | — | |||||||||||||||||||||||||
Total Including Affiliates | 37 | 9 | 60 | 19 | 40 | 17 | 39 | 18 | |||||||||||||||||||||||||
1 | Indicates the fractional number of wells completed during the year, regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for the production of crude oil or natural gas or, in the case of a dry well, the reporting of abandonment to the appropriate agency. Some exploratory wells are not drilled with the intention of producing from the well bore. In such cases, “completion” refers to the completion of drilling. Further categorization of productive or dry is based on the determination as to whether hydrocarbons in a sufficient quantity were found to justify completion as a producing well, whether or not the well is actually going to be completed as a producer. | |
2 | Represents wells that are in the process of drilling but have been neither abandoned nor completed as of the last day of the year. Gross wells include the total number of wells in which the company has an interest. Net wells include wholly owned and the sum of the company’s fractional interests in gross wells. | |
3 | Includes completion of wells from August 1, 2005, related to the former Unocal operations. |
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a) | United States |
California: The company has significant production in the San Joaquin Valley. In 2005, average daily net production was 212,000 barrels of crude oil, 106 million cubic feet of natural gas and 5,000 barrels of natural gas liquids, or 235,000 barrels of daily production on an oil-equivalent basis. Approximately 83 percent of the crude oil production is considered heavy oil (typically with API gravity lower than 22 degrees). |
Gulf of Mexico: Average daily net production rates during 2005 for the company’s combined interests in the Gulf of Mexico shelf and deepwater areas and the fields onshore Louisiana were 101,000 barrels of crude oil, 579 million cubic feet of natural gas and 11,000 barrels of natural gas liquids, or 208,000 oil-equivalent barrels daily. Prior to the hurricanes in August and September, oil-equivalent production in the Gulf of Mexico averaged approximately 300,000 barrels per day. Because of storm damages, fourth quarter 2005 production averaged only 160,000 barrels per day. The expected production level for the full year 2006 is about 200,000 barrels per day, with a slightly higher rate occurring in the first half of the year. Approximately 20,000 net oil-equivalent barrels of daily production are not expected to be sufficiently economic to restore. |
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b) | Africa |
Angola: Chevron is the operator in the Block 0 and Block 14 concessions off the west coast, north of the Congo River. Block 0, in which Chevron has a 39 percent interest, is a 2,155-square-mile concession adjacent to the Cabinda coastline. Block 14, in which Chevron has a 31 percent interest, is a 1,580-square-mile deepwater concession located west of Block 0. In Block 0, the company operates in two areas — A and B — composed of 20 fields that produced 119,000 barrels per day of net liquids in 2005. Area A, comprising 14 producing fields, averaged daily net production of approximately 73,000 barrels of crude oil and 1,000 barrels of liquefied petroleum gas (LPG) in 2005. Area B has six producing fields and averaged daily net production of 43,000 barrels of crude oil and 2,000 barrels of LPG in 2005. Included in the Area B production was the Sanha condensate natural gas utilization and Bomboco crude oil project, which started production in late 2004 and averaged daily net production of 10,000 barrels of oil-equivalent in 2005. The Block 0 concession extends through 2030. Initial recognition of proved reserves for the Sanha Bomboco project was made at the end of 2002. Initial reclassification of reserves from proved undeveloped to proved developed occurred in 2004 and is expected to continue during the drilling program that is scheduled for completion in 2007. |
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Equatorial Guinea: Chevron is a 22 percent partner and operator of the Block L offshore Equatorial Guinea. The first exploration well completed in 2003 was non-commercial. A partner joined the venture in 2005 in return for partially funding an additional exploratory well to be drilled in 2006. Nigeria: Chevron’s principal subsidiary in Nigeria, Chevron Nigeria Limited (CNL), operates and holds a 40 percent interest in 14 concessions, predominantly in the onshore and near-offshore regions of the Niger Delta. CNL operates under a joint-venture arrangement with the Nigerian National Petroleum Corporation (NNPC), which owns the remaining 60 percent interest. In 2005, daily net production from 32 fields averaged 122,000 barrels of crude oil, 3,000 barrels of LPG and 68 million cubic feet of natural gas. |
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c) | Asia-Pacific |
Australia:Chevron has a 17 percent interest in the North West Shelf (NWS) venture offshore Western Australia. Daily net production from the project during 2005 averaged 17,000 barrels of condensate, 360 million cubic feet of natural gas, 14,000 barrels of crude oil and 5,000 barrels of liquefied petroleum gas. Approximately 74 percent of the natural gas was sold in the form of LNG to major utilities in Japan and South Korea, primarily under long-term contracts. The remaining natural gas was sold to the Western Australia domestic market. Expansion of a fifth LNG train, which will increase export capacity by more than 4 million metric tons per year to approximately 16 million, was approved in 2005, with commissioning expected in 2008. In December 2005, the venture participants approved development of the Angel natural gas field, which will supply the fifth LNG train. NWS reserves are recorded according to existing sales agreements. Start-up of the fifth LNG train will accelerate reclassification of proved undeveloped reserves to proved developed. The end of the concession period for the NWS project is 2034. |
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Azerbaijan:Chevron acquired Unocal’s 10 percent working interest in the Azerbaijan International Operating Company (AIOC), which holds offshore crude oil reserves in the Caspian Sea from the Azeri-Chirag-Gunashli (ACG) project. Also as a result of acquiring Unocal, the company has a 9 percent equity interest in Baku-Tbilisi-Ceyhan (BTC) pipeline, which will transport AIOC production from Baku, Azerbaijan through Georgia to deepwater port facilities in Ceyhan, Turkey. The pipeline is planned to have a crude capacity of 1 million barrels per day. The first tanker-loading of crude oil at the Ceyhan marine terminal is expected to occur in the spring of 2006. In the five months of 2005 following the company’s acquisition of Unocal, AIOC’s daily net crude oil production averaged 31,000 barrels. First oil production from Phase I development of the ACG crude oil project began in early 2005, and production from the first of two additional platforms in Phase II began at the end of 2005, at which time a portion of proved undeveloped reserves were reclassified to proved developed. Production from the second platform is expected in late 2006. Phase III, which is the deepwater portion of the project and the final phase of development, was approved in 2004. Production start-up for Phase III is targeted for 2008. Proved undeveloped reserves will be reclassified to proved developed reserves as new wells are drilled and completed. The AIOC operations are conducted under a 30-year production-sharing contract that expires at the end of 2024. |
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Cambodia: Chevron operates and holds a 55 percent interest in the 1.6 million-acre Block A, located offshore in the Gulf of Thailand. In 2004, the company processed more than 600,000 acres of 3-D seismic data and drilled five exploration wells in its second exploration campaign, resulting in four crude oil discoveries. As a result, Chevron and its partners in 2005 obtained a two-year extension of the Cambodia exploration permit. As of early 2006, the company was evaluating data from the five wells and was planning a third drilling campaign that is expected to begin later in the year and be completed in 2007. |
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d) | Indonesia |
Chevron’s operated interests in Indonesia are primarily managed by two wholly owned subsidiaries, PT. Chevron Pacific Indonesia (CPI) and Chevron Geothermal Indonesia (CGI). CPI accounts for nearly half of Indonesia’s total crude oil output and operates four production-sharing contracts (PSCs), with interests ranging from 50 percent to 100 percent. CGI is a power generation company that operates the Darajat geothermal contract area in West Java with a total capacity of 145 megawatts and a cogeneration facility in support of CPI’s operation in North Duri. Chevron also has a 25 percent interest in a nonoperated joint venture in South Natuna Sea Block B. Through the Unocal acquisition, the company operates the Salak geothermal field located in West Java, with a total capacity of 377 megawatts, and holds interests in eight PSCs offshore East Kalimantan in the Kutei Basin and three PSCs offshore northeast Kalimantan. These interests range from 24 percent to 100 percent. |
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e) | Other International Areas |
Argentina: Chevron operates in Argentina through its subsidiary, Chevron San Jorge S.R.L. The company and its partners hold more than 2.8 million acres in the Neuquen and Austral basins in 17 operated production concessions and five exploration blocks (one operated and four nonoperated). Working interests range from approximately 19 percent to 100 percent in operated license areas. Exploration farm-out agreements were reached in three blocks during 2005, and farm-out efforts in the remaining two exploration blocks continued into 2006. Daily net production in 2005 averaged 43,000 barrels of crude oil and 55 million cubic feet of natural gas. Brazil:Chevron holds working interests ranging from 20 percent to 52 percent in four deepwater blocks that span a total of 178 million acres. Exploration is concentrated in the Campos and Santos basins. In the nonoperated Campos Basin Block BC-20, two areas — 38 percent-owned RJS610 and 30 percent-owned RJS609 — have been retained for development following the end of the exploration phase of this block. In the RJS610 area, a three-well appraisal program on the BC-20-610 Field was completed in December 2005, and results confirmed hydrocarbons from a new Eocene reservoir. FEED for this new field is expected to commence in early 2007. In the RJS609 area, one discovery well was drilled in 2005. Two appraisal wells are planned for 2006. Also in the Campos Basin, the company holds a 30 percent |
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Denmark: Chevron holds a 15 percent non-operating interest in the Danish Underground Consortium (DUC), which produces crude oil and natural gas from 15 fields in the Danish North Sea and has 12 percent to 27 percent interests in five exploration areas. Daily net production in 2005 from the DUC was 47,000 barrels of crude oil and 146 million cubic feet of natural gas. Faroe Islands: In January 2005, the company was awarded five offshore exploration blocks in the second offshore licensing round. The blocks cover approximately 170,000 acres and are near the Rosebank/ Lochnagar discovery in the United Kingdom. An extensive 2-D regional seismic program was acquired in 2005 and will be interpreted in 2006. The company has a 40 percent interest in the blocks and is the operator. Netherlands:Chevron gained interests ranging from 34 percent to 80 percent in nine blocks in the Netherlands sector of the North Sea as part of the Unocal acquisition. The company’s share of daily production from four producing blocks during the five months post-acquisition was 4,000 barrels of crude oil and 10 million cubic feet of natural gas. |
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December 31, | ||||||||||||||||||||||
2005 | Refinery Inputs | |||||||||||||||||||||
Number | 2005 | |||||||||||||||||||||
Locations | ||||||||||||||||||||||
Operable | 2004 | 2003 | ||||||||||||||||||||
Capacity | ||||||||||||||||||||||
Pascagoula | Mississippi | 1 | 325 | 263 | 312 | 301 | ||||||||||||||||
Richmond | California | 1 | 225 | 233 | 233 | 235 | ||||||||||||||||
El Segundo | California | 1 | 260 | 230 | 234 | 242 | ||||||||||||||||
Kapolei | Hawaii | 1 | 54 | 50 | 51 | 52 | ||||||||||||||||
Salt Lake City | Utah | 1 | 45 | 41 | 42 | 40 | ||||||||||||||||
El Paso1 | Texas | — | — | — | — | 36 | ||||||||||||||||
Other2 | 1 | 80 | 28 | 42 | 45 | |||||||||||||||||
Total Consolidated Companies — United States | 6 | 989 | 845 | 914 | 951 | |||||||||||||||||
Pembroke | United Kingdom | 1 | 210 | 186 | 209 | 175 | ||||||||||||||||
Cape Town | South Africa | 1 | 110 | 61 | 62 | 72 | ||||||||||||||||
Burnaby, B.C. | Canada | 1 | 55 | 45 | 49 | 50 | ||||||||||||||||
Batangas3 | Philippines | — | — | — | — | 49 | ||||||||||||||||
Total Consolidated Companies — International | 3 | 375 | 292 | 320 | 346 | |||||||||||||||||
Equity in Affiliates4 | Various Locations | 11 | 831 | 746 | 724 | 694 | ||||||||||||||||
Total Including Affiliates — International | 14 | 1,206 | 1,038 | 1,044 | 1,040 | |||||||||||||||||
Total Including Affiliates — Worldwide | 20 | 2,195 | 1,883 | 1,958 | 1,991 | |||||||||||||||||
1 | Chevron sold its interest in the El Paso Refinery in August 2003. | |
2 | Asphalt plants in Perth Amboy, New Jersey, and Portland, Oregon. The Portland plant was sold in February 2005. | |
3 | Chevron ceased refining operations at the Batangas Refinery in November 2003 in advance of the refinery’s conversion into a finished-product terminal. | |
4 | Chevron increased its ownership interest in the Singapore Refining Company Pte. Ltd. from 33 percent to 50 percent in July 2004. This increased the company’s share of operable capacity at December 31, 2004, by about 48,000 barrels per day. |
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2005 | 2004 | 2003 | |||||||||||
United States | |||||||||||||
Gasolines | 709 | 701 | 669 | ||||||||||
Jet Fuel | 291 | 302 | 314 | ||||||||||
Gas Oils and Kerosene | 231 | 218 | 196 | ||||||||||
Residual Fuel Oil | 122 | 148 | 123 | ||||||||||
Other Petroleum Products2 | 120 | 137 | 134 | ||||||||||
Total United States | 1,473 | 1,506 | 1,436 | ||||||||||
International3 | |||||||||||||
Gasolines | 669 | 717 | 643 | ||||||||||
Jet Fuel | 259 | 250 | 228 | ||||||||||
Gas Oils and Kerosene | 784 | 805 | 780 | ||||||||||
Residual Fuel Oil | 410 | 463 | 487 | ||||||||||
Other Petroleum Products2 | 173 | 167 | 164 | ||||||||||
Total International | 2,295 | 2,402 | 2,302 | ||||||||||
Total Worldwide3 | 3,768 | 3,908 | 3,738 | ||||||||||
1 Includes buy/sell arrangements: | 217 | 180 | 194 | |||||||||
2 Principally naphtha, lubricants, asphalt and coke. | ||||||||||||
3 Includes share of equity affiliates’ sales: | 540 | 536 | 525 |
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Net Mileage1 | |||||
United States: | |||||
Crude Oil2 | 2,882 | ||||
Natural Gas | 2,275 | ||||
Petroleum Products3 | 7,181 | ||||
Total United States | 12,338 | ||||
International: | |||||
Crude Oil2 | 451 | ||||
Natural Gas | 426 | ||||
Petroleum Products3 | 433 | ||||
Total International | 1,310 | ||||
Worldwide | 13,648 | ||||
1 | Partially owned pipelines are included in the company’s equity percentage. |
2 | Includes gathering lines related to the transportation function. Excludes gathering lines related to the U.S. and international production activities. |
3 | Includes refined products, chemicals and natural gas liquids. |
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U.S. Flag | Foreign Flag | ||||||||||||||||
Cargo Capacity | Cargo Capacity | ||||||||||||||||
Number | (Millions of Barrels) | Number | (Millions of Barrels) | ||||||||||||||
Owned | 3 | 0.8 | — | — | |||||||||||||
Bareboat Chartered | — | — | 18 | 26.7 | |||||||||||||
Time Chartered* | — | — | 18 | 9.3 | |||||||||||||
Total | 3 | 0.8 | 36 | 36.0 |
* | One year or greater. |
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29
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30
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31
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Item 2. | Properties |
Item 3. | Legal Proceedings |
Item 4. | Submission of Matters to a Vote of Security Holders |
32
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Name and Age | Executive Office Held | Major Area of Responsibility | ||||
D.J. O’Reilly | 59 | Chairman of the Board since 2000 Director since 1998 Vice Chairman from 1998 to 2000 President of Chevron Products Company from 1994 to 1998 Executive Committee Member since 1994 | Chief Executive Officer | |||
P.J. Robertson | 59 | Office of the Chairman since 2005 Vice Chairman of the Board since 2002 Vice President from 1994 to 2001 President of Chevron Overseas Petroleum Inc. from 2000 to 2002 Executive Committee Member since 1997 | Office of the Chairman; Strategic Planning; Policy, Government and Public Affairs; Human Resources | |||
J.E. Bethancourt | 54 | Executive Vice President since 2003 Executive Committee Member since 2003 | Technology; Chemicals; Coal; Health, Environment and Safety | |||
G.L. Kirkland | 55 | Executive Vice President since 2005 President of Chevron Overseas Petroleum Inc. from 2002 to 2004 Vice President from 2000 to 2004 President of Chevron U.S.A. Production Company from 2000 to 2002 Executive Committee Member from 2000 to 2001 and since 2005 | Worldwide Exploration and Production Activities and Global Gas Activities, including Natural Gas Trading | |||
S. Laidlaw | 50 | Executive Vice President since 2003 Executive Committee Member since 2003 | Business Development | |||
M.K. Wirth | 45 | Executive Vice President, effective March 1, 2006 President Global Supply and Trading from 2004 to 2006 Executive Committee Member since 2006 | Global Refining, Marketing, Lubricants, and Supply and Trading, excluding Natural Gas Trading | |||
S.J. Crowe | 58 | Vice President and Chief Financial Officer since 2005 Vice President and Comptroller from 2000 through 2004 Comptroller from 1996 to 2000 Executive Committee Member since 2005 | Finance | |||
C.A. James | 51 | Vice President and General Counsel since 2002 Executive Committee Member since 2002 | Law | |||
J.S. Watson | 49 | President of Chevron International Exploration & Production since 2005 Vice President and Chief Financial Officer from 2000 through 2004 Executive Committee Member from 2000 to 2004 | International Exploration and Production | |||
R.I. Wilcox* | 60 | President, Chevron North America Exploration & Production Company since 2002 Vice President since 2002 | North American Exploration and Production |
* | Effective March 31, 2006, R.I. Wilcox will retire from the company. Wilcox will be succeeded by G.P. Luquette, managing director of the European strategic business unit of Chevron International Exploration & Production Company. |
33
Table of Contents
J.E. Bethancourt | - | Vice President, Texaco Inc., President of Production Operations, Worldwide Exploration and Production, Texaco Inc. — 2000 | ||||
- | Vice President, Human Resources, Chevron Corporation — 2001 | |||||
- | Executive Vice President, Chevron Corporation — 2003 | |||||
C.A. James | - | Partner, Jones Day (a major U.S. law firm) — 1992 | ||||
- | Assistant Attorney General, Antitrust Division, U.S. Department of Justice — 2001 | |||||
- | Vice President and General Counsel — 2002 | |||||
S. Laidlaw | - | President and Chief Operating Officer, Amerada Hess — 2001 | ||||
- | Chief Executive Officer, Enterprise Oil plc — 2002 | |||||
- | Executive Vice President, Chevron Corporation — 2003 | |||||
R.I. Wilcox | - | Vice President and General Manager, Marine Transportation, Chevron Shipping Company — 1996 | ||||
- | General Manager, Asset Management, Chevron Nigeria Limited — 1999 | |||||
- | Chairman and Managing Director, Chevron Nigeria Limited — 2000 | |||||
- | Corporate Vice President and President, Chevron North America Exploration & Production Company — 2002 | |||||
M.K. Wirth | - | General Manager, U.S. Retail Marketing, Chevron Products Company — 1999 | ||||
- | President, Marketing, Caltex Corporation — 2000 | |||||
- | President, Marketing, Asia, Middle East and Africa Marketing Business Unit, Chevron Corporation — 2001 | |||||
- | President, Global Supply and Trading — 2004 | |||||
- | Executive Vice President, Chevron Corporation — 2006 |
34
Table of Contents
Maximum | ||||||||||||||||
Total Number of | Number of Shares | |||||||||||||||
Total Number | Average | Shares Purchased as | that May Yet Be | |||||||||||||
of Shares | Price Paid | Part of Publicly | Purchased Under | |||||||||||||
Period | Purchased(1),(2) | per Share | Announced Program | the Program | ||||||||||||
Oct. 1 – Oct. 31, 2005 | 3,612,153 | 61.12 | 3,515,000 | — | ||||||||||||
Nov. 1 – Nov. 30, 2005 | 7,879,941 | 57.73 | 7,622,200 | — | ||||||||||||
Dec. 1 – Dec. 31, 2005 | 2,013,065 | 57.77 | 1,737,000 | — | ||||||||||||
Total Oct. 1 – Dec 31, 2005 | 13,505,159 | 58.64 | 12,874,200 | (2 | ) | |||||||||||
(1) | Includes 43,905 common shares repurchased during the three-month period ended December 31, 2005 from company employees for required personal income tax withholdings on the exercise of the stock options issued to management and employees under the company’s broad-based employee stock options, long-term incentive plans and former Texaco Inc. stock option plans. Also includes 587,054 shares delivered or attested to in satisfaction of the exercise price by holders of certain former Texaco Inc. employee stock options exercised during the three-month period ended December 31, 2005. |
(2) | On March 31, 2004, the company announced a $5 billion common stock repurchase program. The program was completed on November 23, 2005, at which time 92,096,099 shares had been repurchased for a total of $5 billion. |
35
Table of Contents
Chevron Corporation’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), as of December 31, 2005, have concluded that as of December 31, 2005, the company’s disclosure controls and procedures were effective and designed to provide reasonable assurance that material information relating to the company and its consolidated subsidiaries required to be included in the company’s periodic filings under the Exchange Act would be made known to them by others within those entities. |
The company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). The company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of its internal control over financial reporting based on theInternal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, the company’s management concluded that its internal control over financial reporting was effective as of December 31, 2005. | |
The company management’s assessment of the effectiveness of its internal control over financial reporting as of December 31, 2005, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report that is included on page FS-28 of this Annual Report on Form 10-K. |
During the quarter ended December 31, 2005, there were no changes in the company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting. |
36
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Disclosure Regarding Nominating Committee Functions and Communications Between Security Holders and Boards of Directors |
Rule 10b5-1 Plan Elections |
37
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38
Table of Contents
(a) | The following documents are filed as part of this report: |
(1) Financial Statements: |
Page(s) | ||||
Report of Independent Registered Public Accounting Firm — PricewaterhouseCoopers LLP | FS-28 | |||
Consolidated Statement of Income for the three years ended December 31, 2005 | FS-29 | |||
Consolidated Statement of Comprehensive Income for the three years ended December 31, 2005 | FS-30 | |||
Consolidated Balance Sheet at December 31, 2005 and 2004 | FS-31 | |||
Consolidated Statement of Cash Flows for the three years ended December 31, 2005 | FS-32 | |||
Consolidated Statement of Stockholders’ Equity for the three years ended December 31, 2005 | FS-33 | |||
Notes to the Consolidated Financial Statements | FS-34 to FS-62 |
(2) Financial Statement Schedules: |
We have included on page 40 of this Annual Report on Form 10-K, Schedule II — Valuation and Qualifying Accounts. |
(3) Exhibits: |
The Exhibit Index on pagesE-1 andE-2 of this Annual Report on Form 10-K lists the exhibits that are filed as part of this report. |
39
Table of Contents
Year Ended December 31 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Employee Termination Benefits: | ||||||||||||
Balance at January 1 | $ | 137 | $ | 341 | $ | 336 | ||||||
(Deductions) additions (credited) charged to expense | (21 | ) | 29 | 295 | ||||||||
Additions related to Unocal acquisition | 106 | — | — | |||||||||
Payments | (131 | ) | (233 | ) | (290 | ) | ||||||
Balance at December 31 | $ | 91 | $ | 137 | $ | 341 | ||||||
Allowance for Doubtful Accounts: | ||||||||||||
Balance at January 1 | $ | 219 | $ | 229 | $ | 225 | ||||||
Additions charged to expense | 3 | 36 | 52 | |||||||||
Additions related to Unocal acquisition | 6 | — | — | |||||||||
Bad debt write-offs | (30 | ) | (46 | ) | (48 | ) | ||||||
Balance at December 31 | $ | 198 | $ | 219 | $ | 229 | ||||||
Deferred Income Tax Valuation Allowance:* | ||||||||||||
Balance at January 1 | $ | 1,661 | $ | 1,553 | $ | 1,740 | ||||||
Additions charged to deferred income tax expense | 1,593 | 714 | 375 | |||||||||
Additions related to Unocal acquisition | 400 | — | — | |||||||||
Deductions credited to goodwill | (60 | ) | — | — | ||||||||
Deductions credited to deferred income tax expense | (345 | ) | (606 | ) | (562 | ) | ||||||
Balance at December 31 | $ | 3,249 | $ | 1,661 | $ | 1,553 | ||||||
* | See also Note 16 to the Consolidated Financial Statements beginning on page FS-47. |
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Table of Contents
Chevron Corporation |
By | /s/David J. O’Reilly |
David J. O’Reilly, Chairman of the Board | |
and Chief Executive Officer |
Principal Executive Officers | ||||
(and Directors) | Directors | |||
/s/David J. O’Reilly David J. O’Reilly, Chairman of the Board and Chief Executive Officer | Samuel H. Armacost* Samuel H. Armacost | |||
/s/Peter J. Robertson Peter J. Robertson, Vice Chairman of the Board | Linnet F. Deily* Linnet F. Deily | |||
Robert E. Denham* Robert E. Denham | ||||
Robert J. Eaton* Robert J. Eaton | ||||
Sam Ginn* Sam Ginn | ||||
Principal Financial Officer | ||||
/s/Stephen J. Crowe Stephen J. Crowe, Vice President and Chief Financial Officer | Carla A. Hills* Carla A. Hills | |||
Franklyn G. Jenifer* Franklyn G. Jenifer | ||||
Principal Accounting Officer | ||||
/s/Mark A. Humphrey Mark A. Humphrey, Vice President and Comptroller | Sam Nunn* Sam Nunn | |||
Donald B. Rice* Donald B. Rice | ||||
*By: /s/Lydia I. Beebe Lydia I. Beebe, Attorney-in-Fact | Charles R. Shoemate* Charles R. Shoemate | |||
Ronald D. Sugar* Ronald D. Sugar | ||||
Carl Ware* Carl Ware |
41
INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS,
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page No. | ||
FS-2 | ||
FS-2 | ||
FS-2 to FS-5 | ||
FS-5 to FS-7 | ||
FS-7 to FS-11 | ||
FS-11 to FS-12 | ||
FS-12 | ||
FS-13 | ||
FS-13 to FS-15 | ||
FS-15 | ||
FS-16 to FS-17 | ||
FS-17 to FS-18 | ||
FS-18 | ||
FS-18 to FS-21 | ||
FS-21 to FS-22 | ||
FS-22 to FS-24 | ||
FS-25 | ||
FS-26 | ||
FS-27 | ||
FS-28 | ||
FS-29 | ||
FS-30 | ||
FS-31 | ||
FS-32 | ||
FS-33 | ||
FS-34 to FS-36 | ||
FS-36 to FS-37 | ||
FS-37 to FS-38 | ||
FS-38 | ||
FS-38 to FS-39 | ||
FS-39 | ||
FS-39 to FS-40 | ||
FS-40 to FS-42 | ||
FS-42 | ||
FS-42 to FS-43 | ||
FS-43 | ||
FS-44 | ||
FS-44 to FS-45 | ||
FS-46 | ||
FS-46 to FS-47 | ||
FS-47 to FS-48 | ||
FS-48 to FS-49 | ||
FS-49 | ||
FS-49 | ||
FS-49 to FS-50 | ||
FS-50 to FS-54 | ||
FS-54 to FS-56 | ||
FS-56 to FS-59 | ||
FS-59 to FS-60 | ||
FS-61 | ||
FS-62 | ||
FS-62 | ||
FS-64 | ||
FS-65 to FS-78 |
FS-1
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
KEY FINANCIAL RESULTS
Millions of dollars, except per-share amounts | 2005 | 2004 | 2003 | ||||||||||
Net Income | $ | 14,099 | $ | 13,328 | $ | 7,230 | |||||||
Per Share Amounts: | |||||||||||||
Net Income – Basic | $ | 6.58 | $ | 6.30 | $ | 3.48 | |||||||
– Diluted | $ | 6.54 | $ | 6.28 | $ | 3.48 | |||||||
Dividends | $ | 1.75 | $ | 1.53 | $ | 1.43 | |||||||
Sales and Other Operating Revenues | $ | 193,641 | $ | 150,865 | $ | 119,575 | |||||||
Return on: | |||||||||||||
Average Capital Employed | 21.9 | % | 25.8 | % | 15.7 | % | |||||||
Average Stockholders’ Equity | 26.1 | % | 32.7 | % | 21.3 | % | |||||||
INCOME FROM CONTINUING OPERATIONS BY MAJOR OPERATING AREA
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Income From Continuing Operations | |||||||||||||
Upstream – Exploration and Production | |||||||||||||
United States | $ | 4,168 | $ | 3,868 | $ | 3,160 | |||||||
International | 7,556 | 5,622 | 3,199 | ||||||||||
Total Upstream | 11,724 | 9,490 | 6,359 | ||||||||||
Downstream – Refining, Marketing and Transportation | |||||||||||||
United States | 980 | 1,261 | 482 | ||||||||||
International | 1,786 | 1,989 | 685 | ||||||||||
Total Downstream | 2,766 | 3,250 | 1,167 | ||||||||||
Chemicals | 298 | 314 | 69 | ||||||||||
All Other | (689 | ) | (20 | ) | (213 | ) | |||||||
Income From Continuing Operations | $ | 14,099 | $ | 13,034 | $ | 7,382 | |||||||
Income From Discontinued Operations – Upstream | – | 294 | 44 | ||||||||||
Income Before Cumulative Effect of Changes in Accounting Principles | $ | 14,099 | $ | 13,328 | $ | 7,426 | |||||||
Cumulative Effect of Changes in Accounting Principles | – | – | (196 | ) | |||||||||
Net Income* | $ | 14,099 | $ | 13,328 | $ | 7,230 | |||||||
* Includes Foreign Currency Effects: | $ | (61 | ) | $ | (81 | ) | $ | (404 | ) |
Net income in 2003 included a $196 million charge for the cumulative effect of changes in accounting principle. The primary change related to the company’s adoption of Financial Accounting Standards Board Statement No. 143, “Accounting for Asset Retirement Obligations,” which is discussed in Note 24 to the Consolidated Financial Statements. Net income in 2004 included gains of approximately $1.2 billion relating to the sale of nonstrategic upstream properties. Refer also to the “Results of Operations” section beginning on page FS-7 for a detailed discussion of financial results by major operating area for the three years ending December 31, 2005.
