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On October 9, 2001, a new force in energy emerged. 2001 Annual Report Our vision is to be the global energy company most admiredCVX for its people, partnership and performance. Table of Contents 1 A Transforming Vision 2 A Skilled, Committed Work Force 3 Partner of Choice 4 Measuring Success 5 Global Reach 6 To Our Stockholders 9 Financial Highlights 10 Operating Highlights 14 Focusing on Fundamentals 17 Delivering Results 22 Investing in Our Future 26 Glossary of Energy and Financial Terms 27 Board of Directors 28 Corporate Officers 29 Financial Review 72 Five-Year Financial Summary 80 Four-Year Operating Summary A Transforming Vision With the formation of ChevronTexaco Corporation in October 2001, a dynamic force in the energy industry emerged. The joining of our companies, each with a long, rich history, was not just about expansion. It was about transformation. The merger pro- vided an exceptional opportunity: to create a new company intent on raising the standards of performance and creating lasting value in all aspects of its business. From the outset, it was clear that success in the new company would be measured not just by getting bigger, but by getting better. We would operate intelligently, efficiently and effectively, and we would measure our success by how we treat one another as well as by the bottom line. Business strategies would be inextricably tied to our vision and values. We would, in fact, work to become the global energy company most admired for its people, partnership and performance. Nothing less. A Skilled,Committed Work Force The diversity of ChevronTexaco’s work force reflects the communities where we operate and the customers we serve. Our employees offer a wealth of skills, backgrounds and pointspeople of view. They are unified by a common vision and values that ensure we are responsible for our actions and for our success. The company employs more than 55,000 people around the globe. Our decentralized organi- zation consists of 70-plus business units whose employees focus on delivering results. A new leadership team, drawn from Chevron, Texaco and Caltex, has ChevronTexaco’s culture a track record of strong stresses learning, inno- business performance. vation, accountability and safety – inspiring and empowering individ- uals to drive company performance. 2 By providing energy that powers economic develop- ment, we create value not only for stockholders, but also for our partners, customers and the communities where we operate. We gain access to the best opportunities by being the best partner. Partner of Choice We have an unwavering commitment to building productive, collaborative relation- ships with governments, other companies, our customers and communities. Through these partnerships, we will ensure business success and contribute to the quality of life wherever we operate. Many key partnerships are aimed specifically at pro- ChevronTexaco champions tecting the environment. community partnerships For example, our contri- through a range of initia- butions to The Nature Con- tives in education; health, servancy in Canada and safety and environmental Louisiana and our partner- awareness; training oppor- ship with the World Wildlife tunities; and the improve- Fund in Papua New Guinea ment of infrastructure. In help protect wildlife habitats. turn, these build healthy business environments. 3 We are committed to delivering $1.8 billion in annual synergies, up from the pre- merger announcement of $1.2 billion. We expect to achieve this goal by the The company achieved second quarter 2003. the No.1ranking in total stockholder return among its peers for the two-year period 2000 through 2001. Measuring Success We are committed to excellence in everything we do and strive to continually improve our performance. We are passionate about achieving results that exceed expectationsperformance – our own as well as those of our stakeholders. We measure success and require accountability both for the goals we set and the ways we attain them. With the addition of 1.2 billion barrels of oil and equivalent gas reserves, our rate of reserves replacement for 2001 was 127 percent of the year’s production. Exploration efforts con- tinue to add new resources for future growth. In 2001, we made significant discov- eries in Angola, Australia, U.S. refining and marketing Brazil and deepwater Gulf had exceptionally strong of Mexico. earnings in 2001, with sales of branded motor gasoline up 4 percent. 4 Global Reach ChevronTexaco ranks among the world’s largest and most competitive global energy companies and is engaged in every aspect of the industry. Consumers around the world recognizeglobal our brands and trust our reputation. We have a global perspective and value the positive influence this has on our company. Active in more than 180 We have more than 21,000 countries, our highly skilled retail outlets that market and diverse work force is under the Chevron, Texaco committed to community and Caltex family of brands. involvement and environmental excellence. By investing in promising start-up companies, we are ensuring our participation in key developments in core oil ChevronTexaco is the second- and gas, as well as emerg- largest U.S.