Chevron Corporation 1995 Annual Report
New Prospects. New Perspectives. CHEVRON CORPORATION 1995 ANNUAL REPORT
Table of Contents Chevron at a Glance
1 TO OUR STOCKHOLDERS BUSINESS AREAS OF OPERATION
3 FINANCIAL HIGHLIGHTS EXPLORATION AND PRODUCTION Explores for and produces crude oil and Major producing areas include the 4 OPERATING HIGHLIGHTS natural gas in the United States and 24 Gulf of Mexico, California, the Rocky 6 THE CHEVRON WAY other countries. Third-largest U.S. natu- Mountains, Texas, Canada, the North The company’s Mission and ral gas producer. Worldwide net produc- Sea, Australia, Indonesia, Angola, Vision statements tion was more than 1.4 million barrels a Nigeria and Kazakstan. Exploration day of oil and equivalent gas. areas include the above, as well as 7 NEW PROSPECTS. Competitive Advantage: Balanced U.S. frontiers such as Bolivia, Colombia, NEW PERSPECTIVES. and international short- and long-term Congo, Peru, Ireland and Namibia. STRATEGIES FOR THE FUTURE opportunities create high-value portfolio.
10 Build a committed team to accomplish the corporate mission. REFINING Converts crude oil into a variety of Principal U.S. locations are El Segundo 10 Continue exploration and pro- refined products, including motor gaso- and Richmond, Calif.; Pascagoula, duction growth in international line, diesel and aviation fuels, lubri- Miss.; Salt Lake City, Utah; El Paso, areas. cants, asphalt, chemicals and other Texas; and Honolulu, Hawaii. Also re- 14 Generate cash from North products. Chevron is one of the largest fines in Canada, Wales and (through its American exploration and pro- refiners in the United States. Caltex affiliate) Asia, Africa, the Mid- duction operations, while main- Competitive Advantage: Largest supplier dle East, Australia and New Zealand. taining value through sustained of California reformulated gasoline. production levels.
16 Achieve top financial perform- MARKETING ance in U.S. refining and One of the leading U.S. marketers of marketing. refined products, including motor gasoline, diesel and aviation fuels, 18 Grow Caltex in attractive markets, lubricants and other products. Retail while achieving superior competi- outlets number 7,800 in the United tive financial performance. States, 200 in Canada and 500 in the 19 Continue to improve competitive United Kingdom; Caltex supplies financial performance in chemi- 8,400 retail outlets worldwide. ■ Chevron holds 9 percent or greater gasoline market share. cals, while developing attractive Competitive Advantage: No gasoline sold Retail locations also in Canada, the United opportunities for growth. provides better performance or lower Kingdom and (through Caltex) in Asia, emissions than Chevron gasolines with Africa, the Middle East, Australia and 21 Be selective in non-core busi- nesses. Techron. New Zealand.
22 Focus on reducing costs across SUPPLY AND DISTRIBUTION all activities. Purchases, sells, trades and transports Cargo trading offices in Houston; 23 REPORT ON THE ENVIRONMENT – by pipeline, tanker and barge – crude Walnut Creek, Calif.; London; oil, liquefied natural gas, natural gas Abidjan, Côte d’Ivoire; Singapore; 24 GLOSSARY OF ENERGY AND liquids (such as propane and butane), Mexico City; and Moscow. Interests FINANCIAL TERMS chemicals and refined products. in pipelines throughout the United 25 FINANCIAL REVIEW Competitive Advantage: Chevron’s fleet States and in Africa, Australia, Indo- maintains the best safety and environ- nesia, Papua New Guinea, Europe 60 ELEVEN-YEAR FINANCIAL and the Middle East. Tanker opera- SUMMARY mental record among major oil compa- nies. tions worldwide. 62 ELEVEN-YEAR OPERATING SUMMARY CHEMICALS 63 BOARD OF DIRECTORS Plants in 10 states and in France, Main products are ethylene, benzene, Brazil and Japan. Through affiliates 64 OFFICERS styrene, normal alpha olefins, paraxy- and subsidiaries, operates or markets lene, polyethylene, polystyrene and a in more than 80 countries. Whenever possible, Chevron prints on recy- variety of additives for fuels and cled and recyclable paper. The company has lubricants. printed its Annual Reports on recycled paper Competitive Advantage: Using propri- since 1990. etary technology, Chevron is a low-cost leader and manufacturer of benzene, paraxylene and normal alpha olefins. Mines in New Mexico, Wyoming, COAL Alabama and Kentucky; partnership Mines and markets coal, ranking interests in Illinois and Indiana. among the top 20 coal producers in the United States. Competitive Advantage: More than half the company’s reserves are environmen- tally desirable low-sulfur coal. CHEVRON CORPORATION 1995 ANNUAL REPORT
To Our Stockholders
‘We’ve developed new perspectives
on the way we do business.’ ▼ ’m very optimistic about Chevron’s new opportunities. For instance, we invested Ifuture. I’m also proud of the company’s about $1 billion in new facilities at our performance, not only during 1995, but for California refineries to make cleaner-burn- the past several years. What we’ve accom- ing reformulated gasolines. This has posi- plished has set the stage for what lies ahead. tioned our U.S. downstream (refining and And I see the future as a time of achieve- marketing) operations for greater profitabil- ment and growth. ity. Another example is the progress made We’ve built a strong foundation. We’ve by Caltex, our 50 percent-owned inter- also learned – sometimes the hard way – national downstream affiliate, on several how to operate successfully in the business expansion projects. And there are upstream environment of the ’90s. We’re leaner. We efforts under way worldwide. work more economically. We’re more entre- From these and numerous other preneurial. And we have better growth changes, we’ve found the resources to seek opportunities. out and take advantage of new prospects. We’ve developed new perspectives on the OPERATING EARNINGS CLIMB way we do business. Briefly, our earnings for 1995, excluding special charges, were nearly $2 billion, an BUILDING A STRONG FOUNDATION KEN DERR increase of 17 percent over 1994. Most of THE CHEVRON WAY CHAIRMAN our businesses had excellent years, with A key component of our foundation is a chemicals and international upstream document called The Chevron Way. (See (exploration and production) producing Page 6.) It includes Chevron’s Mission and record earnings. However, the special Vision, as well as four other important state- charges, including the adoption of a new ments. Together, these documents articulate required accounting standard, brought our our goals, values and principles. net income down to $930 million. More TECHNOLOGY PROVIDES information on our financial results follows A COMPETITIVE ADVANTAGE on the next pages. Detailed financial infor- Technology always has been a Chevron mation starts on Page 25. strength. Our technical and scientific know-
FINDING NEW PROSPECTS AND ledge and experience not only have contrib-
NEW PERSPECTIVES uted to our success worldwide, but also are I believe that 1995 marked the beginning of key reasons Chevron often is the partner of a new growth period. Over the past few choice in international joint ventures. years, we’ve focused on our core businesses In exploration and production, Chevron and disposed of many non-core assets. is a leader in such technologies as reservoir We’ve also invested in many areas that are simulation and both three- and four-dimen- starting to pay off – both financially and in sional seismic imaging. (Time is the added CHEVRON CORPORATION 1995 ANNUAL REPORT
dimension.) Our gasoline additive, Techron, On the other hand, planned spending is unsurpassed in reducing car emissions on worldwide refining, marketing and trans- and maintaining vehicle performance. portation – set at $1.5 billion – will be Chevron Chemical Company has two down about 20 percent. Much of the reduc- new proprietary technologies – Aromax tion will come in the United States, where and Eluxyl. we have completed the major investments in
AVERAGE ANNUAL RETURN our California refineries to meet federal and CUTTING COSTS STILL A PRIORITY TO STOCKHOLDERS state requirements for cleaner gasoline. The In today’s business world, cost control is no PERCENTAGE remaining major item is $500 million for longer a competitive advantage. It’s a com- 40 our worldwide chemicals business. petitive necessity. We’ve taken more than