BUSINESS ENVIRONMENT AND OUTLOOK
Upstream Earnings for the upstream segment are closely aligned with industry price levels for crude oil and natural gas. Crude oil and natural gas prices are subject to external factors over which the company has no control, including product demand connected with global economic conditions, industry inventory levels, production quotas imposed by the Organization of Petroleum Exporting Countries (OPEC), weather-related damage and disruptions, competing fuel prices, and regional supply interruptions that may be caused by military conflicts, civil unrest or political uncertainty.
FS-2
Table of Contents
worldwide experienced significant price increases for these items during 2005 that are expected to continue into 2006. Capitalized costs and operating expenses can also be affected by uninsured damages to production facilities caused by severe weather or civil unrest.
FS-3
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Downstream Refining, marketing and transportation earnings are closely tied to global and regional supply and demand for refined products and the associated effects on industry refining and marketing margins. The company’s core marketing areas are the West Coast of North America, the U.S. Gulf Coast, Latin America, Asia and sub-Saharan Africa. In 2005, industry refining margins improved over the prior year, reflecting strong demand for refined products; however, marketing margins, which are highly influenced by regional market conditions, were mixed. Many regions experienced stronger marketing margins, but these margins were generally lower in the United States and Europe, as retail prices did not keep pace with rising crude oil and spot product prices. Industry margins in the future may be volatile, due primarily to changes in the price of crude oil used for refinery feedstock, disruptions at refineries resulting from maintenance programs and mishaps and levels of inventory and demand for refined products.
FS-4
Table of Contents
OPERATING DEVELOPMENTS
Upstream
FS-5
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
FS-6
Table of Contents
Downstream
Chemicals
Other
RESULTS OF OPERATIONS
U.S. Upstream – Exploration and Production
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Income From Continuing Operations | $ | 4,168 | $ | 3,868 | $ | 3,160 | |||||||
Income From Discontinued Operations | – | 70 | 23 | ||||||||||
Cumulative Effect of Accounting Change | – | – | (350 | ) | |||||||||
Total Income* | $ | 4,168 | $ | 3,938 | $ | 2,833 | |||||||
*Includes Special-Item Gains (Charges): | |||||||||||||
Asset Dispositions | |||||||||||||
Continuing Operations | $ | – | $ | 316 | $ | 77 | |||||||
Discontinued Operations | – | 50 | – | ||||||||||
Litigation Provisions | – | (55 | ) | – | |||||||||
Asset Impairments/Write-offs | – | – | (103 | ) | |||||||||
Restructuring and Reorganizations | – | – | (38 | ) | |||||||||
Total | $ | – | $ | 311 | $ | (64 | ) | ||||||
U.S. upstream income of nearly $4.2 billion in 2005 increased $230 million. The amount in 2004 included net special-item benefits (discussed below) of more than $300 million. Higher prices for crude oil and natural gas in 2005 and earnings from the former Unocal operations contributed approximately $2 billion to the increase between periods. Approximately 90 percent of this amount related to the effects of higher prices on heritage-Chevron production. These benefits were partially offset by the adverse effects of lower production (discussed below), higher operating expenses and higher depreciation expense associated with heritage-Chevron properties.
FS-7
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
International Upstream – Exploration and Production
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Income From Continuing Operations1 | $ | 7,556 | $ | 5,622 | $ | 3,199 | |||||||
Income From Discontinued Operations | – | 224 | 21 | ||||||||||
Cumulative Effect of Accounting Change | – | – | 145 | ||||||||||
Total Income2 | $ | 7,556 | $ | 5,846 | $ | 3,365 | |||||||
1 Includes Foreign Currency Effects: | $14 | $(129) | $(319) | ||||||||||
2 Includes Special-Item Gains (Charges): | |||||||||||||
Asset Dispositions | |||||||||||||
Continuing Operations | $ | – | $ | 644 | $ | 32 | |||||||
Discontinued Operations | – | 207 | – | ||||||||||
Asset Impairments/Write-offs | – | – | (30 | ) | |||||||||
Restructuring and Reorganizations | – | – | (22 | ) | |||||||||
Tax Adjustments | – | – | 118 | ||||||||||
Total | $ | – | $ | 851 | $ | 98 | |||||||
International upstream income of more than $7.5 billion in 2005 increased $1.7 billion from $5.8 billion in 2004. Higher prices for crude oil and natural gas in 2005 and earnings from the former Unocal operations increased earnings approximately $2.9 billion between periods. About 80 percent of this benefit arose from the effect of higher prices on heritage-Chevron production. Partially offsetting these benefits were higher expenses between periods for heritage-Chevron operations for certain income-tax items, including the absence of a $200 million benefit in 2004 relating to changes in income tax laws. The change between years also reflected the impact of $851 million of special-item gains in 2004, while no special items were recorded in 2005. Foreign currency losses in 2004 were $129 million. Gains of $14 million were recorded in 2005.
FS-8
Table of Contents
U.S. Downstream – Refining, Marketing and Transportation
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Income* | $ | 980 | $ | 1,261 | $ | 482 | |||||||
*Includes Special-Item Gains (Charges): | |||||||||||||
Asset Dispositions | $ | – | $ | – | $ | 37 | |||||||
Environmental Remediation Provisions | – | – | (132 | ) | |||||||||
Restructuring and Reorganizations | – | – | (28 | ) | |||||||||
Total | $ | – | $ | – | $ | (123 | ) | ||||||
U.S. downstream earnings of nearly $1 billion in 2005 decreased about $300 million from 2004 and were up $500 million from 2003. Results in 2003 included net special-item charges (discussed below) of $123 million. Average refined-product margins in 2005 were higher than in 2004, and margins in 2004 were significantly higher than in 2003. However, the effects of increased downtime at refineries and other facilities and higher fuel costs dampened earnings in 2005. A portion of the downtime in 2005 was associated with hurricanes in the Gulf of Mexico. As a result of the storms, the company’s refinery in Pascagoula, Mississippi, was shut down for more than a month, and the company’s marketing and pipeline operations along the Gulf Coast were also disrupted for an extended period.
International Downstream – Refining, Marketing and Transportation
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Income1,2 | $ | 1,786 | $ | 1,989 | $ | 685 | |||||||
1 Includes Foreign Currency Effects: | $(24) | $7 | $(141) | ||||||||||
2 Includes Special-Item Charges: | |||||||||||||
Asset Dispositions | $ | – | $ | – | $ | (24 | ) | ||||||
Asset Impairments/Write-offs | – | – | (123 | ) | |||||||||
Restructuring and Reorganizations | – | – | (42 | ) | |||||||||
Total | $ | – | $ | – | $ | (189 | ) | ||||||
The international downstream includes the company’s consolidated refining and marketing businesses, non-U.S. shipping operations, non-U.S. supply and trading activities, and equity earnings of affiliates, primarily in the Asia-Pacific region.
FS-9
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Chemicals
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Segment Income* | $ | 298 | $ | 314 | $ | 69 | |||||||
*Includes Foreign Currency Effects: | $ | – | $ | (3 | ) | $ | 13 |
The chemicals segment includes the company’s Oronite subsidiary and the company’s 50 percent share of its equity investment in Chevron Phillips Chemical Company LLC (CPChem). In 2005, results for the company’s Oronite subsidiary were down due to significantly higher costs for feedstocks and adverse effects from the shut-down of operations in the U.S. Gulf Coast due to hurricanes. Earnings in 2005 for CPChem were higher than 2004 on improved margins for commodity chemicals. Results for both businesses in 2005 were dampened by the effects of the U.S. hurricanes. Significantly lower earnings in 2003 reflected weak demand for commodity chemicals and industry oversupply conditions in the period.
All Other
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Charges Before Cumulative Effect of Changes in Accounting Principles | $ | (689 | ) | $ | (20 | ) | $ | (213 | ) | ||||
Cumulative Effect of Accounting Changes | – | – | 9 | ||||||||||
Net Charges1,2 | $ | (689 | ) | $ | (20 | ) | $ | (204 | ) | ||||
1 Includes Foreign Currency Effects: | $(51) | $44 | $43 | ||||||||||
2 Includes Special-Item Gains (Charges): | |||||||||||||
Dynegy-Related | $ | – | $ | – | $ | 325 | |||||||
Asset Impairments/Write-offs | – | – | (84 | ) | |||||||||
Restructuring and Reorganizations | – | – | (16 | ) | |||||||||
Total | $ | – | $ | – | $ | 225 | |||||||
All Other consists of the company’s interest in Dynegy, mining operations of coal and other minerals, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.
FS-10
Table of Contents
CONSOLIDATED STATEMENT OF INCOME
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Sales and other operating revenues | $ | 193,641 | $ | 150,865 | $ | 119,575 | |||||||
Sales and other operating revenues in 2005 increased over 2004 and 2003 due primarily to higher prices for crude oil, natural gas and refined products worldwide. The amount in 2005 also included revenues for five months from former Unocal operations.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Income from equity affiliates | $ | 3,731 | $ | 2,582 | $ | 1,029 | |||||||
Memo: Special-item gains, before tax | $ | – | $ | – | $ | 179 |
Improved results for Tengizchevroil and Hamaca (Venezuela) accounted for nearly three-fourths of the increased income from equity affiliates in 2005. Profits in 2005 also increased at the company’s CPChem and Dynegy affiliates. The improvement in 2004 from 2003 was the result of higher earnings from the company’s downstream affiliates in the Asia-Pacific area, Tengizchevroil, CPChem, Dynegy and the Caspian Pipeline Consortium. Refer to Note 13, beginning on page FS-44, for a discussion of Chevron’s investment in affiliated companies.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Other income | $ | 828 | $ | 1,853 | $ | 308 | |||||||
Memo: Special-item gains, before tax | $ | – | $ | 1,281 | $ | 217 |
Other income in 2005 included no special-item gains or losses; however, net special-item gains relating to upstream property sales were nearly $1.3 billion in 2004 and more than $200 million in 2003. The increase from 2003 through 2005 was otherwise partly due to higher interest income in each period – $400 million in 2005, $200 million in 2004 and $120 million in 2003 – on higher average interest rates and balances of cash and marketable securities. Foreign currency losses were $60 million in both 2005 and 2004 and about $200 million in 2003.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Purchased crude oil and products | $ | 127,968 | $ | 94,419 | $ | 71,310 | |||||||
Crude oil and product purchases in 2005 increased approximately 35 percent from 2004, due mainly to higher prices for crude oil, natural gas and refined products as well as to the inclusion in 2005 of Unocal-related amounts for five months. Crude oil and product purchase costs increased 32 percent in 2004 from the prior year as a result of higher prices and increased purchased volumes of crude oil and products.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Operating, selling, general and administrative expenses | $ | 17,019 | $ | 14,389 | $ | 12,940 | |||||||
Memo: Special-item charges, before tax | $ | – | $ | 85 | $ | 475 |
Operating, selling, general and administrative expenses in 2005 increased 18 percent from a year earlier. Higher amounts in 2005 included former-Unocal expenses for five months, and for heritage-Chevron operations, higher costs for labor and transportation, uninsured costs associated with storms in the Gulf of Mexico, asset write-offs, repair and maintenance services, fuel costs for plant operations and a number of corporate items that individually were not significant. Total expenses increased from 2003 to 2004 due mainly to costs for chartering crude oil tankers and other transportation expenses.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Exploration expense | $ | 743 | $ | 697 | $ | 570 | |||||||
Exploration expenses in 2005 increased mainly due to the inclusion of Unocal amounts for five months. In 2004, amounts were higher than in 2003 for international operations, primarily for seismic costs and expenses associated with evaluating the feasibility of different project alternatives.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Depreciation, depletion and amortization | $ | 5,913 | $ | 4,935 | $ | 5,326 | |||||||
Memo: Special-item charges, before tax | $ | – | $ | – | $ | 286 |
Depreciation, depletion and amortization expenses in 2005 increased mainly as a result of five months of depreciation and depletion expense for the former Unocal assets and higher depreciation rates for certain heritage-Chevron crude oil and natural gas producing fields worldwide. Between 2003 and 2004, expenses did not change materially, after consideration of the effects of special-item charges for asset impairments in 2003.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Interest and debt expense | $ | 482 | $ | 406 | $ | 474 | |||||||
Interest and debt expense in 2005 increased mainly due to the inclusion of debt assumed with the Unocal acquisition and higher average interest rates for commercial paper borrowings. The decline between 2003 and 2004 reflected lower average debt balances.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Taxes other than on income | $ | 20,782 | $ | 19,818 | $ | 17,901 | |||||||
Taxes other than on income in 2005 increased as a result of higher international taxes assessed on product values, higher duty rates in the areas of the company’s European downstream operations and higher U.S. federal excise taxes on jet fuel resulting from a change in tax law that became effective in 2005. The increase in 2004 from 2003 primarily reflected the weakening U.S. dollar on foreign currency–denominated duties in the company’s European downstream operations.
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Income tax expense | $ | 11,098 | $ | 7,517 | $ | 5,294 | |||||||
Memo: Special-item charges (benefits) | $ | $ | 291 | $ | (312) |
Effective income tax rates were 44 percent in 2005, 37 percent in 2004 and 43 percent in 2003, after excluding the effect of net special items. Rates were higher in 2005 compared with the prior year due to the absence of benefits in 2004 from changes in the income tax laws for certain international operations and an increase in earnings in countries with higher tax rates. As compared with the effective tax rate in 2003, the effective tax rate in 2004 benefited from changes in the income tax laws for certain international operations, a change in the mix of international upstream earnings occurring in countries with different tax rates and favorable corporate consolidated tax effects. Refer also to the discussion of income taxes in Note 16 to the Consolidated Financial Statements, beginning on page FS-47.
SELECTED OPERATING DATA1,2
2005 | 2004 | 2003 | |||||||||||
U.S. Upstream | |||||||||||||
Net Crude Oil and Natural Gas Liquids Production (MBPD)3 | 455 | 505 | 562 | ||||||||||
Net Natural Gas Production (MMCFPD)3,4 | 1,634 | 1,873 | 2,228 | ||||||||||
Net Oil-Equivalent Production (MBOEPD)3 | 727 | 817 | 933 | ||||||||||
Sales of Natural Gas (MMCFPD) | 5,449 | 4,518 | 4,304 | ||||||||||
Sales of Natural Gas Liquids (MBPD) | 151 | 177 | 194 | ||||||||||
Revenues From Net Production Liquids ($/Bbl) | $ | 46.97 | $ | 34.12 | $ | 26.66 | |||||||
Natural Gas ($/MCF) | $ | 7.43 | $ | 5.51 | $ | 5.01 | |||||||
International Upstream | |||||||||||||
Net Crude and Natural Gas Liquids Production (MBPD)3 | 1,214 | 1,205 | 1,246 | ||||||||||
Net Natural Gas Production (MMCFPD)3,4 | 2,599 | 2,085 | 2,064 | ||||||||||
Net Oil-Equivalent Production (MBOEPD)3,5 | 1,790 | 1,692 | 1,704 | ||||||||||
Sales Natural Gas (MMCFPD) | 2,289 | 1,885 | 1,951 | ||||||||||
Sales Natural Gas Liquids (MBPD) | 108 | 105 | 107 | ||||||||||
Revenues From Liftings Liquids ($/Bbl) | $ | 47.59 | $ | 34.17 | $ | 26.79 | |||||||
Natural Gas ($/MCF) | $ | 3.19 | $ | 2.68 | $ | 2.64 | |||||||
U.S. and International Upstream | |||||||||||||
Net Oil-Equivalent Production Including Other Produced Volumes (MBOEPD)4,5 | |||||||||||||
United States | 727 | 817 | 933 | ||||||||||
International | 1,790 | 1,692 | 1,704 | ||||||||||
Total | 2,517 | 2,509 | 2,637 | ||||||||||
U.S. Downstream – Refining, Marketing and Transportation | |||||||||||||
Gasoline Sales (MBPD)6 | 709 | 701 | 669 | ||||||||||
Other Refined Products Sales (MBPD) | 764 | 805 | 767 | ||||||||||
Total (MBPD)7 | 1,473 | 1,506 | 1,436 | ||||||||||
Refinery Input (MBPD)8 | 845 | 914 | 951 | ||||||||||
International Downstream – Refining Marketing and Transportation | |||||||||||||
Gasoline Sales (MBPD)6 | 669 | 717 | 643 | ||||||||||
Other Refined Products Sales (MBPD) | 1,626 | 1,685 | 1,659 | ||||||||||
Total (MBPD)7,9 | 2,295 | 2,402 | 2,302 | ||||||||||
Refinery Input (MBPD) | 1,038 | 1,044 | 1,040 | ||||||||||
1 Includes equity in affiliates. | ||||||||||||
2 MBPD = Thousands of barrels per day; MMCFPD = Millions of cubic feet per day; MBOEPD = Thousands of barrels of oil equivalents per day; Bbl = Barrel; MCF = Thousands of cubic feet. Oil-equivalent gas (OEG) conversion ratio is 6,000 cubic feet of gas = 1 barrel of oil. | ||||||||||||
3 Includes net production from August 1, 2005, related to former Unocal properties. | ||||||||||||
4 Includes natural gas consumed on lease (MMCFPD): | ||||||||||||
United States | 48 | 50 | 65 | |||||||||
International | 332 | 293 | 268 | |||||||||
5 Includes other produced volumes (MBPD): | ||||||||||||
Athabasca Oil Sands – Net | 32 | 27 | 15 | |||||||||
Boscan Operating Service Agreement | 111 | 113 | 99 | |||||||||
143 | 140 | 114 | ||||||||||
6 Includes branded and unbranded gasoline | ||||||||||||
7 Includes volumes for buy/sell contracts (MBPD): | ||||||||||||
United States | 82 | 84 | 90 | |||||||||
International | 129 | 96 | 104 | |||||||||
8 The company sold its interest in the El Paso Refinery in August 2003. | ||||||||||||
9 Includes sales of affiliates (MBPD): | 540 | 536 | 525 |
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INFORMATION RELATED TO INVESTMENT IN DYNEGY INC.
LIQUIDITY AND CAPITAL RESOURCES
At year-end 2005, the company had $4.9 billion in committed credit facilities with various major banks, which permitted the refinancing of short-term obligations on a long-term basis. These facilities support commercial paper borrowings and also can be used for general corporate purposes. The company’s practice has been to continually replace expiring commitments with new commitments on substantially the same terms, maintaining levels management
FS-13
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Capital and Exploratory Expenditures
2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||||
Millions of dollars | U.S. | Int'l. | Total | U.S. | Int'l. | Total | U.S. | Int'l. | Total | |||||||||||||||||||||||||||||
Upstream – Exploration and Production | $ | 2,450 | $ | 5,939 | $ | 8,389 | $ | 1,820 | $ | 4,501 | $ | 6,321 | $ | 1,641 | $ | 4,034 | $ | 5,675 | ||||||||||||||||||||
Downstream – Refining, Marketing and Transportation | 818 | 1,332 | 2,150 | 497 | 832 | 1,329 | 403 | 697 | 1,100 | |||||||||||||||||||||||||||||
Chemicals | 108 | 43 | 151 | 123 | 27 | 150 | 173 | 24 | 197 | |||||||||||||||||||||||||||||
All Other | 329 | 44 | 373 | 512 | 3 | 515 | 371 | 20 | 391 | |||||||||||||||||||||||||||||
Total | $ | 3,705 | $ | 7,358 | $ | 11,063 | $ | 2,952 | $ | 5,363 | $ | 8,315 | $ | 2,588 | $ | 4,775 | $ | 7,363 | ||||||||||||||||||||
Total, Excluding Equity in Affiliates | $ | 3,522 | $ | 5,860 | $ | 9,382 | $ | 2,729 | $ | 4,024 | $ | 6,753 | $ | 2,306 | $ | 3,920 | $ | 6,226 | ||||||||||||||||||||
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FINANCIAL RATIOS
Financial Ratios
At December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Current Ratio | 1.4 | 1.5 | 1.2 | ||||||||||
Interest Coverage Ratio | 47.5 | 47.6 | 24.3 | ||||||||||
Total Debt/Total Debt-Plus-Equity | 17.0 | % | 19.9 | % | 25.8 | % | |||||||
Current Ratio– current assets divided by current liabilities. The current ratio in all periods was adversely affected by the fact that Chevron’s inventories are valued on a LIFO basis. At year-end 2005, the book value of inventory was lower than replacement costs, based on average acquisition costs during the year, by approximately $4.8 billion.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
GUARANTEES, OFF-BALANCE-SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS, AND OTHER CONTINGENCIES
Direct or Indirect Guarantees*
Millions of dollars | Commitment Expiration by Period | |||||||||||||||||||
2007- | After | |||||||||||||||||||
Total | 2006 | 2009 | 2010 | 2010 | ||||||||||||||||
Guarantees of non-consolidated affiliates or joint venture obligations | $ | 985 | $ | 454 | $ | 426 | $ | 35 | $ | 70 | ||||||||||
Guarantees of obligations of third parties | 294 | 113 | 136 | 8 | 37 | |||||||||||||||
Guarantees of Equilon debt and leases | 193 | 24 | 55 | 19 | 95 | |||||||||||||||
* | The amounts exclude indemnifications of contingencies associated with the sale of the company’s interest in Equilon and Motiva in 2002, as discussed in the “Indemnifications” section on page FS-16 through FS-17. |
At December 31, 2005, the company and its subsidiaries provided guarantees, either directly or indirectly, of $985 million in guarantees for notes and other contractual obligations of affiliated companies and $294 million for third parties as described by major category below. There are no material amounts being carried as liabilities for the company’s obligations under these guarantees.
