2009 Annual Report

1 4 5 6

Contents Letter to Stockholders Chevron Financial Highlights Chevron Operating Highlights Chevron at a Glance

8 9 69 70

Glossary of Energy and Financial Terms Financial Review Five-Year Financial Summary Five-Year Operating Summary

85 86 87 88

Chevron History Board of Directors Corporate Officers Stockholder and Investor Information

In 2009, Chevron celebrated its 130th anniversary. As we look to the future, we do so with enthusiasm and optimism. We have a vast base of resources, a strong inventory of growth projects and a reputation for the innovative application of technology. Our vision is to be the energy company most admired for its people, partnership and performance. It is an aspiration that guides our activities the world over. We are proud to be a part of the energy industry. We know our work fuels economic development and improves the world’s quality of life. This year, we have streamlined our printed Annual Report and developed an online version that contains additional information about our company, as well as videos you can watch to learn more about our projects. We invite you to visit our Web site 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 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 of operating in water depths of 12,000 feet (3,650 meters) and to a total depth of 40,000 feet (12,200 meters). The Discoverer Clear Leader 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. To learn more, visit: Chevron.com/AnnualReport2009. 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 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 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.

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

dedication and values of our employees worldwide — position us to achieve growth while helping meet long-term global demand for energy. And we continue to build for our future: Our exploration expertise and applied technology resulted in a drilling success rate of 57 percent. We brought major capital projects online or to capacity and achieved industryleading production growth.S. values and focus of its people — are tested in tough times. we made strong progress toward our goal to build a high-impact.6 percent. In 2009. Tombua-Landana offshore Angola and Frade offshore Brazil.Chevron’s core strengths — starting with the talent. We also achieved impressive results managing our producing crude oil and natural gas assets to limit natural field declines. Employees aggressively managed costs. Our downstream and chemical businesses continued their strong focus on reliability and safety. one of the best in the industry. we gave the go-ahead for the massive Gorgon LNG project and achieved important commercial milestones for the Wheatstone LNG development. We made major new discoveries of crude oil and natural gas and continued to grow our natural gas business. including Tahiti in the U. We added 1. ingenuity and hard work. resulting in about a 15 percent decrease in operating expenses over 2008. global natural gas business. Net income in 2009 was $10. reflecting lower prices from 2008 for crude oil and natural gas and lower sales margins and prices for refined products. And we accomplished all this while recording fewer workplace injuries than ever before. environmental. we progressed our renewable energy strategy. Our Tengiz expansion in Kazakhstan and Agbami ramp-ups in Nigeria added significant production volumes. Return on capital employed for the year was 10. … Our world grows more complex every day.5 billion on sales and other operating revenues of $167 billion. In 2009. Total stockholder return — a critical measure of our performance — was No. To manage our refining and marketing businesses in this environment. 1 among our top competitors over the past five years. replacing 112 percent of net oil-equivalent production in 2009. we are aggressively controlling costs. Gulf of Mexico. the people of Chevron delivered strong results in the face of a global economic downturn and difficult industry conditions. Our financial performance for 2009 contributed to a strong balance sheet and returns for investors. Refineries continued to run at industry-leading levels of utilization. We face increased challenges — geopolitical. Construction of the Escravos gas-to-liquids and Angola liquefied natural gas (LNG) plants continued. 2 Chevron Corporation 2009 Annual Report . But Chevron employees have risen to challenges for more than 130 years — with dedication. A company’s strategies — and the abilities. The economic environment was challenging for refining and marketing in 2009. regulatory and technical. Offshore Western Australia. We advanced our upstream growth strategy by bringing world-class deepwater projects online.1 billion barrels of net oil-equivalent proved reserves. which is focused on enhancing our geothermal energy business — the largest in the world — while building our energy efficiency business and developing nonfood biofuels. In 2009. Restructuring in our lubricants and Oronite fuel additives businesses generated improved earnings. We increased our annual dividend in 2009 for the 22nd consecutive year.

Our $21. We build strong partnerships to produce energy and support communities. Watson Chairman of the Board and Chief Executive Officer February 25. focusing on health. with the past 10 years as Chairman and Chief Executive Officer. education and sustainable socioeconomic development. and leaves our company with a legacy of achievement and a strong foundation for future growth. dedication and values of our employees worldwide — position us to achieve growth while helping meet long-term global demand for energy. with solid potential for growth. Our projects generate thousands of jobs and support for businesses big and small around the world. John S. We are deeply committed to safe and efficient operations and to conducting our business in an environmentally sound manner. and on aligning our downstream businesses with the strongest market opportunities. strong market positions and an industry-leading queue of projects and opportunities. The values of The Chevron Way — getting results the right way — guide us every day. 2009. regulatory and technical. Our portfolio of major capital projects grew larger than at any time in our history. Our world grows more complex every day. Chevron’s market capitalization increased by approximately $100 billion. Dave retired December 31. He proved that an energy company can partner with communities. and we set new records in safety and reliability. Under his leadership. But Chevron employees have risen to challenges for more than 130 years — with dedication. Much of our 2010 spending will focus on large multiyear projects aligned with our upstream growth strategies. We have world-class assets. on improving our operating efficiency and reliability. We have robust long-term strategies and a proven ability to deliver results. Chevron enters 2010 from a position of financial and operational strength. Chevron’s future holds great promise.6 billion capital and exploratory budget for 2010 reflects our industry-leading queue of major capital projects that support future growth. And I’m confident we will continue to do so. We face increased challenges — geopolitical. his contributions go well beyond delivering excellent operating and financial results. environmental. Thank you for investing in Chevron. We have unassailable ethics and a culture that attracts and develops the best talent. governments and the private sector to help economies grow and people improve their quality of life. Chevron’s core strengths — starting with the talent. Chevron’s vision remains constant: to be the global energy company most admired for its people. partnership and performance.Chevron’s performance and growth are intrinsically linked with the communities where we operate. ingenuity and hard work. Dave led Chevron through two notable mergers – with Texaco and Unocal – both accomplished with near seamless integration and extraordinary execution. We operate with the highest standards of integrity and respect for human rights. oil-equivalent production climbed about 65 percent and proved reserves increased by 80 percent. However. Our community engagement programs are strategic investments in the future of our communities. 2010 Chevron Corporation 2009 Annual Report 3 . Dave O’Reilly’s Legacy Dave O’Reilly’s career spanned 41 years with Chevron.

6)% 0. Lower earnings reduced Chevron’s return on capital employed to 10.2 % (55.0 05 06 07 08 09 0.1 percent in 2009.99 24 15.648 $ 29.1 % 38.40 80 $76.66 20.990.0)% N/A (2.97 9.3% 11.1 % 5.99 10.5 1.1 % 18.931 $ 264.901 $ 469 $ 86.20 40 12 10.0 1.0 Annual Cash Dividends Dollars per share 3.11 76.632 .1 % Net Income Attributable to Chevron Corporation Billions of dollars 25.165 $ 8.6% (56.00 05 06 07 08 09 0 05 06 07 08 09 0 05 06 07 08 09 The decrease in 2009 was due mainly to the decline in earnings for upstream.24 2.6% $ 23.0 $10.1)% 5.514 $ 647 $ 91.0 % 6.3% 29.064 1 $ $ $ $ 11. 4 Chevron Corporation 2009 Annual Report .621 $ 10.0 2. except per-share amounts 2009 2008 % Change Net income attributable to Chevron Corporation Sales and other operating revenues Noncontrolling interests income Interest expense (after tax) Capital and exploratory expenditures* Total assets at year-end Total debt at year-end Noncontrolling interests Chevron Corporation stockholders’ equity at year-end Cash provided by operating activities Common shares outstanding at year-end (Thousands) Per-share data Net income attributable to Chevron Corporation – diluted Cash dividends Chevron Corporation stockholders’ equity Common stock price at year-end Total debt to total debt-plus-equity ratio Return on stockholders’ equity Return on capital employed (ROCE) *Includes equity in affiliates $ 10.7% 10.958 $ 100 $ — $ 22. The company’s annual dividend increased for the 22nd consecutive year. The company’s stock price rose 4. as a result of lower prices for crude oil and natural gas.2)% (36.66 46.Chevron Financial Highlights Millions of dollars.1 % (34.2% 26.60 20 6 0.373 .6 5.554 1 $ $ $ $ 5.00 Chevron Year-End Common Stock Price Dollars per share 100 Return on Capital Employed Percent 30 $2.4)% 2.54 73.9 % 4.67 2.993.483 $ 167.53 43.237 $ 164.80 60 18 10.0 0.402 $ 80 $ 22 $ 22.914 $ 19.8)% (20.775 $ 161.6 percent.

None are included for 2008.c.47 143.858 3. 2004.530 1.610 2. The comparison covers a five-year period beginning December 31.153 3.704 1.022 4.291 61.9 % 1.99 2008 158.5) % (2.012 59.896 8. 2009.37 *Peer Group: BP p.363 22.7) % Includes equity in affiliates.735 2. and ending December 31.51 2007 194.-ADS. natural gas liquids and synthetic oil.9) % 5.03 138.303 3.0 % (8. For 2009. It includes the reinvestment of all dividends that an investor would be entitled to receive and is adjusted for stock splits.7) % (3. At the end of the year Excludes service station personnel 3 4 Performance Graph The stock performance graph at right shows how an initial investment of $100 in Chevron stock would have compared with an equal investment in the S&P 500 Index or the Competitor Peer Group.Chevron Operating Highlights 1 2009 2008 % Change Net production of crude oil and natural gas liquids (Thousands of barrels per day) Net production of natural gas (Millions of cubic feet per day) Net production of oil sands (Thousands of barrels per day) Total net oil-equivalent production (Thousands of oil-equivalent barrels per day) Refinery input (Thousands of barrels per day) Sales of refined products (Thousands of barrels per day) Net proved reserves of liquids 2. includes 460 million barrels of synthetic oil from Canadian oil sands.25 2006 148.34 104. and for the peer group is weighted by market capitalization as of the beginning of each year.l.878 3.615 19.07 177.99 121. Total Returns – v1 Chevron Corporation 2009 Annual Report 5 . ExxonMobil.125 27 2.254 4. except number of employees Liquids consist of crude oil. 250 200 150 100 50 0 Five-Year Cumulative Total Returns (Calendar years ended December 31) Dollars 2004 2005 2006 2007 2008 2009 Chevron S&P 500 Peer Group* 2004 Chevron S&P 500 Peer Group* 100 100 100 2005 111.649 5.963 1.5 % (3.1 % (5.6) % 16.71 80. Royal Dutch Shell-ADR and ConocoPhillips Five-Year Cum.604 11.57 102.429 4.846 4.3 (Millions of barrels) — Consolidated companies — Affiliated companies Net proved reserves of natural gas3 (Billions of cubic feet) — Consolidated companies — Affiliated companies Net proved oil-equivalent reserves 2. condensate. 2004.40 128.76 2009 171.7) % 6.69 134.90 114.905 3.989 26 2.6) % (9. as of the end of each year between 2005 and 2009.1) % (2. The interim measurement points show the value of $100 invested on December 31.3 (Millions of barrels) — Consolidated companies — Affiliated companies Number of employees at year-end4 1 2 1.053 7.9 % (2.

offshore Nigeria. Utah. including biofuels. Salt Lake Refinery. refine. generate power and produce geothermal energy. produce and transport crude oil and natural gas. We explore for. Stephanie Gutierrez.Chevron at a Glance Chevron is one of the world’s leading integrated energy companies. storage and offloading vessel. provide energy efficiency solutions. 6 Chevron Corporation 2009 Annual Report . market and distribute transportation fuels and other energy products. Our success is driven by the ingenuity and commitment of our employees and their application of the most innovative technologies in the world. with subsidiaries that conduct business worldwide. and develop the energy resources of the future. Agbami Field. Process Engineer. Above. We are involved in virtually every facet of the energy industry. left to right: Floating production. manufacture and sell petrochemical products.

Thailand. Major exploration areas include the U. Chevron is the world’s largest producer of geothermal energy. Chevron is engaged in every aspect of the natural gas business — production. North America. Renewable Energy Strategy: Invest in renewable energy technologies and capture profitable positions. For more information. we improved our safety performance. China. the year we began tracking. including volumes produced from oil sands in Canada. Azerbaijan. Brazil. Thailand. with operations in Indonesia and the Philippines. the Browse Basin. Our downstream operations include refining. net oil-equivalent production averaged 2. shipping. The company has forged a number of alliances to develop renewable energy. At the end of 2009. Australia. Indonesia. Kazakhstan.Exploration and Production Strategy: Grow profitably in core areas and build new legacy positions. the United Kingdom. Our upstream business explores for and produces crude oil and natural gas. Products are sold through a network of approximately 22. Bangladesh. Gulf Coast extending into Latin America. has improved by 30 percent since 1992. also a company priority. Gas Strategy: Commercialize our equity gas resource base while growing a high-impact global gas business. Gulf of Mexico and the offshore areas of northwestern Australia and western Africa. is one of the world’s leading manufacturers of commodity petrochemicals. we processed approximately 1. the United Kingdom and Vietnam.9 million barrels of crude oil per day and averaged approximately 3.3 and 3. reducing the rate of injuries severe enough to require days away from work by 1 1 percent. the United Kingdom. Southeast Asia. a 50-percent owned affiliate. supply and trading. Our most significant areas of operations are the west coast of North America. fuels and lubricants marketing. and ensuring reliable and efficient operations. Refining and Marketing Strategy: Improve returns and selectively grow with a focus on integrated value creation.com. In 2009. southern Africa and the United Kingdom.S. Canada. fuel cells and biomass. Kazakhstan. safeguarding the environment. Denmark. regasification. Nigeria. We hold interests in 16 fuel refineries and market under the Chevron. For the eighth consecutive year. Texaco and Caltex motor fuel and lubricants brands. the U. compared with the previous year. conserve energy and utilize alternative power technologies. the Philippines. and power generation. Safety is our highest priority. We also have significant natural gas holdings in western Africa. Major producing areas include Angola.000 retail stations. South America. marketing and trading. Operational Excellence We define operational excellence as protecting the safety and health of people. visit our Web site: Chevron. respectively. worldwide net oil-equivalent reserves for consolidated operations and affiliated operations were 8. including those of affiliated companies. and the North West Shelf Venture. Chevron Corporation 2009 Annual Report 7 . and we will not be satisfied until we have zero incidents — no one injured. power generation. and gas-toliquids. including solar. We have systematic processes in place that drive our performance and our quest for operational excellence. pipelines. and transportation. including biofuels from nonfood plant sources.3 million barrels per day of refined product sales worldwide. mining. South Korea. In 2009.S. Other businesses include research and technology. Other Businesses Chevron Phillips Chemical Company LLC. Norway and Brazil. Chevron Oronite Company LLC develops. Energy efficiency. liquefaction. 2009 was our safest year ever. We hold the largest natural gas resource position in Australia through the Gorgon and Wheatstone projects. with additional activity in the Gulf of Thailand and the offshore areas of Canada. manufactures and markets worldwide quality additives that improve the performance of fuels and lubricants. the United States. Our subsidiary Chevron Energy Solutions helps internal and external clients improve energy efficiency. Indonesia. and Venezuela.0 billion barrels. Bangladesh.7 million barrels per day. the Partitioned Zone between Kuwait and Saudi Arabia.

. resembling crude oil. household detergents and synthetic motor oils. Return on stockholders’ equity Ratio calculated by dividing earnings by average Chevron Corporation stockholders’ equity. Certain terms. costs and specific PSC terms. such as “probable” or “possible” reserves. Condensate Hydrocarbons that are in a gaseous state at reservoir conditions but condense into liquid as they travel up the wellbore and reach surface conditions. referred to as profit oil and/or gas. which are used to make plastics. are measures considered by management to be important in making capital investment and operating decisions. noncontrolling interests and Chevron Corporation stockholders’ equity for the year. Reserves Crude oil or natural gas contained in underground rock formations called reservoirs and. an indicator of a company’s ability to pay dividends and fund capital and common stock repurchase programs. Margin The difference between the cost of purchasing.Glossary of Energy and Financial Terms Energy Terms Additives Chemicals to control engine deposits and improve lubricating performance. potentially recoverable volumes are those that can be produced using all known primary and enhanced recovery methods. effective for 2009. butane and natural gasoline.g. refining. saleable hydrocarbons extracted from oil sands. synthetic fibers and household detergents. and generating power. wind. Exploration Searching for crude oil and/or natural gas by utilizing geologic and topographical studies. biofuels and hydrogen). such as extra-heavy crude oil or oil sands. and biodegradable industrial and municipal waste.” among others. Integrated energy company A company engaged in all aspects of the energy industry: exploring for and producing crude oil and natural gas (upstream). These include aromatics. producing and/or marketing a product and its sales price. Production Total production refers to all the crude oil (including synthetic oil). Any remaining production. methane. Gross production is the company’s share of total production before deducting both royalties paid to landowners and a government’s agreed-upon share of production under a production-sharing contract. Proved reserves are the estimated quantities that geoscience and engineering data demonstrate with reasonable certainty to be economically producible in the future from known reservoirs under existing economic conditions. manufacturing and distributing petrochemicals (chemicals). hydroelectric power. coalbeds or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas. hydrofluorocarbons. Oil-equivalent gas (OEG) The volume of natural gas needed to generate the equivalent amount of heat as a barrel of crude oil. development and production costs that are subsequently recoverable out of an agreed-upon share of any future PSC production. propane. operating methods and government regulations. Natural gas liquids (NGL) Separated from natural gas. natural gas and refined products (downstream). Biofuel Any fuel that is derived from biomass — recently living organisms or their metabolic byproducts — from sources such as farming. Barrels of oil-equivalent (BOE) A unit of measure to quantify crude oil. which are used to make packaging.g. and drilling of wells. is shared between the parties on an agreed-upon basis as stipulated in the PSC. Gas-to-liquids (GTL) A process that converts natural gas into high-quality transportation fuels and other products. and olefins. Using hydroprocessing technology. carbon dioxide. viscous form of crude oil).. Average Chevron Corporation stockholders’ equity is computed by averaging the sum of the beginning-of-year and end-of-year balances. Liquefied natural gas (LNG) Natural gas that is liquefied under extremely cold temperatures to facilitate storage or transportation in specially designed vessels. plastic pipes. The company only discloses proved reserves in its filings with the SEC. natural gas liquids and natural gas amounts using the same basis. these include ethane. and “resources. ocean and tide. forestry. See oil-equivalent gas and production. Net production is gross production minus both royalties paid to landowners and a government’s agreed-upon share of production under a production-sharing contract. marketing and transporting crude oil. Greenhouse gases Gases that trap heat in Earth’s atmosphere (e. bitumen can be refined to yield synthetic oil. shale. The government also may retain a share of PSC production as a royalty payment. construction and related activities following discovery that are necessary to begin production and transportation of crude oil and natural gas. that is produced by upgrading highly viscous or solid hydrocarbons. Goodwill An asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized. sand and clay. nitrous oxide. perfluorocarbons and sulfur hexafluoride). Oil-equivalent production is the sum of the barrels of liquids and the oil-equivalent barrels of natural gas produced. Natural gas volumes are converted to barrels on the basis of energy content. Excludes cash flows related to the company’s financing and investing activities. water vapor. Oil-equivalent reserves are the sum of the liquids reserves and the oil-equivalent gas reserves. tires. See renewables. These other terms are used because they are common to the industry. Synthetic oil A marketable and transportable hydrocarbon liquid. In that regard. natural gas liquids and natural gas produced from a property. ozone. “potentially recoverable” volumes. solar.000 cubic feet of natural gas is equivalent to one barrel of crude oil. The contractor typically incurs all exploration. Financial Terms Cash flow from operating activities Cash generated from the company’s businesses. See barrels of oil-equivalent and oil-equivalent gas. Enhanced recovery Techniques used to increase or prolong production from crude oil and natural gas fields. referred to as cost recovery oil and/ or gas. batteries. water. The contractor’s share of PSC oil and/or gas production and reserves varies over time as it is dependent on prices. Development Drilling. may be used to describe certain oil and gas properties in sections of this document that are not filed with the SEC. Estimates change as additional information becomes available. Return on capital employed (ROCE) Ratio calculated by dividing earnings (adjusted for after-tax interest expense and noncontrolling interests) by the average of total debt. Total stockholder return (TSR) The return to stockholders as measured by stock price appreciation and reinvested dividends for a period of time. Approximately 6. Renewables Energy resources that are not depleted when consumed or converted into other forms of energy (e. adhesives. 8 Chevron Corporation 2009 Annual Report . Production-sharing contract (PSC) An agreement between a government and a contractor (generally an oil and gas company) whereby production is shared between the parties in a prearranged manner. Earnings Net income attributable to Chevron Corporation as presented on the Consolidated Statement of Income. See barrels of oil-equivalent and oil-equivalent gas. and the contractor may owe income taxes on its portion of the profit oil and/or gas. Petrochemicals Compounds derived from petroleum. and provide some indication to stockholders of the potential ultimate recovery of oil and gas from properties in which the company has an interest. Oil sands Naturally occurring mixture of bitumen (a heavy. geothermal. geophysical and seismic surveys.

uncertainties and other factors. industry-specific taxes. the effects of changed accounting rules under generally accepted accounting principles promulgated by rulesetting bodies. the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities. the competitiveness of alternate-energy sources or product substitutes. Chevron Corporation 2009 Annual Report 9 . and Other Contingencies 21 Financial and Derivative Instruments 22 Transactions With Related Parties 23 Litigation and Other Contingencies 23 Environmental Matters 26 Critical Accounting Estimates and Assumptions 26 New Accounting Standards 29 Quarterly Results and Stock Market Data 31 39 Notes to the Consolidated Financial Statements Summary of Significant Accounting Policies 39 Note 1 Note 2 Noncontrolling Interests 41 Note 3 Equity 41 Note 4 Information Relating to the Consolidated Statement of Cash Flows 42 Note 5 Summarized Financial Data – Chevron U. the potential disruption or interruption of the company’s net production or manufacturing facilities or delivery/transportation networks due to war. timing of exploration expenses.” “estimates.” “plans. 43 Note 7 Summarized Financial Data – Tengizchevroil LLP 43 Note 8 Lease Commitments 44 Note 9 Fair Value Measurements 44 Note 10 Financial and Derivative Instruments 46 Note 11 Operating Segments and Geographic Data 47 Note 12 Investments and Advances 50 Note 13 Properties. future events or otherwise. regulations and litigation.S.” “schedules. actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.” “seeks. foreign currency movements compared with the U. dollar. The reader should not place undue reliance on these forward-looking statements. which speak only as of the date of this report. estimates and projections about the petroleum. These statements are not guarantees of future performance and are subject to certain risks.” “budgets” and similar expressions are intended to identify such forward-looking statements.A. the results of operations and financial condition of equity affiliates. accidents.” “intends. changes in fiscal terms or restrictions on scope of company operations. technological developments. whether as a result of new information.” “targets.” “expects. 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. the potential failure to achieve expected net production from existing and future crude-oil and natural-gas development projects. the potential liability resulting from other pending or future litigation. Therefore. actions of competitors or regulators. Unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements. Unless legally required. some of which are beyond the company’s control and are difficult to predict. Off-Balance-Sheet Arrangements and Contractual Obligations. severe weather or crude-oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries. In addition. changing refining.” “projects. the company’s future acquisition or disposition of assets and gains and losses from asset dispositions or impairments. such statements could be affected by general domestic and international economic and political conditions. political events. government-mandated sales. marketing and chemical margins. potential delays in the development. timing of crude-oil liftings. Plant and Equipment 52 Note 14 Litigation 52 Note 15 Taxes 53 Note 16 Short-Term Debt 55 Note 17 Long-Term Debt 56 Note 18 New Accounting Standards 56 Note 19 Accounting for Suspended Exploratory Wells 57 Note 20 Stock Options and Other Share-Based Compensation 58 Note 21 Employee Benefit Plans 59 Note 22 Other Contingencies and Commitments 65 Note 23 Asset Retirement Obligations 67 Note 24 Other Financial Information 68 Note 25 Assets Held for Sale 68 Note 26 Earnings Per Share 68 Five-Year Financial Summary 69 Five-Year Operating Summary 70 Supplemental Information on Oil and Gas Producing Activities 71 32 Consolidated Financial Statements Report of Management 32 Report of Independent Registered Public Accounting Firm 33 Consolidated Statement of Income 34 Consolidated Statement of Comprehensive Income 35 Consolidated Balance Sheet 36 Consolidated Statement of Cash Flows 37 Consolidated Statement of Equity 38 Cautionary Statement Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 This Annual Report of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations. the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation. Chevron undertakes no obligation to update publicly any forward-looking statements.” “believes. civil unrest. construction or start-up of planned projects. chemicals and other energy-related industries. 43 Note 6 Summarized Financial Data – Chevron Transport Corporation Ltd. divestitures. Words such as “anticipates. significant investment or product changes under existing or future environmental statutes. recapitalizations. Inc.Financial Table of Contents 10 Management’s Discussion and Analysis of Financial Condition and Results of Operations Key Financial Results 10 Earnings by Major Operating Area 10 Business Environment and Outlook 10 Operating Developments 13 Results of Operations 14 Consolidated Statement of Income 17 Selected Operating Data 18 Liquidity and Capital Resources 19 Financial Ratios 20 Guarantees.S.

drilling successfully. Those developments have at times significantly affected the company’s operations and results and are carefully considered by management when evaluating the level of current and future activity in such countries.429 182 (1. Governments may attempt to do so in the future. Nigeria.66 $ $ $ 11. Indonesia. The company’s operations. Azerbaijan. South Africa. Norway. Democratic Republic of the Congo.(2) $ 10. 10 Chevron Corporation 2009 Annual Report . Denmark. 2009. This increase in costs affected the company’s operating expenses and capital programs for all business segments.284 14. Venezuela and Vietnam. Australia. Canada. Kazakhstan. Bangladesh.126 14.931 $ 862 966 2. Costs began to level out in the fourth quarter 2009.67 2. In recent years. Chevron and the oil and gas industry at large experienced an increase in certain costs that exceeded the general trend of inflation in many areas of the world.2% $ 214.483 Includes foreign currency effects: $ (744) (2) Also referred to as “earnings” in the discussions that follow. and handling the many technical and operational details in a safe and cost-effective manner are all important factors in this effort.584 21. Myanmar. especially upstream. Asset dispositions and restructurings may also occur in future periods and could result in significant gains or losses.958 26. including the United States.83 8.Management’s Discussion and Analysis of Financial Condition and Results of Operations Key Financial Results Millions of dollars.216 International 8.215 Total Upstream 10. The single biggest factor that affects the results of operations for both segments is movement in the price of crude oil. except per-share amounts 2009 2008 2007 Net Income Attributable to Chevron Corporation Per Share Amounts: Net Income Attributable to Chevron Corporation – Basic – Diluted Dividends Sales and Other Operating Revenues Return on: Capital Employed Stockholders’ Equity $ 10. Identifying promising areas for exploration.6% 29. the Netherlands.53 $ $ $ 8. China. Colombia.6% Earnings by Major Operating Area Millions of dollars 2009 2008 2007 Upstream – Exploration and Production United States $ 2.431 Downstream – Refining. In the downstream business. Thailand.532 10.060 3. Trinidad and Tobago.6% 11. The overall trend in earnings is typically less affected by results from the company’s chemicals business and other activities and investments.7% $ 264. The company also continually evaluates opportunities to dispose of assets that are not expected to provide sufficient long-term value or to acquire assets or operations complementary to its asset base to help augment the company’s financial performance and growth. the United Kingdom. take them into account in evaluating future investment opportunities. can also be affected by changing economic. Refer to the “Results of Operations” section beginning on page 14 for discussions of net gains on asset sales during 2009. Projects often require long lead times and large capital commitments. Earnings for the company in any period may also be influenced by events or transactions that are infrequent or unusual in nature.390) $ 23. South Korea. certain governments have sought to renegotiate contracts or impose additional costs on the company. The company continues to actively manage its schedule of work.26 $ 167.26 5. The company will continue to monitor these developments. Civil unrest.816 1.1% 25.710 $ 4. the Partitioned Zone between Saudi Arabia and Kuwait. acquiring the necessary rights to explore for and to produce crude oil and natural gas. From time to time.402 10. Chad. (1) $ 7.74 11. the United States.24 2. Business Environment and Outlook Chevron is a global energy company with significant business activities in the following countries: Angola. the company must develop and replenish an inventory of projects that offer attractive financial returns for the investment required. Softening of these cost pressures started in late 2008 and continued through most of 2009.688 $ (352) Refer to the “Results of Operations” section beginning on page 14 for a discussion of financial results by major operating area for the three years ended December 31. the Philippines. marketing and transportation) business segments. Republic of the Congo.77 2. regulatory and political environments in the various countries in which it operates.536 3.091 23.931 $ 18. but particularly for upstream. Earnings of the company depend largely on the profitability of its upstream (exploration and production) and downstream (refining. acts of violence or strained relations between a government and the company or other governments may impact the company’s operations or investments.483 $ 23. Brazil. Singapore.688 $ $ $ 5. and otherwise seek to mitigate any risks to the company’s current operations or future prospects. Argentina.369 2. crude oil is the largest cost component of refined products. To sustain its long-term competitive position in the upstream business.502 396 (26) $ 18. Cambodia. Marketing and Transportation United States (273) International 838 Total Downstream 565 Chemicals 409 All Other (922) Net Income Attributable to Chevron Corporation (1).

) WTI Crude Oil and Henry Hub Natural Gas Spot Prices — Quarterly Average $/bbl 150 $/mcf 25 WTI HH 120 20 90 15 60 10 30 5 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0 2007 2008 2009 Comments related to earnings trends for the company’s major business areas are as follows: Upstream Earnings for the upstream segment are closely aligned with industry price levels for crude oil and natural gas. Production was 7 percent lower due to natural field declines and sales of properties. and attempts to manage risks in operating its facilities and businesses. A differential in crude-oil prices exists between highquality (high-gravity. Chad. and regional supply interruptions or fears thereof that may be caused by military conflicts. with prices for WTI ranging from $34 to $81 per barrel.) The company continues to closely monitor developments in the financial and credit markets. China and the United Kingdom Net Crude Oil & Natural Gas Liquids Production* Thousands of barrels per day 2000 U. The chart at left shows the trend in benchmark prices for West Texas Intermediate (WTI) crude oil and U.73 during 2009.00 500 500 2. the Partitioned Zone between Saudi Arabia and Kuwait. but excludes other produced volumes. External factors include not only the general level of inflation but also commodity prices and prices charged by the industry’s material and service providers.00 1. industry inventory levels. production quotas imposed by the Organization of Petroleum Exporting Countries (OPEC). The amount of the differential in any period is associated with the supply of heavy crude available versus the demand that is a function of the number of refineries that are able to process this lowerquality feedstock into light products (motor gasoline. The differential remained narrow through 2009 as production declines in the industry have been mainly for lower-quality crudes. weather-related damage and disruptions. competing fuel prices. Henry Hub natural gas. procurement and supply-chain activities to effectively manage costs. Moreover. Natural Gas Realizations & Net Production 2000 8. * Includes equity in affiliates. Management is taking these developments into account in the conduct of daily operations and for business planning.S.00 United States International Net liquids production increased 12 percent in 2009 due mainly to new projects in the United States and Nigeria and expansion of capacity at TCO in Kazakhstan. changes in fiscal terms of contracts and changes in tax laws and regulations. the level of worldwide economic activity and the implications to the company of movements in prices for crude oil and natural gas. Prices in Dollars per Thousand Cubic Feet (right scale) Production in Millions of Cubic Feet per Day (left scale) Average prices decreased 53 percent to $3. Capital and exploratory expenditures and operating expenses also can be affected by damage to production facilities caused by severe weather or civil unrest. any of these factors could also inhibit the company’s production capacity in an affected region. civil unrest or political uncertainty. The company monitors developments closely in the countries in which it operates and holds investments. the longer-term trend in earnings for the upstream segment is also a function of other factors. including the company’s ability to find or acquire and efficiently produce crude oil and natural gas.S. which can be affected by the volatility of the industry’s own supply-and-demand conditions for such materials and services.846 1500 1500 1. high-sulfur). the WTI price was about $77. Price levels for capital and exploratory costs and operating expenses associated with the production of crude oil and natural gas can also be subject to external factors beyond the company’s control. The WTI price averaged $62 per barrel for the full-year 2009. Crude-oil andOil Prices 2007 through 2008 – v1 #009 – Crude natural-gas prices are subject to external factors over which the company has no control.399 6. including product demand connected with global economic conditions.00 1000 1000 4.contracting. Industry price levels for crude oil continued to be volatile during 2009. Venezuela and in certain fields in Angola. Indonesia. The company remains confident of its underlying financial strength to address potential challenges presented in this environment. Besides the impact of the fluctuation in prices for crude oil and natural gas. As of mid-February 2010. Chevron#011 – U. Chevron produces or shares in the production of heavy crude oil in California. Natural Gas Corporation 2009 Annual Report Prices 11 – v4 #10B – Net Crude Oil & Nat Gas .S. The decline in prices from 2008 was largely associated with a weakening in global economic conditions and a reduction in the demand for crude oil and petroleum products. jet fuel. aviation gasoline and diesel fuel). low-sulfur) crudes and those of lower-quality (low-gravity. (Refer also to the “Liquidity and Capital Resources” section beginning on page 19.00 0 05 06 07 08 09 0 05 06 07 08 09 0. compared to $100 in 2008. (Refer to the “Upstream” section below for a discussion of the trend in crude-oil prices.

80 per thousand cubic feet (MCF) during 2009. demand in 2009 was associated with the economic slowdown. A significant majority of Chevron’s upstream investment is made outside the United States. these realizations compared favorably with those in the United States during 2009. Asia. (See page 18 for the company’s average U. and international crude-oil realizations. at the beginning of 2007 and each year-end from 2007 through 2009. prices at Henry Hub averaged about $3. Industry margins can also be influenced by refined-product inventory levels. southern Africa and the United Kingdom. diesel. The company’s most significant marketing areas are the West Coast of North America. 2009.S. respectively. Weaker U. and as of mid-February 2010.and Texacobranded motor fuels in the mid-Atlantic and other eastern states. fluctuations in demand for natural gas in various markets. Downstream Earnings for the downstream segment are closely tied to margins on the refining and marketing of products that include gasoline.Management’s Discussion and Analysis of Financial Condition and Results of Operations sector of the North Sea. Sales in these markets 12 Chevron Corporation 2009 Annual Report . sales of Chevron. About onefifth of the company’s net oil-equivalent production in 2009 occurred in the OPEC-member countries of Angola. Latin America. the U. Gulf Coast. Other factors beyond the company’s control include the general level of inflation and energy costs to operate the company’s refinery and distribution network. for new large-scale projects. the time lag between initial exploration and the beginning of production. In the United States. Industry margins are sometimes volatile and can be affected by the global and regional supply-and-demand balance for refined products and by changes in the price of crude oil used for refinery feedstock. Certain international natural-gas markets in which the company operates have different supply. supply-anddemand conditions resulting from the economic slowdown. Refer to the “Results of Operations” section on pages 14 through 15 for additional discussion of the company’s upstream business. the company’s net oil production was reduced by an average of 20. Fluctuations in the price for natural gas in the United States are closely associated with customer demand relative to the volumes produced in North America and the level of inventory in underground storage. geopolitical events. which historically have resulted in lower average sales prices for the company’s production of natural gas in these locations. This estimate is subject to many factors and uncertainties. Unlike prior years.000 barrels per day due to quotas imposed by OPEC. Nigeria and Venezuela and in the Partitioned Zone between Saudi Arabia and Kuwait. which are driven by the industry’s demand for crude-oil and product tankers.70 and $5. where the company sold to retail customers through approximately 1. Other factors affecting profitability for downstream operations include the reliability and efficiency of the company’s refining and marketing network and the effectiveness of the crude-oil and product-supply functions. jet fuel. For the year 2009. primarily as a result of the deterioration of U. compared with about $5. price changes for natural gas in many regional markets are more closely aligned with supply-and-demand conditions in those markets.S.70 million barrels per day. civil unrest. changing geopolitics. demand and regulatory circumstances. International natural-gas realizations averaged about $4. The company completed sales of marketing businesses during 2009 in certain countries in Latin America and Africa.20 per MCF during 2008. fires or other operational events. fuel oil and feedstocks for chemical manufacturing. weather conditions that may shut in production. (See page 18 for the company’s average natural gas realizations for the U. and an accompanying discussion of major changes to proved reserves by geographic area for the three-year period ending December 31.00 per MCF during 2009.) In contrast to price movements in the global market for crude oil.73 million barrels per day.) The company’s worldwide net oil-equivalent production in 2009 averaged 2. by mid-2010. At December 31. cost of materials and services. members of OPEC supported maintaining production quotas in effect since December 2008. including additional quotas that may be imposed by OPEC. changes in fiscal terms or restrictions on the scope of company operations.S. price effects on production volumes calculated under cost-recovery and variable-royalty provisions of certain contracts. The outlook for future production levels is also affected by the size and number of economic investment opportunities and.100 stations and to commercial and industrial customers through supply arrangements. All of the imposed curtailments took place during the first half of the year.S. Investments in upstream projects generally begin well in advance of the start of the associated crude-oil and natural-gas production. lubricants. The company plans to discontinue. The company estimates that oil-equivalent production in 2010 will average approximately 2. the Henry Hub spot price was about $5. Refer to Table V beginning on page 76 for a tabulation of the company’s proved net oil and gas reserves by geographic area.S. compared with almost $9 during 2008. Profitability can also be affected by the volatility of tanker-charter rates for the company’s shipping operations. Chevron continues to invest in longterm projects in these locations to install infrastructure to produce and liquefy natural gas for transport by tanker to other markets where greater demand results in higher prices. Chevron operates or has significant ownership interests in refineries in each of these areas except Latin America. refinery maintenance programs and disruptions at refineries resulting from unplanned outages due to severe weather. or other disruptions to operations.50 per MCF. and international regions. At the December 2009 meeting. 2009. delays in project startups.

in January 2010. The facilities will support 8.8 percent equity interest in the Wheatstone Field licenses and a 12.0 Agreements were signed 2.000 oil-equivalent barrels per day in 2011. of the total LNG available from the foundation project) and to acquire a 16. In 2009 and early 2010. Project facilities are designed with a capacity to handle up to 140. Mafumeira Norte is expected to reach maximum total daily production of 42. which is projected to attain maximum total production of 72.7 percent-owned Block WA-205-P. The 75 percent-owned and operated facilities will have Net Proved Reserves Billions of BOE* LNG processing capacity of 8. Refer to the “Results of Operations” section on pages 15 and 16 for additional discussion of the company’s downstream operations.9 million metric tons reserves were 8 percent lower. Republic of the Congo Crude oil was discovered in the northern portion of the 31.0 development of Chevron’s 6.3 per year and a co-located 10. Given these conditions. per year of LNG from the *2009 includes barrels of project (about 60 percent oil-equivalent reserves for Canadian oil sands. Nonbinding Heads of Agreement (HOAs) with three additional Asian customers were also signed in late 2009 and early 2010 for delivery of LNG from the project.represent approximately 8 percent of the company’s total U.6 million metric tons 12. the company finalized long-term sales agreements for delivery of liquefied natural gas (LNG) from the Gorgon Project with four Asian customers. also located offshore northwest Australia.0 11. The company’s refining and marketing margins in 2009 were generally weak due to challenging industry conditions. located offshore Western Australia. The company also discovered crude oil offshore in the 39. excess refined-product supplies and surplus refining capacity. the company also announced naturalgas discoveries at the Kentish Knock prospect in the 50 percent-owned Block WA-365-P. retail fuel sales volumes. in which Chevron has a 47.000 barrels of crude oil per day.2 percent-owned and operated Mafumeira Norte offshore project in Block 0 and the 31 percent-owned and operated deepwater TombuaLandana project in Block 14.6 percent interest in the foundation natural – Net Provedfacilities at the final investment decision. Also. In addition. and the TombuaLandana project is expected to reach its maximum total production of approximately 100.7 percent-owned and operated deepwater Frade Field. while affiliated companies’ of 4.000 barrels of crude oil in the third quarter 2010. which would bring LNG delivery commitments to a combined total of about 90 percent of Chevron’s share of LNG from the project. Details of the restructuring will be further developed over the next three to six months and may include exits from additional markets.5 percent-owned.0 with two companies to join the Wheatstone Project as 0. partner-operated Papa-Terra Field. including a sharp drop in global demand reflecting the economic slowdown. Operating Developments Key operating developments and other events during 2009 and early 2010 included the following: Upstream Angola Production began at the 39. nonbinding HOAs Affiliates were signed with two Asian Net proved reserves for consolidated customers to take delivery companies increased 5 percent in 2009. which tend to follow crude-oil and natural-gas price movements. All prospects are Chevron-operated. 2009. In addiAfrica United States tion.0 interests in the Wheatstone Field and nearby Iago Field. Refer to the “Results of Operations” section on page 16 for additional discussion of chemical earnings.0 combined 25 percent own05 06 07 08 09 ers and suppliers of natural Other gas for the project’s first Asia two LNG trains. also influence earnings in this segment. 4. industry inventory levels and plant capacity utilization.2 percent-owned and operated Block 0 concession.3 percent-owned and operated interest as of December 31.S. Negotiations continue to finalize binding sales agreements. Chevron Corporation 2009 Annual Report 13 . the company sold the rights to the Gulf trademark in the United States and its territories that it had previously licensed for use in the U.000 barrels of crude oil per day in 2011. Northeast and Puerto Rico. Additionally. #14A gas processing Reserves In May 2009 the company announced the successful (front) – v3 completion of a well at the Clio prospect to further explore and appraise the 66. Chemicals Earnings in the petrochemicals business are closely tied to global chemical demand. reductions in the number of employees and other actions.0 domestic natural-gas plant. Feedstock and fuel costs. partner-operated Moho-Bilondo deepwater permit area. These evaluations concluded that the company’s downstream organization should be restructured to improve operating efficiency and achieve sustained improvement in financial performance. Australia The company and its partners reached final investment decision to proceed with the development of the Gorgon Project. This discovery follows two others made in 2007 in the same permit area. three of which also acquired an ownership interest in the project. dispositions of assets.S. extending a trend of earlier discoveries in the Greater Vanza/ Longui Area. Brazil Production started at the 51. the Achilles and Satyr prospects in the 50 percent-owned Block WA-374-P and the Yellowglen prospect in the 50 percent-owned WA-268-P Block. The company awarded front-end engineering and design contracts for the first phase of the Wheatstone natural gas project. in early 2010 a final investment decision was reached to develop the 37. Proved reserves have not been recognized for these discoveries.5 percent-owned. in January 2010 the company announced to its employees that high-level evaluations of Chevron’s refining and marketing organizations had been completed. which may result in gains or losses in future periods. where first production is expected in 2013.

The benefit from lower operating expenses was largely associated with absence of charges for damages related to the 2008 hurricanes in the Gulf of Mexico.6 billion from 2007.0 0 05 06 07 08 09 0. Côte d’Ivoire.532 U.0 Common Stock Dividends The quarterly common stock dividend increased by 4. Major Operating Areas The following section presents the results of operations for the company’s business segments – upstream.342 1200 20.Management’s Discussion and Analysis of Financial Condition and Results of Operations Venezuela In February 2010. Worldwide Exploration & Production Earnings Billions of dollars 25.90 and $6. 119 million common shares had been acquired under this program for $10. power generation businesses.16 in 2007. to $0.1 billion in 2008 increased $2. compared with $7. Results of Operations 900 15.6 billion associated with lower oil-equivalent production Earnings – v2 and higher operating expenses. United States First oil was achieved at the 58 percentowned and operated Tahiti Field in the deepwater Gulf of Mexico. Nigeria.0 $10.36 per barrel. including a $600 million gain on an asset-exchange transaction.S. Upstream – Exploration and Production Millions of dollars 2009 2008 2007 Earnings $ 2. 2009.0 600 10. Peru and Chile. United States International Earnings decreased in 2009 on lower average prices for crude oil and natural gas. Higher average prices for crude oil and natural gas increased earnings by $3. Republic of the Congo. Partially offsetting these effects was a benefit of about $1.” which includes mining. India. U. The company’s average realization for crude oil and natural gas liquids in 2009 was $54.216 $ 7. upstream earnings of $7. Partially offsetting these benefits were adverse effects of about #017 – #016 – Exploration Expenses – v2 Worldwide Expl & Prod $1.0 The company sold businesses during 2009 in Brazil. Uganda.S. which began in 2007 and expires in September 2010. Also contributing to the higher earnings were gains of approximately $1 billion on asset sales.68 per share. 14 Chevron Corporation 2009 Annual Report . An approximate $600 million benefit to income from lower operating expenses was more than offset by higher depreciation expense.S. upstream earnings of $2. the various companies and departments that are managed at the corporate level.2 billion in 2009 decreased $4.12 in 2008 and 2007.9 billion from 2008. Benin. This section should also be read in conjunction with the discussion in “Business Environment and Outlook” on pages 10 through 13. As of December 31. Italy. which included approximately $400 million of expenses resulting from damage to facilities in the Gulf of Mexico caused by hurricanes. compared with $88.43 in 2008 and $63.” as defined in accounting standards for segment reporting (Accounting Standards Codification (ASC) 280)). The first appraisal well is scheduled to begin drilling in the second quarter 2010.6 percent in July 2009. (Refer to Note 11.3 billion resulting from an increase in net oil-equivalent production.000 barrels of oil-equivalent per day. Cameroon.73 per thousand cubic feet in 2009. Earnings are also presented for the U. Haiti. reaching maximum total production of 135. Downstream U. for a discussion of the company’s “reportable segments. Kenya. The company also discovered crude oil at the Chevron-operated and 55 percent-owned Buckskin prospect in the deepwater Gulf of Mexico. 2009 was the 22nd consecutive year that the company increased its annual dividend payment. Other Exploration Expenses Millions of dollars 1500 $1.126 $ 4. and international geographic areas of the upstream and downstream business segments. beginning on page 47. The average natural-gas realization was $3.1 billion between periods. Lower prices for crude oil and natural gas reduced earnings by about $5.4 300 5. downstream and chemicals – as well as for “all other. and the company’s investment in Dynegy prior to its sale in May 2007. a Chevron-led consortium was named the operator of a heavy-oil project composed of three blocks in the Orinoco Oil Belt of eastern Venezuela. respectively. Togo. and gains on asset sales declined by approximately $900 million.S.0 05 06 07 08 09 United States International Exploration expenses increased 15 percent from 2008 due mainly to higher well write-offs.1 billion.2 billion between periods. Common Stock Repurchase Program The company did not acquire any shares during 2009 under its $15 billion repurchase program.

United States International Downstream earnings decreased 84 percent from 2008 due to lower margins on the sale of refined products.6 billion from 2008.6 billion cubic feet per day in 2009 was down 1 percent and up 8 percent from 2008 and 2007.3 billion from 2007. an increase of approximately 11 percent from 2008 and 5 percent from Worldwide Refining.01 per thousand cubic feet in 2009.5 percent from 2007. U. The decrease between 2007 and 2008 was mainly due to normal field declines and the adverse impact of the hurricanes. Lower prices for crude oil and natural gas reduced earnings by $7.97 per barrel.6 billion in 2008 increased $4.369 $ 966 Earnings* *Includes foreign currency effects: $ 8. up approximately 15 percent from 2008 and 5 percent compared with 2007. Operating expenses were higher between 2007 and 2008.5 0 05 06 07 08 09 -0. which benefited earnings by $300 million.51 in 2008 and $65. compared with $5. The decline was associated with reduced demand for jet fuel and fuel oil. *Includes equity in affiliates Sales volumes of refined products were 1.4 billion in 2008 increased about $400 million from 2007 due mainly to improved margins on the sale of refined products and gains on derivative commodity instruments.5 1200 2. compared with a reduction to earnings of $417 million in 2007. Earnings of $1. #018 – Sales volumes of refined products were 1.284 $ (417) U.01 in 2007. Refer to the “Selected Operating Data” table on page 18 for a three-year comparison of sales volumes of gaso line and other refined products and refinery-input volumes.000 barrels per day. The average natural-gas realization was $4.4 billion cubic feet per day in 2009. down approximately 7 percent from 2008 and about 18 percent from 2007.6 0. The increase between 2008 and 2009 was mainly due to the start-up of the Blind Faith Field in late 2008 and the Tahiti Field in the second quarter 2009. Gasoline & Other Refined-Product Sales Thousands of barrels per day 1600 International upstream earnings of $8.8 billion associated with a reduction of crude-oil sales volumes due to timing of certain cargo liftings and higher depreciation and operating expenses. Partially offsetting these items were benefits of $2. A decline in refined product margins resulted in a negative earnings variance of $1.19 and $3. International Upstream – Exploration and Production Millions of dollars 2009 2008 2007 2007. The company’s average realization for crude oil and natural gas liquids in 2009 was $55.S. downstream operations lost $273 million in 2009. Marketing & and down 2 percent from Trans Earnings – v3 2008 and 2007. Marketing & Transportation Earnings* Billions of dollars 4. when compared with prior years’ production.5 1.9 billion. an earnings decrease of approximately $1. compared with $86.2 billion in 2009 decreased $6. Earnings of $14. Higher prices for crude oil and natural gas increased earnings by $4. Partially offsetting the benefit of higher prices was an impact of about $1. The net liquids component of oil-equivalent production was 1.Net oil-equivalent production in 2009 averaged 717.90 in 2008 and 2007. Branded gasoline sales volumes of 617.4 million barrels per day in 2009. principally associated with the downturn in the U. The volumes for each year included production from oil sands in Canada. Partially offsetting were lower operating expenses.S.99 million barrels per day in 2009 increased about 7 percent and 6 percent from 2008 and 2007. Chevron Corporation 2009 Annual Report 15 .584 $ 873 $10.000 barrels per day in 2009 were up about 3 percent#019 – WW Refining. Foreign-currency effects benefited earnings by $873 million in 2008. Net natural-gas production averaged 1. net oil-equivalent production increased 4 percent in 2009 and 3 percent in 2008.403 3.3 billion resulting from an increase in sales volumes of crude oil and about $500 million associated with asset sales and tax items related to the Gorgon Project in Australia.9 percent from 2008 and down 3. Absent the impact of prices on certain production-sharing and variableroyalty agreements.215 $ (571) $14.000 barrels per day.5 400 $0.4 billion from 2008. for the three-year comparative of international pro duction volumes. Downstream – Refining. respectively. up 6. on page 18.S. Refer to the “Selected Operating Data” table. respectively. Net oil-equivalent production of 1.7 billion.41 million economy. U. Refer to the “Selected Operating Data” table on page 18 for the three-year comparative production volumes in the United States.5 800 1. while foreign-currency effects and higher operating and depreciation expenses decreased income by a total of $2. respectively. Marketing and Transportation Millions of dollars 2009 2008 2007 Earnings $ (273) $ 1. a decrease of 3 percent from 2007. Gas & Other Refined Prod per day v1 barrels Sales – in 2008. Net natural-gas production of 3.U. a decrease of 1 percent from 2008.40 million barrels per day in 2009.S.5 05 06 07 08 09 Gasoline Jet Fuel Gas Oils & Kerosene Residual Fuel Oil Other Refined-product sales volumes decreased about 1 percent from 2008 on lower sales of jet fuel and fuel oil. The net liquids component of oil-equivalent production for 2009 averaged 484. respectively.0 billion.S.2 billion.