$1.5 billion out of our cost structure in the 30 STRONG SHOWING FOR RESERVES past five years, including nearly $300 mil- REPLACEMENT 22.0 lion in 1995. 20 1995 was an outstanding year for adding new oil and natural gas to our inventory. MEETING SAFETY GOALS 10 Chevron replaced 138 percent of its oil and We’ve made enormous progress in meeting natural gas production with new proved our goal of having the best safety record reserves. The replacement rate for interna- among our key competitors. In the past two 0 91 92 93 94 95 tional operations was 178 percent; for U.S. years, we’ve cut our rate of recordable inci- Chevron stockholders have operations, 92 percent. dents nearly in half. Once again, Chevron averaged an annual return of almost 16 percent over the Worldwide, more than 700 million bar- employees have risen to meet a challenge. past seven years. rels of oil and equivalent gas were added to
INVESTING IN THE FUTURE reserves, with more than 50 percent coming RETURN ON AVERAGE Our planned spending for 1996 clearly re- from new drilling. At year-end, Chevron’s CAPITAL EMPLOYED*
flects our optimism about Chevron’s future. PERCENTAGE worldwide proved reserves stood at 6 billion We’re investing more capital because we see 16 barrels of oil and equivalent gas. tremendous opportunities. We’ve set our CAPITALIZING ON OUR capital and exploratory budget at $5.3 bil- 12 NEW PROSPECTS lion, up about 10 percent from 1995 spend- 9.8 Chevron is rich in excellent short- and ing. About $3 billion will go to worldwide 8 long-term growth opportunities. Many of exploration and production, a 10 percent these are described starting on Page 10, but increase over last year. In line with our 4 I’d like to highlight some of them. For strategic intent to focus on international instance… opportunities, about $2 billion will be spent 0 ■ 91 92 93 94 95 The huge Britannia gas field in the outside the United States. However, we also Chevron’s goal is to North Sea. believe that there are excellent U.S. opportu- earn 12 percent on its ■ A large discovery offshore Congo. nities and plan to increase U.S. spending 19 employed capital. *Excluding special items ■ New fields under development offshore percent to more than $1 billion. Congo and Angola.
2 CHEVRON CORPORATION 1995 ANNUAL REPORT
Financial Highlights
Millions of dollars, except per-share amounts 1995 1994 % Change
Net income $ 930 $ 1,693 (45)% Sales and other operating revenues $36,310 $35,130 3% Capital and exploratory expenditures* $ 4,800 $ 4,819 — Total assets at year-end $34,330 $34,407 — Total debt at year-end $ 8,327 $ 8,142 2% Stockholders’ equity at year-end $14,355 $14,596 (2)% Cash flow from operating activities $ 4,075 $ 2,896 41% Common shares outstanding at year-end 652,327 651,751 — (Thousands) Per-share data Net income $ 1.43 $ 2.60 (45)%
Cash dividends $ 1.925 $ 1.85 4%
Stockholders’ equity $ 22.01 $ 22.40 (2)%
3 5 Market price at year-end $52⁄8 $44/8 17%
Total debt/total debt plus equity 36.7% 35.8% Return on average stockholders’ equity 6.4% 11.8% Return on average capital employed (ROCE) 5.3% 8.7%
*Includes equity in affiliates
EARNINGS, EXCLUDING
TOTAL REVENUES NET INCOME SPECIAL ITEMS
BILLIONS OF DOLLARS MILLIONS OF DOLLARS MILLIONS OF DOLLARS
50 2500 2500
$1,962 40 2000 2000 $37.082
30 1500 1500
$930 20 1000 1000
10 500 500
0 0 0 91 92 93 94 95 91 92 93 94 95 91 92 93 94 95
Revenues increased on higher Special items and the Record chemicals and prices for crude oil, refined adoption of a new account- international upstream prof- products and chemicals. ing standard reduced earnings its led to a 17 percent in- by $1.032 billion. crease in adjusted earnings.
3 CHEVRON CORPORATION 1995 ANNUAL REPORT
Operating Highlights
1995 1994 % Change
Net production of crude oil and natural gas liquids* 1,001 993 1% (Thousands of barrels per day) Net production of natural gas* 2,433 2,631 (8)% (Millions of cubic feet per day) Sales of natural gas* 3,379 3,059 10% (Millions of cubic feet per day) Refinery input* 1,523 1,836 (17)% (Thousands of barrels per day) Sales of petroleum products* 2,346 2,497 (6)% (Thousands of barrels per day) Net proved reserves of crude oil, condensate and natural gas liquids* 4,343 4,167 4% (Millions of barrels) Net proved reserves of natural gas* 10,070 9,967 1% (Billions of cubic feet) Chemicals sales revenues** $3,953 $3,362 18% (Millions of dollars) Number of employees at year-end 43,019 45,758 (6)%
*Includes equity in affiliates **Includes sales to other Chevron companies. 1994 amount restated to conform with 1995 presentation.
