Chevron enters the decade with an upstream portfolio of major capital projects that uniquely positions the company for future growth, executives said today at a meeting with financial analysts in New York. In the downstream business, executives highlighted plans to improve returns by aggressively lowering costs, exiting markets and streamlining the organization.

"2009 was an outstanding year, capping a decade of performance improvements achieved through consistency in strategy and execution. We have momentum, an advantaged portfolio and proven capabilities that will continue to deliver value to our stockholders," said John Watson, Chevron's chairman and CEO. "Chevron has held a long-term view favoring aggressive upstream investment, and the company is poised for another decade of upstream growth. We expect a substantial production increase mid-decade as our portfolio shifts toward natural gas and Asia."

George Kirkland, vice chairman and executive vice president, Global Upstream and Gas, highlighted the strong 2009 performance of the upstream and natural gas business. "Oil and gas production increased 7 percent for the year due to the successful start up and ramp up of major capital projects. This placed us first among competitors. Chevron also had another outstanding year in exploration, continuing its industry-leading performance with a 57 percent success rate in exploratory drilling. We added 1.1 billion barrels of net proved reserves, replacing 112 percent of our production. Over the past 10 years, our reserve replacement exceeds 100 percent."

Kirkland also discussed Chevron's extensive and diverse project queue and future prospects. "Our execution success demonstrates our capability to deliver large-scale, complex projects. This gives us confidence to deliver the next generation of projects, in particular the Gorgon and Wheatstone LNG developments in Australia." He also noted that over the next three years 25 projects with net Chevron investment of over $1 billion are expected to achieve start up or final investment decision.

Mike Wirth, executive vice president, Global Downstream, highlighted Chevron's strong refinery reliability performance, cost reduction efforts and successful market exits achieved during 2009.

Commenting on plans to deal with a challenging environment, Wirth stated, "Downstream market conditions are likely to be difficult for the next several years. We intend to further concentrate our downstream portfolio in North America and Asia-Pacific. These are markets in which we have our greatest competitive strength. We are also rapidly and aggressively lowering costs, reducing capital spending, improving efficiency and simplifying our organization."

Wirth outlined plans to improve returns and further streamline Chevron's downstream portfolio and organization. The activities include soliciting bids for certain operations in Europe (including the Pembroke refinery), the Caribbean and select Central America markets; reviewing operations in Hawaii and Africa, outside of South Africa; and further reducing the downstream workforce. First quarter 2010 charges for severance are currently estimated to be in the range of $150 million to $200 million on an after-tax basis. Staff reductions will occur through 2011 with about 2,000 positions eliminated this year.

Pat Yarrington, vice president and chief financial officer, stressed that Chevron's financial capacity and discipline continue to be a competitive advantage. "We plan to sustain and grow our dividend, fund our deep queue of capital projects, and maintain our financial strength and flexibility. We also expect our cost reduction momentum to continue. In 2009, we lowered our operating expenses by $3.9 billion, or 15 percent."

John McDonald, vice president and chief technology officer, explained how the company's technology strategy underpins business success. "We develop, access and apply technologies critical to our business. Our application of technology is a competitive advantage resulting in increased resource recovery and capture, lower costs and improved yields."

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