For Worldwide Chemicals Oronite. #020 – Int’l. Foreign-currency effects increased earnings by $193 million in 2008. professional services and transportation costs and International Gasoline & about a $550 million Other Refined-Product Sales* increase in gains on asset Thousands of barrels per day sales primarily in certain 2500 countries in Latin America and Africa.85 million barrels per day in 2009. 05 06 07 08 09 Higher expenses for planned Chemicals earnings increased about maintenance activities also 125 percent from 2008 due to higher margins on select commodity contributed to the earnings chemical products and lower utility decline.6 billion decline between periods was associated with weaker margins on the sale of gasoline and other refined products and the absence of gains recorded in 2008 on commodity derivative instruments. worldwide cash management and debt financing activities. Marketing and Transportation Millions of dollars 2009 2008 2007 Chemicals Millions of dollars 2009 2008 2007 Earnings* *Includes foreign currency effects: $ 838 $ (213) $ 2. and the company’s interest in Dynegy. An approximate $2. Inc.060 $ 193 $ 2.536 $ 62 Earnings* *Includes foreign currency effects: $ 409 $15 $ 182 $ (18) $ 396 $ (3) International downstream earnings of $838 million in 2009 decreased about $1. For CPChem.851 decreased nearly $500 mil1500 lion from 2007.Management’s Discussion and Analysis of Financial Condition and Results of Operations International Downstream – Refining. segment 300 earnings were $182 million. about level with 2007. respectively. Partially offsetting these items was a $1. on page 18. All Other Millions of dollars 2009 2008 2007 Net Charges* *Includes foreign currency effects: $ (922) $ 25 $ (1. real estate activities. The chemicals segment includes the company’s Oronite subsidiary and the 50 percent-owned Chevron Phillips Chemical Company LLC (CPChem). declined for Oronite due to *Includes equity in affiliates lower volumes and higher operating expenses. compared with $182 million and $396 million in 2008 and 2007.02 million barrels per Refined – v2 day in 2008. Net charges in 2009 decreased $468 million from 2008 due to lower provisions for environmental remediation at sites 16 Chevron Corporation 2009 Annual Report . compared with $396 million 200 in 2007. the earnings improvement from 2008 to 2009 reflected lower utility and manufacturing costs as well as the absence of an impairment recorded in 2008. compared with $62 million in 2007. earnings were $409 million. Refined-product sales volumes were 1.0 billion benefit from lower operating expenses associated mainly with contract labor. In 2008. impact of lower margins *Includes equity in affiliates from sales of refined products.390) $ (186) $ (26) $ 6 All Other includes mining operations. These benefits were partially offset by lower margins on the sale of commodity chemicals. the effect 500 of which more than offset the impact of lower sales $409 400 volumes. In 2009. for a three-year comparison of sales volumes of gasoline and other refined products and refinery-input volumes. The $500 million Gasoline other improvement between Jet Fuel years was associated primarGas Oils & Kerosene Residual Fuel Oil ily with a benefit from gains Other on derivative commodity Sales volumes of refined products instruments that was only were down 8 percent from 2008 due to asset sales and weak economic partially offset by the conditions which depressed demand. insurance operations. prior to its sale in May 2007. Gasoline & Other Refined-product sales volumes were 2. Earnings also and manufacturing expenses. Foreign-currency effects produced a negative variance of $400 million. Earnings in 2000 2008 of $2. Earnings in 2007 included gains of 1000 approximately $1 billion on the sale of assets. earnings increased Earnings* Millions of dollars in 2009 due to higher margins on sales of lubricant 600 and fuel additives. power generation #021 – WW Chemicals Earnings – v2 businesses.2 billion from 2008.1 billion 1. about 8 percent lower than in 2008 due mainly to the effects of asset sales and lower demand. corporate administrative functions. Earnings declined 100 in 2008 due to lower sales volumes of commodity 0 chemicals by CPChem. alternative fuels and technology companies. which 500 included marketing assets in the Benelux region of 0 Europe and an interest in a 05 06 07 08 09 refinery. Refer to the “Selected Operating Data” table.

Foreign-currency effects also contributed to the increase in net charges from 2007 to 2008. depletion and amortization $ 12. Other income of $2.591 $ 21. Results in 2007 included a $680 million gain on the sale of the company’s investment in Dynegy common stock and a loss of approximately $175 million associated with the early redemption of Texaco Capital Inc. respectively. Millions of dollars 2009 2008 2007 Depreciation. natural gas and refined products.7 billion in 2008 and 2007 included net gains from asset sales of $1. Expenses in 2008 declined from 2007 mainly due to lower amounts for well write-offs for operations in the United States. Upstream-related affiliate income declined about $1. Millions of dollars 2009 2008 2007 Income from equity affiliates $ 3. general and administrative expenses in 2009 decreased approximately $4. Income from equity affiliates increased in 2008 from 2007 largely due to improved upstream-related earnings at TCO as a result of higher prices for crude oil. bonds. Foreign-currency effects reduced other income by $466 million in 2009 while increasing other income by $355 million in 2008 and reducing other income by $352 million in 2007.169 $ 1. general and administrative expenses $ 22. Taxes other than on income decreased in 2008 from 2007 mainly due to lower import duties as a result of the effects of the 2007 sales Chevron Corporation 2009 Annual Report 17 . Downstream-related affiliate earnings were lower by approximately $1. $200 million from higher material expenses. Millions of dollars 2009 2008 2007 Operating. other income in 2008 included approximately $700 million in favorable settlements and other items. Crude oil and product purchases in 2008 increased $38. for a discussion of Chevron’s investments in affiliated companies.266 Purchased crude oil and products $ 99.708 Other income $ 918 $ 2.3 billion and $1.7 billion from 2008 due to lower prices for crude oil. depletion and amortization expenses increased in 2009 from 2008 due to incremental production related to start-ups for upstream projects in the United States and Africa and higher depreciation rates for certain other oil and gas producing fields. Consolidated Statement of Income Crude oil and product purchases in 2009 decreased $71. an increase of about $300 million for environmental remediation activities.342 $ 1.316 $ 5.144 Income from equity affiliates decreased in 2009 from 2008. selling. Millions of dollars 2009 2008 2007 Exploration expense $ 1.4 billion from 2007. reflecting completion of highercost development projects and asset-retirement obligations. Millions of dollars 2009 2008 2007 Depreciation. $600 million of increased transportation expenses.858 Comparative amounts for certain income statement categories are shown below: Millions of dollars 2009 2008 2007 Sales and other operating revenues $ 167.0 billion primarily due to weaker margins and an unfavorable swing in foreign-currency effects. and $600 million for other items.323 Exploration expenses in 2009 increased from 2008 due mainly to higher amounts for well write-offs in the United States and international operations. Higher 2008 prices resulted in increased revenues compared with 2007.7 billion. $700 million of uninsured losses associated with hurricanes in the Gulf of Mexico in 2008.110 $ 9.653 $ 171.303 $ 22.669 Other income of $918 million in 2009 included gains of approximately $1.1 billion from 2007 due to higher prices for crude oil.2 billion from 2008 primarily due to $1. $340 million in 2008 and $600 million in 2007.384 $ 26. due mainly to lower prices for crude oil. Millions of dollars 2009 2008 2007 Taxes other than on income $ 17.091 Sales and other operating revenues decreased in 2009. and $700 million from increases for other items. $200 million of lower costs for materials. natural gas and refined products. Interest income was approximately $95 million in 2009.551 $ 22.402 $ 264. Millions of dollars 2009 2008 2007 Operating.528 $ 8.that previously had been closed or sold.366 $ 4.2 billion of higher costs for employee and contract labor and professional services. beginning on page 50. Results in 2008 included net unfavorable corporate tax items and increased costs of environmental remediation.3 billion mainly due to lower earnings for Tengizchevroil (TCO) in Kazakhstan as a result of lower prices for crude oil. In addition. absence of uninsured 2008 hurricane-related charges of $700 million. $800 million of decreased costs for contract labor and professional services. natural gas and refined products. selling.397 $ 133.681 $ 2.309 Taxes other than on income decreased in 2009 from 2008 mainly due to lower import duties for the company’s downstream operations in the United Kingdom.3 billion on asset sales. The increase in 2008 from 2007 was largely due to higher depreciation rates for certain crude-oil and natural-gas producing fields. Refer to Note 12.958 $ 214. a decrease of about $500 million for environmental remediation activities. Total expenses for 2008 were about $3.7 billion higher than 2007 primarily due to $1. Net charges in 2008 increased $1.4 billion of lower fuel and transportation expenses. favorable foreign-currency effects and lower expenses for employee compensation and benefits.

a greater proportion of before-tax income was earned in 2009 by equity affiliates than in 2008.51 $ 5.901 17 54. Net (MBPD): 26 27 27 5 Includes branded and unbranded gasoline. The rate was lower in 2009 than in 2008 mainly due the effect in 2009 of deferred tax benefits and relatively low tax rates on asset sales. the 2007 period included a relatively low effective tax rate on the sale of the company’s investment in Dynegy common stock and the sale of downstream assets in Europe.90 460 1.619 728 729 1.027 96 1.226 15 $ 88.S.) Partially offsetting these items was the effect of a greater proportion of income earned in 2009 in tax jurisdictions with higher tax rates.296 3. Bbl – Barrel. 3 Includes natural gas consumed in operations (MMCFPD): United States 58 70 65 International 463 450 433 4 Includes production from oil sands.026 $ 13.97 Natural Gas ($/MCF) $ 4.S.000 cubic feet of natural gas = 1 barrel of oil.4 United States International Total U.215 17 $ 86. The rate was higher in 2008 compared with 2007 primarily due to a greater proportion of income earned in tax jurisdictions with higher income tax rates.851 88 979 671 1. MMCFPD – millions of cubic feet per day. Interest and debt expense decreased in 2008 because all interest-related amounts were being capitalized.987 Sales of Natural Gas (MMCFPD) 4.12 Income tax expense $ 7.399 717 5.446 2.43 $ 7.062 Sales of Natural Gas Liquids (MBPD) 23 Revenues From Liftings Liquids ($/Bbl) $ 55.479 Effective income tax rates were 43 percent in 2009. MBPD – thousands of barrels per day.2 2009 2008 2007 Interest and debt expense $ 28 $ – $ 166 Interest and debt expense increased in 2009 due to an increase in long-term debt.876 3.624 1.320 1. Refer also to the discussion of income taxes in Note 15 beginning on page 53.228 3.501 671 7.859 4.792 22 $ 65.624 25 $ 63. MCF = Thousands of cubic feet.90 717 1.16 $ 6.016 97 967 743 1. In addition. Millions of dollars 2009 2008 2007 Selected Operating Data1.296 1.403 144 899 555 1. In addition.Management’s Discussion and Analysis of Financial Condition and Results of Operations of the company’s Benelux refining and marketing businesses and a decline in import volumes in the United Kingdom.021 Includes company share of equity affiliates.01 Worldwide Upstream Net Oil-Equivalent Production (MBOEPD)3.01 $ 3.699 743 7. Oil-equivalent gas (OEG) conversion ratio is 6.530 692 721 1. (Equity-affiliate income is reported as a single amount on an after-tax basis on the Consolidated Statement of Income. MBOEPD – thousands of barrels of oil-equivalents per day.362 Net Natural Gas Production (MMCFPD)3 3. International Upstream Net Crude Oil and Natural Gas Liquids Production (MBPD) 1.987 2.859 2.590 Net Oil-Equivalent Production (MBOEPD)4 1. Downstream Gasoline Sales (MBPD)5 Other Refined-Product Sales (MBPD) Total Refined Product Sales (MBPD) Sales of Natural Gas Liquids (MBPD) Refinery Input (MBPD) International Downstream Gasoline Sales (MBPD)5 Other Refined-Product Sales (MBPD) Total Refined Product Sales (MBPD)6 Sales of Natural Gas Liquids (MBPD) Refinery Input (MBPD) 1 2 1.427 2.965 $ 19. both related to an international upstream project. Upstream Net Crude Oil and Natural Gas Liquids Production (MBPD) Net Natural Gas Production (MMCFPD)3 Net Oil-Equivalent Production (MBOEPD) Sales of Natural Gas (MMCFPD) Sales of Natural Gas Liquids (MBPD) Revenues From Net Production Liquids ($/Bbl) $ Natural Gas ($/MCF) $ 484 1. 6 Includes sales of affiliates (MBPD): 516 512 492 18 Chevron Corporation 2009 Annual Report .413 144 891 589 1.73 421 1.876 2. Millions of dollars 2009 2008 2007 U. 44 percent in 2008 and 42 percent in 2007.457 135 812 581 1.704 720 683 1.19 1.36 3.

0 0. a $3. (back) – v3 by investing activities included by Moody’s Investors Service. Total debt increased $1.6 billion increase in total debt and capital lease of its common shares at prevailing prices. $1.68 ibility to increase borrowings and/or modify capital-spending per share.1 billion in Total Interest Expense & Cash Provided by Total Debt at Year-End Operating Activities committed credit facilities with various major banks.0 outstanding under these facilities at December 31. obligations of. 2009. are rated AA by Standard and Poor’s Corporation and Aa1 #022B – Cash $300 million Operating respectively. the company had $5.Liquidity and Capital Resources December 31. bonds that matured in January 2009.3 billion lower (right scale) than 2008 due to lower crude oil amount of nonconvertible debt securities issued or guaranTotal Debt (left scale) and natural gas prices.0 0.0 would be unsecured indebtedness at interest rates based on London Interbank Offered Rate or an average of base lend3. $4.6 billion at $10. and Restricted cash of $123 million and–$367 million associTotal Debt at Year-End – ated with various capital-investment projects at December 31.0 30. Essentially all of the interest was capitalized as part of the cost of The company has outstanding public bonds issued by major projects. Of these amounts. respectively.0 0.2 12. These facilities support commercial paper borrowing and also can be used for general corporate 24. shares during 2009 and does not plan to acquire any shares The company’s debt and capital lease obligations due within in the first quarter 2010. Common stock repurchase program In September 2007. as evidenced by committed credit facilities.5 billion.0 1. consisting primarily of commercial paper and the the company has acquired 119 million shares at a cost of current portion of long-term debt. and Union Cash provided by operating activities was net of contribuOil Company of California. the capital-spending program ketable securities and recorded as “Deferred charges and other and cash that may be generated from asset dispositions. At year-end 2009.6 billion in 2008 and $25. totaled $4.8 billion and $9. the company has an automatic shelf registration Operating cash flows were Total Interest Expense statement that expires in March 2010 for an unspecified approximately $10.3 ing rates published by specified banks and on terms reflecting the company’s strong credit rating. Chevron Corporation. Chevron Corporation 2009 Annual Report 19 . $5.0 1.5 billion in 2008 and $3. was invested in short-term marily on results of operations. Billions of dollars Billions of dollars which permit the refinancing of short-term obligations 15.6 percent to $0. The assets” on the Consolidated Balance Sheet.0 0.1 billion. At year-end 2009.2 billion and $5.6 billion in mercial paper is rated A-1+ by Standard and Poor’s and P-1 2009. lease obligations were $10.0 0.5 billion at December 31. Chevron Corporation Profit Sharing/ Savings Plan Trust Fund. one year. 2008 and 2007. the company increased for refined products and commodity chemicals. compared with $29. Cash provided by operating activities in 2009 was $19.6 6. v2 The company’s future debt level is dependent primar2009 and 2008. In 05 06 07 08 09 05 06 07 08 09 addition.8 billion in 2007.3 billion in 2009. or guaranteed by. Any borrowings under the facilities 12.0 6. The program is for a Gulf Opportunity Zone bonds. No borrowings were 0.0 billion were reclassified to long-term at the end of each period. The company intends to file a new during 2009 to $10. comActivities Cash provided proceeds and deposits related to asset sales of $2. The company’s practice has been to continually $10. by Moody’s. plans to continue paying the common stock dividend and Debt and capital lease obligations Total debt and capital maintain the company’s high-quality debt ratings. company believes that it has substantial borrowing capacity to Dividends Dividends paid to common stockholders were meet unanticipated cash requirements and that during periods approximately $5. invest#023 Total Interest Expense ment-grade securities. 2009. Cash. as the company had the intent and the ability.6 billion at December 31.5 on a long-term basis.0 billion in 2007. settlement of these obligations was not expected to require the use of working capital in 2010. and a $400 million payment of principal discontinued at any time. 2009 and 2008. The company’s U. The company did not acquire any for Texaco Capital Inc. All of these ratings denote high-quality.5 replace expiring commitments with new commitments on $19. the company authorized the acquisition of up to $15 billion The $1.0 substantially the same terms.9 billion at year-end 2008.7 billion. respectively. as permitted by obligations during 2009 included the net effect of a $5 billion securities laws and other legal requirements and subject to public bond issuance. it has the flexits quarterly common stock dividend by 4. to refinance them on a long-term basis. From the inception of the program. up from $8. a $350 million issuance of tax-exempt market conditions and other factors. respectively.2 billion in 2008 and of low prices for crude oil and natural gas and narrow margins $4. Texaco Capital Inc. In July 2009.S. All of these securities are the tions to employee pension plans of approximately $1. Chevron Corporation and $800 million and Provided by in 2009. down from $7. shelf registration statement when the current one expires. 2009.8 billion at year-end 2008. maintaining levels management believes appropriate. cash equivalents and marketable securities Total balances were $8.2 billion decrease in period of up to three years (expiring in 2010) and may be commercial paper.4 18.4 billion.6 billion teed by the company.9 9.0 purposes.3 billion in 2007.

454 $ 15. technology and other corof equity-affiliate expendiporate businesses in 2010 are budgeted at $900 million. or $17. respectively.6 billion of spending by affiliates. Worldwide downstream spending in 2010 is estimated First-Out basis.S.867 53 6 $ 12. United States.Management’s Discussion and Analysis of Financial Condition and Results of Operations Capital and Exploratory Expenditures 2009 Millions of dollars U. Approximately the and $300 million for the international plans). The company estimates contributions in 2010 will be Exploration and production expenditures were about the lion.” beginning on page 26. reflecting the company’s pension accounting in “Critical Accounting Estimates and continuing focus on opportunities available outside the Assumptions. Thailand and the U.8 billion and $20. Financial The company estimates that#015 – Exp & Prod – Cap & Exploratory Ratios in 2010. Int’l.6% Mexico and major development projects in Angola. Canada.1 bilplans).1 1.0 billing interests of $647 million and $469 million at December 5.261 1.848 2.7 billion (including $1. same percentage was also tribution amounts are dependent upon investment returns. Pension Obligations In 2009.3 and 2008.237 $ 20.3 166. $17. Refer also to the discussion of 70 percent in 2008 and 2007.775 $ 20. Int’l. China.652 $ 5.109 4.558 1.5 bilUnited States expenditures in 2009. At year-end 2009. International upstream accounted for about 80 percent be required if investment returns are insufficient to offset of the worldwide upstream investment in 2009 and about increases in plan obligations.906 $ 10.S. or $17.576 218 768 $ 7. about lion to the U. 2007 Total Upstream – Exploration and Production Downstream – Refining.538 3.421 302 405 $ 22. with $13.S.205 485 625 $ 22.2 projects outside the United States.2 Korea and construction of gas-to-liquids facilities in support Billions of dollars billion.S.783 $ 5. Australia.3% 9. In 2008 and management.6 bilof associated upstream projects. is related to upstream approximately $900 million ($600 million for the U.516 2.023 78 7 $ 14. Actual concapital-intensive phase of many significant projects. *Includes equity in affiliates expended for upstream changes in pension obligations. including $1. Marketing and Transportation Chemicals All Other Total Total. plans same as 2008. expenditures were Noncontrolling interests The company had noncontrol$22. the book value of inventory at $3. 0. Additional funding may ultimately 2007. capital and exploratory expenditures will be Expend – v3 including $21.1 tures and $2 billion for the Technology investments include projects related to uncon15.944 2.4 1.558 $ 13. Nigeria.3 billion. oil and gas reservoir concession. Also included is funding for base business improvements ties.0 billion in both periods.026 $17. Distributions to noncontrolthe company’s share of affilling interests totaled $71 million and $99 million in 2009 iates’ expenditures of $2. Gulf of Current Ratio – current assets divided by current liabiliMexico.0 2007. reflecting the activities. the fact that Chevron’s inventories are valued on a Last-In. 2009 and 2008.4 billion.723 $ 8.228 $ 17. 2008 Total U. 20. Gulf of Debt Ratio 10.2 marily targeted for exploratory prospects in the U. 10.910 210 402 $ 5. respectively.0 lion. The current ratio in all periods was adversely affected by and focused appraisals in core hydrocarbon basins.6 billion.052 $ 12. Brazil. is budgeted for exploration and 2009 2008 2007 production activities. Excluding Equity in Affiliates $ 3. Total U.S.511 92 3 $ 16.S.241 $ 11.460 4.120 $ 6.980 1.900 $ 10. with about $1.0 lion for the company’s share Investments in chemicals.9 69.6 billion for projects in the 20 Chevron Corporation 2009 Annual Report . Major capital outlays include projects under Exploration & Production — expenditures Total expendiconstruction at refineries in the United States and South Capital & Exploratory Expenditures* tures for 2009 were $22. Financial Ratios $1. plans and $200 million to the international International three-fourths.094 $ 17.2 billion of plan contributions were $1. Spending in 2010 is priInterest Coverage Ratio 62.3% 8. regulatory environments and operations in 2008 and other economic factors.182 407 618 $ 8.S. Int’l.0 extension of an upstream ventional hydrocarbon technologies. About 80 percent of At December 31 the total.469 $ 4.690 Capital and exploratory United States.2 billion of this amount for Current Ratio 1.790 $15.443 271 774 $20. the company’s pension 05 06 07 08 09 Of the $22. respectively. and gas-fired and renewable power generation. including 31.

Over the approximate 16-year term of the guarantee. Guarantees. Including Throughput and Take-or-Pay Agreements The company and its subsidiaries have certain other contingent liabilities relating to long-term unconditional purchase obligations and commitments. the maximum guarantee amount will be reduced over time as certain fees are paid by the affiliate. when the indemnification expires. The aggregate approximate amounts of required payments under these various commitments are: 2010 – $7.0 debt expense and amortization of capitalized interest. $102.1 billion.5 billion.. the environmental conditions or events that are subject to these indemnities must have arisen prior to December 2001. Although the company has provided for known obligations under this indemnity that are probable and reasonably estimable. result of the $5 billion issuance of public bonds in 2009. Chevron has recorded no liability for its obligation under this guarantee. if any.4 billion. including throughput and take-or-pay agreements. The letter itself provides no estimate of the ultimate claim amount.4 40 100.0 and 2007 due to lower before-tax income.0 divided by before-tax interest costs. 2012 – $1. Under the terms of these indemnities. Long-Term Unconditional Purchase Obligations and Commitments. Through the end of 2009.3 billion. There are numerous cross-indemnity agreements with the affiliate and the other partners to permit recovery of any amounts paid under the guarantee. 2011 – $4. The company would be required to perform if the indemnified liabilities become actual losses. Management does not believe this letter or any other information provides a basis to estimate the amount.was lower than replacement costs. Inc. In February 2009. The company posts no assets as collateral and has made no payments under the indemnities. based on average acquisition costs during the year.0 less net income attributable to noncontrolling interests. 30 75. of a range of loss or potential range of loss with respect to either the Equilon or the Motiva indemnities. plus interest and 50 125. Shell delivered a letter to the company purporting to preserve unmatured claims for certain Equilon indemnities. The amounts payable for the indemnities described in the preceding paragraph are to be net of amounts recovered from insurance carriers and others and net of liabilities recorded by Equilon or Motiva prior to September 30. The company’s 20 50. for any applicable incident. some of which relate to suppliers’ financing arrangements. which had been reached at December 31. Indemnifications The company provided certain indemnities of contingent liabilities of Equilon and Motiva to Shell and Saudi Refining. In general. the amount of additional future costs may be material to results of operations in the period in which they are recognized. to be used or sold in the ordinary course of the company’s business.5 billion. A portion of these commitments may ultimately be shared with project 21 Chevron Corporation 2009 Annual Report . The company has also provided indemnities relating to contingent environmental liabilities related to assets originally contributed by Texaco to the Equilon and Motiva joint ventures and environmental conditions that existed prior to the formation of Equilon and Motiva or that occurred during the period of Texaco’s ownership interest in the joint ventures. Claims had to be asserted by February 2009 for Equilon indemnities and must be asserted no later than February 2012 for Motiva indemnities. the company assumed certain indemnities relating to contingent environmental liabilities associated with assets that were sold in 1997. 2015 and after – $4.4 billion.0 billion. after reaching the $200 million obligation. the company could be required to make future payments up to $300 million. Interest Coverage Ratio – Debt Ratio income before income tax Billions of dollars/Percent expense. such as pipeline and storage capacity. The environmental conditions or events that are subject to these indemnities must have arisen prior to the sale of the assets in 1997. Chevron is solely responsible until April 2022. The terminal is expected to be operational by 2012. The Ratio (right scale) The ratio of total debt to total increase in 2009 over 2008 debt-plus-Chevron Corporation and 2007 was primarily due Stockholders’ Equity increased to 10. in connection with the February 2002 sale of the company’s interests in those investments. drilling rigs. The acquirer of those assets shared in certain environmental remediation costs up to a maximum obligation of $200 million. 2009. and Other Contingencies Direct Guarantee Millions of dollars Total #024 – Debt Ratio – v4 Commitment Expiration by Period 2010 2011– 2012 2013– 2014 After 2014 Guarantee of nonconsolidated affiliate or joint-venture obligation $ 613 $ – $ 38 $ 77 $ 498 The company’s guarantee of approximately $600 million is associated with certain payments under a terminal use agreement entered into by a company affiliate.3 percent at the end of 2009 to the increase in debt as a due to the issuance of $5 billion in public bonds. 0 0. by approximately $5. The agreements typically provide goods and services. Off-Balance-Sheet Arrangements and Contractual Obligations. and petroleum products. Were that to occur. 2001. the company had paid $48 million under these indemnities and continues to be obligated for possible additional indemnification payments in the future. In the acquisition of Unocal.0 Debt Ratio – total debt 05 06 07 08 09 as a percentage of total debt Debt (left scale) plus Chevron Corporation CVX Stockholders’ Equity (left scale) Stockholders’ Equity. 2014 – $1. there is no maximum limit on the amount of potential future payments.0 interest coverage ratio in 2009 was lower than 2008 10 25. 2013 – $1. The company does not expect these costs will have a material effect on its consolidated financial position or liquidity. Under the indemnification agreement. utilities.