PERFORMANCE MEASURES To help achieve its goal of being No.1 among its major competitors in providing total return on stockholders’ investment, Chevron has established several performance measures to track its progress. Some of these are listed below and are discussed throughout this report. The terms are defined on Page 24.
1995 1994 1993
Earnings, Excluding Special Items (Millions of dollars) $1,962 $1,671 $2,148 Adjusted Operating Expenses (Millions of dollars) $7,856 $8,143 $8,283 Operating Expenses Per Barrel $ 6.81 $ 6.57 $ 6.51 ROCE, Excluding Special Items 9.8% 8.6% 10.9% Total Stockholder Return 22.0% 6.8% 30.6%
CAPITAL & EXPLORATORY CHEVRON YEAR-END EXPENDITURES* CASH DIVIDENDS PAID COMMON STOCK PRICE
BILLIONS OF DOLLARS DOLLARS PER SHARE DOLLARS PER SHARE
6 3 60
$52.375
$4.8 5 50
$1.925 4 2 40
3 30
2 1 20
1 10
0 0 0 91 92 93 94 95 91 92 93 94 95 91 92 93 94 95
■ Refining & Marketing Annual dividends increased for In 1995, stockholders earned ■ Exploration & Production the eighth consecutive year. a 22 percent return, assuming ■ Other reinvested dividends. International spending accounted for 56 percent of total 1995 expenditures.
*Includes equity in affiliates
4 CHEVRON CORPORATION 1995 ANNUAL REPORT
■ The Escravos natural gas project in Nigeria. Another important financial measure- ■ The giant Hibernia Field offshore ment is return on capital employed – ROCE. Newfoundland. Chevron’s ROCE for 1995, excluding special ■ The huge Tengiz oil field in Kazakstan. items, was 9.8 percent, up from 8.6 percent ■ The prolific Norphlet natural gas trend in the year before. We’re doing better, but we’re the Gulf of Mexico. still under the 12 percent I believe will be ■ The Green Canyon venture in the deep the minimum needed to be No. 1. waters of the Gulf of Mexico. SETTING NEW GOALS ■ New opportunities in such diverse areas On February 1, we set another goal that I as Vietnam, Peru and Azerbaijan. think we’ll need to meet if we’re to be tops Growth does not mean investing capital in total stockholder return – to reach $3 bil- only in traditional petroleum projects. There lion in annual operating earnings within the are projects that come from looking at our next three years. That’s a big step. We’re at business from a new perspective… about $2 billion now. ■ Chevron’s exclusive marketing alliance I announced this new goal at our with McDonald’s in 12 states. annual employee teleconference, which ■ A new global lubricants business. reached 165 locations worldwide, because if ■ The proposed merger of our natural gas we do it – or I should say – when we do it, and natural gas liquids businesses with it will be Chevron employees who make NGC Corporation announced in January. JIM SULLIVAN it happen. ■ A new international chemicals business unit. VICE CHAIRMAN
■ An agreement with the Venezuelan national LOOKING AHEAD TO A oil company to operate a major oil field. BRIGHT FUTURE These lists are by no means complete. I’ve mentioned a lot of reasons to be opti- But they give an idea of the variety and scope mistic about Chevron’s future. None is more of the opportunities Chevron is pursuing. important than our employees. We have an abundance of outstanding opportunities MAKING PROGRESS ON OUR worldwide that promise excellent returns in LONG-TERM GOAL the short term and sustained earnings in the Our five-year goal (1994–1998) remains the long term. Equally important, we have the same – to outperform our competition and team in place to make our plans a reality. provide the highest rate of total stockholder return (a combination of stock price appre- ciation plus dividends). To meet that goal, I think we’ll need at least a 15 percent annu- alized rate. Although our rate for 1994 and KENNETH T. DERR 1995 averaged 14 percent, it was lower than Chairman of the Board some of our key competitors’. We’re going to February 23, 1996 have to try harder. And we will.
