Chevron Announces $39.8 Billion Capital and Exploratory Budget for 2014

Chevron Corporation (NYSE: CVX) today announced a $39.8 billion capital and exploratory investment program for 2014. Included in the 2014 program are $4.8 billion of planned expenditures by affiliates, which do not require cash outlays by Chevron.

The 2014 budget is approximately $2 billion lower than expected total investments for 2013. For the current year, total investments are estimated at $42 billion, including expenditures of approximately $4 billion for major resource acquisitions not included in the original budget.

“We expect 2013 will be a relative peak year for investments, as we completed several attractive resource acquisitions. We also anticipate 2014 will represent the peak year for spending on our Australian LNG projects as we move them closer to first production. Overall, we have an attractive portfolio of investment opportunities which we will continue to fund in a disciplined fashion to grow value and shareholder distributions,” said Chairman and CEO John Watson.

Approximately 90 percent of the 2014 spending program is budgeted for upstream crude oil and natural gas exploration and production projects. Another 8 percent is associated with the company’s downstream businesses that manufacture, transport and sell gasoline, diesel fuel and other refined products, fuel and lubricant additives, and petrochemicals.

Almost 75 percent of affiliate expenditures are associated with investments by Tengizchevroil LLP in Kazakhstan and Chevron Phillips Chemical Company LLC (CPChem) in the United States.

Upstream

Investment of $35.8 billion is planned for exploration and production activities. Notable major capital investments include developments in Australia, Nigeria, the U.S. deepwater Gulf of Mexico, the U.S. Permian Basin, Kazakhstan, Angola, and the Republic of the Congo.

Planned capital spending is also directed toward improving crude oil and natural gas recovery and reducing natural field declines from existing producing assets throughout the world. About 30 percent of the Upstream capital program is allocated to highly profitable development wells and other projects associated with current producing assets. The 2014 base program includes an increase in activity across several producing regions of North America as well as in Thailand and Indonesia.

In Australia, the Gorgon project has been under construction for four years and is almost 75 percent complete. The current estimate for the cost of the foundation project is US$54 billion (AU$55 billion), with plant startup and first gas planned for mid-2015.

“Gorgon project economics are attractive,” said Vice Chairman George Kirkland. “We continue to make steady progress against key project milestones and are applying lessons learned to our Wheatstone development which is almost 25 percent complete. Approximately 75 percent of our combined LNG offtake from the two projects is committed under firm, long-term sales and purchase agreements. These LNG developments are two of our most important future legacy assets, representing approximately 400,000 barrels a day of net production at full capacity. They will be substantial contributors to our cash flow for decades to come.”

Kirkland added: “Our focus is on developing resource projects that grow shareholder value. For instance, we are steadily increasing activity levels to develop shale and other tight resources in Canada’s Duvernay, the Vaca Muerta in Argentina and the Permian Basin of the United States. We are very pleased with our global unconventional acreage position.”

In the Gulf of Mexico projects under development include Jack/St. Malo, Big Foot, and Tubular Bells. The Jack/St. Malo hull has been moored at the offshore location and is on schedule for a 2014 startup. The Big Foot project is forecasting a third quarter 2014 tow to location and a second quarter 2015 start-up.

Upstream spending in 2014 for major capital projects also includes:

• Kazakhstan/Russia – advancement of the Tengiz Future Growth and Wellhead Pressure Management Projects (Kazakhstan) and the Caspian Pipeline expansion (Kazakhstan, Russia)
• Nigeria – further development of the Usan and Agbami deepwater fields
• Canada – Hebron offshore development and advancement of Kitimat LNG
• Angola, Republic of the Congo – development of Mafumeira Sul (Angola) and Moho Nord (Republic of the Congo)
• Argentina – advancement of the YPF arrangement for the development of the Vaca Muerta shale
• United Kingdom – advancement of the Clair Ridge and Alder projects

Global exploration funding is expected to be $3.2 billion in 2014. This planned spending includes initial appraisal of new acreage acquired over the past two years, including Australia, the Kurdistan region of Iraq and Morocco. The program also supports continued exploration and appraisal activity in Western Australia, the Gulf of Mexico, West Africa, and in several shale gas regions around the world.

Downstream

Capital spending of $3.1 billion in 2014 is budgeted for downstream operations. Expenditures in refining are geared toward enhancing reliability and energy efficiency, feedstock flexibility and production of cleaner transportation fuels. Planned capital spending is also directed toward expanding Oronite additives production in Singapore.

Additional investments are expected to be funded by Chevron affiliates, including chemicals projects managed by the company’s 50 percent-owned CPChem. CPChem will be investing in the construction of a 1.5 million metric ton per year ethane cracker as well as two new polyethylene facilities on the U.S. Gulf Coast, each with an annual capacity of 500,000 metric tonnes. This project takes advantage of existing infrastructure and advantaged feedstocks, and startup is planned for 2017.

All Other

Expenditures of approximately $1 billion in 2014 are budgeted for technology, power generation and other corporate activities.

Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company is involved in virtually every facet of the energy industry. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, California. More information about Chevron is available at www.chevron.com.

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This press release contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets,” “outlook” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices; changing refining, marketing and chemicals margins; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes required by existing or future environmental statutes, regulations and litigation; the potential liability resulting from other pending or future litigation; the company’s future acquisition or disposition of assets and gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on pages 28 through 30 of the company’s 2012 Annual Report on Form 10-K. In addition, such results could be affected by general domestic and international economic and political conditions. Other unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements.