Human energy 2005 Supplement to the Annual report table of Contents 2005 AT A Glance uPstream downstream Chemicals 1 Financial Highlights 11 Highlights 48 Highlights 60 chevron Phillips chemical 1 Accomplishments 14 united States 50 refining Company LLc 1 corporate Strategies 18 Africa 51 Marketing 60 chevron oronite company 23 Asia-Pacific 52 Lubricants 6 1 Manufacturing and research and Financial InformatioN 30 Indonesia 52 Supply & Trading Development Locations 2 Financial Summary 32 other International 53 Transportation - Pipeline 3 consolidated Statement 37 Global Gas and Shipping other businesseS of Income 38 Major development Projects 63 Technology downstream operating data 4 consolidated Statement of 64 Power Generation upstream operating data 54 refining capacities and Comprehensive Income, Income 64 chevron energy Solutions 39 Net Wells completed and Net Crude oil Inputs From continuing operations 64 dynegy Productive Wells 55 refining capacity at by Major operating Area and 65 coal and other Minerals 40 Proved reserves Year-end 2005 Special Items 41 Net oil-equivalent Production 56 refinery utilization 5 consolidated balance Sheet reFereNce 42 Net Liquids Production and Production 6 consolidated Statement of 66 Glossary of energy and 43 Net Natural Gas Production 57 Product Sales and Marketing Cash Flows Financial Terms 44 Gross Production Retail outlets 7 capital and exploratory 67 cautionary Statement 45 realizations, Natural Gas and 58 Inventories and Vessels Expenditures 68 Major organizations Natural Gas Liquids Sales, 8 Properties, Plant and equipment and exploration and 9 Miscellaneous data Development costs 46 Acreage human energy At chevron, we are relentlessly focused on producing safe, reliable energy now and for the future. How are we doing it? by applying the energy we have in most abundance: human energy - our own and that of our partners around the world. “what we’re made of” Hurricanes Katrina and rita interrupted crude oil and deliver critically needed emergency fuel to the region. natural gas production in the u.S. Gulf of Mexico and “There wasn’t a barrier we couldn’t overcome,” says temporarily shut down one of our largest refineries. roland Kell, general manager of the Pascagoula, chevron employees throughout the region responded Mississippi, refinery, which was damaged by the to the storms with exceptional courage, compassion storms. “We truly found out what we’re made of.” and commitment. They rescued neighbors, located colleagues and provided urgently needed food, water, On the coVer: roland Kell, general manager, Pascagoula refinery. clothing and medical aid to local communities. At On the bAcK coVer: The employee team who led relief efforts the same time, they launched a massive, around- and the safe startup of the refinery: (left to right) Val Vialpando, darin Matthews, Amy brandenstein, Amy Jones, brian beech, the-clock effort to restore production, refining, Marisa Jackson, bob Phillips and christine Sims. transportation and marketing operations and to Inside Front coVer: Photo courtesy of NASA. 2005 at a glance financial highlights oUR VISION: TO Be THE GLOBAL ENERgY > sales and other operating revenues – $193.6 billion > net income – $14.1 billion; $6.54 per share – diluted COMPANY MOST aDMIReD FOR ITS PEOPLE, > Return on capital employed – 21.9% PARTNERSHIP AND PERFORMANCE. > Return on average stockholders’ equity – 26.1% > cash dividends – $1.75 per share > total stockholder return – 11.3% accomplishments coRpoRate > Record earnings – Achieved the highest annual earnings in the company’s history, $14.1 billion. > Unocal acquisition – Completed the $17.3 billion acquisition of Unocal Corporation, an independent oil and gas exploration and production company. Unocal’s upstream portfolio of assets bolstered Chevron’s already-strong position in the Asia- Pacific, Gulf of Mexico and Caspian regions. > common stock – Increased the quarterly stock dividend by 12.5 percent – the 18th consecutive year of higher annual divi- dend payouts. > stock repurchase program – Completed the $5 billion stock buyback program that began in April 2004. In December, the company authorized the acquisition of up to $5 billion of additional shares over a period of up to three years. > capital and exploratory expenditures – Reinvested $11.1 billion in the company’s businesses, including $1.7 billion (Chevron’s share) of spending by affiliates. In December, the company announced a 34 percent increase in spending for 2006, to $14.8 billion, with the focus again on exploration and production activities worldwide. > Debt ratio – Reduced the ratio of debt to debt-plus-equity from 20 percent to 17 percent. upstReam – exploRation anD pRoduction > exploration – Achieved a drilling success rate of 58 percent with 31 successful exploratory wells. Discoveries included