5 CHEVRON CORPORATION 1995 ANNUAL REPORT The Chevron Way
hevron has revised its Mission and Vision statements to present a broader, more compelling Cview of its business. They emphasize Chevron’s vision to be “Better than the Best” and its pri- mary objective of achieving excellent financial performance. These statements and four other key documents – Committed Team Values, Total Quality Management, Protecting People and the Environ- ment, and Vision Metrics – comprise The Chevron Way. Together, they sum up not only what Chev- ron is and what it does, but also what it stands for and what it believes in. They provide an integrated framework for the company’s goals, values, strategies and initiatives.
Mission We are an international company providing energy and Committed Team Values chemical products vital to the growth of the world’s Chevron people working together as a team are the key economies. Our mission is to create superior value for to success. These values guide our decisions and behav- our stockholders, our customers and our employees. ior: Vision ■ Honesty & Integrity ■ Recognition Our vision is to be Better than the Best, which means: ■ Trust ■ Achievement
■ Employees are proud of their success as a team ■ Diversity ■ Partnership
■ Customers, suppliers and governments prefer us ■ Communication ■ Alignment ■ Competitors respect us Total Quality Management ■ Communities welcome us This is the process we use to manage our business. It is ■ Investors are eager to invest in us based on integrating quality principles into everything Our primary objective is to exceed the financial we do. It has the power to direct change, align and focus performance of our strongest competitors. Our goal is to efforts, and ensure that we meet the needs of our cus- be No. 1 among our competitors in Total Stockholder tomers, employees, stockholders and communities. The Return for the period 1994–1998. We will balance long- principles of Total Quality Management include: term growth and short-term results in pursuit of this ■ Leadership ■ Process Management objective. ■ Customer Focus ■ Continuous Improvement Our approach to the business is based on: ■ Strategy Development ■ Learning Organization
■ ■ ■ Committed Team Values Te a m wor k Measurement
■ Total Quality Management Protecting People and the Environment ■ Protecting People and the Environment We are committed to protecting the safety and health of We will be guided by the Strategic Intents in our Corpo- people and the environment. We will conduct our busi- rate Strategic Plan and will measure progress with the ness in a socially responsible and ethical manner. Our Vision Metrics. goal is to be the industry leader in safety and health performance, and to be recognized worldwide for envi- Vision Metrics Public ronmental excellence. We will achieve this goal through: Delighted Favorability Customers Metric: ■ Safety ■ Conservation Public Favorability Index Metric: Customer ■ Compliance ■ Advocacy Committed Team Satisfaction Superior Financial Superior Stockholder Performance Return ■ Pollution Prevention ■ Property Transfer Metrics: Metrics: Metric: • Worldwide • Return on Capital Total Stockholder ■ Community Outreach ■ Transportation Employee Competitive Operating Employed Return Survey Results Advantage • Earnings Growth ■ ■ • Safety Product Stewardship Emergency Response Performance Metric: Operating Expense Per Barrel
6 CHEVRON CORPORATION 1995 ANNUAL REPORT New Prospects. New Perspectives.
In an era of rapid change, intense
competition and an increasingly global
economy, it’s not enough to conduct
business in the usual way. The best
opportunities may be in once-unlikely
places. New technology is bringing the
unreachable within grasp. In hundreds
of ways, Chevron is bringing innova-
tion, energy and new insights to its
work. Following are examples of how
the company is taking advantage of
new prospects and looking at its
business from new perspectives. CHEVRON CORPORATION 1995 ANNUAL REPORT New Prospects. New Perspectives.