The repayment schedule above reflects the projected repayment of the entire amounts in the 2011–2012 period. The company uses derivative commodity instruments to manage these exposures on a portion of its activity. one-day VaR corresponds to the unrealized loss in portfolio value that would not be exceeded on average more than one in every 20 trading days. 22 Chevron Corporation 2009 Annual Report The company also uses derivative commodity instruments for limited trading purposes. refined products. including firm commitments and anticipated transactions for the purchase. a 95 percent confidence level. $5.233 Throughput and Take-or-Pay Agreements 15. natural gas.130 6. Item 1A. The company’s VaR model uses the Monte Carlo simulation method that involves generating hypothetical scenarios from the specified probability distribution and constructing a full distribution of a portfolio’s potential values. and a one-day holding period. as derivative commodity instruments in accordance with accounting standards for derivatives (ASC 815). For hedging and risk management. 1 2 Financial and Derivative Instruments The market risk associated with the company’s portfolio of financial and derivative instruments is discussed below. Derivative Commodity Instruments Chevron is exposed to market risks related to the price volatility of crude oil. Fair values are derived principally from published market quotes and other independent third-party quotes. consolidated financial position or liquidity in any single period. which are recorded on the balance sheet at December 31.2 billion of short-term debt that the company expects to refinance is included in longterm debt.555 3.045 Noncancelable Capital Lease Obligations 499 90 168 104 137 Interest 2.743 2. The derivative commodity instruments used in the company’s risk management and trading activities consist mainly of futures.829 – 5.024 1. results of operations or cash flows in 2009. crude oil. 4 Does not include obligations to purchase the company’s share of natural gas liquids and regasified natural gas associated with operations of the 36. That is.1 billion in 2009.825 819 3. options and swap contracts traded on the New York Mercantile Exchange and on electronic platforms of the Inter-Continental Exchange and Chicago Mercantile Exchange.4 percent-owned Angola LNG affiliate. the company’s 95 percent. The results of these activities were not material to the company’s financial position.364 568 844 719 1. natural gas liquids.281 Off-Balance-Sheet: Noncancelable Operating Lease Obligations 3.906 1. the company uses conventional exchange-traded instruments such as futures and options as well as non-exchange-traded swaps. The actual impact of future market changes could differ materially due to factors discussed elsewhere in this report. Does not include amounts related to the company’s income tax liabilities associated with uncertain tax positions. Virtually all derivatives beyond those designated as normal purchase and normal sale contracts are recorded at fair value on the Consolidated Balance Sheet with resulting gains and losses reflected in income. sale and storage of crude oil. Total payments under the agreements were approximately $8. including those set forth under the heading “Risk Factors” in Part I. The change in fair value from Chevron’s derivative commodity instruments in 2009 was a quarterly average decrease of $168 million in total assets and a quarterly average decrease of $104 million in total liabilities. 3 $4. liquefied natural gas and refinery feedstocks. The following table summarizes the company’s significant contractual obligations: Contractual Obligations1 Millions of dollars Total 2010 Payments Due by Period 2011– 2012 2013– 2014 After 2014 On Balance Sheet:2 Short-Term Debt3 $ 384 $ 384 $ – $ – $ – Long-Term Debt3 9.590 317 566 426 1.7 billion in 2007. The company’s market exposure positions are monitored and managed on a daily basis by an internal Risk Control group in accordance with the company’s risk management policies. The LNG plant is expected to commence operations in 2012 and is designed to produce 5. of the company’s 2009 Annual Report on Form 10-K. if the portfolio were held constant for one day. natural gas.931 Other Unconditional Purchase Obligations4 4. natural gas liquids and feedstock for company refineries. natural gas and refinedproduct swap contracts and option contracts are entered into principally with major financial institutions and other oil and gas companies in the “over-the-counter” markets.Management’s Discussion and Analysis of Financial Condition and Results of Operations partners. In addition.041 2. VaR is the maximum loss not to be exceeded within a given probability or confidence level over a given period of time. Information on employee benefit plans is contained in Note 21 beginning on page 59.538 149 Excludes contributions for pensions and other postretirement benefit plans. The estimates of financial exposure to market risk discussed below do not represent the company’s projection of future market changes. 2009.1 billion in 2008 and $3. The one-day holding period is based on the assumption that market-risk positions can be liquidated or hedged within one day. The company is unable to make reasonable estimates for the periods in which these liabilities may become payable. which have been approved by the Audit Committee of the company’s Board of Directors. .2 million metric tons of LNG and related natural gas liquids per year. The company uses a Value-at-Risk (VaR) model to estimate the potential loss in fair value on a single day from the effect of adverse changes in market conditions on derivative commodity instruments held or issued.617 1. The company does not expect settlement of such liabilities will have a material effect on its results of operations. Volumes and prices associated with these purchase obligations are neither fixed nor determinable. The VaR model utilizes an exponentially weighted moving average for computing historical volatilities and correlations. refined products.

the company had no interest rate swaps on floating-rate debt. issued a report recommending that the court assess $8 billion. Management believes these agreements have been negotiated on terms consistent with those that would have been negotiated with an unrelated party. In April 2008. was a minority member of this consortium with Petroecuador. Litigation and Other Contingencies MTBE Chevron and many other companies in the petroleum industry have used methyl tertiary butyl ether (MTBE) as a gasoline additive. a mining engineer appointed by the court to identify and determine the cause of environmental damage. plus a health monitoring program. are recorded at fair value on the balance sheet with resulting gains and losses reflected in income. according to the engineer. Interest rate swaps related to floatingrate debt. With regard to the facts. net cash settlements were based on the difference between fixed-rate and floating-rate interest amounts calculated by reference to agreed notional principal amounts. The lower amounts in 2009 were primarily associated with a decrease in price volatility for these commodities during the year. that the law under which plaintiffs bring the action. that the claims are barred by the statute of limitations in Ecuador. Millions of dollars 2009 2008 Crude Oil Natural Gas Refined Products $ 17 4 19 $ 39 5 45 Foreign Currency The company may enter into foreign-currency derivative contracts to manage some of its foreign-currency exposures. At the conclusion of the consortium and following an independent third-party environmental audit of the concession area. Resolution of these lawsuits and claims may ultimately require the company to correct or ameliorate the alleged effects on the environment of prior release of MTBE by the company or other parties. are recorded at fair value on the balance sheet with resulting gains and losses reflected in income. The foreign-currency derivative contracts. Based on the history described above. fourth. Historically. Interest Rates The company may enter into interest rate swaps from time to time as part of its overall strategy to manage the interest rate risk on its debt. Pursuant to that agreement. and pay for. There were no open foreign-currency derivative contracts at December 31. the company believes that the evidence confirms that Texpet’s remediation was properly conducted and that the remaining environmental damage reflects Petroecuador’s failure to timely fulfill its legal obligations and Petroecuador’s further conduct since assuming full control over the operations. the company believes first. if any. 2009. including personal-injury claims. if any. Texpet conducted a three-year remediation program at a cost of $40 million. These arrangements include long-term supply or offtake agreements and long-term purchase agreements. brought in May 2003 by plaintiffs who claim to be representatives of certain residents of an area where an oil production consortium formerly had operations. Chevron believes that this lawsuit lacks legal or factual merit. As to matters of law. a subsidiary of Texaco Inc. The company’s ultimate exposure related to pending lawsuits and claims is not determinable. the government granted Texpet and all related corporate entities a full release from any and all environmental liability arising from the consortium operations. The lawsuit alleges damage to the environment from the oil exploration and production operations and seeks unspecified damages to fund environmental remediation and restoration of the alleged environmental harm. under the terms of the swaps. for further discussion. 2009 and 2008. but could be material to net income in any one period. The engineer’s report also asserted that an additional $8. if any. Texaco Petroleum Company (Texpet). Refer to Other Financial Information in Note 24 of the Consolidated Financial Statements. page 68. since 1990. enacted in 1999. The table below presents the 95 percent/one-day VaR for each of the company’s primary risk exposures in the area of derivative commodity instruments at December 31. that the lawsuit is also barred by the releases from liability previously given to Texpet by the Republic of Ecuador and Petroecuador. provide financial compensation for purported damages. and.most of which can be liquidated or hedged effectively within one day. second. At year-end 2009. Until 1992. including foreigncurrency capital expenditures and lease commitments. environmental remediation. and to specify steps needed to remediate it. health care systems and additional infrastructure for Petroecuador. as the majority partner. Chevron is a party to 50 pending lawsuits and claims. Chevron also believes that the engineer’s work Chevron Corporation 2009 Annual Report 23 . Additional lawsuits and claims related to the use of MTBE. Ecuador Chevron is a defendant in a civil lawsuit before the Superior Court of Nueva Loja in Lago Agrio. may be accounted for as fair value hedges. cannot be applied retroactively. Interest rate swaps related to a portion of the company’s fixed-rate debt. that the court lacks jurisdiction over Chevron. The company no longer uses MTBE in the manufacture of gasoline in the United States. Transactions With Related Parties Chevron enters into a number of business arrangements with related parties. third. The engineer’s report is not binding on the court. Ecuador. Texpet entered into a formal agreement with the Republic of Ecuador and Petroecuador for Texpet to remediate specific sites assigned by the government in proportion to Texpet’s ownership share of the consortium. among other items. the majority of which involve numerous other petroleum marketers and refiners. including wrongful death claims. principally its equity affiliates. The company’s only interest rate swaps on fixed-rate debt matured in January 2009 and the company had no interest rate swaps on fixed-rate debt at year-end 2009. These exposures include revenue and anticipated purchase transactions. may be filed in the future.3 billion could be assessed against Chevron for unjust enrichment. which would. After certifying that the sites were properly remediated. the operations have been conducted solely by Petroecuador. the Ecuadorian state-owned oil company..

Chevron will continue a vigorous defense of any attempted imposition of liability. land development areas. recommended an increase in the financial compensation for purported damages to a total of $18.4 billion.539 784 (505) $ 1. including MTBE. Management does not believe an estimate of a reasonably possible loss (or a range of loss) can be made in this case.700 from third parties. and mining operations. or will have.441 562 (464) $ 1. the judge presiding over the case petitioned to be recused. and in October 2009.S. regulations.818 $ 1. private claims and legal proceedings related to environmental matters that are subject to legal settlements or that in the future may require the company to take action to correct or ameliorate the effects on the environment of prior release of chemicals or petroleum substances. including those for federal Superfund sites and analogous sites under state laws. the unknown timing and extent of the corrective actions that may be required. The company Reserves for environmental remediation at the end of 2009 were down does not expect these costs 6 percent from the prior year. resulting in the appointment of a new judge. Due to the defects associated with the engineer’s report. management does not believe the report has any utility in calculating a reasonably possible loss (or a range of loss). 24 Chevron Corporation 2009 Annual Report . Any future actions by the EPA or other regulatory agencies to require Chevron to assume other potentially responsible parties’ costs at designated hazardous waste sites are not expected to have a material effect on the company’s results of operations. In the event of an adverse judgment.S. These future costs are not fully determinable due to such factors as the unknown magnitude of possible contamination. the engineer revised the report and. the judge was recused. the highly uncertain legal environment surrounding the case provides no basis for management to estimate a reasonably possible loss (or a range of loss). Chevron submitted a rebuttal to the revised report. will have a material effect on its consolidated financial position or liquidity. Millions of dollars 2009 2008 2007 Balance at January 1 Net Additions Expenditures Balance at December 31 $ 1. Such contingencies may exist for various sites. the ultimate outcome – and any financial effect on Chevron – remains uncertain. 1500 Although the company has provided for known 1000 environmental obligations that are probable and reasonably estimable. by the company or other parties. The company’s remediation reserve for these sites at year-end 2009 was $185 million. the company does not believe its obligations to make such expenditures have had. or international petroleum or chemical companies. In September 2009.9 billion and an increase in the assessment for purported unjust enrichment to a total of $8. refineries. terminals. Environmental Protection Agency (EPA) or other regulatory agencies under the provisions of the federal Superfund law or analogous state laws. but not limited to. service stations. Environmental The company is subject to loss contingencies pursuant to laws. In late September 2009.700 million year-end 2009 reserve balance were remediation activities at approximately 250 sites for which the company had been identified as a potentially responsible party or otherwise involved in the remediation by the U.700 $ 1. Chevron submitted a rebuttal to the report in which it asked the court to strike the report in its entirety.818 351 (469) $ 1. In November 2008. The following table displays#012 – Year End Environmental the annual changes to the Remed Reserves – v2 company’s before-tax environmental remediation reserves. therefore. but the new judge denied these motions. The federal Superfund law and analogous state laws provide for joint and several liability for all responsible parties. and the extent to which 2000 such costs are recoverable $1. closed or divested. whether operating. the determination of the comYear-End Environmental pany’s liability in proportion Remediation Reserves Millions of dollars to other responsible parties. Chevron would expect to pursue its appeals and vigorously defend against enforcement of any such judgment. any significant impact on the company’s competitive position relative to other U. the 500 amount of additional future costs may be material to 0 results of operations in the 05 06 07 08 09 period in which they are recognized.539 Included in the $1. including. without additional evidence. Moreover. consolidated financial position or liquidity. Chevron filed motions to annul all of the rulings made by the prior judge. the full chamber of the provincial court affirmed the recusal.Management’s Discussion and Analysis of Financial Condition and Results of Operations was performed and his report prepared in a manner contrary to law and in violation of the court’s orders. following the disclosure by Chevron of evidence that the judge participated in meetings in which businesspeople and individuals holding themselves out as government officials discussed the case and its likely outcome. which the court dismissed. crude-oil fields. federal Superfund sites and analogous sites under state laws. Also. The court has completed most of the procedural aspects of the case and could render a judgment at any time.

Under accounting standards for asset retirement obligations (ASC 410). Other Contingencies Chevron receives claims from and submits claims to customers. The amounts of these claims. Income Taxes The company calculates its income tax expense and liabilities quarterly. service stations and terminals). plant and equipment. U.2 billion for asset retirement obligations at year-end 2009 related primarily to upstream properties. such as refineries and chemicals facilities. and suppliers. Refer to Note 15 beginning on page 53 for a discussion of the periods for which tax returns have been audited for the company’s major tax jurisdictions and a discussion for all tax jurisdictions of the differences between the amount of tax benefits recognized in the financial statements and the amount taken or expected to be taken in a tax return. including wells that had been previously suspended pending determination as to whether the well had found reserves that could be classified as proved. no provisions are made for exit or cleanup costs that may be required when such assets reach the end of their useful lives unless a decision to sell or otherwise abandon the facility has been made. These activities. soil excavation. beginning on page 57. The ultimate disposition of these well costs is dependent on the results of future drilling activity or development decisions or both.. A wide range remains for a possible net settlement amount for the four zones.S. The effect on exploration expenses in future periods of the $2. Refer also to Note 23 on page 67. The future trend of the company’s exploration expenses can be affected by amounts associated with well write-offs. $820 million related to the company’s U. ownership agreements may provide for periodic reassessments of equity interests in estimated crude-oil and natural-gas reserves. the unknown timing and extent of the corrective actions that may be required. For the company’s other ongoing operating assets. Equity Redetermination For oil and gas producing operations. insurers. onsite containment. for additional discussion of suspended wells. At December 31. consolidated financial position or liquidity. chemicals ($149 million) and other businesses ($70 million). Department of Energy. and the extent to which such costs are recoverable from third parties. whether operating. including normal project evaluation and additional drilling. remediation and/or extraction of petroleum hydrocarbon liquid and vapor from soil. Refer to Note 19. individually or together. California. It is likely that the company will continue to incur additional liabilities. related to the company’s asset retirement obligations and the discussion of “Environmental Matters” on page 26. and the possible maximum net amount that could be owed to Chevron is estimated at about $150 million. beyond those recorded. The timing of the settlement and the exact amount within this range of estimates are uncertain.4 billion of suspended exploratory wells included in properties. including refineries and other plants. trading partners. for environmental remediation relating to past operations. The liability balance of approximately $10. The 2008 balance reflected an increase of $458 million from 2007.e. for the time when the remaining interests in these zones were owned by the U.515 million. individually and in the aggregate.Of the remaining year-end 2009 environmental reserves balance of $1. The remaining $695 million was associated with various sites in international downstream ($107 million). federal. may be significant and take lengthy periods to resolve. 2009. closed or divested.4 billion of suspended wells at year-end 2009 is uncertain pending future activities. governments. No single remediation site at year-end 2009 had a recorded liability that was material to the company’s results of operations. marketing locations (i. state and local regulatory bodies. These liabilities generally are subject to audit and are not finalized with the individual taxing authorities until several years after the end of the annual period for which income taxes have been calculated. Liabilities at all sites.S. contractors. These future costs are not fully determinable due to such factors as the unknown magnitude of possible contamination. One such equity redetermination process has been under way since 1996 for Chevron’s interests in four producing zones at the Naval Petroleum Reserve at Elk Hills. were primarily associated with the company’s plans and activities to remediate soil or groundwater contamination or both. the determination of the company’s liability in proportion to other responsible parties. offsite disposal of contaminants. the fair value of a liability for an asset retirement obligation is recorded when there is a legal obligation associated with the retirement of long-lived assets and the liability can be reasonably estimated. may result in gains or losses that could be material to earnings in any given period. the company had approximately $2. The company does not expect settlement of income tax liabilities associated with uncertain tax positions will have a material effect on its results of operations. and pipelines. upstream ($369 million). an increase of $317 million from 2008. downstream operations. and monitoring of the natural attenuation of the contaminants. Chevron Corporation 2009 Annual Report 25 . Suspended Wells The company suspends the costs of exploratory wells pending a final determination of the commercial potential of the related crude-oil and natural-gas fields.S. The company manages environmental liabilities under specific sets of regulatory requirements. groundwater extraction and treatment. which in the United States include the Resource Conservation and Recovery Act and various state and local regulations. For this range of settlement. Chevron estimates its maximum possible net before-tax liability at approximately $200 million. consolidated financial position or liquidity. as the indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the asset retirement obligation. These and other activities include one or more of the following: site assessment.

These capital costs are in addition to the ongoing costs of complying with environmental regulations and the costs to remediate previously contaminated sites. the recording of deferred tax assets requires an assessment under the accounting rules that the future realization of the associated tax benefits be “more likely than not.Management’s Discussion and Analysis of Financial Condition and Results of Operations The company and its affiliates also continue to review and analyze their operations and may close. 2009. Materially different results can occur as circumstances change and additional information becomes known. abatement or elimination of hazardous substances and pollutants from operating. control. may result in gains or losses in future periods. exchange. Accidental leaks and spills requiring cleanup may occur in the ordinary course of business.” these estimates and assumptions are also subject to revision as circumstances warrant.” Another example is the estimation of crude-oil and natural-gas reserves under SEC rules. abandon. Estimates and assumptions are based on management’s experience and other information available prior to the issuance of the financial statements. An obligation may arise when operations are closed or sold or at non-Chevron sites where company products have been handled or disposed of. Included in these expenditures were approximately $1. require “…by analysis of geosciences and engineering data.7 billion of environmental capital expenditures and $1. but also the products it sells. the company may incur expenses for corrective actions at various owned and previously owned facilities and at third-party-owned waste-disposal sites used by the company. as well as disclosures of contingent assets and liabilities. or remediate and restore areas damaged by prior releases of hazardous materials. individually or together. and 2. closed or divested sites. and materially different results may sometimes occur. and the abandonment and restoration of sites. It is not possible to predict with certainty the amount of additional investments in new or existing facilities or amounts of incremental operating costs to be incurred in the future to: prevent. These regulatory requirements continue to increase in both number and complexity over time and govern not only the manner in which the company conducts its operations. Besides those meeting these “critical” criteria. acquire or restructure assets to achieve operational or strategic benefits and to improve competitiveness and profitability. Although these costs may be significant to the results of operations in any single period. Although not associated with “highly uncertain matters. health and safety laws and regulations. The discussion in this section of “critical” accounting estimates and assumptions is according to the disclosure guidelines of the Securities and Exchange Commission (SEC).1 billion. reduce or eliminate releases of hazardous materials into the environment.8 billion of costs associated with the prevention. Using definitions and guidelines established by the American Petroleum Institute. liabilities. total worldwide environmental capital expenditures are estimated at $2. (the reserves) can be estimated with reasonable certainty to be economically producible…under existing economic conditions” where existing economic conditions include prices based on the average price during the 26 Chevron Corporation 2009 Annual Report . control. Critical Accounting Estimates and Assumptions Virtually all aspects of the businesses in which the company engages are subject to various federal. which. wherein: 1. Most of the expenditures to fulfill these obligations relate to facilities and sites where past operations followed practices and procedures that were considered acceptable at the time but now require investigative or remedial work or both to meet current standards. the company makes many other accounting estimates and assumptions in preparing its financial statements and related disclosures. the company does not expect them to have a material effect on the company’s liquidity or financial position. Chevron estimated its worldwide environmental spending in 2009 at approximately $3. revenues and expenses. Most of the costs of complying with laws and regulations pertaining to company operations and products are embedded in the normal costs of doing business.5 billion for its consolidated companies. For example. state and local environmental. All such estimates and assumptions affect reported amounts of assets. comply with exist- Management makes many estimates and assumptions in the application of generally accepted accounting principles (GAAP) that may have a material impact on the company’s consolidated financial statements and related disclosures and on the comparability of such information over different reporting periods. effective December 31. For 2010. sell. In addition to the costs for environmental protection associated with its ongoing operations and products. Environmental Matters ing and new environmental laws or regulations. the nature of the estimates and assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change. These activities. the impact of the estimates and assumptions on the company’s financial condition or operating performance is material.

beginning on page 39. Total pension expense for 2009 was $1. and the underlying assumptions for those periods. The actual return for 2009 was 15.8 percent for its OPEB plan. The discussion of the critical accounting policy for “Impairment of Properties.S. and international pension and postretirement benefit plan obligations and expense reflect the prevailing rates available on high-quality fixed-income debt instruments. including those deemed “critical. 2009. uncertainties. beginning on page 39. 2009. Asset allocations are periodically updated using pension plan asset/liability studies. “Reserve Quantity Information. Two critical assumptions are the expected long-term rate of return on plan assets and the discount rate applied to pension plan obligations. which accounted for about 61 percent of the Chevron Corporation 2009 Annual Report 27 .S. market value of assets as of year-end is used in calculating the pension expense. contingencies and new accounting standards.7 percent for this plan. Refer to Table V. A 1 percent increase in the discount rate for this same plan. Note 1 to the Consolidated Financial Statements. critical assumptions in determining OPEB obligations and expense are the discount rate and the assumed health care cost-trend rates.S.” and the associated disclosures in this discussion have been discussed by management with the Audit Committee of the Board of Directors.” beginning on page 76. beginning on page 59. general and administrative expenses” and applies to all business segments. These rates were selected based on a cash flow analysis that matched estimated future benefit payments to the Citigroup Pension Discount Yield Curve as of year-end 2009. has remained at 7.8 percent since 2002. the components of pension and OPEB expense for the three years ending December 31.1 billion.S. The expected long-term rate of return on U. and the determination of the company’s estimates of long-term rates of return are consistent with these studies.” Amounts yet to be recognized as components of pension or OPEB expense are reported in “Accumulated other comprehensive loss. actual asset returns averaged 3. The areas of accounting and the associated “critical” estimates and assumptions made by the company are as follows: Pension and Other Postretirement Benefit Plans The determination of pension-plan obligations and expense is based on a number of actuarial assumptions. accounting rules. The estimates of crude-oil and natural-gas reserves are important to the timing of expense recognition for costs incurred. pension plan assets.” beginning on page 28. As an indication of the sensitivity of pension expense to the long-term rate of return assumption. Plant and Equipment and Investments in Affiliates. “Changes in the Standardized Measure of Discounted Future Net Cash Flows From Proved Reserves” on page 84 for estimates of proved-reserve values for each of the three years ended December 31.3 percent discount rate for the major U. pension plan and 5.3 percent for both years for the U.S. the company uses a process that incorporates actual historical asset-class returns and an assessment of expected future performance and takes into consideration external actuarial advice and asset-class factors. The year-end market-related value of assets of the major U. This commentary should be read in conjunction with disclosures elsewhere in this discussion and in the Notes to the Consolidated Financial Statements related to estimates. An increase in the expected long-term return on plan assets or the discount rate would reduce pension plan expense. and vice versa.S. For other postretirement benefit (OPEB) plans. 2009. measured as the difference between plan assets and obligations.” The differences associated with underfunded or unfunded pension and OPEB plans are reported as “Accrued liabilities” or “Reserves for employee benefit plans.S. pension plan would have reduced total pension plan expense for 2009 by approximately $50 million. as opposed to the maximum allowable period of five years under U. The discount rate assumptions used to determine U. 2009. 2009. Significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements. Management considers the three-month period long enough to minimize the effects of distortions from day-to-day market volatility and still be contemporaneous to the end of the year. includes reference to conditions under which downward revisions of proved-reserve quantities could result in impairments of oil and gas properties. for the changes in these estimates for the three years ending December 31.12-month period. The discount rates at the end of 2008 and 2007 were 6. At December 31. Note 21.” To estimate the long-term rate of return on pension assets. The year-end 2009 and 2008 funded status. The differences related to overfunded pension plans are reported as a long-term asset in “Deferred charges and other assets. pension plan used in the determination of pension expense was based on the market value in the preceding three months. of each of the company’s pension and OPEB plans is recognized on the Consolidated Balance Sheet. the company selected a 5.7 percent and was associated with the broad recovery in the financial markets. which account for 69 percent of the company’s pension plan assets. pension and OPEB plans. and to Table VII. The development and selection of accounting estimates and assumptions. includes a description of the “successful efforts” method of accounting for oil and gas exploration and production activities. includes information on the funded status of the company’s pension and OPEB plans at the end of 2009 and 2008. For the 10 years ending December 31. For other plans. which provide for certain health care and life insurance benefits for qualifying retired employees and which are not funded. Pension and OPEB expense is reported on the Consolidated Statement of Income as “Operating expenses” or “Selling. a 1 percent increase in the expected rate of return on assets of the company’s primary U.

would have decreased OPEB expense by approximately $11 million.S. In 2009.7 billion (including $1. Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters.3 billion. 2009. Instead. given the broad range of the company’s PP&E and the number of assumptions involved in the estimates. 2009. Differences between the various assumptions used to determine expense and the funded status of each plan and actual experience are not included in benefit plan costs in the year the difference occurs. an impairment charge is recorded for the excess of carrying value of the asset over its estimated fair value. such as future commodity prices.S. a 0. Impairment of Properties. for information on the $6. A 0. favorable changes to some assumptions might have avoided the need to impair any assets in these periods. As an indication of the sensitivity of pension liabilities to the discount rate assumption. thus changing the funded status of a plan reported on the Consolidated Balance Sheet.S. the company estimates contributions will be approximately $900 million. However. For active employees and retirees under age 65 whose claims experiences are combined for rating purposes. and the outlook for global or regional market supply-and-demand conditions for crude oil. which accounted for about 69 percent of the companywide OPEB expense.6 billion to $1. Such indicators include changes in the company’s business plans. the differences are included in actuarial gain/loss and unamortized amounts have been reflected in “Accumulated other comprehensive loss” on the Consolidated Balance Sheet. postretirement medical plan. No major individual impairments of PP&E and Investments were recorded for the three years ending December 31. would have decreased total OPEB liabilities at the end of 2009 by approximately $65 million. natural gas. changes in pension obligations. A sensitivity analysis of the impact on earnings for these periods if other assumptions had been used in impairment reviews and impairment calculations is not practicable. the company’s pension plan contributions were $1. which accounted for 84 percent of the companywide OPEB liabilities. a 1 percent increase in the discount rate for the company’s primary U. OPEB plan. would have reduced total pension plan expense for 2009 by approximately $150 million. a 1 percent increase in the rates for the main U. If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset. commodity chemicals and refined products. plans). expense for 2009 was $164 million and the total liability. An increase in the discount rate would decrease the pension obligation. which accounted for about 84 percent of the companywide OPEB liabilities. the effects of inflation and technology improvements on operating expenses. which reflected the unfunded status of the plans at the end of 2009. the annual increase to company contributions is limited to 4 percent per year.7 billion of before-tax actuarial losses recorded by the company as of December 31.8 billion. 2009.S. and an estimate of the costs to be recognized in expense during 2010. for underfunded plans was approximately $3. Actual contribution amounts are dependent upon plan-investment results. Other plans would be less underfunded as discount rates increase. whereas unfavorable changes might have caused an additional unknown number of other assets to become impaired. for crude-oil and naturalgas properties.25 percent increase in the discount rate applied to the company’s primary U.25 percent increase in the discount rate for the same plan. changes in commodity prices and.Management’s Discussion and Analysis of Financial Condition and Results of Operations companywide pension obligation. For the company’s OPEB plans. That is. pension plan would have reduced the plan obligation by approximately $300 million. production profiles. In 2010.S. regulatory requirements and other economic factors.5 billion to the U. Refer to Note 21. would have increased OPEB expense $8 million. OPEB plan. 28 Chevron Corporation 2009 Annual Report .1 billion. The actual rates of return on plan assets and discount rates may vary significantly from estimates because of unanticipated changes in the world’s financial markets. plant and equipment (PP&E) for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Additional funding may be required if investment returns are insufficient to offset increases in plan obligations. significant downward revisions of estimated proved-reserve quantities. the assumed health care cost-trend rates start with 7 percent in 2010 and gradually drop to 5 percent for 2018 and beyond. As an indication of the health care cost-trend rate sensitivity to the determination of OPEB expense in 2009. was $3. The total pension liability on the Consolidated Balance Sheet at December 31. For the main U. beginning on page 59. a description of the method used to amortize those costs. the impairment reviews and calculations are based on assumptions that are consistent with the company’s business plans and long-term investment decisions. Plant and Equipment and Investments in Affiliates The company assesses its properties. As an indication of discount rate sensitivity to the determination of OPEB expense in 2009. which would have decreased the plan’s underfunded status from approximately $1.

An estimate as to the sensitivity to earnings for these periods if other assumptions had been used in recording these liabilities is not practicable because of the number of contingencies that must be assessed. and improvements in technology. tax matters and environmental remediation. and if the estimated net proceeds exceed the carrying value of the asset or asset group. which was subsequently codified into ASC 715. environmental remediation and tax matters for the three years ended December 31. Accounting for Transfers of Financial Assets (ASU 2009-16) The FASB issued ASU 2009-16 in December 2009. Such calculations are reviewed each period until the asset or asset group is disposed of. an impairment charge is recorded to the income statement for the difference between the investment’s carrying value and its estimated fair value at the time. Goodwill Goodwill resulting from a business combination is not subject to amortization. an impairment review is performed to determine if the carrying value of the asset remains recoverable. Compensation – Retirement Benefits. Under the accounting rules. When such a decline is deemed to be other than temporary. the determination of additional information on the extent and nature of site contamination. Also. opinions on culpability and assessments on the amount of damages. Transfers and Servicing (ASC 860). less costs to sell. 2009. the number of underlying assumptions and the wide range of reasonably possible outcomes. if the expectation of sale of a particular asset or asset group in any period has been deemed more likely than not. Actual costs can frequently vary from estimates for a variety of reasons. New Accounting Standards The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No.Investments in common stock of affiliates that are accounted for under the equity method.. generally accepted accounting principles (GAAP) and superseded existing literature of the FASB. As required by accounting standards for goodwill (ASC 350). Adoption of the ASC did not affect the company’s accounting. Employee Benefits. for these disclosures. a liability is generally recorded for these types of contingencies if management determines the loss to be both probable and estimable. the investee’s financial performance. American Institute of CPAs and other sources. From time to time. and became effective with the company’s reporting at December 31. for which benefits are recognized only if management determines the tax position is “more likely than not” (i. In making the determination as to whether a decline is other than temporary. An exception to this handling is for income tax matters. likelihood greater than 50 percent) to be allowed by the tax jurisdiction. regulations and their interpretation. and the company’s ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the investment’s market value. the costs from settlement of claims and litigation can vary from estimates based on differing interpretations of laws. This standard established the FASB Accounting Standards Codification (ASC) system as the single authoritative source of U. litigation. are less than the assets’ associated carrying values. the company performs impairment reviews and determines whether any write-down in the carrying value of an asset or asset group is required. Refer to information beginning on page 59 in Note 21. 2009. 2009. Assets that are not impaired on a held-and-used basis could possibly become impaired if a decision is made to sell such assets. For additional discussion of income tax uncertainties.e. as well as investments in other securities of these equity investees. The company generally reports these losses as “Operating expenses” or “Selling. Refer also to the business segment discussions elsewhere in this section for the effect on earnings from losses associated with certain litigation. For example. the company considers such factors as the duration and extent of the decline. liabilities for environmental remediation are subject to change because of changes in laws. which became effective for the company in the quarter ending September 30. For example. when significant downward revisions to crude-oil and natural-gas reserves are made for any single field or concession. both in terms of the probability of loss and the estimates of such loss.S. 2010. but organized the literature into about 90 accounting Topics. general and administrative expenses” on the Consolidated Statement of Income. the FASB issued FSP FAS 132(R)-1. Contingent Losses Management also makes judgments and estimates in recording liabilities for claims. Employer’s Disclosures About Postretirement Benefit Plan Assets (FSP FAS 132(R)-1) In December 2008. The ASC did not change GAAP. Similarly. are reviewed for impairment when the fair value of the investment falls below the company’s carrying value. the FASB issued FAS 168. That is. ASU 2009-16 Chevron Corporation 2009 Annual Report 29 . Emerging Issues Task Force. no impairment charge is required. the assets would be impaired if they are classified as held-for-sale and the estimated proceeds from the sale. This standard amended and expanded the disclosure requirements for the plan assets of defined benefit pension and other postretirement plans. and are not subject to sensitivity analysis. This standard became effective for the company on January 1. Differing assumptions could affect whether an investment is impaired in any period or the amount of the impairment. refer to Note 15 beginning on page 53. the company tests such goodwill at the reporting unit level for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. an impairment review is performed. 162 (FAS 168) In June 2009.

Consolidation (ASC 810). Adoption of the standard is not expected to have a material impact on the company’s results of operations.Management’s Discussion and Analysis of Financial Condition and Results of Operations changes how companies account for transfers of financial assets and eliminates the concept of qualifying specialpurpose entities. 30 Chevron Corporation 2009 Annual Report . Improvements to Financial Reporting by Enterprises Involved With Variable Interest Entities (ASU 2009-17) The FASB issued ASU 2009-17 in December 2009. ASU 2009-17 requires the enterprise to qualitatively assess if it is the primary beneficiary of a variable-interest entity (VIE). Refer to Table V – Reserve Quantity Information. Oil and Gas Reserve Estimation and Disclosures (ASU 2010-03) In January 2010. Modernization of the Oil and Gas Reporting Requirements (the final rule). Extractive Industries – Oil and Gas. if so. and. This standard became effective for the company January 1. the VIE must be consolidated. financial position or liquidity. for additional information on the final rule and the impact of adoption. to align them with the requirements in the Securities and Exchange Commission’s final rule. 2009. The standard amends certain sections of ASC 932. The final rule was issued on December 31. 2010. Adoption of the guidance is not expected to have an impact on the company’s results of operations. Extractive Industries – Oil and Gas (ASC 932). financial position or liquidity. beginning on page 76. the FASB issued ASU 2010-03. which became effective for the company on December 31. 2008.

585 $ 1.975 $ 64. value-added and similar taxes: End of day price.92 0.192 1.400 4.846 15 3.492 338 2.043 438 3.867 3.563 464 82.346 977 381 2.589 4.925 32 $ 7.086 $ $ $ $ $ $ 1.241 9.099 4.678 4.48 $ $ $ $ $ 0.173 1.957 3.346 1.837 $ 43.61 $ 77.895 $ 76. depletion and amortization 3.46 $ 1.85 $ $ 2.224 11.64 61.901 6 $ 4.205 36.64 68.40 2.854 17 $ 1.45 2. Chevron Corporation 2009 Annual Report 31 .449 5.203 23.188 2.676 Costs and Other Deductions Purchased crude oil and products 28.92 $ $ 2.978 8 32. except per-share amounts 4th Q 3rd Q 2nd Q 1st Q 4th Q 3rd Q 2nd Q 2008 1st Q Revenues and Other Income Sales and other operating revenues1 $ 47.606 Operating expenses 4.859 3.443 – 56.588 Income from equity affiliates 898 Other income 190 Total Revenues and Other Income 48.072 373 46.65 $ 77.53 0.756 $ 6.761 16 1.51 $ 2.002 78.659 1.Quarterly Results and Stock Market Data Unaudited 2009 Millions of dollars.341 6.50 $ 2.92 0.54 1.180 1.575 5.68 72.74 $ 2.962 1.65 $ 82.056 5.437 6.509 $ 5.910 $ 0.614 – 64.034 $ $ 0.209 1.275 5.526 14.244 43 65.625 26.583 Interest and debt expense – Total Costs and Other Deductions 42.644 14 40.821 Income Tax Expense 2. As of February 19.647 $ 34.699 – 71.130 23.88 3. There are no restrictions on the company’s ability to pay dividends.652 $ 0.577 $ 0.330 Exploration expenses 281 Depreciation.65 72.91 2.14 2.177 242 2.403 1.893 $ 80.88 0.079 $ $ $ $ $ $ 0.145 886 1.65 $ 103.867 49.44 $ $ 3.988 4.639 307 2.20 $ 57.65 $ 99.547 – 37.168 $ $ 1.765 5.416 $ 7.989 56.416 1.278 271 2.455 1.342 $ 3.58 $ 94.070 Per-Share of Common Stock Net Income Attributable to Chevron Corporation – Basic $ – Diluted $ Dividends Common Stock Price Range – High2 – Low 2 1 2 $ 45.855 Income Before Income Tax Expense 5.50 2. stockholders of record numbered approximately 195.92 1. The company’s common stock is listed on the New York Stock Exchange (trading symbol: CVX).319 $ 1.67 63.831 $ 39.745 20.719 Net Income $ 3.246 2.238 5.987 735 611 (177) 532 40.080 $ 0.35 $ 56.09 $ 86.676 1.172 45.899 Selling.528 4.345 $ 4.969 4.386 6 36.102 Less: Net income attributable to noncontrolling interests 32 Net Income Attributable to Chevron Corporation $ 3.87 0.347 253 2.156 Taxes other than on income1 4.08 $ 77. 2010.215 5.705 4.000.957 7.946 42.83 $ 2.68 79.248 1.196 28 $ 5.009 34 $5.75 2.673 1.90 $ $ 2.537 Includes excise. general and administrative expenses 1.

The Audit Committee meets regularly with members of management. the company’s management concluded that internal control over financial reporting was effective as of December 31. conducted an evaluation of the effectiveness of the company’s internal control over financial reporting based on the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. including the Chief Executive Officer and Chief Financial Officer. Management’s Report on Internal Control Over Financial Reporting The company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The effectiveness of the company’s internal control over financial reporting as of December 31. as such term is defined in Exchange Act Rule 13a-15(f). Yarrington Mark A. The statements were prepared in accordance with accounting principles generally accepted in the United States of America and fairly represent the transactions and financial position of the company. As stated in its report included herein. has been audited by PricewaterhouseCoopers LLP. The company’s management. 2009. Both the internal auditors and the independent registered public accounting firm have free and direct access to the Audit Committee without the presence of management. an independent registered public accounting firm. Watson Patricia E. as stated in its report included herein.Management’s Responsibility for Financial Statements To the Stockholders of Chevron Corporation Management of Chevron is responsible for preparing the accompanying consolidated financial statements and the related information appearing in this report. auditing and financial reporting matters. The Board of Directors of Chevron has an Audit Committee composed of directors who are not officers or employees of the company. Humphrey Chairman of the Board and Chief Executive Officer February 25. internal control. The financial statements include amounts that are based on management’s best estimates and judgment. John S. the internal auditors and the independent registered public accounting firm to review accounting. 2010 Vice President and Chief Financial Officer Vice President and Comptroller 32 Chevron Corporation 2009 Annual Report . 2009. the independent registered public accounting firm of PricewaterhouseCoopers LLP has audited the company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Based on the results of this evaluation.

San Francisco. Because of its inherent limitations. on a test basis. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Also. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. in all material respects. 2009. or that the degree of compliance with the policies or procedures may deteriorate. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. included in the accompanying Management’s Report on Internal Control Over Financial Reporting. based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). the financial position of Chevron Corporation and its subsidiaries at December 31. The Company’s management is responsible for these financial statements. assessing the risk that a material weakness exists. assessing the accounting principles used and significant estimates made by management. and the results of their operations and their cash flows for each of the three years in the period ended December 31. projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions. 2008. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. in all material respects. use. Our audits of the financial statements included examining. the Company maintained. equity and cash flows present fairly. and evaluating the overall financial statement presentation. California February 25. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that. in reasonable detail. accurately and fairly reflect the transactions and dispositions of the assets of the company.Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Chevron Corporation: In our opinion. and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. the accompanying consolidated balance sheets and the related consolidated statements of income. and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition. and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company. effective internal control over financial reporting as of December 31. 2009 in conformity with accounting principles generally accepted in the United States of America. 2009 and December 31. internal control over financial reporting may not prevent or detect misstatements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting. or disposition of the company’s assets that could have a material effect on the financial statements. 2010 Chevron Corporation 2009 Annual Report 33 . Our audits also included performing such other procedures as we considered necessary in the circumstances. evidence supporting the amounts and disclosures in the financial statements. for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. We believe that our audits provide a reasonable basis for our opinions. (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles. Also in our opinion. comprehensive income.

636 99.681 273.795 5. general and administrative expenses Exploration expenses Depreciation.756 1.144 2.303 – 229.005 171. See accompanying Notes to the Consolidated Financial Statements.266 166 188.316 918 171.110 17.169 9.653 17.026 24.563 80 $ 10.926 1.948 43.688 $ $ $ 5.591 28 153.342 12.904 133.965 10. except per-share amounts Year ended December 31 2009 2008 2007 Revenues and Other Income Sales and other operating revenues* Income from equity affiliates Other income Total Revenues and Other Income Costs and Other Deductions Purchased crude oil and products Operating expenses Selling.109 $ $ $ 11.397 20. value-added and similar taxes.669 220.846 $ $ $ 8.Consolidated Statement of Income Millions of dollars.309 16.958 5.708 22. $ 167. depletion and amortization Taxes other than on income* Interest and debt expense Total Costs and Other Deductions Income Before Income Tax Expense Income Tax Expense Net Income Less: Net income attributable to noncontrolling interests Net Income Attributable to Chevron Corporation Per-Share of Common Stock Net Income Attributable to Chevron Corporation – Basic – Diluted *Includes excise.795 107 $ 18.057 19.24 8.527 1.366 2.630 32.26 5.857 4.528 7.77 10.932 5.83 8.528 21.108 18.323 8.121 34 Chevron Corporation 2009 Annual Report .483 $ 264.931 $ 214.031 100 $ 23.274 13.479 18.67 9.091 4.402 3.74 11.

901) (1.166 (80) $ 10.099) (65) (34) 65 159 (399) (397) 10.524 (107) $ 19. $ 10.563 60 2 – 2 (69) (23) 32 (60) $ 24.086 483 (3.417 Chevron Corporation 2009 Annual Report 35 .Consolidated Statement of Comprehensive Income Millions of dollars Year ended December 31 2009 2008 2007 Net Income Currency translation adjustment Unrealized net change arising during period Unrealized holding gain (loss) on securities Net gain (loss) arising during period Reclassification to net income of net realized loss Total Derivatives Net derivatives (loss) gain on hedge transactions Reclassification to net income of net realized (gain) loss Income taxes on derivatives transactions Total Defined benefit plans Actuarial loss Amortization to net income of net actuarial loss Actuarial (loss) gain arising during period Prior service cost Amortization to net income of net prior service credits Prior service (cost) credit arising during period Defined benefit plans sponsored by equity affiliates Income taxes on defined benefit plans Total Other Comprehensive (Loss) Gain.031 (112) (6) – (6) 139 32 (61) 110 $ 18.037 (1.022 356 530 (15) 204 19 (409) 685 729 19.228) (64) (32) (97) 1. Net of Tax Comprehensive Income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to Chevron Corporation See accompanying Notes to the Consolidated Financial Statements.122 (100) $ 22.795 31 17 2 19 (10) 7 (3) (6) 575 (1.909) 22.

818 16.000.216 2.00 par value.678 11. $0.529 5.914 647 92. net Investments and advances Properties.000.466 5.211 9.820 96.521 6.117 $ 161.711 4. at cost (2009 – 434.375 2. except per-share amounts At December 31 2009 2008 Assets Cash and cash equivalents Marketable securities Accounts and notes receivable (less allowance: 2009 – $228.808 72. depletion and amortization Properties.624 1.619 252 $ 161.618 – $ 164.000 shares.676.000. $1.299 81. plant and equipment.200 36.703 $ 9.165 36 Chevron Corporation 2009 Annual Report .162 37.000 shares.924) (434) (26.390 11.580 shares issued at December 31.158 188.75 par value.742 341 17.321) (349) (26.780 4.220 6.832 14.470 2.774 shares.854 4.648 469 87.680 383 1.448 101.077 3.Consolidated Balance Sheet Millions of dollars.060 – 5.954.079 1. $ 8.289 (4.469 32.165 $ 2.023 5.347 213 15.716 106 17.437 5. supplies and other Total inventories Prepaid expenses and other current assets Total Current Assets Long-term receivables. plant and equipment.920 173.288 91. 2009 and 2008) Capital in excess of par value Retained earnings Accumulated other comprehensive loss Deferred compensation and benefit plan trust Treasury stock.879 4.391 26. none issued) Common stock (authorized 6.376) 86.832 14. 2008 – 438.580 8.519 91. 2008 – $246) Inventories: Crude oil and petroleum products Chemicals Materials.856 3.829 301 17.468 2.442.539 6.561 $ 164.168) 91. 2. at cost Less: Accumulated depreciation. net Deferred charges and other assets Goodwill Assets held for sale Total Assets Liabilities and Equity Short-term debt Accounts payable Accrued liabilities Federal and other taxes on income Other taxes payable Total Current Liabilities Long-term debt Capital lease obligations Deferred credits and other noncurrent obligations Noncurrent deferred income taxes Reserves for employee benefit plans Total Liabilities Preferred stock (authorized 100.725 74.413 20.102 (3.444.048 – 1.795 shares) Total Chevron Corporation Stockholders’ Equity Noncontrolling interests Total Equity Total Liabilities and Equity See accompanying Notes to the Consolidated Financial Statements.621 1.175 459 1.631 106.282 21.621 $ 384 16.

110 552 (103) (1.716 $ 24.673) (161) (84) (839) 10 29.632 (19.295) 120 (3. $ 10.821) (10.192) 5.791) (77) (6.343) (4.081) 2.564 127 336 244 (16.795 8.338 185 21 (799) (13. depletion and amortization Dry hole expense Distributions less than income from equity affiliates Net before-tax gains on asset retirements and sales Net foreign currency effects Deferred income tax provision Net (increase) decrease in operating working capital Increase in long-term receivables Decrease (increase) in other deferred charges Cash contributions to employee pension plans Other Net Cash Provided by Operating Activities Investing Activities Capital expenditures Proceeds and deposits related to asset sales Net sales of marketable securities Repayment of loans by equity affiliates Net sales (purchases) of other short-term investments Net Cash Used for Investing Activities Financing Activities Net (payments) borrowings of short-term obligations Proceeds from issuances of long-term debt Repayments of long-term debt and other financing obligations Cash dividends – common stock Distributions to noncontrolling interests Net sales (purchases) of treasury shares Net Cash Used for Financing Activities Effect of Exchange Rate Changes on Cash and Cash Equivalents Net Change in Cash and Cash Equivalents Cash and Cash Equivalents at January 1 Cash and Cash Equivalents at December 31 See accompanying Notes to the Consolidated Financial Statements.933) (345) 650 (3.302) (71) 168 (3.572) (3.Consolidated Statement of Cash Flows Millions of dollars Year ended December 31 2009 2008 2007 Operating Activities Net Income Adjustments Depreciation.315) 378 261 685 (82) (530) (317) 326 24.647 – (965) (5.301) (258) 201 (1.255) 466 467 (2.491 483 179 432 (17.739) 670 19.546) 114 (631) 9.985 7.528 375 (440) (1.358) (355) 598 (1.843) 2.347 $ 8.162) (99) (6.389) (14.373 (19.347 (496) (5.362 $ 9.563 12.708 507 (1.400) (166) 1.493 $ 7.362 Chevron Corporation 2009 Annual Report 37 .439) (2.131) 10.977 (16.031 9.678) 3.347 $ 18.666) 1.

102 10.631 (9.832 $ 14.168 14.011) 527 $(26.118 85.445 85 (3.329 $ (1) $ 14.924) 39 (6) $ 33 $ (2.376) (6) 214 $ (26.914 $ 647 $ 92.289 $ 68.892) $ 77.955 $ (194) 85 (109) (240) (349) $ 14.631 $ 101.931 (5.448 183 $ 14.442.483 (5.292 38 Chevron Corporation 2009 Annual Report .442.008) $ $ $ – 19 19 143 (60) $ 83 $ (4.126 163 $ 14.395) (7.168) $ 91.909) (399) – $ (4.088 $ 204 $ 77.321) 33 110 $ 143 $ (3.585) 685 (108) $ (2.329 23.677 $ – $ 1.901) – $ (3.168 438.008) (1.162) – 4 $101.677 $ $ – 1.117 $(12.892) (8.376) $ 86.243 95.102 $ – – 2.909) $ $ $ 19 (6) 13 $ (2.168 14. – 2.648 $ 469 $ 87.304) 352.429) 438.168 14.442. amounts in millions of dollars 2009 Shares Amount Shares 2008 Amount Shares 2007 Amount Preferred Stock Common Stock Capital in Excess of Par Balance at January 1 Treasury stock transactions Balance at December 31 Retained Earnings Balance at January 1 Net income attributable to Chevron Corporation Cash dividends on common stock Adoption of new accounting standard for uncertain income tax positions Tax benefit from dividends paid on unallocated ESOP shares and other Balance at December 31 Notes Receivable – Key Employees Accumulated Other Comprehensive Loss Currency translation adjustment Balance at January 1 Change during year Balance at December 31 Pension and other postretirement benefit plans Balance at January 1 Change to defined benefit plans during year Adoption of new accounting standard for defined benefit pension and other postretirement plans Balance at December 31 Unrealized net holding gain on securities Balance at January 1 Change during year Balance at December 31 Net derivatives gain (loss) on hedge transactions Balance at January 1 Change during year Balance at December 31 Balance at December 31 Deferred Compensation and Benefit Plan Trust Deferred Compensation Balance at January 1 Net reduction of ESOP debt and other Balance at December 31 Benefit Plan Trust (Common Stock) Balance at December 31 Treasury Stock at Cost Balance at January 1 Purchases Issuances – mainly employee benefit plans Balance at December 31 Total Chevron Corporation Stockholders’ Equity at December 31 Noncontrolling Interests Total Equity See accompanying Notes to the Consolidated Financial Statements.832 $ 14.243 $ (214) – (214) (240) (454) $ (26.289 $ – $ $ (171) 60 (111) $ $ (59) (112) (171) $ $ (90) 31 (59) $ (3.561 $(18.015) $ 14.791) (35) 3 $ 82.464 18.429 (11.168 278.448 $ 82.168 352.036) 539 $(18.Consolidated Statement of Equity Shares in thousands.677 $ – $ 1.688 (4.445 $ (214) 20 (194) (240) (434) $ 14.302) – 6 $106.832 – 2.308) $ $ $ 13 2 15 $ (2.289 159 $ 14.575) 434.