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Contractual Obligations
Millions of dollars | Payments Due by Period | |||||||||||||||||||
2007- | After | |||||||||||||||||||
Total | 2006 | 2009 | 2010 | 2010 | ||||||||||||||||
On Balance Sheet: | ||||||||||||||||||||
Short-Term Debt1 | $ | 739 | $ | 739 | $ | – | $ | – | $ | – | ||||||||||
Long-Term Debt1,2 | 11,807 | – | 8,775 | 176 | 2,856 | |||||||||||||||
Noncancelable Capital Lease Obligations | 324 | – | 154 | 36 | 134 | |||||||||||||||
Interest Expense | 5,600 | 500 | 1,100 | 300 | 3,700 | |||||||||||||||
Off-Balance-Sheet: | ||||||||||||||||||||
Noncancelable Operating Lease Obligations | 2,917 | 507 | 1,194 | 284 | 932 | |||||||||||||||
Unconditional Purchase Obligations | 1,200 | 500 | 600 | 100 | – | |||||||||||||||
Throughput and Take-or-Pay Agreements | 10,800 | 1,700 | 4,900 | 400 | 3,800 | |||||||||||||||
1 | $4.9 billion of short-term debt that the company expects to refinance is included in long-term debt. The repayment schedule above reflects the projected repayment of the entire amounts in the 2007–2009 period. |
2 | Includes guarantees of $247 of LESOP (leveraged employee stock ownership plan) debt, $14 due in 2006 and $233 due after 2006. |
FINANCIAL AND DERIVATIVE INSTRUMENTS
FS-17
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
TRANSACTIONS WITH RELATED PARTIES
LITIGATION AND OTHER CONTINGENCIES
Millions of dollars | 2005 | 2004 | 2003 | ||||||||||
Balance at January 1 | $ | 1,047 | $ | 1,149 | $ | 1,090 | |||||||
Net Additions | 731 | 155 | 296 | ||||||||||
Expenditures | (309 | ) | (257 | ) | (237 | ) | |||||||
Balance at December 31 | $ | 1,469 | $ | 1,047 | $ | 1,149 | |||||||
Included in the additions for 2005 were liabilities assumed in connection with the acquisition of Unocal. These liabilities relate primarily to sites that had been divested or closed by Unocal prior to its acquisition by Chevron, includ-
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FS-19
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
FS-20
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ENVIRONMENTAL MATTERS
FS-21
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
1. | the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters, or the susceptibility of such matters to change; | |||
2. | the impact of the estimates and assumptions on the company’s financial condition or operating performance is material. |
Besides those meeting these “critical” criteria, the company makes many other accounting estimates and assumptions in preparing its financial statements and related disclosures. Although not associated with “highly uncertain matters,” these estimates and assumptions are also subject to revision as circumstances warrant, and materially different results may sometimes occur.
FS-22
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FS-23
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
FS-24
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NEW ACCOUNTING STANDARDS
FS-25
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QUARTERLY RESULTS AND STOCK MARKET DATA Unaudited |
2005 | 2004 | ||||||||||||||||||||||||||||||||
Millions of dollars, except per-share amount | 4TH Q | 3RD Q | 2ND Q | 1ST Q | 4TH Q | 3RD Q | 2ND Q | 1ST Q | |||||||||||||||||||||||||
REVENUES AND OTHER INCOME | |||||||||||||||||||||||||||||||||
Sales and other operating revenues1,2 | $ | 52,457 | $ | 53,429 | $ | 47,265 | $ | 40,490 | $ | 41,612 | $ | 39,611 | $ | 36,579 | $ | 33,063 | |||||||||||||||||
Income (loss) from equity affiliates | 1,110 | 871 | 861 | 889 | 785 | 613 | 740 | 444 | |||||||||||||||||||||||||
Other income | 227 | 156 | 217 | 228 | 295 | 496 | 924 | 138 | |||||||||||||||||||||||||
TOTAL REVENUES AND OTHER INCOME | 53,794 | 54,456 | 48,343 | 41,607 | 42,692 | 40,720 | 38,243 | 33,645 | |||||||||||||||||||||||||
COSTS AND OTHER DEDUCTIONS | |||||||||||||||||||||||||||||||||
Purchased crude oil and products | 34,246 | 36,101 | 31,130 | 26,491 | 26,290 | 25,650 | 22,452 | 20,027 | |||||||||||||||||||||||||
Operating expenses | 3,819 | 3,190 | 2,713 | 2,469 | 2,874 | 2,557 | 2,234 | 2,167 | |||||||||||||||||||||||||
Selling, general and administrative expenses | 1,340 | 1,337 | 1,152 | 999 | 1,319 | 1,231 | 986 | 1,021 | |||||||||||||||||||||||||
Exploration expenses | 274 | 177 | 139 | 153 | 274 | 173 | 165 | 85 | |||||||||||||||||||||||||
Depreciation, depletion and amortization | 1,725 | 1,534 | 1,320 | 1,334 | 1,283 | 1,219 | 1,243 | 1,190 | |||||||||||||||||||||||||
Taxes other than on income1 | 5,063 | 5,282 | 5,311 | 5,126 | 5,216 | 4,948 | 4,889 | 4,765 | |||||||||||||||||||||||||
Interest and debt expense | 135 | 136 | 104 | 107 | 112 | 107 | 94 | 93 | |||||||||||||||||||||||||
Minority interests | 33 | 24 | 18 | 21 | 22 | 23 | 18 | 22 | |||||||||||||||||||||||||
TOTAL COSTS AND OTHER DEDUCTIONS | 46,635 | 47,781 | 41,887 | 36,700 | 37,390 | 35,908 | 32,081 | 29,370 | |||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 7,159 | 6,675 | 6,456 | 4,907 | 5,302 | 4,812 | 6,162 | 4,275 | |||||||||||||||||||||||||
INCOME TAX EXPENSE | 3,015 | 3,081 | 2,772 | 2,230 | 1,862 | 1,875 | 2,056 | 1,724 | |||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 4,144 | 3,594 | 3,684 | 2,677 | 3,440 | 2,937 | 4,106 | 2,551 | |||||||||||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS | – | – | – | – | – | 264 | 19 | 11 | |||||||||||||||||||||||||
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | $ | 4,144 | $ | 3,594 | $ | 3,684 | $ | 2,677 | $ | 3,440 | $ | 3,201 | $ | 4,125 | $ | 2,562 | |||||||||||||||||
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES, NET OF TAX | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||
NET INCOME3 | $ | 4,144 | $ | 3,594 | $ | 3,684 | $ | 2,677 | $ | 3,440 | $ | 3,201 | $ | 4,125 | $ | 2,562 | |||||||||||||||||
PER-SHARE OF COMMON STOCK4 | |||||||||||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | |||||||||||||||||||||||||||||||||
– BASIC | $ | 1.88 | $ | 1.65 | $ | 1.77 | $ | 1.28 | $ | 1.64 | $ | 1.38 | $ | 1.93 | $ | 1.21 | |||||||||||||||||
– DILUTED | $ | 1.86 | $ | 1.64 | $ | 1.76 | $ | 1.28 | $ | 1.63 | $ | 1.38 | $ | 1.93 | $ | 1.20 | |||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS | |||||||||||||||||||||||||||||||||
– BASIC | $ | – | $ | – | $ | – | $ | – | $ | – | $ | 0.13 | $ | 0.01 | $ | – | |||||||||||||||||
– DILUTED | $ | – | $ | – | $ | – | $ | – | $ | – | $ | 0.13 | $ | 0.01 | $ | – | |||||||||||||||||
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | |||||||||||||||||||||||||||||||||
– BASIC | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | |||||||||||||||||
– DILUTED | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | |||||||||||||||||
NET INCOME | |||||||||||||||||||||||||||||||||
– BASIC | $ | 1.88 | $ | 1.65 | $ | 1.77 | $ | 1.28 | $ | 1.64 | $ | 1.51 | $ | 1.94 | $ | 1.21 | |||||||||||||||||
– DILUTED | $ | 1.86 | $ | 1.64 | $ | 1.76 | $ | 1.28 | $ | 1.63 | $ | 1.51 | $ | 1.94 | $ | 1.20 | |||||||||||||||||
DIVIDENDS | $ | 0.45 | $ | 0.45 | $ | 0.45 | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.37 | $ | 0.36 | |||||||||||||||||
COMMON STOCK PRICE RANGE – HIGH | $ | 64.45 | $ | 65.77 | $ | 59.34 | $ | 62.08 | $ | 56.07 | $ | 54.49 | $ | 47.50 | $ | 45.71 | |||||||||||||||||
– LOW | $ | 55.75 | $ | 56.36 | $ | 50.51 | $ | 50.55 | $ | 50.99 | $ | 46.21 | $ | 43.95 | $ | 41.99 | |||||||||||||||||
1 Includes consumer excise taxes: | $ | 2,173 | $ | 2,268 | $ | 2,162 | $ | 2,116 | $ | 2,150 | $ | 2,040 | $ | 1,921 | $ | 1,857 | |||||||||||||||||
2 Includes amounts for buy/sell contracts: | $ | 5,897 | $ | 6,588 | $ | 5,962 | $ | 5,375 | $ | 5,117 | $ | 4,640 | $ | 4,637 | $ | 4,256 | |||||||||||||||||
3 Net benefits (charges) for special items included in “Net Income”: | $ | – | $ | – | $ | – | $ | – | $ | 146 | $ | 486 | $ | 585 | $ | (55 | ) | ||||||||||||||||
4 The amounts in all periods reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. |
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MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS |
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
/S/ DAVID J. O’REILLY
DAVID J. O’REILLY
and Chief Executive Officer
February 27, 2006
/S/ STEPHEN J. CROWE
STEPHEN J. CROWE
and Chief Financial Officer
/S/ MARK A. HUMPHREY
MARK A. HUMPHREY
and Comptroller
FS-27
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
INTERNAL CONTROL OVER FINANCIAL REPORTING
/s/ PricewaterhouseCoopers LLP
San Francisco, California
February 27, 2006
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CONSOLIDATED STATEMENT OF INCOME Millions of dollars, except per-share amounts |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
REVENUES AND OTHER INCOME | |||||||||||||
Sales and other operating revenues1,2 | $ | 193,641 | $ | 150,865 | $ | 119,575 | |||||||
Income from equity affiliates | 3,731 | 2,582 | 1,029 | ||||||||||
Other income | 828 | 1,853 | 308 | ||||||||||
Gain from exchange of Dynegy preferred stock | – | – | 365 | ||||||||||
TOTAL REVENUES AND OTHER INCOME | 198,200 | 155,300 | 121,277 | ||||||||||
COSTS AND OTHER DEDUCTIONS | |||||||||||||
Purchased crude oil and products2 | 127,968 | 94,419 | 71,310 | ||||||||||
Operating expenses | 12,191 | 9,832 | 8,500 | ||||||||||
Selling, general and administrative expenses | 4,828 | 4,557 | 4,440 | ||||||||||
Exploration expenses | 743 | 697 | 570 | ||||||||||
Depreciation, depletion and amortization | 5,913 | 4,935 | 5,326 | ||||||||||
Taxes other than on income1 | 20,782 | 19,818 | 17,901 | ||||||||||
Interest and debt expense | 482 | 406 | 474 | ||||||||||
Minority interests | 96 | 85 | 80 | ||||||||||
TOTAL COSTS AND OTHER DEDUCTIONS | 173,003 | 134,749 | 108,601 | ||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 25,197 | 20,551 | 12,676 | ||||||||||
INCOME TAX EXPENSE | 11,098 | 7,517 | 5,294 | ||||||||||
INCOME FROM CONTINUING OPERATIONS | 14,099 | 13,034 | 7,382 | ||||||||||
INCOME FROM DISCONTINUED OPERATIONS | – | 294 | 44 | ||||||||||
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | $ | 14,099 | $ | 13,328 | $ | 7,426 | |||||||
Cumulative effect of changes in accounting principles | – | – | (196 | ) | |||||||||
NET INCOME | $ | 14,099 | $ | 13,328 | $ | 7,230 | |||||||
PER-SHARE OF COMMON STOCK3 | |||||||||||||
INCOME FROM CONTINUING OPERATIONS | |||||||||||||
– BASIC | $ | 6.58 | $ | 6.16 | $ | 3.55 | |||||||
– DILUTED | $ | 6.54 | $ | 6.14 | $ | 3.55 | |||||||
INCOME FROM DISCONTINUED OPERATIONS | |||||||||||||
– BASIC | $ | – | $ | 0.14 | $ | 0.02 | |||||||
– DILUTED | $ | – | $ | 0.14 | $ | 0.02 | |||||||
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | |||||||||||||
– BASIC | $ | – | $ | – | $ | (0.09 | ) | ||||||
– DILUTED | $ | – | $ | – | $ | (0.09 | ) | ||||||
NET INCOME | |||||||||||||
– BASIC | $ | 6.58 | $ | 6.30 | $ | 3.48 | |||||||
– DILUTED | $ | 6.54 | $ | 6.28 | $ | 3.48 | |||||||
1Includes consumer excise taxes: | $ | 8,719 | $ | 7,968 | $ | 7,095 | |||||||
2Includes amounts in revenues for buy/sell contracts associated costs are in “Purchased crude oil and products.” See Note 15, on page FS-46: | $ | 23,822 | $ | 18,650 | $ | 14,246 | |||||||
3All periods reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. |
See accompanying Notes to the Consolidated Financial Statements. |
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Millions of dollars |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
NET INCOME | $ | 14,099 | $ | 13,328 | $ | 7,230 | |||||||
Currency translation adjustment | |||||||||||||
Unrealized net change arising during period | (5 | ) | 36 | 32 | |||||||||
Unrealized holding (loss) gain on securities | |||||||||||||
Net (loss) gain arising during period | (32 | ) | 35 | 445 | |||||||||
Reclassification to net income of net realized (gain) | – | (44 | ) | (365 | ) | ||||||||
Total | (32 | ) | (9 | ) | 80 | ||||||||
Net derivatives (loss) gain on hedge transactions | |||||||||||||
Net (loss) gain arising during period | |||||||||||||
Before income taxes | (242 | ) | (8 | ) | 115 | ||||||||
Income taxes | 89 | (1 | ) | (40 | ) | ||||||||
Reclassification to net income of net realized loss | |||||||||||||
Before income taxes | 34 | – | – | ||||||||||
Income taxes | (12 | ) | – | – | |||||||||
Total | (131 | ) | (9 | ) | 75 | ||||||||
Minimum pension liability adjustment | |||||||||||||
Before income taxes | 89 | 719 | 12 | ||||||||||
Income taxes | (31 | ) | (247 | ) | (10 | ) | |||||||
Total | 58 | 472 | 2 | ||||||||||
OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX | (110 | ) | 490 | 189 | |||||||||
COMPREHENSIVE INCOME | $ | 13,989 | $ | 13,818 | $ | 7,419 | |||||||
See accompanying Notes to the Consolidated Financial Statements. |
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CONSOLIDATED BALANCE SHEET Millions of dollars, except per-share amounts |
At December 31 | |||||||||
2005 | 2004 | ||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 10,043 | $ | 9,291 | |||||
Marketable securities | 1,101 | 1,451 | |||||||
Accounts and notes receivable (less allowance: 2005 – $156; 2004 – $174) | 17,184 | 12,429 | |||||||
Inventories: | |||||||||
Crude oil and petroleum products | 3,182 | 2,324 | |||||||
Chemicals | 245 | 173 | |||||||
Materials, supplies and other | 694 | 486 | |||||||
Total inventories | 4,121 | 2,983 | |||||||
Prepaid expenses and other current assets | 1,887 | 2,349 | |||||||
TOTAL CURRENT ASSETS | 34,336 | 28,503 | |||||||
Long-term receivables, net | 1,686 | 1,419 | |||||||
Investments and advances | 17,057 | 14,389 | |||||||
Properties, plant and equipment, at cost | 127,446 | 103,954 | |||||||
Less: Accumulated depreciation, depletion and amortization | 63,756 | 59,496 | |||||||
Properties, plant and equipment, net | 63,690 | 44,458 | |||||||
Deferred charges and other assets | 4,428 | 4,277 | |||||||
Goodwill | 4,636 | – | |||||||
Assets held for sale | – | 162 | |||||||
TOTAL ASSETS | $ | 125,833 | $ | 93,208 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Short-term debt | $ | 739 | $ | 816 | |||||
Accounts payable | 16,074 | 10,747 | |||||||
Accrued liabilities | 3,690 | 3,410 | |||||||
Federal and other taxes on income | 3,127 | 2,502 | |||||||
Other taxes payable | 1,381 | 1,320 | |||||||
TOTAL CURRENT LIABILITIES | 25,011 | 18,795 | |||||||
Long-term debt | 11,807 | 10,217 | |||||||
Capital lease obligations | 324 | 239 | |||||||
Deferred credits and other noncurrent obligations | 10,507 | 7,942 | |||||||
Noncurrent deferred income taxes | 11,262 | 7,268 | |||||||
Reserves for employee benefit plans | 4,046 | 3,345 | |||||||
Minority interests | 200 | 172 | |||||||
TOTAL LIABILITIES | 63,157 | 47,978 | |||||||
Preferred stock (authorized 100,000,000 shares, $1.00 par value; none issued) | – | – | |||||||
Common stock (authorized 4,000,000,000 shares, $0.75 par value; 2,442,676,580 and 2,274,032,014 shares issued at December 31, 2005 and 2004, respectively) | 1,832 | 1,706 | |||||||
Capital in excess of par value | 13,894 | 4,160 | |||||||
Retained earnings | 55,738 | 45,414 | |||||||
Notes receivable – key employees | (3 | ) | – | ||||||
Accumulated other comprehensive loss | (429 | ) | (319 | ) | |||||
Deferred compensation and benefit plan trust | (486 | ) | (607 | ) | |||||
Treasury stock, at cost (2005 – 209,989,910 shares; 2004 – 166,911,890 shares) | (7,870 | ) | (5,124 | ) | |||||
TOTAL STOCKHOLDERS’ EQUITY | 62,676 | 45,230 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 125,833 | $ | 93,208 | |||||
See accompanying Notes to the Consolidated Financial Statements. |
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CONSOLIDATED STATEMENT OF CASH FLOWS Millions of dollars |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
OPERATING ACTIVITIES | |||||||||||||
Net income | $ | 14,099 | $ | 13,328 | $ | 7,230 | |||||||
Adjustments | |||||||||||||
Depreciation, depletion and amortization | 5,913 | 4,935 | 5,326 | ||||||||||
Dry hole expense | 226 | 286 | 256 | ||||||||||
Distributions less than income from equity affiliates | (1,304 | ) | (1,422 | ) | (383 | ) | |||||||
Net before-tax gains on asset retirements and sales | (134 | ) | (1,882 | ) | (194 | ) | |||||||
Net foreign currency effects | 62 | 60 | 199 | ||||||||||
Deferred income tax provision | 1,393 | (224 | ) | 164 | |||||||||
Net (increase) decrease in operating working capital | (54 | ) | 430 | 162 | |||||||||
Minority interest in net income | 96 | 85 | 80 | ||||||||||
(Increase) decrease in long-term receivables | (191 | ) | (60 | ) | 12 | ||||||||
Decrease (increase) in other deferred charges | 668 | (69 | ) | 1,646 | |||||||||
Cumulative effect of changes in accounting principles | – | – | 196 | ||||||||||
Gain from exchange of Dynegy preferred stock | – | – | (365 | ) | |||||||||
Cash contributions to employee pension plans | (1,022 | ) | (1,643 | ) | (1,417 | ) | |||||||
Other | 353 | 866 | (597 | ) | |||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 20,105 | 14,690 | 12,315 | ||||||||||
INVESTING ACTIVITIES | |||||||||||||
Cash portion of Unocal acquisition, net of Unocal cash received | (5,934 | ) | – | – | |||||||||
Capital expenditures | (8,701 | ) | (6,310 | ) | (5,625 | ) | |||||||
Advances to equity affiliate | – | (2,200 | ) | – | |||||||||
Repayment of loans by equity affiliates | 57 | 1,790 | 293 | ||||||||||
Proceeds from asset sales | 2,681 | 3,671 | 1,107 | ||||||||||
Net sales (purchases) of marketable securities | 336 | (450 | ) | 153 | |||||||||
NET CASH USED FOR INVESTING ACTIVITIES | (11,561 | ) | (3,499 | ) | (4,072 | ) | |||||||
FINANCING ACTIVITIES | |||||||||||||
Net (payments) borrowings of short-term obligations | (109 | ) | 114 | (3,628 | ) | ||||||||
Proceeds from issuances of long-term debt | 20 | – | 1,034 | ||||||||||
Repayments of long-term debt and other financing obligations | (966 | ) | (1,398 | ) | (1,347 | ) | |||||||
Cash dividends – common stock | (3,778 | ) | (3,236 | ) | (3,033 | ) | |||||||
Dividends paid to minority interests | (98 | ) | (41 | ) | (37 | ) | |||||||
Net (purchases) sales of treasury shares | (2,597 | ) | (1,645 | ) | 57 | ||||||||
Redemption of preferred stock of subsidiaries | (140 | ) | (18 | ) | (75 | ) | |||||||
NET CASH USED FOR FINANCING ACTIVITIES | (7,668 | ) | (6,224 | ) | (7,029 | ) | |||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (124 | ) | 58 | 95 | |||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 752 | 5,025 | 1,309 | ||||||||||
CASH AND CASH EQUIVALENTS AT JANUARY 1 | 9,291 | 4,266 | 2,957 | ||||||||||
CASH AND CASH EQUIVALENTS AT DECEMBER 31 | $ | 10,043 | $ | 9,291 | $ | 4,266 | |||||||
See accompanying Notes to the Consolidated Financial Statements. |
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CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY Shares in thousands; amounts in millions of dollars |
2005 | 2004 | 2003 | |||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||
PREFERRED STOCK | – | $ | – | – | $ | – | – | $ | – | ||||||||||||||||
COMMON STOCK1 | |||||||||||||||||||||||||
Balance at January 1 | 2,274,032 | $ | 1,706 | 2,274,042 | $ | 1,706 | 2,274,042 | $ | 1,706 | ||||||||||||||||
Shares issued for Unocal acquisition | 168,645 | 126 | – | – | |||||||||||||||||||||
Conversion of Texaco Inc. acquisition | – | – | (10 | ) | – | – | – | ||||||||||||||||||
BALANCE AT DECEMBER 31 | 2,442,677 | $ | 1,832 | 2,274,032 | $ | 1,706 | 2,274,042 | $ | 1,706 | ||||||||||||||||
CAPITAL IN EXCESS OF PAR1 | |||||||||||||||||||||||||
Balance at January 1 | $ | 4,160 | $ | 4,002 | $ | 3,980 | |||||||||||||||||||
Shares issued for Unocal acquisition | 9,585 | – | – | ||||||||||||||||||||||
Stock options and restricted stock units | 67 | – | – | ||||||||||||||||||||||
Treasury stock transactions | 82 | 158 | 22 | ||||||||||||||||||||||
BALANCE AT DECEMBER 31 | $ | 13,894 | $ | 4,160 | $ | 4,002 | |||||||||||||||||||
RETAINED EARNINGS | |||||||||||||||||||||||||
Balance at January 1 | $ | 45,414 | $ | 35,315 | $ | 30,942 | |||||||||||||||||||
Net income | 14,099 | 13,328 | 7,230 | ||||||||||||||||||||||
Cash dividends on common stock | (3,778 | ) | (3,236 | ) | (3,033 | ) | |||||||||||||||||||
Tax benefit from dividends paid on unallocated ESOP shares and other | 3 | 7 | 6 | ||||||||||||||||||||||
Exchange of Dynegy securities | – | – | 170 | ||||||||||||||||||||||
BALANCE AT DECEMBER 31 | $ | 55,738 | $ | 45,414 | $ | 35,315 | |||||||||||||||||||
NOTES RECEIVABLE – KEY EMPLOYEES | $ | (3 | ) | $ | – | $ | – | ||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||||||||||||||||||||
Currency translation adjustment | |||||||||||||||||||||||||
Balance at January 1 | $ | (140 | ) | $ | (176 | ) | $ | (208 | ) | ||||||||||||||||
Change during year2 | (5 | ) | 36 | 32 | |||||||||||||||||||||
Balance at December 31 | $ | (145 | ) | $ | (140 | ) | $ | (176 | ) | ||||||||||||||||
Minimum pension liability adjustment | |||||||||||||||||||||||||
Balance at January 1 | $ | (402 | ) | $ | (874 | ) | $ | (876 | ) | ||||||||||||||||
Change during year | 58 | 472 | 2 | ||||||||||||||||||||||
Balance at December 31 | $ | (344 | ) | $ | (402 | ) | $ | (874 | ) | ||||||||||||||||
Unrealized net holding gain on securities | |||||||||||||||||||||||||
Balance at January 1 | $ | 120 | $ | 129 | $ | 49 | |||||||||||||||||||
Change during year | (32 | ) | (9 | ) | 80 | ||||||||||||||||||||
Balance at December 31 | $ | 88 | $ | 120 | $ | 129 | |||||||||||||||||||
Net derivatives gain (loss) on hedge transactions | |||||||||||||||||||||||||
Balance at January 1 | $ | 103 | $ | 112 | $ | 37 | |||||||||||||||||||
Change during year2 | (131 | ) | (9 | ) | 75 | ||||||||||||||||||||
Balance at December 31 | $ | (28 | ) | $ | 103 | $ | 112 | ||||||||||||||||||
BALANCE AT DECEMBER 31 | $ | (429 | ) | $ | (319 | ) | $ | (809 | ) | ||||||||||||||||
DEFERRED COMPENSATION AND BENEFIT PLAN TRUST | |||||||||||||||||||||||||
DEFERRED COMPENSATION | |||||||||||||||||||||||||
Balance at January 1 | $ | (367 | ) | $ | (362 | ) | $ | (412 | ) | ||||||||||||||||
Net reduction of ESOP debt and other | 121 | (5 | ) | 50 | |||||||||||||||||||||
BALANCE AT DECEMBER 31 | (246 | ) | (367 | ) | (362 | ) | |||||||||||||||||||
BENEFIT PLAN TRUST (COMMON STOCK)1 | 14,168 | (240 | ) | 14,168 | (240 | ) | 14,168 | (240 | ) | ||||||||||||||||
BALANCE AT DECEMBER 31 | 14,168 | $ | (486 | ) | 14,168 | $ | (607 | ) | 14,168 | $ | (602 | ) | |||||||||||||
TREASURY STOCK AT COST1 | |||||||||||||||||||||||||
Balance at January 1 | 166,912 | $ | (5,124 | ) | 135,747 | $ | (3,317 | ) | 137,769 | $ | (3,374 | ) | |||||||||||||
Purchases | 52,013 | (3,029 | ) | 42,607 | (2,122 | ) | 81 | (3 | ) | ||||||||||||||||
Issuances – mainly employee benefit plans | (8,935 | ) | 283 | (11,442 | ) | 315 | (2,103 | ) | 60 | ||||||||||||||||
BALANCE AT DECEMBER 31 | 209,990 | $ | (7,870 | ) | 166,912 | $ | (5,124 | ) | 135,747 | $ | (3,317 | ) | |||||||||||||
TOTAL STOCKHOLDERS’ EQUITY AT DECEMBER 31 | $ | 62,676 | $ | 45,230 | $ | 36,295 | |||||||||||||||||||
1 | 2003 restated to reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. |
2 | Includes Unocal balances at December 31, 2005. |
See accompanying Notes to the Consolidated Financial Statements. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Millions of dollars, except per-share amounts |
NOTE 1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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NOTE 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued |
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Notes to the Consolidated Financial Statements | |
Millions of dollars, except per-share amounts | |
NOTE 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Net income, as reported | $ | 14,099 | $ | 13,328 | $ | 7,230 | |||||||
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects1 | $ | 81 | $ | 42 | $ | 16 | |||||||
Deduct: Total stock-based employee compensation expense determined under fair-valued-based method for awards, net of related tax effects1,2 | $ | (108 | ) | $ | (84 | ) | $ | (41 | ) | ||||
Pro forma net income | $ | 14,072 | $ | 13,286 | $ | 7,205 | |||||||
Net income per share:3,4 | |||||||||||||
Basic – as reported | $ | 6.58 | $ | 6.30 | $ | 3.48 | |||||||
Basic – pro forma | $ | 6.56 | $ | 6.28 | $ | 3.47 | |||||||
Diluted – as reported | $ | 6.54 | $ | 6.28 | $ | 3.48 | |||||||
Diluted – pro forma | $ | 6.53 | $ | 6.26 | $ | 3.47 | |||||||
1 | Periods prior to 2005 conformed to the 2005 presentation. |
2 | Fair value determined using the Black-Scholes option-pricing model. |
3 | Per-share amounts in all periods refl ect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. |
4 | The amounts in 2003 include a benefit of $0.08 for the company’s share of a capital stock transaction of its Dynegy Inc. affiliate, which under the applicable accounting rules was recorded directly to the company’s retained earnings and not included in net income for the period. |
NOTE 2.