YOU CAN GO HOME AGAIN were key selling points. In addition, NATURAL GAS BUSINESSES: the alliance is a natural. Boscan oil, a Looking at business from a different A NEW STRATEGIC POSITION premier asphaltic crude, is perfectly perspective – along with a healthy suited to Chevron’s asphalt refineries. A new entrepreneurial merger sig- dose of nostalgia – has led to a new nals a strategic shift in the com- alliance in Venezuela. In an agree- TECHNOLOGY: TAKING IT TO pany’s natural gas and natural gas ment with Maraven, Venezuela’s liquids businesses. The intended state oil company, Chevron will THE FOURTH DIMENSION merger of two company organiza- return after a 20-year absence to Indonesia’s giant Duri Field, a 1941 tions – Warren Petroleum Company further develop Boscan – an oil field discovery operated by 50 percent- and the Natural Gas Business Unit it discovered in 1946. Also, a supply owned Caltex Pacific Indonesia of Chevron U.S.A. Production Com- agreement will provide crude oil to (CPI), has yielded more than 1 bil- pany – with NGC Corporation will Chevron refineries, and a Chevron- lion barrels of oil and is still divulg- form North America’s largest pro- Maraven partnership will market ing subsurface secrets that will cessor and marketer of natural gas asphalt and other products in the ensure continued production. and natural gas liquids. western United States. Steam injection of Duri began The merged company, in which This marks the first time that in 1985, and the field now is the site Chevron will have about 28 percent Chevron will operate a field this of the world’s largest steamflood proj- ownership, is expected to have a large (1.6 billion barrels of estimated ect. With the help of four-dimen- strong competitive position in the recoverable reserves) on a service sional (4-D) seismic technology – growing deregulated energy services contract basis; the first time Chev- 3-D surveys reshot periodically, with sector, with the advantages of Chev- ron’s production, refining and mar- time being the fourth dimension – ron’s assets and experience in proc- keting businesses have joined CPI scientists now are getting a essing and marketing natural gas together to forge an alliance with clearer picture of how steam moves and natural gas liquids and NGC’s another country; and the first time through Duri’s underground forma- leading position in energy marketing, since Venezuela nationalized its oil tions. This enables the company including electric power. industry in 1975 that an interna- to better judge where and at what The new company will retain tional oil company has taken respon- rate to inject steam to increase oil the NGC name. It brings economies sibility for so much Venezuelan production. of scale, a greater operational flexi- production – 80,000 barrels a day, A leader in this new technology, bility to meet customers’ needs, and expected to grow to 115,000. considered a breakthrough in reser- opportunities to expand into new Chevron’s expertise in heavy voir management, Chevron also has North American and international oil and its environmental record 4-D surveys under way in the Gulf markets – factors expected to greatly of Mexico and Nigeria. benefit Chevron and NGC. 8 CHEVRON CORPORATION 1995 ANNUAL REPORT
THE PROCESS resulted in greater predictability and, DOWNSTREAM EXPANDS thus, fewer changes in later project MAKES THE PROJECT phases. As a result, the $500 million INTERNATIONAL FOCUS A formalized, disciplined method of project came in 14 percent under Chevron’s upstream businesses – managing projects recently has budget, on schedule and with an exploration and production – have taken root in Chevron. Originally exemplary safety record. long been noted for their interna- designed to oversee large capital tional scope. Now adding some projects, the Chevron Project Devel- CHEVRON READIES ITS muscle to global expansion are new opment & Execution Process DEEPEST GULF VENTURE opportunities in manufacturing and (CPDEP) has proved itself valuable marketing, the downstream side of Chevron is moving ahead on its first in many areas. With its structured the petroleum business. venture in a new frontier of U.S. way of making decisions and analyz- In particular, the petrochemi- petroleum production – the deep ing risk, CPDEP has improved how cals and lubricants businesses boast waters of the Gulf of Mexico. Engi- the company approaches such varied new-found strengths. neers are studying several designs tasks as negotiating mergers and Chevron’s Aromax and Eluxyl for a floating platform that will be acquisitions, developing training cur- technologies – used to make ben- placed in one of the area’s most ricula and conducting environmental zene and paraxylene, respectively – promising prospects, the Green assessments. form the cornerstone of a strategy to Canyon 205 Field 100 miles offshore CPDEP involves all