Manatee in Trinidad and Tobago, Macuira in Venezuela and Big Foot and Knotty Head in the U.S. Gulf of Mexico. > production – Produced more than 2.5 million barrels of oil-equivalent per day, with approximately 70 percent of the volume outside the United States in more than 20 different countries. > oil and gas reserves – Added 1.5 billion barrels of oil-equivalent reserves as a result of the Unocal acquisition. Total reserves added during the year equated to 175 percent of production for the period. > major projects – Continued progress on the company’s “Big 5” projects to deliver future production growth. First oil was achieved in early 2006 at the deepwater Belize Field, offshore Angola. Production startup is scheduled for 2007 at the Tengizchevroil Sour Gas Injection/Second Generation Plant, in 2008 for the discoveries at Agbami in Nigeria and Tahiti in the Gulf of Mexico, and in 2010 at the Gorgon liquefied natural gas (LNG) project in Australia. > U.s. LNG initiatives – Secured additional LNG storage and pipeline capacity in Sabine Pass in Louisiana and announced plans to own, construct and operate a natural gas import terminal at Casotte Landing, adjacent to the company’s refinery in Pascagoula, Mississippi. downstReam – Refining, maRketing anD tRanspoRtation > Refinery upgrades – Commenced construction on the expansion of the fluid catalytic cracking unit at the company’s refinery in Pascagoula, Mississippi. This upgrade will enable increased production of gasoline and other light products. The company’s 50 percent-owned GS Caltex affiliate in South Korea also approved a $1.5 billion upgrade to the Yeosu Refinery, the world’s fourth largest. Startup of these two upgrade projects is expected in 2006 and 2007, respectively. chemicals > manufacturing facility expansion – Secured approvals and completed the financial closing of the 50 percent-owned Chevron Phillips Chemical Company’s (CPChem) Q-Chem II joint-venture project in Qatar. The project, 49 percent-owned by CPChem, will add significant manufacturing capacity for polyethylene and normal alpha olefins. Startup is expected in late 2008. coRpoRate stRategies > financial-return objective – Create value and achieve sustained financial returns that will enable Chevron to outperform its competitors. > strategies for major businesses – Upstream – grow profitably in core areas, build new legacy positions, and commercialize the company’s natural gas resource base by targeting North American and Asian markets. Downstream – improve returns by focusing on areas of market and supply strength. > enabling strategies companywide – Invest in people to achieve the company’s strategies. Leverage technology to deliver superior performance and growth. Build organizational capability to deliver world-class performance in operational excellence, cost reduction, capital stewardship and profitable growth. chevron corporation 2005 supplement to the annual report Financial inFormation financial sUmmary 8EEL8C:8J?;@M@;<E;J ReView of opeRations 2001–2005 ;fccXijg\ij_Xi\ FINANCIAL sUmmary )%'' (%., Millions of Dollars, except per-share amounts 20051 2004 2003 2002 200 net income $ 14,099 $ 13,328 $ 7,230 $ 1,132 $ 3,288 (%,' sales and other operating revenues2 $ 193,641 $ 150,865 $ 119,575 $ 98,340 $ 103,951 cash Dividends – common stock 3,778 3,236 3,033 2,965 2,733 capital and exploratory expenditures 11,063 8,315 7,363 9,255 12,028 (%'' cash provided by operating activities 20,105 14,690 12,315 9,943 11,475 at December 3: Working capital 9,325 9,708 3,315 (2,100) (2,327) total assets 125,833 93,208 81,470 77,359 77,572 '%,' total Debt and capital lease obligations 12,870 11,272 12,597 16,269 17,418 stockholders’ equity 62,676 45,230 36,295 31,604 33,958 common shares outstanding at December 3 (millions)3,4 2,218.5 2,093.0 2,124.1 2,122.1 2,120.2 '%'' per-share Data3 '( ') '* '+ ', Net income – Basic $ 6.58 $ 6.30 $ 3.48 $ 0.53 $ 1.55 – Diluted 6.54 6.28 3.48 0.53 1.55 Cash Dividends 1.75 1.53 1.43 1.40 1.33 Stockholders’ equity at December 3 28.25 21.61 17.09 14.89 16.02 I<KLIEFE:8G@K8C Market price at December 3 56.77 52.51 43.19 33.24 44.81 <DGCFP<; – high 65.49 56.07 43.49 45.80 49.25 G\iZ\ek – low 54.80 41.99 30.65 32.71 39.22 4 *' Financial ratios Current ratio 1.4 1.5 1.2 0.9 0.9 Interest coverage 47.5 47.6 24.3 7.6 9.6 )+ Total Debt to total Debt-plus-equity 17.0% 19.9% 25.8% 34.0 % 33.9% )(%0 Return on average stockholders’ equity 26.1% 32.7% 21.3% 3.5 % 9.8% Return on capital employed 21.9% 25.8% 15.7% 3.2 % 7.8% (/ Return on average total assets 12.9% 15.3% 9.1% 1.5 % 4.2% Cash Dividends/net income (payout ratio) 26.8% 24.3% 42.0% 261.9 % 83.3% Cash Dividends/cash from operations 18.8% 22.0% 24.6% 29.8 % 23.9% () Total stockholder return 11.3% 25.5% 35.2% (23.1)% 9.2% includes effects of former-unocal operations from august , 2005.