ACQUISITION OF UNOCAL CORPORATION
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NOTE 2. | ACQUISITION OF UNOCAL CORPORATION – Continued |
At August 1, 2005 | ||||
Current assets | $ | 3,531 | ||
Investments and long-term receivables | 1,647 | |||
Properties | 17,288 | |||
Goodwill | 4,700 | |||
Other assets | 2,055 | |||
Total assets acquired | 29,221 | |||
Current liabilities | (2,365 | ) | ||
Long-term debt and capital leases | (2,392 | ) | ||
Deferred income taxes | (3,743 | ) | ||
Other liabilities | (3,435 | ) | ||
Total liabilities assumed | (11,935 | ) | ||
Net assets acquired | $ | 17,286 | ||
The $4,700 of goodwill is assigned to the upstream segment. None of the goodwill is deductible for tax purposes. The goodwill represents benefits of the acquisition that are additional to the fair values of the other net assets acquired. The primary reasons for the acquisition and the principal factors that contributed to a Unocal purchase price that resulted in the recognition of goodwill were as follows:
• | The “going concern” element of the Unocal businesses, which presents the opportunity to earn a higher rate of return on the assembled collection of net assets than would be expected if those assets were acquired separately. These benefits include upstream growth opportunities in the Asia-Pacific, Gulf of Mexico and Caspian regions. Some of these areas contain operations that are complementary to Chevron’s, and the acquisition is consistent with Chevron’s long-term strategies to grow profitability in its core upstream areas, build new legacy positions and commercialize the company’s large undeveloped natural gas resource base. | |||
• | Cost savings that can be obtained through the capture of operational synergies. The opportunities for cost savings include the elimination of duplicate facilities and services, high-grading of investment opportunities in the combined portfolio and the sharing of best practices of the two companies. |
Year ended December 31 | |||||||||
2005 | 2004 | ||||||||
Sales and other operating revenues | $ | 198,762 | $ | 158,471 | |||||
Net income | 14,967 | 14,164 | |||||||
Net income per share of common stock | |||||||||
Basic | $ | 6.68 | $ | 6.22 | |||||
Diluted | $ | 6.64 | $ | 6.19 | |||||
The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may differ significantly from this pro forma financial information. The pro forma information does not reflect any synergistic savings that might be achieved from combining the operations and is not intended to reflect the actual results that would have occurred had the companies actually been combined during the periods presented.
NOTE 3.
INFORMATION RELATING TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Net (increase) decrease in operating working capital was composed of the following: | |||||||||||||
Increase in accounts and notes receivable | $ | (3,164 | ) | $ | (2,515 | ) | $ | (265 | ) | ||||
(Increase) decrease in inventories | (968 | ) | (298 | ) | 115 | ||||||||
(Increase) decrease in prepaid expenses and other current assets | (54 | ) | (76 | ) | 261 | ||||||||
Increase in accounts payable and accrued liabilities | 3,851 | 2,175 | 242 | ||||||||||
Increase (decrease) in income and other taxes payable | 281 | 1,144 | (191 | ) | |||||||||
Net (increase) decrease in operating working capital | $ | (54 | ) | $ | 430 | $ | 162 | ||||||
Net cash provided by operating activities includes the following cash payments for interest and income taxes: | |||||||||||||
Interest paid on debt (net of capitalized interest) | $ | 455 | $ | 422 | $ | 467 | |||||||
Income taxes | $ | 8,875 | $ | 6,679 | $ | 5,316 | |||||||
Net (purchases) sales of marketable securities consisted of the following gross amounts: | |||||||||||||
Marketable securities purchased | $ | (918 | ) | $ | (1,951 | ) | $ | (3,563 | ) | ||||
Marketable securities sold | 1,254 | 1,501 | 3,716 | ||||||||||
Net sales (purchases) of marketable securities | $ | 336 | $ | (450 | ) | $ | 153 | ||||||
The 2005 “Net increase in operating working capital” included a reduction of $20 for excess income tax benefits associated with stock options exercised since July 1, 2005, in accordance with the cash-flows classifi cation requirements of
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NOTE 3. | INFORMATION RELATING TO THE CONSOLIDATED STATEMENT OF CASH FLOWS— Continued |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Additions to properties, plant and equipment1 | $ | 8,154 | $ | 5,798 | $ | 4,953 | |||||||
Additions to investments | 459 | 303 | 687 | ||||||||||
Current-year dry hole expenditures | 198 | 228 | 132 | ||||||||||
Payments for other liabilities and assets, net | (110 | ) | (19 | ) | (147 | ) | |||||||
Capital expenditures | 8,701 | 6,310 | 5,625 | ||||||||||
Expensed exploration expenditures | 517 | 412 | 315 | ||||||||||
Assets acquired through capital | |||||||||||||
lease obligations and other financing obligations | 164 | 31 | 286 | 2 | |||||||||
Capital and exploratory expenditures, excluding equity affiliates | 9,382 | 6,753 | 6,226 | ||||||||||
Equity in affiliates’ expenditures | 1,681 | 1,562 | 1,137 | ||||||||||
Capital and exploratory expenditures, including equity affiliates | $ | 11,063 | $ | 8,315 | $ | 7,363 | |||||||
1 | Net of noncash additions of $435 in 2005, $212 in 2004 and $1,183 in 2003. |
2 | Includes deferred payment of $210 related to the 1993 acquisition of the company’s interest in the Tengizchevroil joint venture. |
SUMMARIZED FINANCIAL DATA – CHEVRON U.S.A. INC.
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Sales and other operating revenues | $ | 138,296 | $ | 108,351 | $ | 82,760 | |||||||
Total costs and other deductions | 132,180 | 102,180 | 78,399 | ||||||||||
Net income* | 4,693 | 4,773 | 3,083 | ||||||||||
* | 2003 net income includes a charge of $323 for the cumulative effect of changes in accounting principles. |
At December 31 | |||||||||
2005 | 2004 | ||||||||
Current assets | $ | 27,878 | $ | 23,147 | |||||
Other assets | 20,611 | 19,961 | |||||||
Current liabilities | 20,286 | 17,044 | |||||||
Other liabilities | 12,897 | 12,533 | |||||||
Net equity | 15,306 | 13,531 | |||||||
Memo: Total debt | $ | 8,353 | $ | 8,349 |
SUMMARIZED FINANCIAL DATA – CHEVRON TRANSPORT CORPORATION LTD.
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NOTE 5. | SUMMARIZED FINANCIAL DATA – CHEVRON TRANSPORT CORPORATION LTD. – Continued |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Sales and other operating revenues | $ | 640 | $ | 660 | $ | 601 | |||||||
Total costs and other deductions | 509 | 495 | 535 | ||||||||||
Net income | 113 | 160 | 50 | ||||||||||
At December 31 | |||||||||
2005 | 2004 | ||||||||
Current assets | $ | 358 | $ | 292 | |||||
Other assets | 283 | 219 | |||||||
Current liabilities | 119 | 67 | |||||||
Other liabilities | 243 | 278 | |||||||
Net equity | 279 | 166 | |||||||
STOCKHOLDERS’ EQUITY
FINANCIAL AND DERIVATIVE INSTRUMENTS
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NOTE 7. | FINANCIAL AND DERIVATIVE INSTRUMENTS – Continued |
OPERATING SEGMENTS AND GEOGRAPHIC DATA
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NOTE 8. | OPERATING SEGMENTS AND GEOGRAPHIC DATA – Continued |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Income From Continuing Operations | |||||||||||||
Upstream – Exploration and Production | |||||||||||||
United States | $ | 4,168 | $ | 3,868 | $ | 3,160 | |||||||
International | 7,556 | 5,622 | 3,199 | ||||||||||
Total Upstream | 11,724 | 9,490 | 6,359 | ||||||||||
Downstream – Refining, Marketing and Transportation | |||||||||||||
United States | 980 | 1,261 | 482 | ||||||||||
International | 1,786 | 1,989 | 685 | ||||||||||
Total Downstream | 2,766 | 3,250 | 1,167 | ||||||||||
Chemicals | |||||||||||||
United States | 240 | 251 | 5 | ||||||||||
International | 58 | 63 | 64 | ||||||||||
Total Chemicals | 298 | 314 | 69 | ||||||||||
Total Segment Income | 14,788 | 13,054 | 7,595 | ||||||||||
All Other | |||||||||||||
Interest expense | (337 | ) | (257 | ) | (352 | ) | |||||||
Interest income | 266 | 129 | 75 | ||||||||||
Other | (618 | ) | 108 | 64 | |||||||||
Income From Continuing Operations | 14,099 | 13,034 | 7,382 | ||||||||||
Income From Discontinued Operations | – | 294 | 44 | ||||||||||
Cumulative effect of changes in accounting principles | – | – | (196 | ) | |||||||||
Net Income | $ | 14,099 | $ | 13,328 | $ | 7,230 | |||||||
At December 31 | |||||||||
2005 | 2004 | ||||||||
Upstream – Exploration and Production | |||||||||
United States | $ | 19,006 | $ | 11,869 | |||||
International | 46,501 | 31,239 | |||||||
Goodwill | 4,636 | – | |||||||
Total Upstream | 70,143 | 43,108 | |||||||
Downstream – Refining, Marketing and Transportation | |||||||||
United States | 12,273 | 10,091 | |||||||
International | 22,294 | 19,415 | |||||||
Total Downstream | 34,567 | 29,506 | |||||||
Chemicals | |||||||||
United States | 2,452 | 2,316 | |||||||
International | 727 | 667 | |||||||
Total Chemicals | 3,179 | 2,983 | |||||||
Total Segment Assets | 107,889 | 75,597 | |||||||
All Other* | |||||||||
United States | 9,234 | 11,746 | |||||||
International | 8,710 | 5,865 | |||||||
Total All Other | 17,944 | 17,611 | |||||||
Total Assets – United States | 42,965 | 36,022 | |||||||
Total Assets – International | 78,232 | 57,186 | |||||||
Goodwill | 4,636 | – | |||||||
Total Assets | $ | 125,833 | $ | 93,208 | |||||
* | All Other assets consist primarily of worldwide cash, cash equivalents and marketable securities, real estate, information systems, the company’s investment in Dynegy, mining operations of coal and other minerals, power generation businesses, technology companies, and assets of the corporate administrative functions. |
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NOTE 8. | OPERATING SEGMENTS AND GEOGRAPHIC DATA — Continued |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Upstream — Exploration and Production | |||||||||||||
United States | $ | 16,044 | $ | 8,242 | $ | 6,842 | |||||||
Intersegment | 8,651 | 8,121 | 6,295 | ||||||||||
Total United States | 24,695 | 16,363 | 13,137 | ||||||||||
International | 10,190 | 7,246 | 7,013 | ||||||||||
Intersegment | 13,652 | 10,184 | 8,142 | ||||||||||
Total International | 23,842 | 17,430 | 15,155 | ||||||||||
Total Upstream | 48,537 | 33,793 | 28,292 | ||||||||||
Downstream — Refining, Marketing and Transportation | |||||||||||||
United States | 73,721 | 57,723 | 44,701 | ||||||||||
Excise taxes | 4,521 | 4,147 | 3,744 | ||||||||||
Intersegment | 535 | 179 | 225 | ||||||||||
Total United States | 78,777 | 62,049 | 48,670 | ||||||||||
International | 83,223 | 67,944 | 52,486 | ||||||||||
Excise taxes | 4,184 | 3,810 | 3,342 | ||||||||||
Intersegment | 14 | 87 | 46 | ||||||||||
Total International | 87,421 | 71,841 | 55,874 | ||||||||||
Total Downstream | �� | 166,198 | 133,890 | 104,544 | |||||||||
Chemicals | |||||||||||||
United States | 343 | 347 | 323 | ||||||||||
Intersegment | 241 | 188 | 129 | ||||||||||
Total United States | 584 | 535 | 452 | ||||||||||
International | 760 | 747 | 677 | ||||||||||
Excise taxes | 14 | 11 | 9 | ||||||||||
Intersegment | 131 | 107 | 83 | ||||||||||
Total International | 905 | 865 | 769 | ||||||||||
Total Chemicals | 1,489 | 1,400 | 1,221 | ||||||||||
All Other | |||||||||||||
United States | 597 | 551 | 338 | ||||||||||
Intersegment | 514 | 431 | 121 | ||||||||||
Total United States | 1,111 | 982 | 459 | ||||||||||
International | 44 | 97 | 100 | ||||||||||
Intersegment | 26 | 16 | 4 | ||||||||||
Total International | 70 | 113 | 104 | ||||||||||
Total All Other | 1,181 | 1,095 | 563 | ||||||||||
Segment Sales and Other Operating Revenues | |||||||||||||
United States | 105,167 | 79,929 | 62,718 | ||||||||||
International | 112,238 | 90,249 | 71,902 | ||||||||||
Total Segment Sales and Other Operating Revenues | 217,405 | 170,178 | 134,620 | ||||||||||
Elimination of intersegment sales | (23,764 | ) | (19,313 | ) | (15,045 | ) | |||||||
Total Sales and Other Operating Revenues* | $ | 193,641 | $ | 150,865 | $ | 119,575 | |||||||
* | Includes buy/sell contracts of $23,822 in 2005, $18,650 in 2004 and $14,246 in 2003. Substantially all of the amounts in each period relates to the downstream segment. Refer to Note 15, beginning on page FS-46, for a discussion of the company’s accounting for buy/sell contracts. |
Year ended December 31 | |||||||||||||
2005 | 2004 | 20031 | |||||||||||
Upstream — Exploration and Production | |||||||||||||
United States | $ | 2,330 | $ | 2,308 | $ | 1,853 | |||||||
International | 8,440 | 5,041 | 3,831 | ||||||||||
Total Upstream | 10,770 | 7,349 | 5,684 | ||||||||||
Downstream — Refining, Marketing and Transportation | |||||||||||||
United States | 575 | 739 | 300 | ||||||||||
International | 576 | 442 | 275 | ||||||||||
Total Downstream | 1,151 | 1,181 | 575 | ||||||||||
Chemicals | |||||||||||||
United States | 99 | 47 | (25 | ) | |||||||||
International | 25 | 17 | 6 | ||||||||||
Total Chemicals | 124 | 64 | (19 | ) | |||||||||
All Other | (947 | ) | (1,077 | ) | (946 | ) | |||||||
Income Tax Expense From Continuing Operations2 | $ | 11,098 | $ | 7,517 | $ | 5,294 | |||||||
1 | See Note 24, beginning on page FS-59, for information concerning the cumulative effect of changes in accounting principles due to the adoption of FAS 143,“Accounting for Asset Retirement Obligations.” |
2 | Income tax expense of $100 and $50 related to discontinued operations for 2004 and 2003, respectively, is not included. |
LITIGATION
LEASE COMMITMENTS
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Table of Contents
NOTE 10. | LEASE COMMITMENTS – Continued |
At December 31 | |||||||||
2005 | 2004 | ||||||||
Exploration and Production | $ | 442 | $ | 277 | |||||
Refining, Marketing and Transportation | 837 | 842 | |||||||
Total | 1,279 | 1,119 | |||||||
Less: Accumulated amortization | 745 | 690 | |||||||
Net capitalized leased assets | $ | 534 | $ | 429 | |||||
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Minimum rentals | $ | 2,102 | $ | 2,093 | $ | 1,567 | |||||||
Contingent rentals | 6 | 7 | 3 | ||||||||||
Total | 2,108 | 2,100 | 1,570 | ||||||||||
Less: Sublease rental income | 43 | 40 | 48 | ||||||||||
Net rental expense | $ | 2,065 | $ | 2,060 | $ | 1,522 | |||||||
At December 31 | |||||||||||
Operating | Capital | ||||||||||
Leases | Leases | ||||||||||
Year: | 2006 | $ | 507 | $ | 106 | ||||||
2007 | 444 | 87 | |||||||||
2008 | 401 | 76 | |||||||||
2009 | 349 | 77 | |||||||||
2010 | 284 | 58 | |||||||||
Thereafter | 932 | 564 | |||||||||
Total | $ | 2,917 | $ | 968 | |||||||
Less: Amounts representing interest and executory costs | (277 | ) | |||||||||
Net present values | 691 | ||||||||||
Less: Capital lease obligations included in short-term debt | (367 | ) | |||||||||
Long-term capital lease obligations | $ | 324 | |||||||||
RESTRUCTURING AND REORGANIZATION COSTS
Amounts before tax | 2005 | |||
Balance at August 1 | $ | 106 | ||
Payments | (62 | ) | ||
Balance at December 31 | $ | 44 | ||
Amounts before tax | 2005 | 2004 | |||||||
Balance at January 1 | $ | 119 | $ | 240 | |||||
Additions/adjustments | (10 | ) | 27 | ||||||
Payments | (62 | ) | (148 | ) | |||||
Balance at December 31 | $ | 47 | $ | 119 | |||||
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Table of Contents
ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Revenues and other income | $ | – | $ | 635 | $ | 485 | |||||||
Income from discontinued operations before income tax expense | – | 394 | 94 | ||||||||||
Income from discontinued operations, net of tax | – | 294 | 44 | ||||||||||
INVESTMENTS AND ADVANCES
Investments and Advances | Equity in Earnings | ||||||||||||||||||||
At December 31 | Year ended December 31 | ||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2003 | |||||||||||||||||
Upstream — Exploration and Production | |||||||||||||||||||||
Tengizchevroil | $ | 5,007 | $ | 4,725 | $ | 1,514 | $ | 950 | $ | 611 | |||||||||||
Hamaca | 1,189 | 836 | 390 | 98 | 45 | ||||||||||||||||
Other | 679 | 341 | 139 | 148 | 155 | ||||||||||||||||
Total Upstream | 6,875 | 5,902 | 2,043 | 1,196 | 811 | ||||||||||||||||
Downstream — Refining, Marketing and Transportation | |||||||||||||||||||||
GS Caltex Corporation | 1,984 | 1,820 | 320 | 296 | 107 | ||||||||||||||||
Caspian Pipeline Consortium | 1,014 | 1,039 | 101 | 140 | 52 | ||||||||||||||||
Star Petroleum Refining Company Ltd. | 709 | 663 | 81 | 207 | 8 | ||||||||||||||||
Caltex Australia Ltd. | 435 | 263 | 214 | 173 | 13 | ||||||||||||||||
Colonial Pipeline Company | 565 | – | 13 | – | – | ||||||||||||||||
Other | 1,562 | 1,125 | 273 | 143 | 100 | ||||||||||||||||
Total Downstream | 6,269 | 4,910 | 1,002 | 959 | 280 | ||||||||||||||||
Chemicals | |||||||||||||||||||||
Chevron Phillips Chemical Company LLC | 1,908 | 1,896 | 449 | 334 | 24 | ||||||||||||||||
Other | 20 | 19 | 3 | 2 | 1 | ||||||||||||||||
Total Chemicals | 1,928 | 1,915 | 452 | 336 | 25 | ||||||||||||||||
All Other | |||||||||||||||||||||
Dynegy Inc. | 682 | 525 | 189 | 86 | (56 | ) | |||||||||||||||
Other | 740 | 601 | 45 | 5 | (31 | ) | |||||||||||||||
Total equity method | $ | 16,494 | $ | 13,853 | $ | 3,731 | $ | 2,582 | $ | 1,029 | |||||||||||
Other at or below cost | 563 | 536 | |||||||||||||||||||
Total investments and advances | $ | 17,057 | $ | 14,389 | |||||||||||||||||
Total United States | $ | 4,624 | $ | 3,788 | $ | 833 | $ | 588 | $ | 175 | |||||||||||
Total International | $ | 12,433 | $ | 10,601 | $ | 2,898 | $ | 1,994 | $ | 854 | |||||||||||
Tengizchevroil Chevron has a 50 percent equity ownership interest in Tengizchevroil (TCO), a joint venture formed in 1993 to develop the Tengiz and Korolev crude oil fields in Kazakhstan over a 40-year period.