stakehold- penetrate fast-growing markets, par- Louisiana. The structure, which will ers at the appropriate time and ticularly in the Pacific Rim. be installed in water a half-mile ensures that the right questions are An additives plant is planned deep, also will be a stepping stone asked and performance is consis- for Singapore, and an Aromax for Chevron’s aggressive deep-water tently measured against project plant is being developed for Saudi exploration program. objectives and against competitors. Arabia. Possible ventures in Thai- Exploration and production in This systematic measurement is land, Indonesia, China, Mexico and the gulf beyond the 600-foot depth just one of many tools that allow one Venezuela also are in the works. has intensified since it was learned project team to learn from the experi- Chevron also has consolidated that many of the sand formations ences of others. its U.S. and international lubricants there flow crude oil at a much higher At Chevron’s El Segundo, Calif., units to better meet the needs of rate than those closer to shore, which refinery, for example, CPDEP guided customers on a worldwide basis. reduces the development costs. the facility’s modernization to make Recognized as a low-cost producer new, reformulated gasoline. Doing and technology leader in lubricants, more of the engineering work early the company plans to build on the strength of the Chevron brand. 9 CHEVRON CORPORATION 1995 ANNUAL REPORT Strategies for the future
hevron’s plans and goals are based on eight key strategies. C These strategies underlie the company’s vision to be “Better than the Best.” They support Chevron’s mission to create superior value for its stockholders, customers and employees. While global business conditions shift and change, these strategies guide the company as it seeks new prospects and gains new perspectives.
EMPLOYEE OWNERSHIP pay when the company meets certain finan- OF STOCK – 1995 YEAR-END cial and operational targets. PERCENTAGE Employees. Employee survey spurs change. In 1996, Chevron is conducting its fourth worldwide BUILD A COMMITTED TEAM TO ACCOM- employee survey, asking opinions about PLISH THE CORPORATE MISSION work, commitment and company policies. Of the eight strategic intents, “building a The company will use the results to fine- Chevron Employees - 13% Institutions - 46% committed team” is most basic to Chevron’s tune its employee practices. For instance, Individuals - 41% success. When employees feel that they’re Chevron has responded to past surveys by Chevron employees own part of a team, when they want to excel for improving its programs for upward feed- more shares than any other the benefit of their colleagues and company, back, leadership training and filling open single investor group. they provide a real competitive advantage. jobs. Perhaps the most dramatic shift has A new document, The Chevron Way, been a new emphasis on “people skills.” articulates the company’s key values and Because employees have placed a premium sets a standard of excellence for employees. on supervisors’ ability to work well with people, such skills have become an impor- Company promotes commitment. Chev- tant promotion prerequisite, along with ron encourages commitment in many ways. technical and business savvy. By sharing decision-making with employees who have the greatest knowledge of a sub- ject, management reinforces teamwork and increases employees’ contributions to the business. International Chevron also rewards commitment by sharing its profits and ownership with Upstream.
employees. About 90 percent of employees CONTINUE EXPLORATION AND PRODUC-
are members of the company’s profit shar- TION GROWTH IN INTERNATIONAL AREAS ing and savings plans. Cumulatively, they own 84 million shares, which makes One of Chevron’s most promising areas of employees the largest owner of Chevron. financial and operational growth is inter- Two other programs, Chevron Success Shar- national upstream (exploration and prod- ing and a broad-based stock option plan, uction). In 1995, Chevron’s international reward employees with special incentive operations posted record earnings.
10 CHEVRON CORPORATION 1995 ANNUAL REPORT
HIGHLIGHTS – INTERNATIONAL UPSTREAM
Millions of dollars 1995 1994 1993 Earnings, Excluding Special Items $ 811 $ 519 $ 641 Capital and Exploratory Expenditures $1,835 $1,931 $1,599 Net Liquids Production (MBPD) 651 624 556 Net Natural Gas Production (MMCFPD) 565 546 469 Net Liquids Reserves (MMBbl) 3,155 2,967 2,906 Net Natural Gas Reserves (BCF) 4,538 4,391 3,927
MBPD = Thousands of barrels per day; MMCFPD = Millions of cubic feet per day; MMBbl = Millions of barrels; BCF = Billions of cubic feet
International production, reserves climb. Nigerian gas project moves ahead. Phase INTERNATIONAL Chevron’s proved reserves outside the I of the Escravos Gas Project is scheduled EXPLORATION &