Undivided interests in oil and gas joint ventures and certain other assets are consolidated on a proportionate basis. For some of this derivative activity. First-Out (LIFO) method. supplies and other” inventories generally are stated at average cost. the carrying value of the investment is written down to its fair value. and the company’s ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the investment’s market value. Short-Term Investments All short-term investments are classified as available for sale and are in highly liquid debt securities. The company’s Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America. generally limited to large. Interest rate swaps – hedging a portion of the company’s fixed-rate debt – are accounted for as fair value hedges. petroleum products and chemicals are generally stated at cost. The nature of the company’s operations and the many countries in which it operates subject the company to changing economic. with any unrealized gains or losses included in “Other comprehensive income. generally because of the short-term nature of the contracts or their limited use. Chevron Corporation 2009 Annual Report 39 . These require the use of estimates and assumptions that affect the assets. liabilities. marketing and transportation (downstream) operations relate to refining crude oil into finished petroleum products. whereas interest rate swaps relating to a portion of the company’s floating-rate debt are recorded at fair value on the Consolidated Balance Sheet. and the amount of the write-down is included in net income. revenues and expenses reported in the financial statements. Investments in and advances to affiliates in which the company has a substantial ownership interest of approximately 20 percent to 50 percent or for which the company exercises significant influence but not control over policy decisions are accounted for by the equity method. and fuel and lubricant oil additives. As part of that accounting. the company recognizes gains and losses that arise from the issuance of stock by an affiliate that results in changes in the company’s proportionate share of the dollar amount of the affiliate’s equity currently in income. including discussion and disclosure of contingent liabilities. and transporting crude oil. these costs are below market. For the company’s commodity trading activity and foreign currency exposures. except per-share amounts Note 1 Summary of Significant Accounting Policies General Exploration and production (upstream) operations consist of exploring for. motor equipment and rail car. actual results could differ from these estimates as future confirming events occur. When appropriate.” Inventories Crude oil. For other similar derivative instruments. marine vessel. the company considers such factors as the duration and extent of the decline. the company’s share of the affiliate’s reported earnings is adjusted quarterly to reflect the difference between these allocated values and the affiliate’s historical book values. gains and losses from derivative instruments are reported in current income. with resulting gains and losses reflected in income. Investments are assessed for possible impairment when events indicate that the fair value of the investment may be below the company’s carrying value. The new cost basis of investments in these equity investees is not changed for subsequent recoveries in fair value. marketing crude oil and the many products derived from petroleum. Differences between the company’s carrying value of an equity investment and its underlying equity in the net assets of the affiliate are assigned to the extent practicable to specific assets and liabilities based on the company’s analysis of the various factors giving rise to the difference. regulatory and political conditions. Those investments that are part of the company’s cash management portfolio and have original maturities of three months or less are reported as “Cash equivalents. the company may elect to apply fair value or cash flow hedge accounting. Refining. Subsidiary and Affiliated Companies The Consolidated Financial Statements include the accounts of controlled subsidiary companies more than 50 percent-owned and variable-interest entities in which the company is the primary beneficiary. plastics for industrial uses. Although the company uses its best estimates and judgments. fair value receivable and payable amounts recognized for derivative instruments executed with the same counterparty are offset on the balance sheet. The company does not believe it is vulnerable to the risk of near-term severe impact as a result of any concentration of its activities. natural gas and petroleum products by pipeline. as well as amounts included in the notes thereto. Where Chevron is a party to master netting arrangements.” The balance of the short-term investments is reported as “Marketable securities” and is marked-to-market. In making the determination as to whether a decline is other than temporary. “Materials. When such a condition is deemed to be other than temporary. Chemical operations include the manufacture and marketing of commodity petrochemicals. and changes in the fair value of those contracts are reflected in current income. the investee’s financial performance. developing and producing crude oil and natural gas and marketing natural gas. the company does not apply hedge accounting. Derivatives The majority of the company’s activity in derivative commodity instruments is intended to manage the financial risk posed by physical transactions. In the aggregate. using a Last-In.Notes to the Consolidated Financial Statements Millions of dollars. discrete or infrequently occurring transactions.

proved mineral interests in crude oil and natural gas properties. are expensed using the unit-of-production method generally by individual field. Outside the United States. Costs of wells that are assigned proved reserves remain capitalized. as appropriate. including proved crude-oil and natural-gas properties. reviews are performed on a country. on page 67. Refer also to Note 23. For proved crude-oil and natural-gas properties in the United States. the company tests such goodwill at the reporting unit level for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Depreciation and depletion of all capitalized costs of proved crude-oil and natural-gas producing properties. except per-share amounts Note 1 Summary of Significant Accounting Policies – Continued Properties. beginning on page 57. In general. Costs also are capitalized for exploratory wells that have found crude-oil and natural gas reserves even if the reserves cannot be classified as proved when the drilling is completed. Liabilities related to future remediation costs are recorded when environmental assessments or cleanups or both are probable and the costs can be reasonably estimated. Depletion expenses for capitalized costs of proved mineral interests are recognized using the unit-of-production method by individual field as the related proved reserves are produced. marketing. Plant and Equipment The successful efforts method is used for crude-oil and natural-gas exploration and production activities. a marketing area or marketing assets by country. the fair value of a liability for an ARO is recorded as an asset and a liability when there is a legal obligation associated with the retirement of a long-lived asset and the amount can be reasonably estimated. 40 Chevron Corporation 2009 Annual Report .Notes to the Consolidated Financial Statements Millions of dollars. the declining-balance method is used to depreciate plant and equipment in the United States. the asset is considered impaired and adjusted to the lower value. and Canadian marketing facilities. a liability for an ARO is made. natural-gas and mineral-producing properties. impairment reviews are generally done on the basis of a refinery. significant change in the extent or manner of use of or a physical change in an asset. as the proved developed reserves are produced. For the company’s U. transportation and chemicals areas. Gains or losses from abnormal retirements are recorded as expenses and from sales as “Other income. relating to AROs. depletion and amortization” expense. For crude-oil. and a more-likely-thannot expectation that a long-lived asset or asset group will be sold or otherwise disposed of significantly sooner than the end of its previously estimated useful life. a plant. except mineral interests. All other exploratory wells and costs are expensed. Major replacements and renewals are capitalized. Events that can trigger assessments for possible impairments include write-downs of proved reserves based on field performance. Costs of exploratory wells are capitalized pending determination of whether the wells found proved reserves. are assessed for possible impairment by comparing their carrying values with their associated undiscounted future net before-tax cash flows. generally their discounted future net before-tax cash flows.” Expenditures for maintenance (including those for planned major maintenance projects). and related asset retirement obligation (ARO) assets are capitalized. Gains or losses are not recognized for normal retirements of properties. As required under accounting standards for asset retirement and environmental obligations (Accounting Standards Codification (ASC) 410). In the refining.S. the accrual is based in part on the probability that a future remediation commitment will be required. repairs and minor renewals to maintain facilities in operating condition are generally expensed as incurred. plant and equipment subject to composite group amortization or depreciation. All costs for development wells. Periodic valuation provisions for impairment of capitalized costs of unproved mineral interests are expensed. significant decreases in the market value of an asset. Expenditures that create future benefits or contribute to future revenue generation are capitalized. Long-lived assets to be held and used. development area or field basis. Environmental Expenditures Environmental expenditures that relate to ongoing operations or to conditions caused by past operations are expensed. Goodwill Goodwill resulting from a business combination is not subject to amortization. the company generally performs the impairment review on an individual field basis. provided the exploratory well has found a sufficient quantity of reserves to justify its completion as a producing well and the company is making sufficient progress assessing the reserves and the economic and operating viability of the project. Long-lived assets that are held for sale are evaluated for possible impairment by comparing the carrying value of the asset with its fair value less the cost to sell. the straight-line method generally is used to depreciate international plant and equipment and to amortize all capitalized leased assets. Impaired assets are written down to their estimated fair values. concession. The capitalized costs of all other plant and equipment are depreciated or amortized over their estimated useful lives. related plant and equipment. If the net book value exceeds the fair value less cost to sell. Depreciation and depletion expenses for mining assets are determined using the unit-of-production method as the proved reserves are produced. As required by accounting standards for goodwill (ASC 350). Refer to Note 19. Impairment amounts are recorded as incremental “Depreciation. for additional discussion of accounting for suspended exploratory well costs.

Future amounts are not discounted. all gains and losses from currency translations are currently included in income. Stock options and stock appreciation rights granted under the company’s Long-Term Incentive Plan have graded vesting provisions by which one-third of each award vests on the first. natural gas.” Activity for the equity attributable to noncontrolling interests for 2009. Stock Options and Other Share-Based Compensation The company issues stock options and other share-based compensation to its employees and accounts for these transactions under the accounting standards for share-based compensation (ASC 718).000 shares remain available for issuance from the 800. value-added and similar taxes assessed by a governmental authority on a revenue-producing transaction between a seller and a customer are presented on a gross basis.122 and $7. 2009.S. total compensation cost is based on the grant date fair value and for liability awards. Chevron Corporation 2009 Annual Report 41 . For equity awards. the company records a liability for its designated share of the probable and estimable costs and probable amounts for other potentially responsible parties when mandated by the regulatory agencies because the other parties are not able to pay their respective shares.000 shares of the company’s common stock that were reserved for awards under the Chevron Corporation Non-Employee Directors’ Equity Compensation and Deferral Plan (Non-Employee Directors’ Plan). dollar is the functional currency for substantially all of the company’s consolidated operations and those of its equity affiliates. 2009. which is the shorter of the vesting period or the time period an employee becomes eligible to retain the award at retirement. dollar are included in “Currency translation adjustment” on the Consolidated Statement of Equity. included approximately $8. For those operations.S. on page 67. The cumulative translation effects for those few entities. Refer to Note 23. for a discussion of the company’s AROs. The gross amount of environmental liabilities is based on the company’s best estimate of future costs using currently available technology and applying current regulations and the company’s own internal environmental policies. Revenue Recognition Revenues associated with sales of crude oil. In addition. The amount of consolidated net income attributable to the parent and the noncontrolling interests are both presented on the face of the Consolidated Statement of Income. Currency Translation The U.Note 1 Summary of Significant Accounting Policies – Continued following accounting standards for asset retirement and environmental obligations. At December 31. Recoveries or reimbursements are recorded as assets when receipt is reasonably assured. 2008 and 2007 is as follows: 2009 2008 2007 Balance at January 1 $ Net income Distributions to noncontrolling interests Other changes. The term “earnings” is defined as “Net Income Attributable to Chevron Corporation. total compensation cost is based on the settlement value. The company recognizes stock-based compensation expense for all awards over the service period required to earn the award. net of royalties. and all other sources are recorded when title passes to the customer. coal. approximately 342. using functional currencies other than the U. The associated amounts are shown as a footnote to the Consolidated Statement of Income on page 34 Purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another (including buy/sell arrangements) are combined and recorded on a net basis and reported in “Purchased crude oil and products” on the Consolidated Statement of Income.951. discounts and allowances. such as stock appreciation rights. net Balance at December 31 $ 469 80 (71) 169 647 $ $ 204 100 (99) 264 469 $ $ 209 107 (77) (35) 204 Note 3 Equity Retained earnings at December 31. For federal Superfund sites and analogous sites under state laws. and retroactive to the earliest period presented. 2009 and 2008. about 94 million shares of Chevron’s common stock remained available for issuance from the 160 million shares that were reserved for issuance under the Chevron Corporation Long-Term Incentive Plan (LTIP). such as stock options. Note 2 Noncontrolling Interests The company adopted accounting standards for noncontrolling interests (ASC 810) in the consolidated financial statements effective January 1. The company amortizes these graded awards on a straightline basis. respectively. petroleum and chemicals products. as applicable. for the company’s share of undistributed earnings of equity affiliates. Ownership interests in the company’s subsidiaries held by parties other than the parent are presented separately from the parent’s equity on the Consolidated Balance Sheet. Revenues from natural gas production from properties in which Chevron has an interest with other producers are generally recognized on the entitlement method. Excise. second and third anniversaries of the date of grant. both consolidated and affiliated.

In 2008.975) $ 185 In accordance with accounting standards for cash-flow classifications for stock options (ASC 718). for a discussion of revisions to the company’s AROs that also did not involve cash receipts or payments for the three years ending December 31. plant and equipment” related to the acquisition of an additional interest in an equity affiliate that required a change to the consolidated method of accounting for the investment during 2008. Purchases in 2008 and 2007 included shares purchased under the company’s common stock repurchase programs. 2008 and 2007.301) Net cash provided by operating activities includes the following cash payments for interest and income taxes: Interest paid on debt (net of capitalized interest) $ – Income taxes $ 7. Refer also to Note 23.930 741 $ 685 $ – $ 19.469 2. $106 and $96 for excess income tax benefits associated with stock options exercised during 2009.306 $ 22. 2 2009 includes payments of $2. net 2 Capital expenditures Expensed exploration expenditures Assets acquired through capital lease obligations and other financing obligations Capital and exploratory expenditures.237 9 20.400 increase in “Properties. a $2.036 in 2009.476) Decrease (increase) in inventories 1.843 790 $ 18. except per-share amounts Note 4 Information Relating to the Consolidated Statement of Cash Flows Year ended December 31 2009 2008 2007 Net (increase) decrease in operating working capital was composed of the following: (Increase) decrease in accounts and notes receivable $ (1.652 1.628) (909) $ (1.” In 2009.051 320 (200) 19. including equity affiliates. The Consolidated Statement of Cash Flows for 2009 excludes changes to the Consolidated Balance Sheet that did not affect cash.” The “Net sales (purchases) of treasury shares” represents the cost of common shares purchased less the cost of shares issued for share-based compensation plans. Mississippi refinery and the Angola liquefied-natural-gas project that was invested in short-term securities and reclassified from “Cash and cash equivalents” to “Deferred charges and other assets” on the Consolidated Balance Sheet. the “Net (increase) decrease in operating working capital” includes reductions of $25.537 Net sales of marketable securities consisted of the following gross amounts: Marketable securities sold $ 157 Marketable securities purchased (30) Net sales of marketable securities $ 127 $ 6. the payments related to these “Accrued liabilities” were excluded from “Net (increase) decrease in operating working capital” and were reported as “Capital expenditures. excluding equity affiliates Company’s share of expenditures by equity affiliates Capital and exploratory expenditures. at cost” were considered non-cash transactions and excluded from “Net (increase) decrease in operating working capital” and “Capital expenditures. “Capital expenditures” in 2008 excludes a $1.867) (749) (370) 4.” The amount is related to upstream operating agreements outside the United States.560 in 2007. 2009. respectively.160 (1.340 $ 3.130 $ 203 $ 12. This addition was offset primarily by reductions in “Investments and advances” and working capital and an increase in “Noncurrent deferred income tax” liabilities.666 794 $ 16. In 2009.326 19. on page 67.585 $ 22.775 196 17.236) $ 483 $ 2. upstream property and $280 in cash.495 1.450 for accruals recorded in 2008.026 Excludes noncash additions of $985 in 2009. 2008 and 2007. $5. of tax exempt Mississippi Gulf Opportunity Zone Bonds as a source of funds for Pascagoula Refinery projects. including equity affiliates 1 $ 16.213 Increase in prepaid expenses and other current assets (264) (Decrease) increase in accounts payable and accrued liabilities (1. are presented in the following table: Year ended December 31 2009 2008 2007 Additions to properties. in 2009 and 2007 respectively.153 in 2008 and $3.719 (3. The carrying value of this property in “Properties.336 $ 20.011 and $7.545) (621) (4.Notes to the Consolidated Financial Statements Millions of dollars. Purchases totaled $6. plant and equipment1 Additions to investments Current-year dry-hole expenditures Payments for other liabilities and assets. plant and equipment.107 942 468 2. respectively.121) (Decrease) increase in income and other taxes payable (653) Net (increase) decrease in operating working capital $ (2. plant and equipment” on the Consolidated Balance Sheet was not significant. 42 Chevron Corporation 2009 Annual Report .690 2.673) $ (3. “Net sales (purchases) of treasury shares” excludes $680 of treasury shares acquired in exchange for a U. “Net sales (purchases) of other short-term investments” consisted of $123 in restricted cash associated with capital-investment projects at the company’s Pascagoula. In 2008.678 816 19 20.127 881 418 (748) 16.S. The company issued $350 and $650.450 increase in “Accrued liabilities” and a corresponding increase to “Properties. The major components of “Capital expenditures” and the reconciliation of this amount to the reported capital and exploratory expenditures.030 (1. These amounts are offset by an equal amount in “Net sales (purchases) of treasury shares. $8.

is an indirect.329 5. Summarized financial information for CTC and its consolidated subsidiaries is as follows: Year ended December 31 2009 2008 2007 Sales and other operating revenues Total costs and other deductions Net income attributable to CTC $ 683 810 (124) $1. Chevron Corporation has fully and unconditionally guaranteed this subsidiary’s obligations in connection with certain debt securities issued by a third party.134 $ 8. excluding most of the regulated pipeline operations of Chevron. 2008. CUSA and its subsidiaries manage and operate most of Chevron’s U. (CTC). on page 50.426 4. The summarized financial information for CUSA and its consolidated subsidiaries presented in the table below gives retroactive effect to the reorganizations as if they had occurred on January 1.S. The summarized financial information for CUSA and its consolidated subsidiaries is as follows: Year ended December 31 2009 2008 2007 Chevron Transport Corporation Ltd.013 6. 2008.286 $ 32. marketing. natural gas and natural gas liquids and those associated with the refining.Note 5 Summarized Financial Data — Chevron U. 2007.999 $ 6. Summarized financial information for 100 percent of TCO is presented in the following table: Year ended December 31 2009 2008 2007 The amount for the years ended December 31.919 3.867 4. During 2008.827 31.806 16.S.740 12.A.044 4. Sales and other operating revenues Costs and other deductions Net income attributable to TCO $ 12.022 2. the financial information in the following table may not reflect the financial position and operating results in the future or the historical results in the periods presented if the reorganization actually had occurred on that date.A.484 8.053 185.195 $ 6. incorporated in Bermuda. Refer to Note 12.322 14. Inc.354 Chevron Corporation 2009 Annual Report 43 . which is accounted for using the equity method.191 There were no restrictions on CTC’s ability to pay dividends or make loans or advances at December 31. Inc.509 5. for a discussion of TCO operations.022 947 120 $ 667 713 (39) At December 31 2009 2008 Current assets Other assets Current liabilities Other liabilities Total CTC net equity $ 377 173 115 90 345 $ 482 172 98 88 468 Sales and other operating revenues Total costs and other deductions Net income attributable to CUSA $ 121. (CUSA) is a major subsidiary of Chevron Corporation.760 32. CUSA also holds the company’s investment in the Chevron Phillips Chemical Company LLC joint venture.759 8. CTC is the principal operator of Chevron’s international tanker fleet and is engaged in the marine transportation of crude oil and refined petroleum products.049 25.178 $14.240 1.553 $ 195.625 14. supply and distribution of products derived from petroleum.813 Chevron has a 50 percent equity ownership interest in Tengizchevroil LLP (TCO). Note 7 Summarized Financial Data — Tengizchevroil LLP At December 31 2009 2008 Current assets Other assets Current liabilities Other liabilities Total CUSA net equity Memo: Total debt $ 23. Note 6 Summarized Financial Data — Chevron Transport Corporation Ltd. However. Most of CTC’s shipping revenue is derived from providing transportation services to other Chevron companies. wholly owned subsidiary of Chevron Corporation.574 147.190 12. Chevron U. 2009.098 14.318 $ 153.593 120. Chevron implemented legal reorganizations in which certain Chevron subsidiaries transferred assets to or under CUSA. for “Net income attributable to CUSA” and the balances at December 31. for “Other liabilities” and “Total CUSA net equity” have been adjusted by immaterial amounts associated with the allocation of income-tax liabilities among Chevron Corporation subsidiaries. 2007.141 7.302 $ 2. and December 31. Assets include those related to the exploration and production of crude oil. businesses.390 36.788 1.S.621 6.952 At December 31 2009 2008 Current assets Other assets Current liabilities Other liabilities Total TCO net equity $ 3.387 3.

Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts

Note 8
Lease Commitments

At December 31 Operating Leases Capital Leases

Certain noncancelable leases are classified as capital leases, and the leased assets are included as part of “Properties, plant and equipment, at cost” on the Consolidated Balance Sheet. Such leasing arrangements involve tanker charters, crude-oil production and processing equipment, service stations, office buildings, and other facilities. Other leases are classified as operating leases and are not capitalized. The payments on such leases are recorded as expense. Details of the capitalized leased assets are as follows:
At December 31 2009 2008

Year: 2010 2011 2012 2013 2014 Thereafter Total Less: Amounts representing interest and executory costs Net present values Less: Capital lease obligations included in short-term debt Long-term capital lease obligations

568 438 406 372 347 1,233 $ 3,364

90 81 87 60 44 137 $ 499 (104) 395 (94) $ 301

Upstream Downstream Chemicals and all other Total Less: Accumulated amortization Net capitalized leased assets

$

510 332 171 1,013 585 $ 428

$

491 399 171 1,061 522 $ 539

Note 9
Fair Value Measurements

Rental expenses incurred for operating leases during 2009, 2008 and 2007 were as follows:
Year ended December 31 2009 2008 2007

Minimum rentals Contingent rentals Total Less: Sublease rental income Net rental expense

$ 2,179 7 2,186 41 $ 2,145

$ 2,984 6 2,990 41 $ 2,949

$ 2,419 6 2,425 30 $ 2,395

Contingent rentals are based on factors other than the passage of time, principally sales volumes at leased service stations. Certain leases include escalation clauses for adjusting rentals to reflect changes in price indices, renewal options ranging up to 25 years, and options to purchase the leased property during or at the end of the initial or renewal lease period for the fair market value or other specified amount at that time. At December 31, 2009, the estimated future minimum lease payments (net of noncancelable sublease rentals) under operating and capital leases, which at inception had a noncancelable term of more than one year, were as follows:

Accounting standards for fair-value measurement (ASC 820) establish a framework for measuring fair value and stipulate disclosures about fair-value measurements. The standards apply to recurring and nonrecurring financial and nonfinancial assets and liabilities that require or permit fair-value measurements. ASC 820 became effective for Chevron on January 1, 2008, for all financial assets and liabilities and recurring nonfinancial assets and liabilities. On January 1, 2009, the standard became effective for nonrecurring nonfinancial assets and liabilities. Among the required disclosures is the fair-value hierarchy of inputs the company uses to value an asset or a liability. The three levels of the fair-value hierarchy are described as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. For the company, Level 1 inputs include exchange-traded futures contracts for which the parties are willing to transact at the exchange-quoted price and marketable securities that are actively traded. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly. For the company, Level 2 inputs include quoted prices for similar assets or liabilities, prices obtained through third-party broker quotes, and prices that can be corroborated with other observable inputs for substantially the complete term of a contract.

44 Chevron Corporation 2009 Annual Report

Note 9 Fair Value Measurements – Continued

Level 3: Unobservable inputs. The company does not use Level 3 inputs for any of its recurring fair-value measurements. Level 3 inputs may be required for the determination of fair value associated with certain nonrecurring measurements of nonfinancial assets and liabilities. In 2009, the company used Level 3 inputs to determine the fair value of certain nonrecurring nonfinancial assets. The fair-value hierarchy for recurring assets and liabilities measured at fair value at December 31, 2009, and December 31, 2008, is as follows: Assets and Liabilities Measured at Fair Value on a Recurring Basis
Prices in Active Markets for Identical Assets/Liabilities (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Prices in Active Markets for Identical Assets/Liabilities (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3)

At December 31 2009

At December 31 2008

Marketable Securities Derivatives Total Recurring Assets at Fair Value Derivatives Total Recurring Liabilities at Fair Value

$ 106 127 $ 233 $ 101 $ 101

$ 106 14 $ 120 $ 20 $ 20

$

– 113

$

– – – – –

$ 213 805 $1,018 $ 516 $ 516

$ 213 529 $ 742 $ 98 $ 98

$

– 276

$

– – – – –

$ 113 $ 81 $ 81

$ $ $

$ 276 $ 418 $ 418

$ $ $

Marketable Securities The company calculates fair value for its marketable securities based on quoted market prices for identical assets and liabilities. The fair values reflect the cash that would have been received if the instruments were sold at December 31, 2009. Marketable securities had average maturities of less than one year. Derivatives The company records its derivative instruments – other than any commodity derivative contracts that are designated as normal purchase and normal sale – on the Consolidated Balance Sheet at fair value, with virtually all the offsetting amount to the Consolidated Statement of Income. For derivatives with identical or similar provisions as contracts that are publicly traded on a regular basis, the company uses the market values of the publicly traded instruments as an input for fair-value calculations. The company’s derivative instruments principally include crude-oil, natural-gas and refined-product futures, swaps, options and forward contracts. Derivatives classified as Level 1 include futures, swaps and options contracts traded in active markets such as the New York Mercantile Exchange. Derivatives classified as Level 2 include swaps, options, and forward contracts principally with financial institutions and other oil and gas companies, the fair values for which are obtained from third-party broker quotes, industry pric-

ing services and exchanges. The company obtains multiple sources of pricing information for the Level 2 instruments. Since this pricing information is generated from observable market data, it has historically been very consistent. The company does not materially adjust this information. The company incorporates internal review, evaluation and assessment procedures, including a comparison of Level 2 fair values derived from the company’s internally developed forward curves (on a sample basis) with the pricing information to document reasonable, logical and supportable fair-value determinations and proper level of classification. Impairments of “Properties, plant and equipment” During 2009 and in accordance with the accounting standard for the impairment or disposal of long-lived assets (ASC 360), long-lived assets “held and used” with a carrying amount of $949 were written down to a fair value of $490, resulting in a before-tax loss of $459. The fair values were determined from internal cash-flow models, using discount rates consistent with those used by the company to evaluate cash flows of other assets of a similar nature. Long-lived assets “held for sale” with a carrying amount of $160 were written down to a fair value of $68, resulting in a before-tax loss of $92. The fair values were determined based on bids received from prospective buyers.