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NOTE 13. | INVESTMENTS AND ADVANCES — Continued |
Affiliates | Chevron Share | ||||||||||||||||||||||||
Year ended December 31 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
Total revenues | $ | 64,642 | $ | 55,152 | $ | 42,323 | $ | 31,252 | $ | 25,916 | $ | 19,467 | |||||||||||||
Income before income tax expense | 7,883 | 5,309 | 1,657 | 4,165 | 3,015 | 1,211 | |||||||||||||||||||
Net income | 6,645 | 4,441 | 1,508 | 3,534 | 2,582 | 1,029 | |||||||||||||||||||
At December 31 | |||||||||||||||||||||||||
Current assets | $ | 19,903 | $ | 16,506 | $ | 12,204 | $ | 8,537 | $ | 7,540 | $ | 5,180 | |||||||||||||
Noncurrent assets | 46,925 | 38,104 | 39,422 | 17,747 | 15,567 | 15,765 | |||||||||||||||||||
Current liabilities | 13,427 | 10,949 | 9,642 | 6,034 | 4,962 | 4,132 | |||||||||||||||||||
Noncurrent liabilities | 26,579 | 22,261 | 22,738 | 4,906 | 4,520 | 5,002 | |||||||||||||||||||
Net equity | $ | 26,822 | $ | 21,400 | $ | 19,246 | $ | 15,344 | $ | 13,625 | $ | 11,811 | |||||||||||||
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PROPERTIES, PLANT AND EQUIPMENT1,2
At December 31 | Year ended December 31 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Investment at Cost | Net Investment | Additions at Cost | 3 | Depreciation Expense | 4,5 | ||||||||||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||||||||
Upstream | |||||||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 43,390 | $ | 37,329 | $ | 34,798 | $ | 15,327 | $ | 10,047 | $ | 9,953 | $ | 2,160 | $ | 1,584 | $ | 1,776 | $ | 1,869 | $ | 1,508 | $ | 1,815 | |||||||||||||||||||||||||||
International | 54,497 | 38,721 | 37,402 | 34,311 | 21,192 | 20,572 | 4,897 | 3,090 | 3,246 | 2,804 | 2,180 | 2,227 | |||||||||||||||||||||||||||||||||||||||
Total Upstream | 97,887 | 76,050 | 72,200 | 49,638 | 31,239 | 30,525 | 7,057 | 4,674 | 5,022 | 4,673 | 3,688 | 4,042 | |||||||||||||||||||||||||||||||||||||||
Downstream | |||||||||||||||||||||||||||||||||||||||||||||||||||
United States | 13,832 | 12,826 | 12,959 | 6,169 | 5,611 | 5,881 | 793 | 482 | 389 | 461 | 490 | 493 | |||||||||||||||||||||||||||||||||||||||
International | 11,235 | 10,843 | 11,174 | 5,529 | 5,443 | 5,944 | 453 | 441 | 388 | 550 | 572 | 655 | |||||||||||||||||||||||||||||||||||||||
Total Downstream | 25,067 | 23,669 | 24,133 | 11,698 | 11,054 | 11,825 | 1,246 | 923 | 777 | 1,011 | 1,062 | 1,148 | |||||||||||||||||||||||||||||||||||||||
Chemicals | |||||||||||||||||||||||||||||||||||||||||||||||||||
United States | 624 | 615 | 613 | 282 | 292 | 303 | 12 | 12 | 12 | 19 | 20 | 21 | |||||||||||||||||||||||||||||||||||||||
International | 721 | 725 | 719 | 402 | 392 | 404 | 43 | 27 | 24 | 23 | 26 | 38 | |||||||||||||||||||||||||||||||||||||||
Total Chemicals | 1,345 | 1,340 | 1,332 | 684 | 684 | 707 | 55 | 39 | 36 | 42 | 46 | 59 | |||||||||||||||||||||||||||||||||||||||
All Other6 | |||||||||||||||||||||||||||||||||||||||||||||||||||
United States | 3,127 | 2,877 | 2,772 | 1,655 | 1,466 | 1,393 | 199 | 314 | 169 | 186 | 158 | 109 | |||||||||||||||||||||||||||||||||||||||
International | 20 | 18 | 119 | 15 | 15 | 88 | 4 | 2 | 8 | 1 | 3 | 26 | |||||||||||||||||||||||||||||||||||||||
Total All Other | 3,147 | 2,895 | 2,891 | 1,670 | 1,481 | 1,481 | 203 | 316 | 177 | 187 | 161 | 135 | |||||||||||||||||||||||||||||||||||||||
Total United States | 60,973 | 53,647 | 51,142 | 23,433 | 17,416 | 17,530 | 3,164 | 2,392 | 2,346 | 2,535 | 2,176 | 2,438 | |||||||||||||||||||||||||||||||||||||||
Total International | 66,473 | 50,307 | 49,414 | 40,257 | 27,042 | 27,008 | 5,397 | 3,560 | 3,666 | 3,378 | 2,781 | 2,946 | |||||||||||||||||||||||||||||||||||||||
Total | $ | 127,446 | $ | 103,954 | $ | 100,556 | $ | 63,690 | $ | 44,458 | $ | 44,538 | $ | 8,561 | $ | 5,952 | $ | 6,012 | $ | 5,913 | $ | 4,957 | $ | 5,384 | |||||||||||||||||||||||||||
1 | Refer to Note 24, beginning on page FS-59, for a discussion of the effect on 2003 PP&E balances and depreciation expenses related to the adoption of FAS 143,“Accounting for Asset Retirement Obligations.” |
2 | 2005 balances include assets acquired in connection with the acquisition of Unocal Corporation. Refer to Note 2, beginning on page FS-36, for additional information. |
3 | Net of dry hole expense related to prior years’ expenditures of $28, $58 and $124 in 2005, 2004 and 2003, respectively. |
4 | Depreciation expense includes accretion expense of $187, $93 and $132 in 2005, 2004 and 2003, respectively. |
5 | Depreciation expense includes discontinued operations of $22 and $58 in 2004 and 2003, respectively. |
6 | Primarily mining operations of coal and other minerals, power generation businesses, real estate assets and management information systems. |
ACCOUNTING FOR BUY/SELL CONTRACTS
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Table of Contents
NOTE 15. | ACCOUNTING FOR BUY/SELL CONTRACTS – Continued |
TAXES
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Taxes on income1 | |||||||||||||
U.S. federal | |||||||||||||
Current | $ | 1,459 | $ | 2,246 | $ | 1,133 | |||||||
Deferred2 | 567 | (290 | ) | 121 | |||||||||
State and local | 409 | 345 | 133 | ||||||||||
Total United States | 2,435 | 2,301 | 1,387 | ||||||||||
International | |||||||||||||
Current | 7,837 | 5,150 | 3,864 | ||||||||||
Deferred2 | 826 | 66 | 43 | ||||||||||
Total International | 8,663 | 5,216 | 3,907 | ||||||||||
Total taxes on income | $ | 11,098 | $ | 7,517 | $ | 5,294 | |||||||
1 | Excludes income tax expense of $100 and $50 related to discontinued operations for 2004 and 2003, respectively. |
2 | Excludes a U.S. deferred tax benefit of $191 and a foreign deferred tax expense of $170 associated with the adoption of FAS 143 in 2003 and the related cumulative effect of changes in accounting method in 2003. |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
U.S. statutory federal income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | |||||||
Effect of income taxes from international operations in excess of taxes at the U.S. statutory rate | 9.2 | 5.3 | 12.8 | ||||||||||
State and local taxes on income, net of U.S. federal income tax benefit | 1.0 | 0.9 | 0.5 | ||||||||||
Prior-year tax adjustments | 0.1 | (1.0 | ) | (1.6 | ) | ||||||||
Tax credits | (1.1 | ) | (0.9 | ) | (1.5 | ) | |||||||
Effects of enacted changes in tax laws | – | (0.6 | ) | 0.3 | |||||||||
Capital loss tax benefit | (0.1 | ) | (2.1 | ) | (0.8 | ) | |||||||
Other | 0.2 | – | (1.9 | ) | |||||||||
Consolidated companies | 44.3 | 36.6 | 42.8 | ||||||||||
Effect of recording income from equity affiliates on an after-tax basis | (0.2 | ) | – | (1.0 | ) | ||||||||
Effective tax rate | 44.1 | % | 36.6 | % | 41.8 | % | |||||||
At December 31 | |||||||||
2005 | 2004 | ||||||||
Deferred tax liabilities | |||||||||
Properties, plant and equipment | $ | 14,220 | $ | 8,889 | |||||
Investments and other | 1,469 | 931 | |||||||
Total deferred tax liabilities | 15,689 | 9,820 | |||||||
Deferred tax assets | |||||||||
Abandonment/environmental reserves | (2,083 | ) | (1,495 | ) | |||||
Employee benefits | (1,250 | ) | (965 | ) | |||||
Tax loss carryforwards | (1,113 | ) | (1,155 | ) | |||||
Capital losses | (246 | ) | (687 | ) | |||||
Deferred credits | (1,618 | ) | (838 | ) | |||||
Foreign tax credits | (1,145 | ) | (93 | ) | |||||
Inventory | (182 | ) | (99 | ) | |||||
Other accrued liabilities | (240 | ) | (300 | ) | |||||
Miscellaneous | (1,237 | ) | (876 | ) | |||||
Total deferred tax assets | (9,114 | ) | (6,508 | ) | |||||
Deferred tax assets valuation allowance | 3,249 | 1,661 | |||||||
Total deferred taxes, net | $ | 9,824 | $ | 4,973 | |||||
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Table of Contents
NOTE 16. | TAXES — Continued |
At December 31 | |||||||||
2005 | 2004 | ||||||||
Prepaid expenses and other current assets | $ | (892 | ) | $ | (1,532 | ) | |||
Deferred charges and other assets | (547 | ) | (769 | ) | |||||
Federal and other taxes on income | 1 | 6 | |||||||
Noncurrent deferred income taxes | 11,262 | 7,268 | |||||||
Total deferred income taxes, net | $ | 9,824 | $ | 4,973 | |||||
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
United States | |||||||||||||
Excise taxes on products and merchandise | $ | 4,521 | $ | 4,147 | $ | 3,744 | |||||||
Import duties and other levies | 8 | 5 | 11 | ||||||||||
Property and other miscellaneous taxes | 392 | 359 | 309 | ||||||||||
Payroll taxes | 149 | 137 | 138 | ||||||||||
Taxes on production | 323 | 257 | 244 | ||||||||||
Total United States | 5,393 | 4,905 | 4,446 | ||||||||||
International | |||||||||||||
Excise taxes on products and merchandise | 4,198 | 3,821 | 3,351 | ||||||||||
Import duties and other levies | 10,466 | 10,542 | 9,652 | ||||||||||
Property and other miscellaneous taxes | 535 | 415 | 320 | ||||||||||
Payroll taxes | 52 | 52 | 54 | ||||||||||
Taxes on production | 138 | 86 | 83 | ||||||||||
Total International | 15,389 | 14,916 | 13,460 | ||||||||||
Total taxes other than on income* | $ | 20,782 | $ | 19,821 | $ | 17,906 | |||||||
* | Includes taxes on discontinued operations of $3 and $5 in 2004 and 2003, respectively. |
SHORT-TERM DEBT
At December 31 | |||||||||
2005 | 2004 | ||||||||
Commercial paper* | $ | 4,098 | $ | 4,068 | |||||
Notes payable to banks and others with originating terms of one year or less | 170 | 310 | |||||||
Current maturities of long-term debt | 467 | 333 | |||||||
Current maturities of long-term capital leases | 70 | 55 | |||||||
Redeemable long-term obligations Long-term debt | 487 | 487 | |||||||
Capital leases | 297 | 298 | |||||||
Subtotal | 5,589 | 5,551 | |||||||
Reclassified to long-term debt | (4,850 | ) | (4,735 | ) | |||||
Total short-term debt | $ | 739 | $ | 816 | |||||
* | Weighted-average interest rates at December 31, 2005 and 2004, were 4.18 percent and 1.98 percent, respectively. |
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Table of Contents
NOTE 17. | SHORT-TERM DEBT — Continued |
LONG-TERM DEBT
At December 31 | |||||||||
2005 | 2004 | ||||||||
3.5% notes due 2007 | $ | 1,992 | $ | 1,995 | |||||
3.375% notes due 2008 | 736 | 754 | |||||||
7.5% debentures due 20291 | 475 | – | |||||||
5.05% debentures due 20121 | 412 | – | |||||||
5.5% notes due 2009 | 406 | 422 | |||||||
7.35% debentures due 20091 | 347 | – | |||||||
7% debentures due 20281 | 259 | – | |||||||
9.75% debentures due 2020 | 250 | 250 | |||||||
7.327% amortizing notes due 20142 | 247 | 360 | |||||||
Fixed interest rate notes, maturing from 2006 to 2015 (8.1%)1,3 | 241 | – | |||||||
8.625% debentures due 2031 | 199 | 199 | |||||||
8.625% debentures due 2032 | 199 | 199 | |||||||
7.5% debentures due 2043 | 198 | 198 | |||||||
Fixed and floating interest rate loans due 2007 to 2009 (4.4%)1,3 | 194 | – | |||||||
9.125% debentures due 20061 | 167 | – | |||||||
8.625% debentures due 2010 | 150 | 150 | |||||||
8.875% debentures due 2021 | 150 | 150 | |||||||
8% debentures due 2032 | 148 | 148 | |||||||
7.09% notes due 2007 | 144 | 144 | |||||||
8.25% debentures due 2006 | 129 | 129 | |||||||
Medium-term notes, maturing from 2017 to 2043 (7.5%)3 | 210 | 210 | |||||||
Other foreign currency obligations (3.2%)3 | 30 | 39 | |||||||
5.7% notes due 2008 | – | 206 | |||||||
Other long-term debt (6.4%)3 | 141 | 262 | |||||||
Total including debt due within one year | 7,424 | 5,815 | |||||||
Debt due within one year | (467 | ) | (333 | ) | |||||
Reclassified from short-term debt | 4,850 | 4,735 | |||||||
Total long-term debt | $ | 11,807 | $ | 10,217 | |||||
1 | Debt assumed with acquisition of Unocal in 2005. |
2 | Guarantee of ESOP debt. |
3 | Less than $100 individually; weighted-average interest rate at December 31, 2005. |
NEW ACCOUNTING STANDARDS
ACCOUNTING FOR SUSPENDED EXPLORATORY WELLS
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Table of Contents
NOTE 20. | ACCOUNTING FOR SUSPENDED EXPLORATORY WELLS – Continued |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Beginning balance at January 1 | $ | 671 | $ | 549 | $ | 478 | |||||||
Additions associated with the acquisition of Unocal | 317 | – | – | ||||||||||
Additions to capitalized exploratory well costs pending the determination of proved reserves | 290 | 252 | 344 | ||||||||||
Reclassifications to wells, facilities and equipment based on the determination of proved reserves | (140 | ) | (64 | ) | (145 | ) | |||||||
Capitalized exploratory well costs charged to expense | (6 | ) | (66 | ) | (126 | ) | |||||||
Other reductions* | (23 | ) | – | (2 | ) | ||||||||
Ending balance at December 31 | $ | 1,109 | $ | 671 | $ | 549 | |||||||
* | Represent property sales and an exchange. |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Exploratory well costs capitalized for a period of one year or less | $ | 259 | $ | 222 | $ | 181 | |||||||
Exploratory well costs capitalized for a period greater than one year | 850 | 449 | 368 | ||||||||||
Balance at December 31 | $ | 1,109 | $ | 671 | $ | 549 | |||||||
Number of projects with exploratory well costs that have been capitalized for a period greater than one year* | 40 | 22 | 22 | ||||||||||
* | Certain projects have multiple wells or fields or both. |
Number | ||||||||
Aging based on drilling completion date of individual wells: | Amount | of wells | ||||||
1994–2000 | $ | 147 | 28 | |||||
2001–2004 | 703 | 77 | ||||||
Total | $ | 850 | 105 | |||||
Number | ||||||||
Aging based on drilling completion date of last well in project: | Amount | of projects | ||||||
1998–2000 | $ | 91 | 4 | |||||
2001–2005 | 759 | 36 | ||||||
Total | $ | 850 | 40 | |||||
EMPLOYEE BENEFIT PLANS
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NOTE 21. | EMPLOYEE BENEFIT PLANS — Continued |
Pension Benefits | ||||||||||||||||||||||||||
2005 | 2004 | Other Benefits | ||||||||||||||||||||||||
U.S. | Int'l. | U.S. | Int'l. | 2005 | 2004 | |||||||||||||||||||||
CHANGE IN BENEFIT OBLIGATION | ||||||||||||||||||||||||||
Benefit obligation at January 1 | $ | 6,587 | $ | 3,144 | $ | 5,819 | $ | 2,708 | $ | 2,820 | $ | 3,135 | ||||||||||||||
Assumption of Unocal benefit obligations | 1,437 | 169 | – | – | 277 | – | ||||||||||||||||||||
Service cost | 208 | 84 | 170 | 70 | 30 | 26 | ||||||||||||||||||||
Interest cost | 395 | 199 | 326 | 180 | 164 | 164 | ||||||||||||||||||||
Plan participants’ contributions | 1 | 6 | 1 | 6 | – | – | ||||||||||||||||||||
Plan amendments | 42 | 7 | – | 26 | – | (811 | ) | |||||||||||||||||||
Actuarial loss | 593 | 476 | 861 | 165 | 189 | 497 | ||||||||||||||||||||
Foreign currency exchange rate changes | – | (293 | ) | – | 207 | (2 | ) | 8 | ||||||||||||||||||
Benefits paid | (669 | ) | (181 | ) | (590 | ) | (213 | ) | (226 | ) | (199 | ) | ||||||||||||||
Curtailment | – | – | – | (6 | ) | – | – | |||||||||||||||||||
Special termination benefits | – | – | – | 1 | – | – | ||||||||||||||||||||
Benefit obligation at December 31 | 8,594 | 3,611 | 6,587 | 3,144 | 3,252 | 2,820 | ||||||||||||||||||||
CHANGE IN PLAN ASSETS | ||||||||||||||||||||||||||
Fair value of plan assets at January 1 | 5,776 | 2,634 | 4,444 | 2,129 | – | – | ||||||||||||||||||||
Acquisition of Unocal plan assets | 1,034 | 65 | – | – | – | – | ||||||||||||||||||||
Actual return on plan assets | 527 | 441 | 589 | 229 | – | – | ||||||||||||||||||||
Foreign currency exchange rate changes | – | (303 | ) | – | 172 | – | – | |||||||||||||||||||
Employer contributions | 794 | 228 | 1,332 | 311 | 226 | 199 | ||||||||||||||||||||
Plan participants’ contributions | 1 | 6 | 1 | 6 | – | – | ||||||||||||||||||||
Benefits paid | (669 | ) | (181 | ) | (590 | ) | (213 | ) | (226 | ) | (199 | ) | ||||||||||||||
Fair value of plan assets at December 31 | 7,463 | 2,890 | 5,776 | 2,634 | – | – | ||||||||||||||||||||
FUNDED STATUS | (1,131 | ) | (721 | ) | (811 | ) | (510 | ) | (3,252 | ) | (2,820 | ) | ||||||||||||||
Unrecognized net actuarial loss | 2,332 | 1,108 | 2,080 | 939 | 1,167 | 1,071 | ||||||||||||||||||||
Unrecognized prior-service cost | 305 | 89 | 308 | 104 | (679 | ) | (771 | ) | ||||||||||||||||||
Unrecognized net transitional assets | – | 5 | – | 7 | – | – | ||||||||||||||||||||
Total recognized at December 31 | $ | 1,506 | $ | 481 | $ | 1,577 | $ | 540 | $ | (2,764 | ) | $ | (2,520 | ) | ||||||||||||
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET AT DECEMBER 31 | ||||||||||||||||||||||||||
Prepaid benefit cost | $ | 1,961 | $ | 960 | $ | 1,759 | $ | 933 | $ | – | $ | – | ||||||||||||||
Accrued benefit liability1 | (890 | ) | (545 | ) | (712 | ) | (458 | ) | (2,764 | ) | (2,520 | ) | ||||||||||||||
Intangible asset | 12 | 2 | 14 | 5 | – | – | ||||||||||||||||||||
Accumulated other comprehensive income2 | 423 | 64 | 516 | 60 | – | – | ||||||||||||||||||||
Net amount recognized | $ | 1,506 | $ | 481 | $ | 1,577 | $ | 540 | $ | (2,764 | ) | $ | (2,520 | ) | ||||||||||||
1 | The company recorded additional minimum liabilities of $435 and $66 in 2005 for U.S. and international plans, respectively, and $530 and $64 in 2004 for U.S. and international plans, respectively, to reflect the amount of unfunded accumulated benefit obligations. The long-term portion of accrued benefits liability is recorded in “Reserves for employee benefit plans,” and the short-term portion is reflected in “Accrued liabilities.” |
2 | “Accumulated other comprehensive income” includes deferred income taxes of $148 and $22 in 2005 for U.S. and international plans, respectively, and $181 and $21 in 2004 for U.S. and international plans, respectively. This item is presented net of these taxes in the Consolidated Statement of Stockholders’ Equity. |
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NOTE 21. | EMPLOYEE BENEFIT PLANS – Continued |
At December 31 | |||||||||
2005 | 2004 | ||||||||
Projected benefit obligations | $ | 2,950 | $ | 1,449 | |||||
Accumulated benefit obligations | 2,625 | 1,360 | |||||||
Fair value of plan assets | 1,359 | 282 | |||||||
Pension Benefits | ||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | Other Benefits | |||||||||||||||||||||||||||||||||||
U.S. | Int'l. | U.S. | Int'l. | U.S. | Int'l. | 2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||
Service cost | $ | 208 | $ | 84 | $ | 170 | $ | 70 | $ | 144 | $ | 54 | $ | 30 | $ | 26 | $ | 28 | ||||||||||||||||||||
Interest cost | 395 | 199 | 326 | 180 | 334 | 151 | 164 | 164 | 191 | |||||||||||||||||||||||||||||
Expected return on plan assets | (449 | ) | (208 | ) | (358 | ) | (169 | ) | (224 | ) | (132 | ) | – | – | – | |||||||||||||||||||||||
Amortization of transitional assets | – | 2 | – | 1 | – | (3 | ) | – | – | – | ||||||||||||||||||||||||||||
Amortization of prior-service costs | 45 | 16 | 42 | 16 | 45 | 14 | (91 | ) | (47 | ) | (3 | ) | ||||||||||||||||||||||||||
Recognized actuarial losses | 177 | 51 | 114 | 69 | 133 | 42 | 93 | 54 | 12 | |||||||||||||||||||||||||||||
Settlement losses | 86 | – | 96 | 4 | 132 | 1 | – | – | – | |||||||||||||||||||||||||||||
Curtailment losses | – | – | – | 2 | – | 6 | – | – | – | |||||||||||||||||||||||||||||
Special termination benefits recognition | – | – | – | 1 | – | – | – | – | – | |||||||||||||||||||||||||||||
Net periodic benefit cost | $ | 462 | $ | 144 | $ | 390 | $ | 174 | $ | 564 | $ | 133 | $ | 196 | $ | 197 | $ | 228 | ||||||||||||||||||||
Pension Benefits | ||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | Other Benefits | |||||||||||||||||||||||||||||||||||
U.S. | Int'l. | U.S. | Int'l. | U.S. | Int'l. | 2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||
Assumptions used to determine benefit obligations Discount rate | 5.5 | % | 5.9 | % | 5.8 | % | 6.4 | % | 6.0 | % | 6.8 | % | 5.6 | % | 5.8 | % | 6.1 | % | ||||||||||||||||||||
Rate of compensation increase | 4.0 | % | 5.1 | % | 4.0 | % | 4.9 | % | 4.0 | % | 4.9 | % | 4.0 | % | 4.1 | % | 4.1 | % | ||||||||||||||||||||
Assumptions used to determine net periodic benefit cost Discount rate1,2 | 5.5 | % | 6.4 | % | 5.9 | % | 6.8 | % | 6.3 | % | 7.1 | % | 5.8 | % | 6.1 | % | 6.8 | % | ||||||||||||||||||||
Expected return on plan assets1,2 | 7.8 | % | 7.9 | % | 7.8 | % | 8.3 | % | 7.8 | % | 8.3 | % | N/A | N/A | N/A | |||||||||||||||||||||||
Rate of compensation increase2 | 4.0 | % | 5.0 | % | 4.0 | % | 4.9 | % | 4.0 | % | 5.1 | % | 4.0 | % | 4.1 | % | 4.1 | % | ||||||||||||||||||||
1 | Discount rate and expected rate of return on plan assets were reviewed and updated as needed on a quarterly basis for the main U.S. pension plan. |
2 | The 2005 discount rate, expected return on plan assets and rate of compensation increase reflect the remeasurement of the Unocal benefit plans at July 31, 2005, due to the acquisition of Unocal. |
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NOTE 21. | EMPLOYEE BENEFIT PLANS — Continued |
1 Percent | 1 Percent | |||||||
Increase | Decrease | |||||||
Effect on total service and interest cost components | $ | 8 | $ | (9 | ) | |||
Effect on postretirement benefit obligation | $ | 126 | $ | (184 | ) | |||
U.S. | International | ||||||||||||||||
Asset Category | 2005 | 2004 | 2005 | 2004 | |||||||||||||
Equities | 69 | % | 70 | % | 60 | % | 57 | % | |||||||||
Fixed Income | 21 | % | 21 | % | 39 | % | 42 | % | |||||||||
Real Estate | 9 | % | 9 | % | 1 | % | 1 | % | |||||||||
Other | 1 | % | – | – | – | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Pension Benefits | Other | |||||||||||
U.S. | Int'l. | Benefits | ||||||||||
2006 | $ | 788 | $ | 177 | $ | 220 | ||||||
2007 | $ | 639 | $ | 185 | $ | 218 | ||||||
2008 | $ | 674 | $ | 195 | $ | 224 | ||||||
2009 | $ | 714 | $ | 202 | $ | 231 | ||||||
2010 | $ | 729 | $ | 212 | $ | 237 | ||||||
2011–2015 | $ | 3,803 | $ | 1,240 | $ | 1,238 | ||||||
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NOTE 21. | EMPLOYEE BENEFIT PLANS – Continued |
Thousands | 2005 | 2004 | |||||||
Allocated shares | 23,928 | 24,832 | |||||||
Unallocated shares | 9,163 | 9,940 | |||||||
Total LESOP shares | 33,091 | 34,772 | |||||||
STOCK OPTIONS AND OTHER SHARE-BASED COMPENSATION
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NOTE 22. | STOCK OPTIONS AND OTHER SHARE-BASED COMPENSATION – Continued |
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NOTE 22. | STOCK OPTIONS AND OTHER SHARE-BASED COMPENSATION — Continued |
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Chevron LTIP: | |||||||||||||
Expected term in years1 | 6.4 | 7.0 | 7.0 | ||||||||||
Volatility2 | 24.5 | % | 16.5 | % | 19.3 | % | |||||||
Risk-free interest rate based on zero coupon U.S. treasury note | 3.8 | % | 4.4 | % | 3.1 | % | |||||||
Dividend yield | 3.4 | % | 3.7 | % | 3.5 | % | |||||||
Weighted-average fair value per option granted | $ | 11.66 | $ | 7.14 | $ | 5.51 | |||||||
Texaco SIP: | |||||||||||||
Expected term in years1 | 2.1 | 2.0 | 2.0 | ||||||||||
Volatility2 | 18.6 | % | 17.8 | % | 22.0 | % | |||||||
Risk-free interest rate based on zero coupon U.S. treasury note | 3.8 | % | 2.5 | % | 1.7 | % | |||||||
Dividend yield | 3.4 | % | 3.8 | % | 3.9 | % | |||||||
Weighted-average fair value per option granted | $ | 6.09 | $ | 4.00 | $ | 4.03 | |||||||
Unocal Plans:3 | |||||||||||||
Expected term in years1 | 4.2 | – | – | ||||||||||
Volatility2 | 21.6 | % | – | – | |||||||||
Risk-free interest rate based on zero coupon U.S. treasury note | 3.9 | % | – | – | |||||||||
Dividend yield | 3.4 | % | – | – | |||||||||
Weighted-average fair value per option granted | $ | 21.48 | $ | – | $ | – | |||||||
1 | Expected term is based on historical exercise and post-vesting cancellation data. |
2 | Volatility rate is based on historical stock prices over an appropriate period, generally equal to the expected term. |
3 | Represents options converted at the acquisition date. |
Weighted- | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Shares | Exercise | Contractual | Intrinsic | |||||||||||||
(Thousands) | Price | Term | Value | |||||||||||||
Outstanding at January 1, 2005 | 54,440 | $ | 42.89 | |||||||||||||
Granted | 8,718 | $ | 56.76 | |||||||||||||
Granted in Unocal acquisition | 5,313 | $ | 35.02 | |||||||||||||
Exercised* | (13,946 | ) | $ | 44.19 | ||||||||||||
Restored | 5,596 | $ | 58.41 | |||||||||||||
Forfeited* | (597 | ) | $ | 49.19 | ||||||||||||
Outstanding at December 31, 2005 | 59,524 | $ | 45.32 | 6.1 yrs. | $ | 694 | ||||||||||
Exercisable at December 31, 2005 | 40,033 | $ | 42.18 | 5.2 yrs. | $ | 586 | ||||||||||
* | Includes fully-vested Chevron options exchanged for outstanding Unocal options. |
OTHER CONTINGENCIES AND COMMITMENTS
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NOTE 23. | OTHER CONTINGENCIES AND COMMITMENTS – Continued |
FS-57
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NOTE 23. | OTHER CONTINGENCIES AND COMMITMENTS — Continued |
FS-58
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NOTE 23. | OTHER CONTINGENCIES AND COMMITMENTS — Continued |
ASSET RETIREMENT OBLIGATIONS
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NOTE 24. | ASSET RETIREMENT OBLIGATIONS — Continued |
2005 | 2004 | 2003 | |||||||||||
Balance at January 1 | $ | 2,878 | $ | 2,856 | $ | 2,797 | * | ||||||
Liabilities assumed in the Unocal acquisition | 1,216 | – | – | ||||||||||
Liabilities incurred | 90 | 37 | 14 | ||||||||||
Liabilities settled | (172 | ) | (426 | ) | (128 | ) | |||||||
Accretion expense | 187 | 93 | 132 | ||||||||||
Revisions in estimated cash flows | 105 | 318 | 41 | ||||||||||
Balance at December 31 | $ | 4,304 | $ | 2,878 | $ | 2,856 | |||||||
* | Includes the cumulative effect of the accounting change. |
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NOTE 25.
