Chevron boosts capital and exploratory budget by 35% in 2006

Chevron Corp. is planning a $14.8 billion capital and exploratory spending program for 2006, a 35% increase compared with estimated expenditures of approximately $11 billion in 2005.

Offshore staff

(International) - Chevron Corp. is planning a $14.8 billion capital and exploratory spending program for 2006, a 35% increase compared with estimated expenditures of approximately $11 billion in 2005.

"The size of our overall program reflects a strong queue of growth projects, many of which are entering their construction phase, and demonstrates our commitment to bring new energy supplies to market," says chairman and CEO Dave O'Reilly.

For 2006, the $14.8 billion budget includes $4.9 billion for investment in the United States, a $1.1 billion increase over 2005 estimated spending.

"Our overall investment program continues to advance our strategies to build legacy positions in key producing regions and commercialize our significant natural gas resource base. We also have planned investments to expand gasoline production capacity, produce cleaner fuels, and develop transportation infrastructure to bring fuels to market," O'Reilly says.

Of the planned increase over 2005 spending, approximately $3 billion is targeted to the company's upstream operations.

The higher investment reflects three primary impacts: several key growth projects entering the more capital-intensive construction phase; full-year spending to develop the growth projects of Unocal, which was acquired in August 2005; and increased industry-wide costs for materials and services.

Investments to commercialize the company's natural gas resources are estimated at $1 billion, including LNG facilities, gas-to-liquids (GTL) facilities, and ensuring natural gas regasification and import capability for the US markets.

Approximately 75% of total capital and exploratory spending, or $11.3 billion, is targeted for upstream investment in E&P and natural gas-related projects, including $3.3 billion in the US.

George Kirkland, Chevron's executive VP of Upstream and Gas, says, "Our upstream and gas investment opportunities will help the company deliver more oil and gas resources to world markets. In the past year, we commenced construction of two important US energy projects, Tahiti and Blind Faith, in the Gulf of Mexico."

The upstream program builds on the company's exploration successes that have delivered significant resources for growth and includes continued investment in high-impact opportunities in the deepwater GoM and western Africa, as well as in prospective areas outside those regions.

In addition to Tahiti and Blind Faith, major development spending in 2006 includes longer-term projects in the following areas:

•Angola – investments in LNG facilities, as well as ongoing development programs for near-shore producing fields and deepwater developments at Benguela Belize-Lobito Tomboco.

•Nigeria – ongoing investments in deepwater developments at Agbami and near-shore developments, and LNG facilities.

•Kazakhstan – continued development of the expansion project at Tengiz.

•Australia – further development of the Greater Gorgon Area natural gas resource offshore Western Australia.

Chevron 2006 planned capital & exploratory expenditure:

-- US upstream, $3.3 billion
-- International upstream, $8 billion
-- US downstream, $1 billion
-- International downstream, $1.8 billion
-- Chemicals and other, $0.7 billion
-- Total (including Chevron's share of expenditures by affiliated companies), $14.8 billion
-- Cash expenditures by Chevron consolidated companies, $12.8 billion

12/08/05

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