Chevron Corporation 2009 Annual Report

45

Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts

Note 9 Fair Value Measurements – Continued

The fair-value hierarchy for nonrecurring assets and liabilities measured at fair value during 2009 is presented in the following table. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
Year Ended December 31 2009 Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Loss (Before Tax) Year Ended December 31 2009

Properties, plant and equipment, net (held and used) Properties, plant and equipment, net (held for sale) Total Nonrecurring Assets at Fair Value

$ $

490 68 558

$ $

– – –

$ $

– 68 68

$ $

490 – 490

$ $

459 92 551

Assets and Liabilities Not Required to Be Measured at Fair Value The company holds cash equivalents in U.S. and nonU.S. portfolios. The instruments held are primarily time deposits and money market funds. The fair values reflect the cash that would have been received or paid if the instruments were settled at year-end. Cash equivalents had carrying/fair values of $6,396 and $7,058 at December 31, 2009 and 2008, respectively, and average maturities under 90 days. The balance at December 31, 2009, includes $123 of investments for restricted funds related to an international upstream development project and Pascagoula Refinery projects, which are included in “Deferred charges and other assets” on the Consolidated Balance Sheet. Long-term debt of $5,705 and $1,221 had estimated fair values of $6,229 and $1,414 at December 31, 2009 and 2008, respectively. Fair values of other financial instruments at the end of 2009 and 2008 were not material.

Note 10
Financial and Derivative Instruments

Derivative Commodity Instruments Chevron is exposed to market risks related to price volatility of crude oil, refined products, natural gas, natural gas liquids, liquefied natural gas and refinery feedstocks. The company uses derivative commodity instruments to manage these exposures on a portion of its activity, including firm commitments and anticipated transactions for the pur-

chase, sale and storage of crude oil, refined products, natural gas, natural gas liquids and feedstock for company refineries. From time to time, the company also uses derivative commodity instruments for limited trading purposes. The company’s derivative commodity instruments principally include crude-oil, natural-gas and refined-product futures, swaps, options and forward contracts. None of the company’s derivative instruments is designated as a hedging instrument, although certain of the company’s affiliates make such designation. The company’s derivatives are not material to the company’s financial position, results of operations or liquidity. The company believes it has no material market or credit risks to its operations, financial position or liquidity as a result of its commodities and other derivatives activities. The company uses International Swaps and Derivatives Association agreements to govern derivative contracts with certain counterparties to mitigate credit risk. Depending on the nature of the derivative transactions, bilateral collateral arrangements may also be required. When the company is engaged in more than one outstanding derivative transaction with the same counterparty and also has a legally enforceable netting agreement with that counterparty, the net mark-to-market exposure represents the netting of the positive and negative exposures with that counterparty and is a reasonable measure of the company’s credit risk exposure. The company also uses other netting agreements with certain counterparties with which it conducts significant transactions to mitigate credit risk.

Derivative instruments measured at fair value at December 31, 2009, and December 31, 2008, and their classification on the Consolidated Balance Sheet and Consolidated Statement of Income are as follows: Consolidated Balance Sheet: Fair Value of Derivatives Not Designated as Hedging Instruments
Asset Derivatives – Fair Value Type of Derivative Contract Balance Sheet Classification At December 31 2009 At December 31 2008 Balance Sheet Classification Liability Derivatives – Fair Value At December 31 2009 At December 31 2008

Foreign Exchange Commodity Commodity

Accounts and notes receivable, net Accounts and notes receivable, net Long-term receivables, net

$

– 99 28 127

$

11 764 30 805

Accrued liabilities Accounts payable Deferred credits and other noncurrent obligations

$

– 73 28 101

$

89 344

$

$

$

83 $ 516

46 Chevron Corporation 2009 Annual Report

However. The currency derivative contracts. may be accounted for as fair value hedges. Interest Rates The company may enter into interest rate swaps from time to time as part of its overall strategy to manage the interest rate risk on its debt. including foreign currency capital expenditures and lease commitments. The first three of these groupings represent the company’s “reportable segments” and “operating segments” as defined in accounting standards for segment reporting (ASC 280). downstream – refining. which makes decisions about resources to be allocated to the segments and to assess their performance. The CODM is the company’s Executive Committee. marketable securities. At year-end 2009. The operating segments represent components of the company. net cash settlements were based on the difference between fixed-rate and floating-rate interest amounts calculated by reference to agreed notional principal amounts. business-unit managers within the operating segments are directly responsible for decisions relating to project implementation and all other matters connected with daily operations. are recorded at fair value on the balance sheet with resulting gains and losses reflected in income. chemicals. derivative financial instruments and trade receivables. reflecting the company’s diversified sources of revenue. if any. The company routinely assesses the financial strength of its customers. as well as reviews capital and exploratory funding for major projects and approves major changes to the annual capital and exploratory budgets. For this purpose. and all other. that engage in activities (a) from which revenues are earned and expenses are incurred. as described in accounting standards for segment reporting (ASC 280). These exposures include revenue and anticipated purchase transactions. There were no open currency derivative contracts at December 31. Similar standards of diversity and creditworthiness are applied to the company’s counterparties in derivative instruments. reports to the Board of Directors of Chevron Corporation. The CODM approves annual capital and exploratory budgets at the reportable segment level. Although each subsidiary of Chevron is responsible for its own affairs. Historically. 2009. are dispersed among the company’s broad customer base worldwide. Company officers who are Chevron Corporation 2009 Annual Report 47 . and (c) for which discrete financial information is available. Interest rate swaps related to a portion of the company’s fixedrate debt. the investments are grouped as follows: upstream – exploration and production. Chevron Corporation manages its investments in these subsidiaries and their affiliates. Concentrations of Credit Risk The company’s financial instruments that are exposed to concentrations of credit risk consist primarily of its cash equivalents. in turn.Note 10 Financial and Derivative Instruments – Continued Consolidated Statement of Income: The Effect of Derivatives Not Designated as Hedging Instruments Type of Derivative Contract Statement of Income Classification Gain/(Loss) Year Ended December 31 2009 2008 Foreign Exchange Commodity Commodity Commodity Other income Sales and other operating revenues Purchased crude oil and products Other income $ 26 (94) $ (314) 706 424 (3) $ 813 The trade receivable balances. the company had no interest rate swaps. (b) whose operating results are regularly reviewed by the CODM. As a result. requiring Letters of Credit is a principal method used to support sales to customers. a committee of senior officers that includes the Chief Executive Officer and that. marketing and transportation. are recorded at fair value on the balance sheet with resulting gains and losses reflected in income. Segment managers for the reportable segments are directly accountable to and maintain regular contact with the company’s CODM to discuss the segment’s operating activities and financial performance. if any. This diversified investment policy limits the company’s exposure both to credit risk and to concentrations of credit risk. the company believes concentrations of credit risk are limited. if any. The segments are separately managed for investment purposes under a structure that includes “segment managers” who report to the company’s “chief operating decision maker” (CODM) (terms as defined in ASC 280). Interest rate swaps related to floating-rate debt. The company’s short-term investments are placed with a wide array of financial institutions with high credit ratings. under the terms of the swaps. (353) – $ (421) Note 11 Operating Segments and Geographic Data Foreign Currency The company may enter into currency derivative contracts to manage some of its foreign currency exposures. The company’s only interest rate swaps on fixed-rate debt matured in January 2009. When the financial strength of a customer is not considered sufficient.

crude oil and natural gas liquids. power generation businesses. This segment also generates revenues from the transportation and trading of refined products. gas oils. The company’s primary country of operation is the United States of America.066 3.441 2. “All Other” activities include mining operations.891 2. for the years 2009.532 10.083 103.067 24. Segment Earnings The company evaluates the performance of its operating segments on an after-tax basis.256 5. However. real estate. real estate activities. Segment assets at year-end 2009 and 2008 are as follows: At December 31 2009 2008 Upstream United States International Goodwill Total Upstream Downstream United States International Total Downstream Chemicals United States International Total Chemicals Total Segment Assets All Other* United States International Total All Other Total Assets – United States Total Assets – International Goodwill Total Assets $ 24.” Earnings by major operating area are presented in the following table: Year ended December 31 2009 2008 2007 Segment Assets Segment assets do not include intercompany investments or intercompany receivables.883 52.618 104.483 $ 7.618 4.937 4.321 – 192 (1.086 3. cash equivalents and marketable securities.284 14. lubricants.714 (107) 385 (304) $ 18.931 $ 4.060 3. alternative fuels and technology companies.459 107.582) $ 23. including internal transfers. and the company’s interest in Dynegy (through May 2007. its country of domicile.431 (273) 838 565 198 211 409 11.087 4.810 1.536 3. Corporate administrative costs and assets are not allocated to the operating segments. insurance operations. Revenues for the upstream segment are derived primarily from the production and sale of crude oil and natural gas. both of which are managed by the company on a worldwide basis.869 23. operating segments are billed for the direct use of corporate services.816 966 2. Products are transferred between operating segments at internal product values that approximate market prices.824 42.920 53.240 $ 26. alternative fuels and technology companies.369 2. Revenues for the downstream segment are derived from the refining and marketing of petroleum products such as gasoline.621 146.918 74.381 14.216 8. corporate administrative functions. as well as the sale of third-party production of natural gas.215 10. Other components of the company’s operations are reported as “International” (outside the United States).282 7. except per-share amounts Note 11 Operating Segments and Geographic Data – Continued members of the Executive Committee also have individual management responsibilities and participate in other committees for purposes other than acting as the CODM.473 18.Notes to the Consolidated Financial Statements Millions of dollars.071 72.125 8.405 (22) 46 (946) $ 10. mining operations.876 151.688 Segment Sales and Other Operating Revenues Operating segment sales and other operating revenues. and assets of the corporate administrative functions.899 13.619 $ 164. $ 2. when Chevron sold its interest).220 15.619 103. Revenues 48 Chevron Corporation 2009 Annual Report . worldwide cash management and debt financing activities. residual fuel oils and other products derived from crude oil.710 1. 2008 and 2007.984 6.572 39.429 22 160 182 25.535 1.502 253 143 396 18.126 14.530 4. power generation businesses. jet fuel. information systems. Nonbillable costs remain at the corporate level in “All Other.165 Segment Earnings Upstream United States International Total Upstream Downstream United States International Total Downstream Chemicals United States International Total Chemicals Total Segment Earnings All Other Interest expense Interest income Other Net Income Attributable to Chevron Corporation *“All Other” assets consist primarily of worldwide cash. without considering the effects of debt financing interest expense or investment interest income. are presented in the table on the following page.621 $ 161.584 21.

625 38.701 $ 23.585 306.225 7.578 247.042 38 102.245 142.388 55 154 1.361 19.274 351 2 235 588 1.409 18. 2008 and 2007.958 $ 214.482 138.016 97.969) $ 167.817 70.307 13. Other than the United States.959 757 760 1.331) $ 13.686 8.629 39 33 72 1.258 178.143 86 142 1.736 15.452) $ 19.230 219. plant and equipment by segment is contained in Note 13.374) 133.231 65 132 1.142 11. no single country accounted for 10 percent or more of the company’s total sales and other operating revenues in 2009.213 24.673 34.628 (22) 47 25 (1.746 447 92.469 15.471 106 80.064 5.732 52 33 85 1.965 $ 3.535 4. real estate activities and technology companies.776 (30.145 113.854 271 – 194 465 1.371 1.860 82.402 $ 264.442 13. 2008 and 2007 is as follows: Year ended December 31 2009 2008 2007 Upstream United States Intersegment Total United States International Intersegment Total International Total Upstream Downstream United States Excise and similar taxes Intersegment Total United States International Excise and similar taxes Intersegment Total International Total Downstream Chemicals United States Excise and similar taxes Intersegment Total United States International Excise and similar taxes Intersegment Total International Total Chemicals All Other United States Intersegment Total United States International Intersegment Total International Total All Other Segment Sales and Other Operating Revenues United States International Total Segment Sales and Other Operating Revenues Elimination of intersegment sales Total Sales and Other Operating Revenues $ 9.606 Upstream United States International Total Upstream Downstream United States International Total Downstream Chemicals United States International Total Chemicals All Other Total Income Tax Expense $ 1.243 (41.221 87. insurance operations.026 $ 2.515 4.693 15.848 520 400 920 6 36 42 (1.204 19.938 305 2 266 573 1.893 665 964 1. Information related to properties.117) $ 7.285) 108.091 Chevron Corporation 2009 Annual Report 49 .609 76.886 51.328 57.517 58 31 89 1.708 122. “All Other” activities include revenues from mining operations.911 (111) 182 71 54 46 100 (1.573 190 62.178 5.645 30. beginning on page 50.541 11. 84.503 $ 18.631 197.990 491 76. power generation businesses.Note 11 Operating Segments and Geographic Data – Continued for the chemicals segment are derived primarily from the manufacture and sale of additives for lubricants and fuels.044 122 127. Year ended December 31 2009 2008 2007 Segment Income Taxes Segment income tax expense for the years 2009.132 18.060 (32.170 815 917 1.647 43.658 172.278 19.668 3.846 4. on page 52.597 2.164 10.428 1.479 Other Segment Information Additional information for the segmentation of major equity affiliates is contained in Note 12.825 815 813 1.318 65.477 31.

938 Petropiar/Hamaca 1. 2009.059 $ 3. 873 Caltex Australia Ltd. The difference reflects the excess of the net book value of the assets contributed by Chevron over its underlying equity in Petroboscan’s net assets.918 $ 2.963 $ 6.366 $ 4. are as follows: Tengizchevroil Chevron has a 50 percent equity ownership interest in Tengizchevroil (TCO).290 $ 2.872 2.316 $ 5. including significant differences between the company’s carrying value of its investments and its underlying equity in the net assets of the affiliates. predominantly in South Korea.002 $ 511 $ 307 $ 478 $ 16.144 989 $ 20. 2009. 2009.615 3.” Investments and Advances At December 31 2009 2008 Equity in Earnings Year ended December 31 2009 2008 2007 a portion of its interest in TCO at a value greater than the underlying book value for that portion of TCO’s net assets.139 Petroboscan 832 Angola LNG Limited 1.135 1. The remaining 50 percent of CAL is publicly owned. Caspian Pipeline Consortium Chevron has a 15 percent interest in the Caspian Pipeline Consortium. At December 31. a joint stock company formed in 2006 to operate the Boscan Field in Venezuela until 2026.158 Chemicals Chevron Phillips Chemical Company LLC 2. (SPRC).205 2.406 Caspian Pipeline Consortium 852 Star Petroleum Refining Company Ltd. GS Caltex Corporation Chevron owns 50 percent of GS Caltex Corporation.158 Total United States $ 4.191 (12) (8) 21 725 118 206 204 10. is shown in the table below. the company’s carrying value of its investment in TCO was about $200 higher than the amount of underlying equity in TCO’s net assets. Petroboscan Chevron has a 39 percent interest in Petroboscan.037 25 2. Chevron has a 36 percent interest in Angola LNG Ltd. At December 31. Star Petroleum Refining Company Ltd.853 Other 686 Total Upstream 10.150 (191) 105 444 103 217 102 157 129 39 318 962 (4) 22 11 250 51 32 311 354 283 1. Angola LNG Ltd. the company’s carrying value of its investment in Petropiar was approximately $195 less than the amount of underlying equity in Petropiar’s net assets. At December 31. Chevron pays its share of some income taxes directly. the company’s carrying value of its investment in Petroboscan was approximately $275 higher than the amount of underlying equity in Petroboscan’s net assets. which owns the Star Refinery in Thailand. which provides the critical export route for crude oil from both TCO and Karachaganak. This difference results from Chevron acquiring 50 Chevron Corporation 2009 Annual Report . 740 Colonial Pipeline Company 514 Other 1. has a 25-year contract term.664 7. refines and markets petroleum products and petrochemicals.062 328 7 335 158 4 162 380 6 386 567 83 20 (76) $ 19. Chevron had a 30 percent interest in the Hamaca project. Chevron previously operated the field under an operating service agreement. The project.130 122 317 327 816 171 244 185 1. which will process and liquefy natural gas produced in Angola for delivery to international markets. a joint venture with GS Holdings.195 Total International $ 16.152 2.805 $ 5.773 Total Downstream 7. Prior to the formation of Petropiar.Notes to the Consolidated Financial Statements Millions of dollars. At December 31. See Note 7. (CAL). a joint venture formed in 1993 to develop the Tengiz and Korolev crude-oil fields in Kazakhstan over a 40-year period. for summarized financial information for 100 percent of TCO.920 $ 4. together with investments in and advances to companies accounted for using the equity method and other investments accounted for at or below cost. Chevron has a 50 percent equity ownership interest in Caltex Australia Ltd.448 Downstream GS Caltex Corporation 2.355 All Other Other 507 Total equity method $ 20. 2009. Petropiar Chevron has a 30 percent interest in Petropiar. located in Venezuela’s Orinoco Belt.468 Other at or below cost 690 Total investments and advances $ 21. The joint venture imports. For such affiliates. The Petroleum Authority of Thailand owns the remaining 36 percent of SPRC. a joint stock company formed in 2008 to operate the Hamaca heavyoil production and upgrading project. the equity in earnings does not include these taxes.. Upstream Tengizchevroil $ 5.601 749 877 723 536 1. Caltex Australia Ltd. For certain equity affiliates.979 2.931 $ 3.220 $ 2.216 $ 3. except per-share amounts Note 12 Investments and Advances Equity in earnings.666 Descriptions of major affiliates. which are reported on the Consolidated Statement of Income as “Income tax expense.327 Other 28 Total Chemicals 2. Chevron has a 64 percent equity ownership interest in Star Petroleum Refining Company Ltd. The difference represents the excess of Chevron’s underlying equity in Petropiar’s net assets over the net book value of the assets contributed to the venture. on page 43.

995 11.631.511 3.055 7. which includes Chevron loans to affiliates of $2. respectively. The Colonial Pipeline system runs from Texas to New Jersey and transports petroleum products in a 13-state market.705 $ 25.045 9.510 9. respectively.743 $ 26. 2009 and 2008.360 48. respectively.531 $ 43.532 5.010 $ 39. $6. “Accounts and notes receivable” on the Consolidated Balance Sheet includes $1.524 $ 10.914 19.836 4. $15.431 $ 54.120.745 $ 18.129 7. 2009 and 2008. At December 31. Other Information “Sales and other operating revenues” on the Consolidated Statement of Income includes $10.533 $ 18. “Accounts payable” includes $345 and $289 due to affiliated companies at December 31.361 7.493 $112.707 17.500 12.106 $ 19.009 21.049 $ 38.111 55. Colonial Pipeline Company Chevron owns an approximate 23 percent equity interest in the Colonial Pipeline Company.864 12. Affiliates Chevron Share 2009 2008 2007 Year ended December 31 Total revenues Income before income tax expense Net income attributable to affiliates At December 31 Current assets Noncurrent assets Current liabilities Noncurrent liabilities Total affiliates’ net equity 2009 2008 2007 $ 81.125 and $701 due from affiliated companies at December 31. “Purchased crude oil and products” includes $4.550 $ 11.083 8.205 Chevron Corporation 2009 Annual Report 51 .450 21. The following table provides summarized financial information on a 100 percent basis for all equity affiliates as well as Chevron’s total share.757 $ 33.926 $ 46.440 19. 2009.878 17. The other half is owned by ConocoPhillips Corporation.391.555 with affiliated companies for 2009.850 and $5. the company’s carrying value of its investment in Colonial Pipeline was approximately $550 higher than the amount of underlying equity in Colonial Pipeline net assets.Note 12 Investments and Advances – Continued the fair value of Chevron’s share of CAL common stock was approximately $1. Chevron Phillips Chemical Company LLC Chevron owns 50 percent of Chevron Phillips Chemical Company LLC.194 51. This difference primarily relates to purchase price adjustments from the acquisition of Unocal Corporation. 2008 and 2007.727 21. 2009. 2008 and 2007.033 22.579 5.804 20.833 5. respectively.422 at December 31.363 17.390 and $11.474 4.261 $ 27.280 4.009 3.285 $ 11.464 with affiliated companies for 2009.296 $ 94.

651 5.614 8.548 2.441 4. $430 and $399 in 2009. the company believes first.690 12. the government granted Texpet and all related corporate entities a full release from any and all environmental liability arising from the consortium operations.493 3.022 61.193 34.124 7.468 $ 91. real estate assets and management information systems. Texpet conducted a three-year remediation program at a cost of $40.553 4.746 8.588 $ 96. 2 Note 14 Litigation MTBE Chevron and many other companies in the petroleum industry have used methyl tertiary butyl ether (MTBE) as a gasoline additive.281 7.853 34.615 57.581 3. After certifying that the sites were properly remediated.262 15. second. as the majority partner. that the law under which plaintiffs bring the action.983 3. $55 and $89 in 2009. 3 Depreciation expense includes accretion expense of $463. The company no longer uses MTBE in the manufacture of gasoline in the United States. and. including personal-injury claims. since 1990.429 $ 188. the Ecuadorian state-owned oil company.089 6.310 17 4.981 725 828 1.132 30.589 81. plus a health monitoring program.730 for 2009 and 2008. that the claims are barred by the statute of limitations in Ecuador. Based on the history described above.605 10.127 5. power generation businesses.822 18. the majority of which involve numerous other petroleum marketers and refiners.859 106. 2008 and 2007.947 5.282 138.033 40 53 93 $ 3. Ecuador Chevron is a defendant in a civil lawsuit before the Superior Court of Nueva Loja in Lago Agrio.084 $ 21.645 93.237 1. plant and equipment (PP&E) in 2009 and 2008.140 76. enacted in 1999.978 338 496 834 $ 19. The company’s ultimate exposure related to pending lawsuits and claims is not determinable.977 6. Additional lawsuits and claims related to the use of MTBE.895 331 545 876 8. was a minority member of this consortium with Petroecuador.587 28.434 10.299 $ 50. brought in May 2003 by plaintiffs who claim to be representatives of certain residents of an area where an oil production consortium formerly had operations. fourth.806 16.496 $ 5. third.539 11. respectively.098 19 33 52 509 633 1.807 10. respectively.959 11. Chevron is a party to 50 pending lawsuits and claims.278 678 815 1.408 122.431 63.253 51.523 2. may be filed in the future. As to matters of law. that the court lacks jurisdiction over Chevron.873 41 3.305 664 437 1.054 7. Pursuant to that agreement.750 13. The lawsuit alleges damage to the environment from the oil exploration and production operations and seeks unspecified damages to fund environmental remediation and restoration of the alleged 52 Chevron Corporation 2009 Annual Report environmental harm. Resolution of these lawsuits and claims may ultimately require the company to correct or ameliorate the alleged effects on the environment of prior release of MTBE by the company or other parties.708 Other than the United States and Nigeria.914 71.438 17.915 12. Texaco Petroleum Company (Texpet).Notes to the Consolidated Financial Statements Millions of dollars.394 11. 4 Primarily mining operations.265 $12..032 2.871 1. respectively.294 54. a subsidiary of Texaco Inc.008 $23.463 and $10. except per-share amounts Note 13 Properties.142 19 26 45 2.648 48. Texpet entered into a formal agreement with the Republic of Ecuador and Petroecuador for Texpet to remediate specific sites assigned by the government in proportion to Texpet’s ownership share of the consortium. Nigeria had net PP&E of $12.089 $ 17.443 7.991 71.780 $ 78.288 $ 54.735 $ 154.585 96. Ecuador. Only the United States had more than 10 percent in 2007.885 $ 22.610 354 598 680 3 5 5 357 603 685 5.101 31 35 66 629 469 1.327 76.110 $ 9.512 13. cannot be applied retroactively.349 82.551 16.177 10.374 $ 5.725 9.714 $ 173.048 325 250 215 4 4 1 329 254 216 4.138 73.593 $19.685 4.001 14.375 308 453 761 $ 3.156 84. Net of dry hole expense related to prior years’ expenditures of $84.963 $ 2. Chevron believes that this lawsuit lacks legal or factual merit. that the lawsuit is also barred by the releases from liability previously .534 2. Plant and Equipment1 At December 31 Gross Investment at Cost 2009 2008 2007 2009 Net Investment 2008 2007 2009 Additions at Cost 2 2008 2007 2009 Year ended December 31 Depreciation Expense3 2008 2007 Upstream United States International Total Upstream Downstream United States International Total Downstream Chemicals United States International Total Chemicals All Other4 United States International Total All Other Total United States Total International Total 1 $ 57.643 4.850 43.700 6.514 519 2. 2008 and 2007.424 3. the operations have been conducted solely by Petroecuador.528 $ 8.683 $ 2.177 150.319 31. no other country accounted for 10 percent or more of the company’s net properties.246 18.295 25 85 110 2. but could be material to net income in any one period.569 20 4.399 15.179 11 11 14 2. Until 1992.234 730 913 1.559 2. At the conclusion of the consortium and following an independent third-party environmental audit of the concession area.471 26.285 4.317 50 72 122 1.