EARNINGS PER SHARE
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
BASIC EPS CALCULATION | |||||||||||||
Income from continuing operations | $ | 14,099 | $ | 13,034 | $ | 7,382 | |||||||
Add: Dividend equivalents paid on stock units | 2 | 3 | 2 | ||||||||||
Add: Affiliated stock transaction recorded to retained earnings1 | – | – | 170 | ||||||||||
Income from continuing operations available to common stockholders | $ | 14,101 | $ | 13,037 | $ | 7,554 | |||||||
Income from discontinued operations | – | 294 | 44 | ||||||||||
Cumulative effect of changes in accounting principle2 | – | – | (196 | ) | |||||||||
Net income available to common stockholders – Basic | $ | 14,101 | $ | 13,331 | $ | 7,402 | |||||||
Weighted-average number of common shares outstanding3 | 2,143 | 2,114 | 2,123 | ||||||||||
Add: Deferred awards held as stock units | 1 | 2 | 2 | ||||||||||
Total weighted-average number of common shares outstanding | 2,144 | 2,116 | 2,125 | ||||||||||
Per-Share of Common Stock | |||||||||||||
Income from continuing operations available to common stockholders | $ | 6.58 | $ | 6.16 | $ | 3.55 | |||||||
Income from discontinued operations | – | 0.14 | 0.02 | ||||||||||
Cumulative effect of changes in accounting principle | – | – | (0.09 | ) | |||||||||
Net income – Basic | $ | 6.58 | $ | 6.30 | $ | 3.48 | |||||||
DILUTED EPS CALCULATION | |||||||||||||
Income from continuing operations | $ | 14,099 | $ | 13,034 | $ | 7,382 | |||||||
Add: Dividend equivalents paid on stock units | 2 | 3 | 2 | ||||||||||
Add: Affiliated stock transaction recorded to retained earnings1 | – | – | 170 | ||||||||||
Add: Dilutive effects of employee stock-based awards | 2 | 1 | 2 | ||||||||||
Income from continuing operations available to common stockholders | $ | 14,103 | $ | 13,038 | $ | 7,556 | |||||||
Income from discontinued operations | – | 294 | 44 | ||||||||||
Cumulative effect of changes in accounting principle2 | – | – | (196 | ) | |||||||||
Net income available to common stockholders – Diluted | $ | 14,103 | $ | 13,332 | $ | 7,404 | |||||||
Weighted-average number of common shares outstanding3 | 2,143 | 2,114 | 2,123 | ||||||||||
Add: Deferred awards held as stock units | 1 | 2 | 2 | ||||||||||
Add: Dilutive effect of employee stock-based awards | 11 | 6 | 2 | ||||||||||
Total weighted-average number of common shares outstanding | 2,155 | 2,122 | 2,127 | ||||||||||
Per-Share of Common Stock | |||||||||||||
Income from continuing operations available to common stockholders | $ | 6.54 | $ | 6.14 | $ | 3.55 | |||||||
Income from discontinued operations | – | 0.14 | 0.02 | ||||||||||
Cumulative effect of changes in accounting principle | – | – | (0.09 | ) | |||||||||
Net income – Diluted | $ | 6.54 | $ | 6.28 | $ | 3.48 | |||||||
1 | 2003 amount is the company’s share of a capital stock transaction of its Dynegy affiliate, which, under the applicable accounting rules, was recorded directly to retained earnings. |
2 | Includes a net loss of $200 for the adoption of FAS 143 and a net gain of $4 for the company’s share of Dynegy’s cumulative effect of adoption of EITF 02-3. |
3 | Share amounts in all periods reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. |
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Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
NOTE 26.
COMMON STOCK SPLIT
NOTE 27.
OTHER FINANCIAL INFORMATION
Year ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Total financing interest and debt costs | $ | 542 | $ | 450 | $ | 549 | |||||||
Less: Capitalized interest | 60 | 44 | 75 | ||||||||||
Interest and debt expense | $ | 482 | $ | 406 | $ | 474 | |||||||
Research and development expenses | $ | 316 | $ | 242 | $ | 228 | |||||||
Foreign currency effects* | $ | (61 | ) | $ | (81 | ) | $ | (404 | ) | ||||
* | Includes $(2), $(13) and $(96) in 2005, 2004 and 2003, respectively, for the company’s share of equity affiliates’ foreign currency effects. |
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FIVE-YEAR FINANCIAL SUMMARY
FIVE-YEAR FINANCIAL SUMMARY Unaudited |
Millions of dollars, except per-share amounts | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
COMBINED STATEMENT OF INCOME DATA | |||||||||||||||||||||
REVENUES AND OTHER INCOME | |||||||||||||||||||||
Total sales and other operating revenues | $ | 193,641 | $ | 150,865 | $ | 119,575 | $ | 98,340 | $ | 103,951 | |||||||||||
Income from equity affiliates and other income | 4,559 | 4,435 | 1,702 | 197 | 1,751 | ||||||||||||||||
TOTAL REVENUES AND OTHER INCOME | 198,200 | 155,300 | 121,277 | 98,537 | 105,702 | ||||||||||||||||
TOTAL COSTS AND OTHER DEDUCTIONS | 173,003 | 134,749 | 108,601 | 94,437 | 97,517 | ||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 25,197 | 20,551 | 12,676 | 4,100 | 8,185 | ||||||||||||||||
INCOME TAX EXPENSE | 11,098 | 7,517 | 5,294 | 2,998 | 4,310 | ||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 14,099 | 13,034 | 7,382 | 1,102 | 3,875 | ||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS | – | 294 | 44 | 30 | 56 | ||||||||||||||||
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | 14,099 | 13,328 | 7,426 | 1,132 | 3,931 | ||||||||||||||||
Extraordinary loss, net of tax | – | – | – | – | (643 | ) | |||||||||||||||
Cumulative effect of changes in accounting principles | – | – | (196 | ) | – | – | |||||||||||||||
NET INCOME | $ | 14,099 | $ | 13,328 | $ | 7,230 | $ | 1,132 | $ | 3,288 | |||||||||||
PER SHARE OF COMMON STOCK1 | |||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS2 | |||||||||||||||||||||
– Basic | $ | 6.58 | $ | 6.16 | $ | 3.55 | $ | 0.52 | $ | 1.82 | |||||||||||
– Diluted | $ | 6.54 | $ | 6.14 | $ | 3.55 | $ | 0.52 | $ | 1.82 | |||||||||||
INCOME FROM DISCONTINUED OPERATIONS | |||||||||||||||||||||
– Basic | $ | – | $ | 0.14 | $ | 0.02 | $ | 0.01 | $ | 0.03 | |||||||||||
– Diluted | $ | – | $ | 0.14 | $ | 0.02 | $ | 0.01 | $ | 0.03 | |||||||||||
EXTRAORDINARY ITEM | |||||||||||||||||||||
– Basic | $ | – | $ | – | $ | – | $ | – | $ | (0.30 | ) | ||||||||||
– Diluted | $ | – | $ | – | $ | – | $ | – | $ | (0.30 | ) | ||||||||||
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | |||||||||||||||||||||
– Basic | $ | – | $ | – | $ | (0.09 | ) | $ | – | $ | – | ||||||||||
– Diluted | $ | – | $ | – | $ | (0.09 | ) | $ | – | $ | – | ||||||||||
NET INCOME2 | |||||||||||||||||||||
– Basic | $ | 6.58 | $ | 6.30 | $ | 3.48 | $ | 0.53 | $ | 1.55 | |||||||||||
– Diluted | $ | 6.54 | $ | 6.28 | $ | 3.48 | $ | 0.53 | $ | 1.55 | |||||||||||
CASH DIVIDENDS PER SHARE | $ | 1.75 | $ | 1.53 | $ | 1.43 | $ | 1.40 | $ | 1.33 | |||||||||||
COMBINED BALANCE SHEET DATA (AT DECEMBER 31) | |||||||||||||||||||||
Current assets | $ | 34,336 | $ | 28,503 | $ | 19,426 | $ | 17,776 | $ | 18,327 | |||||||||||
Noncurrent assets | 91,497 | 64,705 | 62,044 | 59,583 | 59,245 | ||||||||||||||||
TOTAL ASSETS | 125,833 | 93,208 | 81,470 | 77,359 | 77,572 | ||||||||||||||||
Short-term debt | 739 | 816 | 1,703 | 5,358 | 8,429 | ||||||||||||||||
Other current liabilities | 24,272 | 17,979 | 14,408 | 14,518 | 12,225 | ||||||||||||||||
Long-term debt and capital lease obligations | 12,131 | 10,456 | 10,894 | 10,911 | 8,989 | ||||||||||||||||
Other noncurrent liabilities | 26,015 | 18,727 | 18,170 | 14,968 | 13,971 | ||||||||||||||||
TOTAL LIABILITIES | 63,157 | 47,978 | 45,175 | 45,755 | 43,614 | ||||||||||||||||
STOCKHOLDERS’ EQUITY | $ | 62,676 | $ | 45,230 | $ | 36,295 | $ | 31,604 | $ | 33,958 | |||||||||||
1 | Per-share amounts in all periods reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004. |
2 | The amount in 2003 includes a benefit of $0.08 for the company’s share of a capital stock transaction of its Dynegy Inc. affiliate, which, under the applicable accounting rules, was recorded directly to retained earnings and not included in net income for the period. |
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SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES
SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES Unaudited |
TABLE I – COSTS INCURRED IN EXPLORATION, PROPERTY ACQUISITIONS AND DEVELOPMENT1
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Millions of dollars | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | ||||||||||||||||||||||||||||||||||||||||||||||||
Wells | $ | – | $ | 452 | $ | 24 | $ | 476 | $ | 105 | $ | 38 | $ | 9 | $ | 201 | $ | 353 | $ | 829 | $ | – | $ | – | ||||||||||||||||||||||||
Geological and geophysical | – | 67 | – | 67 | 96 | 28 | 10 | 68 | 202 | 269 | – | – | ||||||||||||||||||||||||||||||||||||
Rentals and other | – | 93 | 8 | 101 | 24 | 58 | 12 | 72 | 166 | 267 | – | – | ||||||||||||||||||||||||||||||||||||
Total exploration | – | 612 | 32 | 644 | 225 | 124 | 31 | 341 | 721 | 1,365 | – | – | ||||||||||||||||||||||||||||||||||||
Property acquisitions | ||||||||||||||||||||||||||||||||||||||||||||||||
Proved – Unocal2,3 | – | 1,608 | 2,388 | 3,996 | 30 | 6,609 | 637 | 1,790 | 9,066 | 13,062 | – | – | ||||||||||||||||||||||||||||||||||||
Proved – Other2 | – | 6 | �� | 10 | 16 | 2 | 2 | – | 12 | 16 | 32 | – | – | |||||||||||||||||||||||||||||||||||
Unproved – Unocal | – | 819 | 295 | 1,114 | 11 | 2,209 | 821 | 38 | 3,079 | 4,193 | – | – | ||||||||||||||||||||||||||||||||||||
Unproved – Other | – | 17 | 6 | 23 | 67 | – | – | 28 | 95 | 118 | – | – | ||||||||||||||||||||||||||||||||||||
Total property acquisitions | – | 2,450 | 2,699 | 5,149 | 110 | 8,820 | 1,458 | 1,868 | 12,256 | 17,405 | – | – | ||||||||||||||||||||||||||||||||||||
Development4 | 494 | 639 | 596 | 1,729 | 1,871 | 1,026 | 325 | 713 | 3,935 | 5,664 | 767 | 43 | ||||||||||||||||||||||||||||||||||||
ARO asset | 13 | 41 | 5 | 59 | 21 | 62 | 57 | 13 | 153 | 212 | – | – | ||||||||||||||||||||||||||||||||||||
TOTAL COSTS INCURRED | $ | 507 | $ | 3,742 | $ | 3,332 | $ | 7,581 | $ | 2,227 | $ | 10,032 | $ | 1,871 | $ | 2,935 | $ | 17,065 | $ | 24,646 | $ | 767 | $ | 43 | ||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | ||||||||||||||||||||||||||||||||||||||||||||||||
Wells | $ | – | $ | 388 | $ | – | $ | 388 | $ | 116 | $ | 25 | $ | 2 | $ | 127 | $ | 270 | $ | 658 | $ | – | $ | – | ||||||||||||||||||||||||
Geological and geophysical | – | 47 | 2 | 49 | 103 | 10 | 12 | 46 | 171 | 220 | – | – | ||||||||||||||||||||||||||||||||||||
Rentals and other | – | 43 | 3 | 46 | 52 | 47 | 1 | 53 | 153 | 199 | – | – | ||||||||||||||||||||||||||||||||||||
Total exploration | – | 478 | 5 | 483 | 271 | 82 | 15 | 226 | 594 | 1,077 | – | – | ||||||||||||||||||||||||||||||||||||
Property acquisitions | ||||||||||||||||||||||||||||||||||||||||||||||||
Proved2 | – | 6 | 1 | 7 | 111 | 16 | – | 4 | 131 | 138 | – | – | ||||||||||||||||||||||||||||||||||||
Unproved | – | 29 | – | 29 | 82 | – | – | 5 | 87 | 116 | – | – | ||||||||||||||||||||||||||||||||||||
Total property acquisitions | – | 35 | 1 | 36 | 193 | 16 | – | 9 | 218 | 254 | – | – | ||||||||||||||||||||||||||||||||||||
Development4 | 412 | 457 | 372 | 1,241 | 1,047 | 567 | 245 | 542 | 2,401 | 3,642 | 896 | 208 | ||||||||||||||||||||||||||||||||||||
ARO asset | 1 | 9 | 3 | 13 | 10 | 53 | 158 | 85 | 306 | 319 | – | – | ||||||||||||||||||||||||||||||||||||
TOTAL COSTS INCURRED | $ | 413 | $ | 979 | $ | 381 | $ | 1,773 | $ | 1,521 | $ | 718 | $ | 418 | $ | 862 | $ | 3,519 | $ | 5,292 | $ | 896 | $ | 208 | ||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exploration | ||||||||||||||||||||||||||||||||||||||||||||||||
Wells | $ | – | $ | 415 | $ | 9 | $ | 424 | $ | 116 | $ | 43 | $ | 2 | $ | 72 | $ | 233 | $ | 657 | $ | – | $ | – | ||||||||||||||||||||||||
Geological and geophysical | – | 16 | 23 | 39 | 75 | 9 | 5 | 30 | 119 | 158 | – | – | ||||||||||||||||||||||||||||||||||||
Rentals and other | – | 64 | (20 | ) | 44 | 12 | 58 | – | 46 | 116 | 160 | – | – | |||||||||||||||||||||||||||||||||||
Total exploration | – | 495 | 12 | 507 | 203 | 110 | 7 | 148 | 468 | 975 | – | – | ||||||||||||||||||||||||||||||||||||
Property acquisitions | ||||||||||||||||||||||||||||||||||||||||||||||||
Proved2 | – | 15 | 3 | 18 | – | 20 | – | 7 | 27 | 45 | – | – | ||||||||||||||||||||||||||||||||||||
Unproved | – | 30 | 3 | 33 | 51 | 6 | – | 14 | 71 | 104 | – | – | ||||||||||||||||||||||||||||||||||||
Total property acquisitions | – | 45 | 6 | 51 | 51 | 26 | – | 21 | 98 | 149 | – | – | ||||||||||||||||||||||||||||||||||||
Development | 264 | 434 | 350 | 1,048 | 974 | 605 | 363 | 461 | 2,403 | 3,451 | 551 | 199 | ||||||||||||||||||||||||||||||||||||
TOTAL COSTS INCURRED | $ | 264 | $ | 974 | $ | 368 | $ | 1,606 | $ | 1,228 | $ | 741 | $ | 370 | $ | 630 | $ | 2,969 | $ | 4,575 | $ | 551 | $ | 199 | ||||||||||||||||||||||||
1 | Includes costs incurred whether capitalized or expensed. Excludes general support equipment expenditures. See Note 24, “Asset Retirement Obligations,” beginning on page FS-59. |
2 | Includes wells, equipment and facilities associated with proved reserves. Does not include properties acquired through property exchanges. |
3 | Included in proved property acquisitions for Unocal are $845 of ARO assets, composed of: Gulf of Mexico $115; Other U.S. $271; Africa $9; Asia-Pacific $366; Indonesia $25; Other International $59. |
4 | Includes $160 and $63 costs incurred prior to assignment of proved reserves in 2005 and 2004, respectively. |
FS-65
Table of Contents
Supplemental Information on Oil and Gas Producing Activities —Continued |
TABLE II – CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES1
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Millions of dollars | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
AT DEC. 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Unproved properties | $ | 769 | $ | 1,077 | $ | 397 | $ | 2,243 | $ | 407 | $ | 2,287 | $ | 645 | $ | 983 | $ | 4,322 | $ | 6,565 | $ | 108 | $ | – | ||||||||||||||||||||||||
Proved properties and related producing assets | 9,530 | 17,871 | 11,103 | 38,504 | 8,169 | 14,308 | 4,441 | 9,259 | 36,177 | 74,681 | 2,259 | 1,212 | ||||||||||||||||||||||||||||||||||||
Support equipment | 204 | 193 | 230 | 627 | 715 | 426 | 3,124 | 356 | 4,621 | 5,248 | 549 | – | ||||||||||||||||||||||||||||||||||||
Deferred exploratory wells | – | 284 | 5 | 289 | 245 | 154 | 173 | 248 | 820 | 1,109 | – | – | ||||||||||||||||||||||||||||||||||||
Other uncompleted projects | 149 | 782 | 209 | 1,140 | 2,878 | 790 | 427 | 946 | 5,041 | 6,181 | 2,332 | – | ||||||||||||||||||||||||||||||||||||
ARO asset2 | 16 | 412 | 364 | 792 | 235 | 620 | 265 | 368 | 1,488 | 2,280 | 5 | 1 | ||||||||||||||||||||||||||||||||||||
GROSS CAP. COSTS | 10,668 | 20,619 | 12,308 | 43,595 | 12,649 | 18,585 | 9,075 | 12,160 | 52,469 | 96,064 | 5,253 | 1,213 | ||||||||||||||||||||||||||||||||||||
Unproved properties valuation | 736 | 90 | 22 | 848 | 162 | 69 | – | 318 | 549 | 1,397 | 17 | – | ||||||||||||||||||||||||||||||||||||
Proved producing properties – | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 6,813 | 13,866 | 5,943 | 26,622 | 4,132 | 3,915 | 2,895 | 5,533 | 16,475 | 43,097 | 455 | 90 | ||||||||||||||||||||||||||||||||||||
Support equipment depreciation | 140 | 119 | 149 | 408 | 317 | 88 | 1,824 | 222 | 2,451 | 2,859 | 213 | – | ||||||||||||||||||||||||||||||||||||
ARO asset depreciation2 | 5 | 201 | 106 | 312 | 134 | 101 | 66 | 187 | 488 | 800 | 5 | – | ||||||||||||||||||||||||||||||||||||
Accumulated provisions | 7,694 | 14,276 | 6,220 | 28,190 | 4,745 | 4,173 | 4,785 | 6,260 | 19,963 | 48,153 | 690 | 90 | ||||||||||||||||||||||||||||||||||||
NET CAPITALIZED COSTS | $ | 2,974 | $ | 6,343 | $ | 6,088 | $ | 15,405 | $ | 7,904 | $ | 14,412 | $ | 4,290 | $ | 5,900 | $ | 32,506 | $ | 47,911 | $ | 4,563 | $ | 1,123 | ||||||||||||||||||||||||
AT DEC. 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||
Unproved properties | $ | 769 | $ | 380 | $ | 109 | $ | 1,258 | $ | 322 | $ | 211 | $ | – | $ | 970 | $ | 1,503 | $ | 2,761 | $ | 108 | $ | – | ||||||||||||||||||||||||
Proved properties and related producing assets | 9,170 | 16,610 | 8,660 | 34,440 | 7,188 | 7,485 | 3,643 | 8,961 | 27,277 | 61,717 | 2,163 | 963 | ||||||||||||||||||||||||||||||||||||
Support equipment | 211 | 175 | 208 | 594 | 513 | 127 | 3,030 | 361 | 4,031 | 4,625 | 496 | – | ||||||||||||||||||||||||||||||||||||
Deferred exploratory wells | – | 225 | – | 225 | 213 | 81 | – | 152 | 446 | 671 | – | – | ||||||||||||||||||||||||||||||||||||
Other uncompleted projects | 91 | 400 | 169 | 660 | 2,050 | 605 | 351 | 391 | 3,397 | 4,057 | 1,749 | 149 | ||||||||||||||||||||||||||||||||||||
ARO asset2 | 28 | 204 | 70 | 302 | 206 | 113 | 181 | 292 | 792 | 1,094 | 20 | – | ||||||||||||||||||||||||||||||||||||
GROSS CAP. COSTS | 10,269 | 17,994 | 9,216 | 37,479 | 10,492 | 8,622 | 7,205 | 11,127 | 37,446 | 74,925 | 4,536 | 1,112 | ||||||||||||||||||||||||||||||||||||
Unproved properties valuation | 734 | 111 | 27 | 872 | 118 | 67 | – | 294 | 479 | 1,351 | 15 | – | ||||||||||||||||||||||||||||||||||||
Proved producing properties – | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 6,694 | 13,562 | 5,617 | 25,873 | 3,753 | 3,122 | 2,396 | 4,933 | 14,204 | 40,077 | 423 | 43 | ||||||||||||||||||||||||||||||||||||
Support equipment depreciation | 148 | 107 | 139 | 394 | 268 | 60 | 1,802 | 206 | 2,336 | 2,730 | 190 | – | ||||||||||||||||||||||||||||||||||||
ARO asset depreciation2 | 24 | 174 | 64 | 262 | 128 | 49 | 36 | 148 | 361 | 623 | 5 | – | ||||||||||||||||||||||||||||||||||||
Accumulated provisions | 7,600 | 13,954 | 5,847 | 27,401 | 4,267 | 3,298 | 4,234 | 5,581 | 17,380 | 44,781 | 633 | 43 | ||||||||||||||||||||||||||||||||||||
NET CAPITALIZED COSTS | $ | 2,669 | $ | 4,040 | $ | 3,369 | $ | 10,078 | $ | 6,225 | $ | 5,324 | $ | 2,971 | $ | 5,546 | $ | 20,066 | $ | 30,144 | $ | 3,903 | $ | 1,069 | ||||||||||||||||||||||||
1 | Includes assets held for sale. |
2 | See Note 24, “Asset Retirement Obligations,” beginning on page FS-59. |
FS-66
Table of Contents
TABLE II – CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES1 — Continued |
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Millions of dollars | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
AT DEC. 31, 20032 | ||||||||||||||||||||||||||||||||||||||||||||||||
Unproved properties | $ | 769 | $ | 416 | $ | 131 | $ | 1,316 | $ | 290 | $ | 214 | $ | – | $ | 1,048 | $ | 1,552 | $ | 2,868 | $ | 108 | $ | – | ||||||||||||||||||||||||
