CHEVRON CORPORATION 2009 ANNUAL REPORT ANNUAL 2009 CORPORATION CHEVRON 2009 Annual Report Chevron Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 USA Cert no. SGS-COC-005612 www.chevron.com Recycled Recyclable 912-0953 010290 BCxFC.cg.JPG.indd 1 3/29/10 10:26 AM Contents 1 Letter to Stockholders 8 Glossary of Energy and Financial Terms 85 Chevron History 4 Chevron Financial Highlights 9 Financial Review 86 Board of Directors 5 Chevron Operating Highlights 69 Five-Year Financial Summary 87 Corporate Officers 6 Chevron at a Glance 70 Five-Year Operating Summary 88 Stockholder and Investor Information The Corporate Responsibility Report notice is available in May on the company’s As used in this report, the term In 2009, Chevron celebrated its 130th anniversary. As we look Web site, Chevron.com, or a copy may “Chevron” and such terms as “the REPORT ANNUAL 2009 CORPORATION CHEVRON be requested by writing to: company,” “the corporation,” “our,” to the future, we do so with enthusiasm and optimism. We have Policy, Government and Public Affairs “we” and “us” may refer to one or Chevron Corporation more of its consolidated subsidi- 2009 Annual Report 6001 Bollinger Canyon Road, A2177 aries or to all of them taken as a a vast base of resources, a strong inventory of growth projects San Ramon, CA 94583-2324 whole. All of these terms are used for convenience only and are not and a reputation for the innovative application of technology. Details of the company’s political intended as a precise description of contributions for 2009 are avail- any of the separate companies, each Our vision is to be the energy company most admired for its able on the company’s Web site, of which manages its own affairs. Chevron.com, or by writing to: Chevron Corporation 6001 Bollinger Canyon Road Policy, Government and Public Affairs Corporate HeadquartersSan Ramon, CA 94583-2324 USA Cert no. SGS-COC-005612 people, partnership and performance. It is an aspiration that www.chevron.com Recycled Recyclable Chevron Corporation 6001 Bollinger Canyon Road 912-0953 6001 Bollinger Canyon Road, A2114 San Ramon, CA 94583-2324 2009 Annual Report guides our activities the world over. We are proud to be a part San Ramon, CA 94583-2324 925 842 1000 of the energy industry. We know our work fuels economic Information about charitable contributions is available in the development and improves the world’s quality of life. second half of the year on Chevron’s Web site, Chevron.com. 2009 Supplement to the Annual Report For additional information about the company and the energy This year, we have streamlined our printed Annual Report and industry, visit Chevron’s Web site, Chevron.com. It includes articles, developed an online version that contains additional information news releases, speeches, quarterly earnings information, the Proxy about our company, as well as videos you can watch to learn Statement and the complete text of this Annual Report. more about our projects. We invite you to visit our Web site 2009 Supplement to the Annual Report at: Chevron.com/AnnualReport2009. On the Cover: The Discoverer Clear Leader, an ultra-deepwater drillship built to Chevron’s specifications, has set sail and is now operating in This Annual Report contains forward-looking statements — identified by words such as “expects,” “intends,” “projects,” the deepwater U.S. Gulf of Mexico. The state-of-the-art vessel offers the most advanced capabilities in the offshore drilling industry. It is capable etc. — that reflect management’s current estimates and beliefs, but are not guarantees of future results. Please see “Cautionary Statement Relevant to Forward-Looking Information for the Purpose of ‘Safe Harbor’ Provisions of the The Value of operating in water depths of 12,000 feet (3,650 meters) and to a total depth of 40,000 feet (12,200 meters). TheDiscoverer Clear Leader Private Securities Litigation Reform Act of 1995” on Page 9 for a discussion of some of the factors that could cause of Partnership will help Chevron expand its search for crude oil and natural gas in the deepwater Gulf, where it is one of the top leaseholders and producers. actual results to differ materially. To learn more, visit: Chevron.com/AnnualReport2009. PHOTOGRAPHY Cover: Courtesy of Transocean — photographer: Ken Childress; Inside Front Cover: Robin Davies; 2009 Corporate Responsibility Report Pages 1, 3: Eric Myer; Page 6: (left) Myriad Media Ltd., (right) Tina Toriello. This Page: The sun sets over Barrow Island, offshore Western Australia. The island will be the site of a domestic natural gas plant and liquefied PROduCed bY Policy, Government and Public Affairs and Comptroller’s Departments, Chevron Corporation desIGn Design One — San Francisco, California natural gas (LNG) facility to support the Gorgon Project, a vast natural gas development. Gorgon is expected to be a major contributor to Chevron’s PRInTInG ColorGraphics — Los Angeles, California 2009 Corporate Responsibility Report growth over the next four decades. A groundbreaking ceremony took place in 2009, with major construction planned in the second half of 2010. First LNG deliveries are expected in 2014. To learn more, visit: Chevron.com/AnnualReport2009. 