-based energy ing, technologies. company, with more than 11 billion barrels of oil and equivalent gas reserves and We have interests in 47 power 2.4 million barrels per day of projects now operating or being refining capacity. Our aver- developed and hold an approxi- age daily net production is mate 26 percent interest in 2.7 million oil-equivalent energy marketer Dynegy Inc. barrels. To Our Stockholders Dave O’Reilly Chairman of the Board and Chief Executive Officer “Our main business objective is to be No.1 among our peers in total stockholder return for the period 2000 through 2004. We were No.1 for the two-year period 2000 through 2001, and we are moving aggressively to retain that position.” 6 Last October’s creation of ChevronTexaco Corporation, on time and as planned, was a major achievement that we’re proud of. The tragic events of September 11, however, overshadowed the merger and tempered our sense of celebration. The terrorist attacks were a reminder – a terrible one – of how interconnected the world has become. This interdependence can and should be a force for positive change – all the more reason for those of us in the global energy industry to work with renewed intensity. When we do a good job of providing communities around the world with the energy they need for economic growth and an improved quality of life, we also create value for our stockholders. The intent of uniting Chevron and Texaco is to better equip us to do that job. We can already see an interlocking of strengths in the rapid integration of our busi- nesses and increased scope of our operations. We expect to be realizing $1.8 billion in annual synergies by the second quarter 2003. And we’re raising our sights higher still. Now active in more than 180 countries and doing business on a much larger scale, we intend to be a leader and innovator wherever we operate. The true measure of success, however, is not whether we have grown bigger but whether we have become better and how that translates into improved results. We are confident that we can achieve these results. Staying focused Even as the nuts and bolts of the merger were being fitted, some important achieve- ments to further strengthen the company were being realized. I We replaced 127 percent of the oil and gas we produced in 2001 – through discov- eries, acquisitions and other additions. That marked the ninth consecutive year the company has added more reserves than it has produced. I We successfully started up a number of oil and gas operations. Typhoon began operations in the deepwater Gulf of Mexico. The Hamaca oil field in Venezuela is off to a good start, as are North Nemba (right) and a new phase of Kuito, both off- shore Angola. In addition, the Malampaya gas project in the Philippines began production. Collectively, these projects will contribute an average of more than 80,000 net oil-equivalent barrels a day in 2002. I Many of our historically strong oil-producing regions continued to perform exceptionally well. North Sea production averaged more than 240,000 barrels of net oil-equivalent a day, and the shelf area of the Gulf of Mexico averaged more than 360,000 barrels per day. 7 I We successfully began operations of the Caspian Pipeline connecting the huge Tengiz oil field to the Russian port city of Novorossiysk. Earlier in the year, we increased to 50 percent our interest in Tengizchevroil, our joint venture with the Republic of Kazakhstan. I U.S. refining and marketing had outstanding earnings in 2001, reflecting improved margins, higher refinery utilization, and improved product yield and reliability. I We have begun implementing a $9.4 billion capital and exploratory program for 2002. This is lower than the combined companies’ 2001 expenditures and represents a focus on high-impact, long-term exploration and production growth projects. I The sale of Texaco’s interests in the U.S. refining and marketing joint ventures Equilon and Motiva was completed in February 2002, with the company realizing $2.2 billion in cash. Our 2001 operating earnings were a solid $6.8 billion. One-time merger costs and special items reduced net income to $3.3 billion. Special charges, coupled with weak market fundamentals at year-end, led to a disappointing fourth quarter. There’s no reason, however, for a single quarter’s weak results to cloud our view going forward. As with any temporary downturn, we are staying focused on executing our plans to create value for our stockholders.

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