Proved properties and related producing assets | 8,785 | 18,069 | 10,749 | 37,603 | 6,474 | 6,288 | 3,097 | 10,469 | 26,328 | 63,931 | 2,091 | 356 | ||||||||||||||||||||||||||||||||||||
Support equipment | 200 | 200 | 277 | 677 | 519 | 100 | 3,016 | 374 | 4,009 | 4,686 | 425 | – | ||||||||||||||||||||||||||||||||||||
Deferred exploratory wells | – | 126 | 1 | 127 | 233 | 67 | 2 | 120 | 422 | 549 | – | – | ||||||||||||||||||||||||||||||||||||
Other uncompleted projects | 76 | 280 | 152 | 508 | 1,894 | 1,502 | 715 | 334 | 4,445 | 4,953 | 1,011 | 661 | ||||||||||||||||||||||||||||||||||||
ARO asset3 | 25 | 227 | 83 | 335 | 207 | 60 | 23 | 236 | 526 | 861 | 20 | 1 | ||||||||||||||||||||||||||||||||||||
GROSS CAP. COSTS | 9,855 | 19,318 | 11,393 | 40,566 | 9,617 | 8,231 | 6,853 | 12,581 | 37,282 | 77,848 | 3,655 | 1,018 | ||||||||||||||||||||||||||||||||||||
Unproved properties valuation | 731 | 138 | 43 | 912 | 101 | 59 | 1 | 310 | 471 | 1,383 | 12 | – | ||||||||||||||||||||||||||||||||||||
Proved producing properties – | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 6,473 | 14,450 | 6,894 | 27,817 | 3,656 | 2,793 | 2,022 | 6,015 | 14,486 | 42,303 | 354 | 24 | ||||||||||||||||||||||||||||||||||||
Future equipment depreciation | 141 | 133 | 180 | 454 | 237 | 68 | 1,784 | 200 | 2,289 | 2,743 | 160 | – | ||||||||||||||||||||||||||||||||||||
ARO asset depreciation3 | 23 | 186 | 79 | 288 | 133 | 36 | 19 | 148 | 336 | 624 | 4 | – | ||||||||||||||||||||||||||||||||||||
Accumulated provisions | 7,368 | 14,907 | 7,196 | 29,471 | 4,127 | 2,956 | 3,826 | 6,673 | 17,582 | 47,053 | 530 | 24 | ||||||||||||||||||||||||||||||||||||
NET CAPITALIZED COSTS | $ | 2,487 | $ | 4,411 | $ | 4,197 | $ | 11,095 | $ | 5,490 | $ | 5,275 | $ | 3,027 | $ | 5,908 | $ | 19,700 | $ | 30,795 | $ | 3,125 | $ | 994 | ||||||||||||||||||||||||
1 | Includes assets held for sale. |
2 | 2003 reclassified to conform to 2005 presentation. |
3 | See Note 24, “Asset Retirement Obligations,” beginning on page FS-59. |
FS-67
Table of Contents
Supplemental Information on Oil and Gas Producing Activities –Continued |
TABLE III – RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES1
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Millions of dollars | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues from net production | ||||||||||||||||||||||||||||||||||||||||||||||||
Sales | $ | 337 | $ | 1,576 | $ | 3,174 | $ | 5,087 | $ | 2,142 | $ | 2,941 | $ | 539 | $ | 2,668 | $ | 8,290 | $ | 13,377 | $ | 2,307 | $ | 666 | ||||||||||||||||||||||||
Transfers | 3,497 | 2,127 | 1,395 | 7,019 | 3,615 | 3,179 | 1,986 | 2,607 | 11,387 | 18,406 | – | – | ||||||||||||||||||||||||||||||||||||
Total | 3,834 | 3,703 | 4,569 | 12,106 | 5,757 | 6,120 | 2,525 | 5,275 | 19,677 | 31,783 | 2,307 | 666 | ||||||||||||||||||||||||||||||||||||
Production expenses excluding taxes | (916 | ) | (638 | ) | (777 | ) | (2,331 | ) | (558 | ) | (570 | ) | (660 | ) | (596 | ) | (2,384 | ) | (4,715 | ) | (152 | ) | (82 | ) | ||||||||||||||||||||||||
Taxes other than on income | (65 | ) | (41 | ) | (384 | ) | (490 | ) | (48 | ) | (189 | ) | (1 | ) | (195 | ) | (433 | ) | (923 | ) | (27 | ) | – | |||||||||||||||||||||||||
Proved producing properties: | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | (253 | ) | (936 | ) | (520 | ) | (1,709 | ) | (414 | ) | (852 | ) | (550 | ) | (672 | ) | (2,488 | ) | (4,197 | ) | (83 | ) | (46 | ) | ||||||||||||||||||||||||
Accretion expense2 | (13 | ) | (35 | ) | (46 | ) | (94 | ) | (22 | ) | (20 | ) | (15 | ) | (25 | ) | (82 | ) | (176 | ) | (1 | ) | – | |||||||||||||||||||||||||
Exploration expenses | – | (307 | ) | (13 | ) | (320 | ) | (117 | ) | (90 | ) | (26 | ) | (190 | ) | (423 | ) | (743 | ) | – | – | |||||||||||||||||||||||||||
Unproved properties valuation | (3 | ) | (32 | ) | (4 | ) | (39 | ) | (50 | ) | (8 | ) | – | (24 | ) | (82 | ) | (121 | ) | – | – | |||||||||||||||||||||||||||
Other income (expense)3 | 2 | (354 | ) | (140 | ) | (492 | ) | (243 | ) | (182 | ) | 182 | 280 | 37 | (455 | ) | (9 | ) | 8 | |||||||||||||||||||||||||||||
Results before income taxes | 2,586 | 1,360 | 2,685 | 6,631 | 4,305 | 4,209 | 1,455 | 3,853 | 13,822 | 20,453 | 2,035 | 546 | ||||||||||||||||||||||||||||||||||||
Income tax expense | (913 | ) | (482 | ) | (953 | ) | (2,348 | ) | (3,430 | ) | (2,264 | ) | (644 | ) | (1,938 | ) | (8,276 | ) | (10,624 | ) | (611 | ) | (186 | ) | ||||||||||||||||||||||||
RESULTS OF PRODUCING OPERATIONS | $ | 1,673 | $ | 878 | $ | 1,732 | $ | 4,283 | $ | 875 | $ | 1,945 | $ | 811 | $ | 1,915 | $ | 5,546 | $ | 9,829 | $ | 1,424 | $ | 360 | ||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues from net production | ||||||||||||||||||||||||||||||||||||||||||||||||
Sales | $ | 251 | $ | 1,925 | $ | 2,163 | $ | 4,339 | $ | 1,321 | $ | 1,191 | $ | 256 | $ | 2,481 | $ | 5,249 | $ | 9,588 | $ | 1,619 | $ | 205 | ||||||||||||||||||||||||
Transfers | 2,651 | 1,768 | 1,224 | 5,643 | 2,645 | 2,265 | 1,613 | 1,903 | 8,426 | 14,069 | – | – | ||||||||||||||||||||||||||||||||||||
Total | 2,902 | 3,693 | 3,387 | 9,982 | 3,966 | 3,456 | 1,869 | 4,384 | 13,675 | 23,657 | 1,619 | 205 | ||||||||||||||||||||||||||||||||||||
Production expenses excluding taxes | (710 | ) | (547 | ) | (697 | ) | (1,954 | ) | (574 | ) | (431 | ) | (591 | ) | (544 | ) | (2,140 | ) | (4,094 | ) | (143 | ) | (53 | ) | ||||||||||||||||||||||||
Taxes other than on income | (57 | ) | (45 | ) | (321 | ) | (423 | ) | (24 | ) | (138 | ) | (1 | ) | (134 | ) | (297 | ) | (720 | ) | (26 | ) | – | |||||||||||||||||||||||||
Proved producing properties: | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | (232 | ) | (774 | ) | (384 | ) | (1,390 | ) | (367 | ) | (401 | ) | (393 | ) | (798 | ) | (1,959 | ) | (3,349 | ) | (104 | ) | (4 | ) | ||||||||||||||||||||||||
Accretion expense2 | (12 | ) | (25 | ) | (19 | ) | (56 | ) | (22 | ) | (8 | ) | (13 | ) | 11 | (32 | ) | (88 | ) | (2 | ) | – | ||||||||||||||||||||||||||
Exploration expenses | – | (227 | ) | (6 | ) | (233 | ) | (235 | ) | (69 | ) | (17 | ) | (144 | ) | (465 | ) | (698 | ) | – | – | |||||||||||||||||||||||||||
Unproved properties valuation | (3 | ) | (29 | ) | (4 | ) | (36 | ) | (23 | ) | (8 | ) | – | (25 | ) | (56 | ) | (92 | ) | – | – | |||||||||||||||||||||||||||
Other income (expense)3 | 14 | 24 | 474 | 512 | 49 | 10 | 12 | 1,028 | 1,099 | 1,611 | (7 | ) | (58 | ) | ||||||||||||||||||||||||||||||||||
Results before income taxes | 1,902 | 2,070 | 2,430 | 6,402 | 2,770 | 2,411 | 866 | 3,778 | 9,825 | 16,227 | 1,337 | 90 | ||||||||||||||||||||||||||||||||||||
Income tax expense | (703 | ) | (765 | ) | (898 | ) | (2,366 | ) | (2,036 | ) | (1,395 | ) | (371 | ) | (1,759 | ) | (5,561 | ) | (7,927 | ) | (401 | ) | – | |||||||||||||||||||||||||
RESULTS OF PRODUCING OPERATIONS | $ | 1,199 | $ | 1,305 | $ | 1,532 | $ | 4,036 | $ | 734 | $ | 1,016 | $ | 495 | $ | 2,019 | $ | 4,264 | $ | 8,300 | $ | 936 | $ | 90 | ||||||||||||||||||||||||
1 | The value of owned production consumed on lease as fuel has been eliminated from revenues and production expenses, and the related volumes have been deducted from net production in calculating the unit average sales price and production cost. This has no effect on the results of producing operations. |
2 | Represents accretion of ARO liability. Refer to Note 24, “Asset Retirement Obligations,” beginning on page FS-59. |
3 | Includes net sulfur income, foreign currency transaction gains and losses, certain significant impairment write-downs in 2004 and 2003, miscellaneous expenses, etc. Also includes net income from related oil and gas activities that do not have oil and gas reserves attributed to them (for example, net income from technical and operating service agreements) and items identified in the Management’s Discussion and Analysis on pages FS-7 through FS-11. Does not include results for LNG-related activities. |
FS-68
Table of Contents
TABLE III – RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES1 – Continued |
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Millions of dollars | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
YEAR ENDED DEC. 31, 20032 | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues from net production | ||||||||||||||||||||||||||||||||||||||||||||||||
Sales | $ | 261 | $ | 2,197 | $ | 2,049 | $ | 4,507 | $ | 1,339 | $ | 1,442 | $ | 55 | $ | 2,556 | $ | 5,392 | $ | 9,899 | $ | 1,116 | $ | 104 | ||||||||||||||||||||||||
Transfers | 2,085 | 1,740 | 1,096 | 4,921 | 1,835 | 1,738 | 1,566 | 1,356 | 6,495 | 11,416 | – | – | ||||||||||||||||||||||||||||||||||||
Total | 2,346 | 3,937 | 3,145 | 9,428 | 3,174 | 3,180 | 1,621 | 3,912 | 11,887 | 21,315 | 1,116 | 104 | ||||||||||||||||||||||||||||||||||||
Production expenses excluding taxes | (631 | ) | (578 | ) | (750 | ) | (1,959 | ) | (505 | ) | (331 | ) | (616 | ) | (669 | ) | (2,121 | ) | (4,080 | ) | (117 | ) | (20 | ) | ||||||||||||||||||||||||
Taxes other than on income | (28 | ) | (48 | ) | (280 | ) | (356 | ) | (22 | ) | (126 | ) | (1 | ) | (100 | ) | (249 | ) | (605 | ) | (29 | ) | – | |||||||||||||||||||||||||
Proved producing properties: | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and depletion | (224 | ) | (878 | ) | (430 | ) | (1,532 | ) | (327 | ) | (398 | ) | (314 | ) | (846 | ) | (1,885 | ) | (3,417 | ) | (97 | ) | (4 | ) | ||||||||||||||||||||||||
Accretion Expense3 | (12 | ) | (37 | ) | (20 | ) | (69 | ) | (20 | ) | (5 | ) | (8 | ) | (26 | ) | (59 | ) | (128 | ) | (2 | ) | – | |||||||||||||||||||||||||
Exploration expenses | (2 | ) | (168 | ) | (23 | ) | (193 | ) | (123 | ) | (130 | ) | (8 | ) | (117 | ) | (378 | ) | (571 | ) | – | – | ||||||||||||||||||||||||||
Unproved properties valuation | – | (16 | ) | (4 | ) | (20 | ) | (20 | ) | (9 | ) | – | (41 | ) | (70 | ) | (90 | ) | – | – | ||||||||||||||||||||||||||||
Other (expense) income4 | (18 | ) | (104 | ) | (51 | ) | (173 | ) | (173 | ) | (342 | ) | 2 | (175 | ) | (688 | ) | (861 | ) | (4 | ) | (35 | ) | |||||||||||||||||||||||||
Results before income taxes | 1,431 | 2,108 | 1,587 | 5,126 | 1,984 | 1,839 | 676 | 1,938 | 6,437 | 11,563 | 867 | 45 | ||||||||||||||||||||||||||||||||||||
Income tax expense | (528 | ) | (777 | ) | (585 | ) | (1,890 | ) | (1,410 | ) | (1,158 | ) | (289 | ) | (831 | ) | (3,688 | ) | (5,578 | ) | (260 | ) | – | |||||||||||||||||||||||||
RESULTS OF PRODUCING OPERATIONS | $ | 903 | $ | 1,331 | $ | 1,002 | $ | 3,236 | $ | 574 | $ | 681 | $ | 387 | $ | 1,107 | $ | 2,749 | �� | $ | 5,985 | $ | 607 | $ | 45 | |||||||||||||||||||||||
1 | The value of owned production consumed on lease as fuel has been eliminated from revenues and production expenses, and the related volumes have been deducted from net production in calculating the unit average sales price and production cost. This has no effect on the results of producing operations. |
2 | 2003 includes certain reclassifications to conform to 2005 presentation. |
3 | Represents accretion of ARO liability. Refer to Note 24, “Assets Retirement Obligation,” beginning on page F5-59. |
4 | Includes net sulfur income, foreign currency transaction gains and losses, certain significant impairment write-downs, miscellaneous expenses, etc. Also includes net income from related oil and gas activities that do not have oil and gas reserves attributed to them (for example, net income from technical and operating service agreements) and items identified in the Management’s Discussion and Analysis on pages FS-7 through FS-11. |
FS-69
Table of Contents
Supplemental Information on Oil and Gas Producing Activities —Continued |
TABLE IV – RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES – UNIT PRICES AND COSTS1,2
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | |||||||||||||||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average sales prices | ||||||||||||||||||||||||||||||||||||||||||||||||
Liquids, per barrel | $ | 45.24 | $ | 48.80 | $ | 48.29 | $ | 46.97 | $ | 50.54 | $ | 45.88 | $ | 44.40 | $ | 48.61 | $ | 47.83 | $ | 47.56 | $ | 45.59 | $ | 45.89 | ||||||||||||||||||||||||
Natural gas, per thousand cubic feet | 6.94 | 8.43 | 6.90 | 7.43 | 0.04 | 3.59 | 5.74 | 3.31 | 3.48 | 5.18 | 0.61 | 0.26 | ||||||||||||||||||||||||||||||||||||
Average production costs, per barrel | 10.74 | 8.55 | 7.57 | 8.88 | 4.72 | 3.38 | 11.28 | 4.32 | 4.93 | 6.32 | 2.45 | 5.53 | ||||||||||||||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average sales prices | ||||||||||||||||||||||||||||||||||||||||||||||||
Liquids, per barrel | $ | 33.43 | $ | 34.69 | $ | 34.61 | $ | 34.12 | $ | 34.85 | $ | 31.34 | $ | 31.12 | $ | 34.58 | $ | 33.33 | $ | 33.60 | $ | 30.23 | $ | 23.32 | ||||||||||||||||||||||||
Natural gas, per thousand cubic feet | 5.18 | 6.08 | 5.07 | 5.51 | 0.04 | 3.41 | 3.88 | 2.68 | 2.90 | 4.27 | 0.65 | 0.27 | ||||||||||||||||||||||||||||||||||||
Average production costs, per barrel | 8.14 | 5.26 | 6.65 | 6.60 | 4.89 | 3.50 | 9.69 | 3.47 | 4.67 | 5.43 | 2.31 | 6.10 | ||||||||||||||||||||||||||||||||||||
YEAR ENDED DEC. 31, 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average sales prices | ||||||||||||||||||||||||||||||||||||||||||||||||
Liquids, per barrel | $ | 25.77 | $ | 27.89 | $ | 26.48 | $ | 26.66 | $ | 28.54 | $ | 24.66 | $ | 25.10 | $ | 27.56 | $ | 26.70 | $ | 26.69 | $ | 22.07 | $ | 17.06 | ||||||||||||||||||||||||
Natural gas, per thousand cubic feet | 5.04 | 5.56 | 4.51 | 5.01 | 0.04 | 3.64 | 2.26 | 2.58 | 2.87 | 4.08 | 0.68 | 0.33 | ||||||||||||||||||||||||||||||||||||
Average production costs, per barrel3 | 7.01 | 4.47 | 6.40 | 5.82 | 4.42 | 2.49 | 9.30 | 3.99 | 4.41 | 4.99 | 2.04 | 3.24 | ||||||||||||||||||||||||||||||||||||
1 | The value of owned production consumed on lease as fuel has been eliminated from revenues and production expenses, and the related volumes have been deducted from net production in calculating the unit average sales price and production cost. This has no effect on the results of producing operations. |
2 | Natural gas converted to oil-equivalent gas (OEG) barrels at a rate of 6 MCF = 1 OEG barrel. |
3 | Conformed to 2005 presentation to exclude taxes. |
TABLE V – RESERVE QUANTITY INFORMATION
FS-70
Table of Contents
TABLE V — RESERVE QUANTITY INFORMATION — Continued |
FS-71
Table of Contents
Supplemental Information on Oil and Gas Producing Activities —Continued |
TABLE V – RESERVE QUANTITY INFORMATION – Continued
NET PROVED RESERVES OF CRUDE OIL, CONDENSATE AND NATURAL GAS LIQUIDS
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Millions of barrels | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
RESERVES AT JAN. 1, 2003 | 1,102 | 389 | 626 | 2,117 | 1,976 | 815 | 889 | 697 | 4,377 | 6,494 | 1,689 | 485 | ||||||||||||||||||||||||||||||||||||
Changes attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revisions | (4 | ) | (5 | ) | – | (9 | ) | (1 | ) | 105 | (57 | ) | 19 | 66 | 57 | 200 | – | |||||||||||||||||||||||||||||||
Improved recovery | 38 | 8 | 7 | 53 | 36 | – | 54 | 52 | 142 | 195 | – | – | ||||||||||||||||||||||||||||||||||||
Extensions and discoveries | 2 | 113 | 9 | 124 | 24 | 15 | 3 | 26 | 68 | 192 | – | – | ||||||||||||||||||||||||||||||||||||
Purchases1 | – | 1 | – | 1 | – | – | – | 12 | 12 | 13 | – | – | ||||||||||||||||||||||||||||||||||||
Sales2 | (3 | ) | (2 | ) | (18 | ) | (23 | ) | – | (42 | ) | – | (1 | ) | (43 | ) | (66 | ) | – | – | ||||||||||||||||||||||||||||
Production | (84 | ) | (69 | ) | (52 | ) | (205 | ) | (112 | ) | (97 | ) | (82 | ) | (109 | ) | (400 | ) | (605 | ) | (49 | ) | (6 | ) | ||||||||||||||||||||||||
RESERVES AT DEC. 31, 2003 | 1,051 | 435 | 572 | 2,058 | 1,923 | 796 | 807 | 696 | 4,222 | 6,280 | 1,840 | 479 | ||||||||||||||||||||||||||||||||||||
Changes attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revisions | 13 | (68 | ) | (2 | ) | (57 | ) | (70 | ) | (43 | ) | (36 | ) | (12 | ) | (161 | ) | (218 | ) | 206 | (2 | ) | ||||||||||||||||||||||||||
Improved recovery | 28 | – | 6 | 34 | 34 | – | 6 | – | 40 | 74 | – | – | ||||||||||||||||||||||||||||||||||||
Extensions and discoveries | – | 8 | 6 | 14 | 77 | 9 | – | 17 | 103 | 117 | – | – | ||||||||||||||||||||||||||||||||||||
Purchases1 | – | 2 | – | 2 | – | – | – | – | – | 2 | – | – | ||||||||||||||||||||||||||||||||||||
Sales2 | – | (27 | ) | (103 | ) | (130 | ) | (16 | ) | – | – | (33 | ) | (49 | ) | (179 | ) | – | – | |||||||||||||||||||||||||||||
Production | (81 | ) | (56 | ) | (47 | ) | (184 | ) | (115 | ) | (86 | ) | (79 | ) | (101 | ) | (381 | ) | (565 | ) | (52 | ) | (9 | ) | ||||||||||||||||||||||||
RESERVES AT DEC. 31, 2004 | 1,011 | 294 | 432 | 1,737 | 1,833 | 676 | 698 | 567 | 3,774 | 5,511 | 1,994 | 468 | ||||||||||||||||||||||||||||||||||||
Changes attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revisions | (23 | ) | (6 | ) | (11 | ) | (40 | ) | (29 | ) | (56 | ) | (108 | ) | (6 | ) | (199 | ) | (239 | ) | (5 | ) | (19 | ) | ||||||||||||||||||||||||
Improved recovery | 57 | – | 4 | 61 | 67 | 4 | 42 | 29 | 142 | 203 | – | – | ||||||||||||||||||||||||||||||||||||
Extensions and discoveries | – | 37 | 7 | 44 | 53 | 21 | 1 | 65 | 140 | 184 | – | – | ||||||||||||||||||||||||||||||||||||
Purchases1 | – | 49 | 147 | 196 | 4 | 287 | 20 | 65 | 376 | 572 | – | – | ||||||||||||||||||||||||||||||||||||
Sales2 | (1 | ) | – | (1 | ) | (2 | ) | – | – | – | (58 | ) | (58 | ) | (60 | ) | – | – | ||||||||||||||||||||||||||||||
Production | (79 | ) | (41 | ) | (45 | ) | (165 | ) | (114 | ) | (103 | ) | (74 | ) | (89 | ) | (380 | ) | (545 | ) | (50 | ) | (14 | ) | ||||||||||||||||||||||||
RESERVES AT DEC. 31, 20053 | 965 | 333 | 533 | 1,831 | 1,814 | 829 | 579 | 573 | 3,795 | 5,626 | 1,939 | 435 | ||||||||||||||||||||||||||||||||||||
DEVELOPED RESERVES4 | ||||||||||||||||||||||||||||||||||||||||||||||||
At Jan. 1, 2003 | 867 | 335 | 564 | 1,766 | 1,042 | 642 | 655 | 529 | 2,868 | 4,634 | 99 | 63 | ||||||||||||||||||||||||||||||||||||
At Dec. 31, 2003 | 832 | 304 | 515 | 1,651 | 1,059 | 641 | 588 | 522 | 2,810 | 4,461 | 1,304 | 140 | ||||||||||||||||||||||||||||||||||||
At Dec. 31, 2004 | 832 | 192 | 386 | 1,410 | 990 | 543 | 490 | 469 | 2,492 | 3,902 | 1,510 | 188 | ||||||||||||||||||||||||||||||||||||
At Dec. 31, 2005 | 809 | 177 | 474 | 1,460 | 945 | 534 | 439 | 416 | 2,334 | 3,794 | 1,611 | 196 | ||||||||||||||||||||||||||||||||||||
1 | Includes reserves acquired through property exchanges. |
2 | Includes reserves disposed of through property exchanges. |