010291 IFCxIBC.cg.JPG.indd 1 3/29/10 10:32 AM To Our Stockholders Since Chevron was founded more than 130 years ago, crude oil, natural gas and other sources of energy have produced an unprecedented rise in living standards for billions of people. Over that time, our company has built an enduring legacy of industry leadership and value for investors while producing the energy that makes our quality of life possible. As your Chairman, I’m committed to building on that legacy. It’s an honor to lead Chevron into a future where energy will continue to be a foundation for global economic growth. > Chevron Corporation 2009 Annual Report 1 010292 Narrative.cg_R6.indd 1 3/28/10 8:56 AM Chevron’s core strengths — A company’s strategies — and the abilities, values and focus of its people — are tested in tough times. In 2009, the people of Chevron delivered strong results starting with the talent, in the face of a global economic downturn and difficult industry conditions. dedication and values of We brought major capital projects online or to capacity and achieved industry- leading production growth. We made major new discoveries of crude oil our employees worldwide — and natural gas and continued to grow our natural gas business. Employees aggressively managed costs, resulting in about a 15 percent decrease in position us to achieve operating expenses over 2008. And we accomplished all this while recording growth while helping meet fewer workplace injuries than ever before. long-term global demand Our financial performance for 2009 contributed to a strong balance sheet and returns for investors. Total stockholder return — a critical measure of our for energy. … Our world performance — was No. 1 among our top competitors over the past five years. We increased our annual dividend in 2009 for the 22nd consecutive year. Net grows more complex every income in 2009 was $10.5 billion on sales and other operating revenues of $167 billion, reflecting lower prices from 2008 for crude oil and natural gas day. We face increased and lower sales margins and prices for refined products. Return on capital employed for the year was 10.6 percent. challenges — geopolitical, We advanced our upstream growth strategy by bringing world-class deepwater environmental, regulatory projects online, including Tahiti in the U.S. Gulf of Mexico, Tombua-Landana offshore Angola and Frade offshore Brazil. Our Tengiz expansion in Kazakhstan and technical. But Chevron and Agbami ramp-ups in Nigeria added significant production volumes. We also achieved impressive results managing our producing crude oil and natural gas employees have risen to assets to limit natural field declines. challenges for more than In 2009, we made strong progress toward our goal to build a high-impact, global 130 years — with dedication, natural gas business. Construction of the Escravos gas-to-liquids and Angola liquefied natural gas (LNG) plants continued. Offshore Western Australia, we ingenuity and hard work. gave the go-ahead for the massive Gorgon LNG project and achieved important commercial milestones for the Wheatstone LNG development. We added 1.1 billion barrels of net oil-equivalent proved reserves, replacing 112 percent of net oil-equivalent production in 2009. And we continue to build for our future: Our exploration expertise and applied technology resulted in a drilling success rate of 57 percent, one of the best in the industry. The economic environment was challenging for refining and marketing in 2009. To manage our refining and marketing businesses in this environment, we are aggressively controlling costs. Our downstream and chemical businesses continued their strong focus on reliability and safety. Refineries continued to run at industry-leading levels of utilization. Restructuring in our lubricants and Oronite fuel additives businesses generated improved earnings. In 2009, we progressed our renewable energy strategy, which is focused on enhancing our geothermal energy business — the largest in the world — while building our energy efficiency business and developing nonfood biofuels. 2 Chevron Corporation 2009 Annual Report 010293 Narrative.cg_R6.indd 2 3/28/10 8:56 AM Chevron’s performance and growth are intrinsically linked with the communities where we operate. Our projects generate thousands of jobs and support for businesses big and small around the world. Our community engagement programs are strategic investments in the future of our communities, focusing on health, education and sustainable socioeconomic development. Chevron enters 2010 from a position of financial and operational strength, with solid potential for growth. Our $21.6 billion capital and exploratory budget for 2010 reflects our industry-leading queue of major capital projects Dave O’Reilly’s Legacy that support future growth.