3 | Net reserve changes (excluding production) in 2005 consist of 490 million barrels of developed reserves and (170) million barrels of undeveloped reserves for consolidated companies and (178) million barrels of developed reserves and (154) million barrels of undeveloped reserves for affiliated companies. |
4 | During 2005, the percentages of undeveloped reserves at December 31, 2004, transferred to developed reserves were 11 percent and 20 percent for consolidated companies and affiliated companies, respectively. |
INFORMATION ON CANADIAN OIL SANDS NET PROVED RESERVES NOT INCLUDED ABOVE:
FS-72
Table of Contents
TABLE V — RESERVE QUANTITY INFORMATION — Continued |
FS-73
Table of Contents
Supplemental Information on Oil and Gas Producing Activities –Continued |
TABLE V – RESERVE QUANTITY INFORMATION – Continued
NET PROVED RESERVES OF NATURAL GAS
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Billions of cubic feet | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
RESERVES AT JAN. 1, 2003 | 325 | 2,052 | 4,040 | 6,417 | 2,298 | 4,646 | 518 | 2,924 | 10,386 | 16,803 | 2,489 | 43 | ||||||||||||||||||||||||||||||||||||
Changes attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revisions | 25 | (106 | ) | (525 | ) | (606 | ) | 342 | 879 | 36 | 976 | 2,233 | 1,627 | 109 | 70 | |||||||||||||||||||||||||||||||||
Improved recovery | 15 | 7 | 1 | 23 | 17 | – | 15 | 35 | 67 | 90 | – | – | ||||||||||||||||||||||||||||||||||||
Extensions and discoveries | – | 270 | 118 | 388 | 3 | 76 | 12 | 47 | 138 | 526 | – | – | ||||||||||||||||||||||||||||||||||||
Purchases1 | – | 8 | – | 8 | – | 7 | – | 55 | 62 | 70 | – | – | ||||||||||||||||||||||||||||||||||||
Sales2 | (1 | ) | (12 | ) | (51 | ) | (64 | ) | – | – | – | (6 | ) | (6 | ) | (70 | ) | – | – | |||||||||||||||||||||||||||||
Production | (41 | ) | (378 | ) | (394 | ) | (813 | ) | (18 | ) | (235 | ) | (61 | ) | (366 | ) | (680 | ) | (1,493 | ) | (72 | ) | (1 | ) | ||||||||||||||||||||||||
RESERVES AT DEC. 31, 2003 | 323 | 1,841 | 3,189 | 5,353 | 2,642 | 5,373 | 520 | 3,665 | 12,200 | 17,553 | 2,526 | 112 | ||||||||||||||||||||||||||||||||||||
Changes attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revisions | 27 | (391 | ) | (316 | ) | (680 | ) | 346 | 236 | 21 | 325 | 928 | 248 | 963 | 23 | |||||||||||||||||||||||||||||||||
Improved recovery | 2 | – | 1 | 3 | 7 | – | 13 | – | 20 | 23 | – | – | ||||||||||||||||||||||||||||||||||||
Extensions and discoveries | 1 | 54 | 89 | 144 | 16 | 39 | 2 | 13 | 70 | 214 | – | – | ||||||||||||||||||||||||||||||||||||
Purchases1 | – | 5 | – | 5 | – | 4 | – | – | 4 | 9 | – | – | ||||||||||||||||||||||||||||||||||||
Sales2 | – | (147 | ) | (289 | ) | (436 | ) | – | – | – | (111 | ) | (111 | ) | (547 | ) | – | – | ||||||||||||||||||||||||||||||
Production | (39 | ) | (298 | ) | (348 | ) | (685 | ) | (32 | ) | (247 | ) | (54 | ) | (354 | ) | (687 | ) | (1,372 | ) | (76 | ) | (1 | ) | ||||||||||||||||||||||||
RESERVES AT DEC. 31, 2004 | 314 | 1,064 | 2,326 | 3,704 | 2,979 | 5,405 | 502 | 3,538 | 12,424 | 16,128 | 3,413 | 134 | ||||||||||||||||||||||||||||||||||||
Changes attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revisions | 21 | (15 | ) | (15 | ) | (9 | ) | 211 | (428 | ) | (31 | ) | 243 | (5 | ) | (14 | ) | (547 | ) | 49 | ||||||||||||||||||||||||||||
Improved recovery | 8 | – | – | 8 | 13 | – | – | 31 | 44 | 52 | – | – | ||||||||||||||||||||||||||||||||||||
Extensions and discoveries | – | 68 | 99 | 167 | 25 | 118 | 5 | 55 | 203 | 370 | – | – | ||||||||||||||||||||||||||||||||||||
Purchases1 | – | 269 | 899 | 1,168 | 5 | 3,962 | 247 | 274 | 4,488 | 5,656 | – | – | ||||||||||||||||||||||||||||||||||||
Sales2 | – | – | (6 | ) | (6 | ) | – | – | – | (248 | ) | (248 | ) | (254 | ) | – | – | |||||||||||||||||||||||||||||||
Production | (39 | ) | (215 | ) | (350 | ) | (604 | ) | (42 | ) | (434 | ) | (77 | ) | (315 | ) | (868 | ) | (1,472 | ) | (79 | ) | (2 | ) | ||||||||||||||||||||||||
RESERVES AT DEC. 31, 20053 | 304 | 1,171 | 2,953 | 4,428 | 3,191 | 8,623 | 646 | 3,578 | 16,038 | 20,466 | 2,787 | 181 | ||||||||||||||||||||||||||||||||||||
DEVELOPED RESERVES4 | ||||||||||||||||||||||||||||||||||||||||||||||||
At Jan. 1, 2003 | 266 | 1,770 | 3,600 | 5,636 | 582 | 2,934 | 262 | 2,157 | 5,935 | 11,571 | 1,474 | 6 | ||||||||||||||||||||||||||||||||||||
At Dec. 31, 2003 | 265 | 1,572 | 2,964 | 4,801 | 954 | 3,627 | 223 | 3,043 | 7,847 | 12,648 | 1,789 | 52 | ||||||||||||||||||||||||||||||||||||
At Dec. 31, 2004 | 252 | 937 | 2,191 | 3,380 | 1,108 | 3,701 | 271 | 2,273 | 7,353 | 10,733 | 2,584 | 63 | ||||||||||||||||||||||||||||||||||||
At Dec. 31, 2005 | 251 | 977 | 2,794 | 4,022 | 1,346 | 4,819 | 449 | 2,453 | 9,067 | 13,089 | 2,314 | 85 | ||||||||||||||||||||||||||||||||||||
1 | Includes reserves acquired through property exchanges. |
2 | Includes reserves disposed of through property exchanges. |
3 | Net reserve changes (excluding production) in 2005 consist of 5,141 billion cubic feet of developed reserves and 669 billion cubic feet of undeveloped reserves for consolidated companies and (672) billion cubic feet of developed reserves and 174 billion cubic feet of undeveloped reserves for affiliated companies. |
4 | During 2005, the percentages of undeveloped reserves at December 31, 2004, transferred to developed reserves were 12 percent and 19 percent for consolidated companies and affiliated companies, respectively. |
FS-74
Table of Contents
TABLE V — RESERVE QUANTITY INFORMATION – Continued |
FS-75
Table of Contents
Supplemental Information on Oil and Gas Producing Activities –Continued |
TABLE VI – STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES
FS-76
Table of Contents
TABLE VI – STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES – Continued |
Consolidated Companies | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||||||||||||||||||
Gulf of | Total | Asia- | Total | Affiliated Companies | ||||||||||||||||||||||||||||||||||||||||||||
Millions of dollars | Calif. | Mexico | Other | U.S. | Africa | Pacific | Indonesia | Other | Int’l. | Total | TCO | Hamaca | ||||||||||||||||||||||||||||||||||||
AT DECEMBER 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Future cash inflows from production | $ | 50,771 | $ | 29,422 | $ | 50,039 | $ | 130,232 | $ | 101,912 | $ | 73,612 | $ | 32,538 | $ | 44,680 | $ | 252,742 | $ | 382,974 | $ | 97,707 | $ | 20,616 | ||||||||||||||||||||||||
Future production costs | (15,719 | ) | (5,758 | ) | (12,767 | ) | (34,244 | ) | (11,366 | ) | (12,459 | ) | (18,260 | ) | (11,908 | ) | (53,993 | ) | (88,237 | ) | (7,399 | ) | (2,101 | ) | ||||||||||||||||||||||||
Future devel. costs | (2,274 | ) | (2,467 | ) | (873 | ) | (5,614 | ) | (8,197 | ) | (5,840 | ) | (1,730 | ) | (2,439 | ) | (18,206 | ) | (23,820 | ) | (5,996 | ) | (762 | ) | ||||||||||||||||||||||||
Future income taxes | (11,092 | ) | (7,173 | ) | (12,317 | ) | (30,582 | ) | (50,894 | ) | (21,509 | ) | (5,709 | ) | (13,917 | ) | (92,029 | ) | (122,611 | ) | (23,818 | ) | (6,036 | ) | ||||||||||||||||||||||||
Undiscounted future net cash flows | 21,686 | 14,024 | 24,082 | 59,792 | 31,455 | 33,804 | 6,839 | 16,416 | 88,514 | 148,306 | 60,494 | 11,717 | ||||||||||||||||||||||||||||||||||||
10 percent midyear annual discount for timing of estimated cash flows | (10,947 | ) | (4,520 | ) | (10,838 | ) | (26,305 | ) | (14,881 | ) | (14,929 | ) | (2,269 | ) | (5,635 | ) | (37,714 | ) | (64,019 | ) | (37,674 | ) | (7,768 | ) | ||||||||||||||||||||||||
STANDARDIZED MEASURE NET CASH FLOWS | $ | 10,739 | $ | 9,504 | $ | 13,244 | $ | 33,487 | $ | 16,574 | $ | 18,875 | $ | 4,570 | $ | 10,781 | $ | 50,800 | $ | 84,287 | $ | 22,820 | $ | 3,949 | ||||||||||||||||||||||||
AT DECEMBER 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||
Future cash inflows from production | $ | 32,793 | $ | 19,043 | $ | 28,676 | $ | 80,512 | $ | 64,628 | $ | 35,960 | $ | 25,313 | $ | 30,061 | $ | 155,962 | $ | 236,474 | $ | 61,875 | $ | 12,769 | ||||||||||||||||||||||||
Future production costs | (11,245 | ) | (3,840 | ) | (7,343 | ) | (22,428 | ) | (10,662 | ) | (8,604 | ) | (12,830 | ) | (7,884 | ) | (39,980 | ) | (62,408 | ) | (7,322 | ) | (3,734 | ) | ||||||||||||||||||||||||
Future devel. costs | (1,731 | ) | (2,389 | ) | (667 | ) | (4,787 | ) | (6,355 | ) | (2,531 | ) | (717 | ) | (1,593 | ) | (11,196 | ) | (15,983 | ) | (5,366 | ) | (407 | ) | ||||||||||||||||||||||||
Future income taxes | (6,706 | ) | (4,336 | ) | (6,991 | ) | (18,033 | ) | (29,519 | ) | (9,731 | ) | (5,354 | ) | (9,914 | ) | (54,518 | ) | (72,551 | ) | (13,895 | ) | (2,934 | ) | ||||||||||||||||||||||||
Undiscounted future net cash flows | 13,111 | 8,478 | 13,675 | 35,264 | 18,092 | 15,094 | 6,412 | 10,670 | 50,268 | 85,532 | 35,292 | 5,694 | ||||||||||||||||||||||||||||||||||||
10 percent midyear annual discount for timing of estimated cash flows | (6,656 | ) | (2,715 | ) | (6,110 | ) | (15,481 | ) | (9,035 | ) | (6,966 | ) | (2,465 | ) | (3,451 | ) | (21,917 | ) | (37,398 | ) | (22,249 | ) | (3,817 | ) | ||||||||||||||||||||||||
STANDARDIZED MEASURE NET CASH FLOWS | $ | 6,455 | $ | 5,763 | $ | 7,565 | $ | 19,783 | $ | 9,057 | $ | 8,128 | $ | 3,947 | $ | 7,219 | $ | 28,351 | $ | 48,134 | $ | 13,043 | $ | 1,877 | ||||||||||||||||||||||||
AT DECEMBER 31, 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||
Future cash inflows from production | $ | 30,307 | $ | 23,521 | $ | 33,251 | $ | 87,079 | $ | 55,532 | $ | 33,031 | $ | 26,288 | $ | 29,987 | $ | 144,838 | $ | 231,917 | $ | 56,485 | $ | 9,018 | ||||||||||||||||||||||||
Future production costs | (10,692 | ) | (5,003 | ) | (9,354 | ) | (25,049 | ) | (8,237 | ) | (6,389 | ) | (11,387 | ) | (6,334 | ) | (32,347 | ) | (57,396 | ) | (6,099 | ) | (1,878 | ) | ||||||||||||||||||||||||
Future devel. costs | (1,668 | ) | (1,550 | ) | (990 | ) | (4,208 | ) | (4,524 | ) | (2,432 | ) | (1,729 | ) | (1,971 | ) | (10,656 | ) | (14,864 | ) | (6,066 | ) | (463 | ) | ||||||||||||||||||||||||
Future income taxes | (6,073 | ) | (5,742 | ) | (7,752 | ) | (19,567 | ) | (25,369 | ) | (9,932 | ) | (5,993 | ) | (7,888 | ) | (49,182 | ) | (68,749 | ) | (12,520 | ) | (2,270 | ) | ||||||||||||||||||||||||
Undiscounted future net cash flows | 11,874 | 11,226 | 15,155 | 38,255 | 17,402 | 14,278 | 7,179 | 13,794 | 52,653 | 90,908 | 31,800 | 4,407 | ||||||||||||||||||||||||||||||||||||
10 percent midyear annual discount for timing of estimated cash flows | (6,050 | ) | (3,666 | ) | (7,461 | ) | (17,177 | ) | (8,482 | ) | (6,392 | ) | (3,013 | ) | (5,039 | ) | (22,926 | ) | (40,103 | ) | (20,140 | ) | (2,949 | ) | ||||||||||||||||||||||||
STANDARDIZED MEASURE NET CASH FLOWS | $ | 5,824 | $ | 7,560 | $ | 7,694 | $ | 21,078 | $ | 8,920 | $ | 7,886 | $ | 4,166 | $ | 8,755 | $ | 29,727 | $ | 50,805 | $ | 11,660 | $ | 1,458 | ||||||||||||||||||||||||
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Supplemental Information on Oil and Gas Producing Activities –Continued |
TABLE VII – CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS FROM PROVED RESERVES
Consolidated Companies* | Affiliated Companies | |||||||||||||||||||||||||
Millions of dollars | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||
PRESENT VALUE AT JANUARY 1 | $ | 48,134 | $ | 50,805 | $ | 48,585 | $ | 14,920 | $ | 13,118 | $ | 12,606 | ||||||||||||||
Sales and transfers of oil and gas produced net of production costs | (26,145 | ) | (18,843 | ) | (16,630 | ) | (2,712 | ) | (1,602 | ) | (1,054 | ) | ||||||||||||||
Development costs incurred | 5,504 | 3,579 | 3,451 | 810 | 1,104 | 750 | ||||||||||||||||||||
Purchases of reserves | 25,307 | 58 | 97 | – | – | – | ||||||||||||||||||||
Sales of reserves | (2,006 | ) | (3,734 | ) | (839 | ) | – | – | – | |||||||||||||||||
Extensions, discoveries and improved recovery less related costs | 7,446 | 2,678 | 5,445 | – | – | – | ||||||||||||||||||||
Revisions of previous quantity estimates | (13,564 | ) | 1,611 | 1,200 | (2,598 | ) | 970 | 653 | ||||||||||||||||||
Net changes in prices, development and production costs | 61,370 | 6,173 | 1,857 | 19,205 | 266 | (1,187 | ) | |||||||||||||||||||
Accretion of discount | 8,160 | 8,139 | 7,903 | 2,055 | 1,818 | 1,709 | ||||||||||||||||||||
Net change in income tax | (29,919 | ) | (2,332 | ) | (264 | ) | (4,911 | ) | (754 | ) | (359 | ) | ||||||||||||||
Net change for the year | 36,153 | (2,671 | ) | 2,220 | 11,849 | 1,802 | 512 | |||||||||||||||||||
PRESENT VALUE AT DECEMBER 31 | $ | 84,287 | $ | 48,134 | $ | 50,805 | $ | 26,769 | $ | 14,920 | $ | 13,118 | ||||||||||||||
* | 2003 conformed to 2004 and 2005 presentation. |
FS-78
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Exhibit No. | Description | |||
2 | .1 | Amendment No. 1 to Agreement and Plan of Merger dated as of July 19, 2005, by and among Unocal Corporation, Chevron Corporation and Blue Merger Sub Inc., filed as Annex A to Exhibit 20.1 to Chevron’s Current Report on Form 8-K dated July 25, 2005, and incorporated herein by reference. | ||
3 | .1 | Restated Certificate of Incorporation of Chevron Corporation, dated May 9, 2005, filed as Exhibit 99.1 to Chevron’s Current Report on Form 8-K dated July 25, 2005, and incorporated herein by reference. | ||
3 | .2 | By-Laws of Chevron Corporation, as amended June 29, 2005, filed as Exhibit 3.2 to Chevron Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005, and incorporated herein by reference. | ||
4 | Pursuant to the Instructions to Exhibits, certain instruments defining the rights of holders of long-term debt securities of the corporation and its consolidated subsidiaries are not filed because the total amount of securities authorized under any such instrument does not exceed 10 percent of the total assets of the corporation and its subsidiaries on a consolidated basis. A copy of such instrument will be furnished to the Commission upon request. | |||
10 | .1 | Chevron Corporation Non-Employee Directors’ Equity Compensation and Deferral Plan, approved by the company’s stockholders on May 22, 2003, filed as Appendix A to Chevron Corporation’s Notice of Annual Meeting of Stockholders and Proxy Statement dated March 24, 2003, and incorporated herein by reference. | ||
10 | .2 | Management Incentive Plan of Chevron Corporation, as amended and restated on December 7, 2005, filed as Exhibit 10.3 to Chevron Corporation’s Current Report on Form 8-K dated December 7, 2005, and incorporated herein by reference. | ||
10 | .3 | Chevron Corporation Excess Benefit Plan, amended and restated as of April 1, 2002, filed as Exhibit 10.3 to Chevron Corporation’s Annual Report on Form 10-K for the year ended December 31, 2003, and incorporated herein by reference. | ||
10 | .4 | Chevron Corporation Long-Term Incentive Plan, as amended and restated on December 7, 2005, filed as Exhibit 10.4 to Chevron Corporation’s Current Report on Form 8-K dated December 7, 2005, and incorporated herein by reference. | ||
10 | .6 | Chevron Corporation Deferred Compensation Plan for Management Employees, as amended and restated on December 7, 2005, filed as Exhibit 10.5 to Chevron Corporation’s Current Report on Form 8-K dated December 7, 2005, and incorporated herein by reference. | ||
10 | .8 | Texaco Inc. Stock Incentive Plan, adopted May 9, 1989, as amended May 13, 1993, and May 13, 1997, filed as Exhibit 10.13 to Chevron Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference. | ||
10 | .9 | Supplemental Pension Plan of Texaco Inc., dated June 26, 1975, filed as Exhibit 10.14 to Chevron Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference. | ||
10 | .10 | Supplemental Bonus Retirement Plan of Texaco Inc., dated May 1, 1981, filed as Exhibit 10.15 to Chevron Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference. | ||
10 | .11 | Texaco Inc. Director and Employee Deferral Plan approved March 28, 1997, filed as Exhibit 10.16 to Chevron Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference. |
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Table of Contents
Exhibit No. | Description | |||
10 | .12 | Chevron Corporation 1998 Stock Option Program for U.S. Dollar Payroll Employees, filed as Exhibit 10.12 to Chevron Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002, and incorporated herein by reference. | ||
10 | .13 | Summary of Chevron’s Management and Incentive Plan Awards and Criteria, filed as Exhibit 10.13 to Chevron Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005, and incorporated herein by reference. | ||
10 | .14 | Chevron Corporation Change in Control Surplus Employee Severance Program For Salary Grades 41 and Above, as amended on December 7, 2005, filed as Exhibit 10.1 to Chevron Corporation’s Current Report on Form 8-K dated December 7, 2005, and incorporated herein by reference. | ||
10 | .15 | Chevron Corporation Benefit Protection Program, as amended and restated on December 7, 2005, filed as Exhibit 10.2 to Chevron Corporation’s Current Report on Form 8-K dated December 7, 2005, and incorporated herein by reference. | ||
10 | .16 | Form of Notice of Grant under the Chevron Corporation Long-Term Incentive Plan, filed as Exhibit 10.1 to Chevron’s Current Report on Form 8-K dated June 29, 2005, and incorporated herein by reference. | ||
10 | .17 | Form of Retainer Stock Option Agreement under the Chevron Corporation Non-Employee Directors’ Equity Compensation and Deferral Plan, filed as Exhibit 10.2 to Chevron’s Current Report on Form 8-K dated June 29, 2005, and incorporated herein by reference. | ||
12 | .1* | Computation of Ratio of Earnings to Fixed Charges (page E-3). | ||
21 | .1* | Subsidiaries of Chevron Corporation (page E-4 to E-5). | ||
23 | .1* | Consent of PricewaterhouseCoopers LLP (page E-6). | ||
24 | .1 | Powers of Attorney for directors and certain officers of Chevron Corporation, authorizing the signing of | ||
to 24 | .12 | the Annual Report on Form 10-K on their behalf. | ||
31 | .1* | Rule 13a-14(a)/15d-14(a) Certification of the company’s Chief Executive Officer (page E-7). | ||
31 | .2* | Rule 13a-14(a)/15d-14(a) Certification of the company’s Chief Financial Officer (page E-8). | ||
32 | .1* | Section 1350 Certification of the company’s Chief Executive Officer (page E-9). | ||
32 | .2* | Section 1350 Certification of the company’s Chief Financial Officer (page E-10). | ||
99 | .1* | Definitions of Selected Energy and Financial Terms (page E-11). |
* | Filed herewith. |
E-2