292 and $24. for business tax credits.000. a mining engineer appointed by the court to identify and determine the cause of environmental damage. Chevron also believes that the engineer’s work was performed and his report prepared in a manner contrary to law and in violation of the court’s orders.4 0.S. the full chamber of the provincial court affirmed the recusal. management does not believe the report has any utility in calculating a reasonably possible loss (or a range of loss).0% 10. environmental remediation. federal income tax expense was reduced by $204. The engineer’s report is not binding on the court. the engineer revised the report and. provide financial compensation for purported damages. In April 2008. the company believes that the evidence confirms that Texpet’s remediation was properly conducted and that the remaining environmental damage reflects Petroecuador’s failure to timely fulfill its legal obligations and Petroecuador’s further conduct since assuming full control over the operations. $32.7) 44.3) (1.0 (0. but the new judge denied these motions.Note 14 Litigation – Continued given to Texpet by the Republic of Ecuador and Petroecuador. Federal Current Deferred State and local Current Deferred Total United States International Current Deferred Total International Total taxes on income $ 128 (147) 216 14 211 $ 2.822 15. resulting in the appointment of a new judge. compared with before-tax income of $10.1) 0. which the court dismissed.1 (2.8 0.2% 8.388 in 2009.1) (0. the judge presiding over the case petitioned to be recused. health care systems and additional infrastructure for Petroecuador.416 54 11. statutory rate State and local taxes on income.0% 35. including wrongful death claims. The reconciliation between the U.886 in 2008 and 2007. the judge was recused.3) (1. therefore.0% 35. In late September 2009.S.5) (0. $198 and $132 in 2009. Note 15 Taxes Income Taxes Year ended December 31 2009 2008 2007 Taxes on income U.204 $ 19. In the event of an adverse judgment. before-tax income was $17. and to specify steps needed to remediate it.300 could be assessed against Chevron for unjust enrichment.S.6) (0. net of U.470 $ 13.S.479 7.8) 41. operations. and in October 2009.154 600 7.2 0.1 1. Moreover. following the disclosure by Chevron of evidence that the judge participated in meetings in which businesspeople and individuals holding themselves out as government officials discussed the case and its likely outcome.3 (0. and pay for.218. the highly uncertain legal environment surrounding the case provides no basis for management to estimate a reasonably possible loss (or a range of loss). the ultimate outcome – and any financial effect on Chevron – remains uncertain.8% Chevron Corporation 2009 Annual Report 53 .021 183 15. which would.446 225 356 (18) 2. With regard to the facts. among other items. The engineer’s report also asserted that an additional $8. was $1.754 $ 7.0) 43. according to the engineer. 2008 and 2007. before-tax income for U. Chevron will continue a vigorous defense of any attempted imposition of liability.4) (0. recommended an increase in the financial compensation for purported damages to a total of $18. Chevron filed motions to annul all of the rulings made by the prior judge. 2008 and 2007. Due to the defects associated with the engineer’s report.009 11. Management does not believe an estimate of a reasonably possible loss (or a range of loss) can be made in this case.765 and $7.026 $ 1.879 274 528 141 3. In September 2009.0% 10.S. U.S. issued a report recommending that the court assess $8. For international operations. Chevron submitted a rebuttal to the report in which it asked the court to strike the report in its entirety.965 In 2009.400. statutory federal income tax rate and the company’s effective income tax rate is explained in the following table: Year ended December 31 2009 2008 2007 U.9 (0.310. including related corporate and other charges. respectively. respectively. The court has completed most of the procedural aspects of the case and could render a judgment at any time.S.900 and an increase in the assessment for purported unjust enrichment to a total of $8. Chevron submitted a rebuttal to the revised report. without additional evidence. statutory federal income tax rate Effect of income taxes from international operations at rates different from the U. federal income tax benefit Prior-year tax adjustments Tax credits Effects of enacted changes in tax laws Other Effective tax rate 35. In November 2008. respectively. Chevron would expect to pursue its appeals and vigorously defend against enforcement of any such judgment.

681) (20. Deferred tax assets were essentially unchanged in 2009. The reported deferred tax balances are composed of the following: At December 31 2009 2008 The overall valuation allowance relates to deferred tax assets for foreign tax credit carryforwards.933) (1. Foreign tax credit carryforwards of $5.921 $ 8. This amount represents earnings reinvested as part of the company’s ongoing international business.263) 7.387) (4.2 percent in 2008 to 43. in management’s assessment.350 20.553 $ 18.496 (4. a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. Increases related to additional foreign tax credits arising from earnings in high-tax-rate international jurisdictions (which were substantially offset by valuation allowances) and to inventory-related temporary differences.499) (3.225 20. 2009. 54 Chevron Corporation 2009 Annual Report . deferred taxes were classified on the Consolidated Balance Sheet as follows: At December 31 2009 2008 Prepaid expenses and other current assets Deferred charges and other assets Federal and other taxes on income Noncurrent deferred income taxes Total deferred income taxes. a greater proportion of before-tax income was earned in 2009 by equity affiliates than in 2008. It is not practicable to estimate the amount of taxes that might be payable on the eventual remittance of earnings that are intended to be reinvested indefinitely. At the end of 2009. The increase was primarily related to increased temporary differences for properties. It reduces the deferred tax assets to amounts that are.0 percent in 2009. tax loss carryforwards and temporary differences.732) (20. These effects were offset by reductions in deferred credits and tax loss carryforwards primarily resulting from the usage of tax benefits in international tax jurisdictions.553 $ (1. deferred income taxes were recorded for the undistributed earnings of certain international operations for which the company no longer intends to indefinitely reinvest the earnings. The company does not anticipate incurring significant additional taxes on remittances of earnings that are not indefinitely reinvested. both related to an international upstream project.469) (819) (553) (431) (1.825) (1. Tax loss carryforwards exist in many international jurisdictions.521 $ 8. more likely than not to be realized.539 $ 7.271 2. a company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.535 $ 7. plant and equipment Investments and other Total deferred tax liabilities Deferred tax assets Foreign tax credits Abandonment/environmental reserves Employee benefits Deferred credits Tax loss carryforwards Other accrued liabilities Inventory Miscellaneous Total deferred tax assets Deferred tax assets valuation allowance Total deferred taxes.268) 125 11. except per-share amounts Note 15 Taxes – Continued The company’s effective tax rate decreased from 44. Income taxes are not accrued for unremitted earnings of international operations that have been or are intended to be reinvested indefinitely.895 (5. others expire at various times from 2010 through 2036. Whereas some of these tax loss carryforwards do not have an expiration date. The term “tax position” in the accounting standards for income taxes (ASC 740-10-20) refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.387 will expire between 2010 and 2019.912 Deferred tax liabilities Properties.130) (2.) Partially offsetting these items was the effect of a greater proportion of income earned in 2009 in tax jurisdictions with higher tax rates.488) (3.e.119) 7. The rate was lower in 2009 mainly due to the effect of deferred tax benefits and relatively low tax rates on asset sales. net $ 18. At December 31. The company records its deferred taxes on a taxjurisdiction basis and classifies those net amounts as current or noncurrent based on the balance sheet classification of the related assets or liabilities. (Equity-affiliate income is reported as a single amount on an after-tax basis on the Consolidated Statement of Income. Uncertain Income Tax Positions Under accounting standards for uncertainty in income taxes (ASC 740-10).. In addition.545 2.Notes to the Consolidated Financial Statements Millions of dollars. 2009 and 2008. Undistributed earnings of international consolidated subsidiaries and affiliates for which no deferred income tax provision has been made for possible future remittances totaled $20.338) (3.686) 189 11.912 Deferred tax liabilities at the end of 2009 increased by approximately $400 from year-end 2008.784) (4. plant and equipment.458 at December 31.424) (3. net $ (1.139) (445) (260) (1.

702 18 4.573 (4) 584 223 135 5.404 528 89 148 16.499 213 66 76 1. 2009 2008 2007 compared with accruals of $276 as of year-end 2008.296 19 418 – – 120 (225) (255) – United States Excise and similar taxes on products and merchandise Import duties and other levies Property and other miscellaneous taxes Payroll taxes Taxes on production Total United States International Excise and similar taxes on products and merchandise Import duties and other levies Property and other miscellaneous taxes Payroll taxes Taxes on production Total International Total taxes other than on income $ 4. examinations of tax returns for certain prior tax years had not been completed as of December 31. respectively. 2008 and 2007. Redeemable long-term obligations consist primarily of tax-exempt variable-rate put bonds that are included as current liabilities because they become redeemable at the option of the bondholders within one year following Chevron Corporation 2009 Annual Report 55 .303 5. Angola – 2001 and Saudi Arabia – 2003.Note 15 Taxes – Continued The following table indicates the changes to the company’s unrecognized tax benefits for the year ended December 31. the company reports interest and penalties related to liabilities for uncertain tax positions as “Income tax expense.266 – 3. would have an impact on the effective tax rate if subsequently recognized. Interest and penalties are not included.199 (1) 522 (17) 175 337 (246) (215) (58) $ 2. Approximately 90 percent of the $3.368 1.195 – $ 2. respectively. accruals of $232 for anticipated interest and penalty obligations were included on the Consolidated Balance Sheet.992 12 491 185 288 5. Taxes Other Than on Income Year ended December 31 2009 2008 2007 Balance at January 1 $ Foreign currency effects Additions based on tax positions taken in current year Reductions based on tax positions taken in current year Additions/reductions resulting from current-year asset acquisitions/sales Additions for tax positions taken in prior years Reductions for tax positions taken in prior years Settlements with taxing authorities in current year Reductions as a result of a lapse of the applicable statute of limitations Reductions due to tax positions previously expected to be taken but subsequently not taken on prior-year tax returns Balance at December 31 $ 2. 2009. Commercial paper* Notes payable to banks and others with originating terms of one year or less Current maturities of long-term debt Current maturities of long-term capital leases Redeemable long-term obligations Long-term debt Capital leases Subtotal Reclassified to long-term debt Total short-term debt $ 2. Nigeria – 1994.” As of December 31.696 (174) $ 2.818 *Weighted-average interest rates at December 31.968 3. the latest years for which income tax examinations had been finalized were as follows: United States – 2005. 2009. 2009 and 2008. 2009.950) $ 2.768 (4.972 $ 4. The term “unrecognized tax benefits” in the accounting standards for income taxes (ASC 740-10-20) refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. For the company’s major tax jurisdictions.08 percent and 0. $79 and $70 in 2009.080 $ 17.742 149 429 78 1.557 106 202 15.591 5.740 134 120 12. were 0.331 $ 21. For these jurisdictions. Income tax (benefit) expense associated with interest and penalties was $(20).696 (1) 459 – – 533 (182) (300) (10) $ 2.098 8.748 1 588 204 431 5. Tax positions for Chevron and its subsidiaries and affiliates are subject to income tax audits by many tax jurisdictions throughout the world.298 $ 22.550 1.511 $ 4.351 19 7.536 6.67 percent.190) $ 384 $ 5. 2009.199 Note 16 Short-Term Debt At December 31 2009 2008 Although unrecognized tax benefits for individual tax positions may increase or decrease during 2010. On the Consolidated Statement of Income.195 of unrecognized tax benefits at December 31.574 (4.129 10. the company believes that no change will be individually significant during 2010.

financial position or liquidity. 2014 – $2. ASU 2009-16 changes how companies account for transfers of financial assets and eliminates the concept of qualifying special-purpose entities. At December 31. Interest on borrowings under the terms of specific agreements may be based on the London Interbank Offered Rate or bank prime rate. Weighted-average interest rate at December 31.000 of public bonds was issued. 2009 and 2008.950 $ 5.95% notes due 2014 3. Adoption of the ASC did not affect the company’s accounting.742 Guarantee of ESOP debt.500 – 147 109 107 83 74 56 40 30 38 19 – 5 5. This standard established the FASB Accounting Standards Codification (ASC) system as the single authoritative source of U.95% notes due 2019 5. at December 31.97%)2 Fixed interest rate notes. and $400 of Texaco Capital Inc. No amounts were outstanding under these credit agreements during 2009 or at year-end. The facilities support the company’s commercial paper borrowings. Adoption of the guidance is not expected to have an impact on the company’s results of operations. which permit the company to refinance short-term obligations on a long-term basis. In 2009.190 $ 9. 2012 – $1.69%)2 Total including debt due within one year Debt due within one year Reclassified from short-term debt Total long-term debt 1 2 $ 1. Employee Benefits. respectively. debt totaling $822 matured. In 2009.221 (429) 4. 2013 – $21. Employer’s Disclosures About Postretirement Benefit Plan Assets (FSP FAS 132(R)-1) In December 2008.45% notes due 2012 4. The company periodically enters into interest rate swaps on a portion of its short-term debt. 2010.500 1.5% notes due 2009 8. the company had no interest rate swaps on short-term debt. for information concerning the company’s debt-related derivative activities. At December 31. except per-share amounts Note 16 Short-Term Debt – Continued the balance sheet date. 56 Chevron Corporation 2009 Annual Report .625% debentures due 2031 7. This standard amended and expanded the disclosure requirements for the plan assets of defined benefit pension and other postretirement plans. 2009.020.829. 2009.520.997 1.190 and $4. This standard became effective for the company January 1. 2009.S. the FASB issued FAS 168. excluding capital leases. the company classified $4. The company’s long-term debt outstanding at year-end 2009 and 2008 was as follows: At December 31 2009 2008 3.327% amortizing notes due 20141 8. At December 31.950. and became effective with the company’s reporting at December 31. was $9. This standard became effective for the company on January 1. 2009.875% debentures due 2021 8. American Institute of CPAs and other sources.100 of committed credit facilities with banks worldwide. Compensation – Retirement Benefits. In 2008.378%)2 Other foreign currency obligations Other long-term debt (6. Refer to information beginning on page 59 in Note 21. 2009. but organized the literature into about 90 accounting Topics.75% debentures due 2020 8. which became effective for the company in the quarter ending September 30. generally accepted accounting principles (GAAP) and superseded existing literature of the FASB. Settlement of these obligations is not expected to require the use of working capital in 2010.625% debentures due 2032 7. the company had $5. of short-term debt as long-term. Improvements to Financial Reporting by Enterprises Involved With Variable Interest Entities (ASU 2009-17) The FASB issued ASU 2009-17 in December 2009. Transfers and Servicing (ASC 860). the FASB issued FSP FAS 132(R)-1. beginning on page 46. Long-term debt of $5.705 (66) 4. Accounting for Transfers of Financial Assets (ASU 2009-16) The FASB issued ASU 2009-16 in December 2009. The ASC did not change GAAP. bonds matured. as the company has both the intent and the ability to refinance this debt on a long-term basis. maturing from 2021 to 2038 (5. maturing 2011 (9. Consolidation (ASC 810). 162 (FAS 168) In June 2009.625% debentures due 2010 Medium-term notes.829 $ – – – 400 147 194 108 85 74 56 40 30 38 21 13 15 1.5% debentures due 2043 8% debentures due 2032 9. 2009. for these disclosures. See Note 10.045. including $749 of Chevron Canada Funding Company notes. $5. 2011 – $33. Emerging Issues Task Force. 2010. Note 18 New Accounting Standards Note 17 Long-Term Debt The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. which was subsequently codified into ASC 715.705 matures as follows: 2010 – $66. ASU 2009-17 requires the enterprise to qualitatively Total long-term debt.Notes to the Consolidated Financial Statements Millions of dollars. and after 2014 – $2. $350 of tax-exempt Gulf Opportunity Zone bonds related to projects at the Pascagoula Refinery were issued.

The final rule was issued on December 31.871 of exploratory well costs capitalized for more than one year at December 31. Of the $1.239 663 643 486 (174) (172) $ 2. the VIE must be consolidated.660 46 50 54 *Certain projects have multiple wells or fields or both. which became effective for the company on December 31.559 $ 2. net of any salvage value.660 The following table provides an aging of capitalized well costs and the number of projects for which exploratory well costs have been capitalized for a period greater than one year since the completion of drilling. for additional information on the final rule and the impact of adoption. to align them with the requirements in the Securities and Exchange Commission’s final rule. facilities and equipment based on the determination of proved reserves Capitalized exploratory well costs charged to expense Ending balance at December 31 $ 2. Additional drilling was not deemed necessary because the presence of hydrocarbons had already been established. The accounting standards provide a number of indicators that can assist an entity in demonstrating that sufficient progress is being made in assessing the reserves and economic viability of the project. Extractive Industries – Oil and Gas. The following table indicates the changes to the company’s suspended exploratory well costs for the three years ended December 31. financial position or liquidity.118 $ 1. the FASB issued ASU 2010-03. 2009.435 1.143 (28 projects) is related to projects that had drilling activities under way or firmly planned for the near future. if so. At December 31 2009 2008 2007 Note 19 Accounting for Suspended Exploratory Wells Accounting standards for the costs of exploratory wells (ASC 932) provide that exploratory well costs continue to be capitalized after the completion of drilling when (a) the well has found a sufficient quantity of reserves to justify completion as a producing well and (b) the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project. $1. The $728 balance is related to 18 projects in areas requiring a major capital expenditure before production could begin and for which additional drilling efforts were not under way or firmly planned for the near future.Note 18 New Accounting Standards – Continued assess if it is the primary beneficiary of a variable-interest entity (VIE). 2009 2008 2007 Beginning balance at January 1 Additions to capitalized exploratory well costs pending the determination of proved reserves Reclassifications to wells. The standard amends certain sections of ASC 932.118 (23) (42) $ 1.118 1. and. the exploratory well would be assumed to be impaired. Oil and Gas Reserve Estimation and Disclosures (ASU 2010-03) In January 2010. 2009. and other activities were in process to enable a future decision on project development. Modernization of the Oil and Gas Reporting Requirements (the final rule). Extractive Industries – Oil and Gas (ASC 932). Chevron Corporation 2009 Annual Report 57 . 2008. Adoption of the standard is not expected to have a material impact on the company’s results of operations.435 (49) (136) $ 2.660 $ 1. If either condition is not met or if an enterprise obtains information that raises substantial doubt about the economic or operational viability of the project. and its costs. beginning on page 76.211 $ 1. 2009: Exploratory well costs capitalized for a period of one year or less Exploratory well costs capitalized for a period greater than one year Balance at December 31 Number of projects with exploratory well costs that have been capitalized for a period greater than one year* $ 564 $ 559 $ 449 1.871 $ 2. would be charged to expense. Refer to Table V – Reserve Quantity Information.

restricted stock.871 1 1 5 39 46 Note 20 Stock Options and Other Share-Based Compensation Compensation expense for stock options for 2009. outstanding stock options and stock appreciation rights granted under various Unocal Plans were exchanged for fully vested Chevron options and appreciation rights. The majority of these decisions are expected to occur in the next three years. $88 – miscellaneous activities for 10 projects with smaller amounts suspended. retained a provision for being restored.577 $ 1.871 3 3 42 101 149 Number of projects Amount 1992 1999 2003–2004 2005–2009 Total $ 8 8 242 1. Cash received in payment for option exercises under all share-based payment arrangements for 2009. 2008 and 2007. performance units and restricted stock units was $170 ($110 58 Chevron Corporation 2009 Annual Report . these awards will expire between early 2010 and early 2015. (d) $49 (one project) – progression of development concept selection. In addition. The tables below contain the aging of these costs on a well and project basis: Aging based on drilling completion date of individual wells: Amount Number of wells after tax). except per-share amounts Note 19 Accounting for Suspended Exploratory Wells – Continued The projects for the $728 referenced above had the following activities associated with assessing the reserves and the projects’ economic viability: (a) $330 (one project) – negotiation of crude-oil and natural-gas transportation contracts and construction agreements. 2008 and 2007. Cash paid to settle performance units and stock appreciation rights was $89. This provision enables a participant who exercises a stock option to receive new options equal to the number of shares exchanged or who has shares withheld to satisfy tax withholding obligations to receive new options equal to the number of shares exchanged or withheld. represents 149 exploratory wells in 46 projects. restricted stock units. If not exercised. respectively. 2008 and 2007 was $182 ($119 after tax). respectively. Beginning in 2007. The restored options are fully exercisable six months after the date of grant. 2009. Chevron Long-Term Incentive Plan (LTIP) Awards under the LTIP may take the form of. The $1.Notes to the Consolidated Financial Statements Millions of dollars. respectively. $132 ($86 after tax) and $205 ($133 after tax) for 2009. While progress was being made on all 46 projects. compensation expense for stock appreciation rights. $103 and $94 for 2009. Texaco Stock Incentive Plan (Texaco SIP) On the closing of the acquisition of Texaco in October 2001. which have 10-year contractual lives extending into 2011. 1992 1997–1998 1999–2003 2004–2008 Total Aging based on drilling completion date of last suspended well in project: $ 8 15 271 1. (f ) $34 (one project) – reviewing development alternatives. respectively. respectively. 2008 and 2007. $168 ($109 after tax) and $146 ($95 after tax).613 $ 1. (b) $107 (two projects) – discussion with possible natural-gas purchasers ongoing. No significant stockbased compensation cost was capitalized at December 31. $136 and $88 for 2009. $404 and $445. 2009 and 2008. performance units and nonstock grants. (c) $73 (two projects) – continued unitization efforts on adjacent discoveries that span international boundaries while planning on an LNG facility has commenced. stock options.871 of suspended well costs capitalized for a period greater than one year as of December 31. the decision on the recognition of proved reserves under SEC rules in some cases may not occur for several years because of the complexity. From April 2004 through January 2014. 2008 and 2007 was $147. Actual tax benefits realized for the tax deductions from option exercises were $25. These options. no more than 160 million shares may be issued under the LTIP. and the exercise price is the market value of the common stock on the day the restored option is granted. stock appreciation right or award requiring full payment for shares by the award recipient. (e) $47 (one project) – subsurface and facilities engineering studies concluding with front-end engineering and design expected to begin in early 2010. stock appreciation rights. restricted stock. outstanding options granted under the Texaco SIP were converted to Chevron options. and no more than 64 million of those shares may be in a form other than a stock option. restored options were issued under the LTIP. Unocal Share-Based Plans (Unocal Plans) When Chevron acquired Unocal in August 2005. but are not limited to. scale and negotiations connected with the projects. No further awards may be granted under the former Texaco plans. These awards retained the same provisions as the original Unocal Plans.

the difference between the exercise price and the market price) of options exercised during 2009.4 yrs 5.0% 1.. Chevron granted all eligible LTIP employees restricted stock units in lieu of annual cash bonus. The expense associated with these special restricted stock units was recognized at the time of the grants. That cost is expected to be recognized over a weighted-average period of 1. 2009 Granted Exercised Restored Forfeited Outstanding at December 31. In the United States.75 70.1 yrs $ 1. with the following weighted-average assumptions: Year ended December 31 2009 2008 2007 Stock Options Expected term in years1 Volatility2 Risk-free interest rate based on zero coupon U.1% 1. Under accounting standards for postretirement benefits (ASC 715). medical plan is secondary to Medicare (including Part D). there was $233 of total unrecognized before-tax compensation cost related to nonvested share-based compensation arrangements granted or restored under the plans.418) 1 (842) 69.709 (3. 2009.2% $ 15. In March 2009. Expected term is based on historical exercise and postvesting cancellation data. 2009.800 units were granted. and the company and retirees share the costs. During 2009. The funded status of the company’s pension and other postretirement benefit plans for 2009 and 2008 is on the following page: Chevron Corporation 2009 Annual Report 59 . All of the special restricted stock units will be payable in November 2010.120 $ $ $ $ $ 61.36 1. The plans are unfunded.27 1. generally equal to the expected term. treasury note Dividend yield Weighted-average fair value per option granted Restored Options Expected term in years1 Volatility2 Risk-free interest rate based on zero coupon U.0% 4.1% 3.5% 3.7% $ 10. treasury note Dividend yield Weighted-average fair value per option granted 1 6.0% 2.2% $ 15.9% 2.1 22.013 14.61 At January 1. A liability of $45 was recorded for these awards.0 30.555 shares. Note 21 Employee Benefit Plans A summary of option activity during 2009 is presented below: WeightedAverage Exercise Price WeightedAverage Remaining Contractual Term Aggregate Intrinsic Value Shares (Thousands) Outstanding at January 1. nonqualified pension plans that are not subject to funding requirements under laws and regulations because contributions to these pension plans may be less economic and investment returns may be less attractive than the company’s other investment alternatives. outstanding stock appreciation rights and other awards that were granted under various LTIP and former Texaco and Unocal programs totaled approximately 1. 2009.34 The total intrinsic value (i.Note 20 Stock Options and Other Share-Based Compensation – Continued The fair market values of stock options and stock appreciation rights granted in 2009. The company has defined benefit pension plans for many employees.36 69.S.38 6.e.5% $ 12. 2 Volatility rate is based on historical stock prices over an appropriate period.463 44. At December 31. Total fair value of the special restricted stock units was $32 as of December 31.97 1. Medical coverage for Medicare-eligible retirees in the company’s main U. 992.294 units were forfeited. and the increase to the company contribution for retiree medical coverage is limited to no more than 4 percent per year. As of December 31.01 6.2% 4. Certain life insurance benefits are paid by the company.679. respectively. 2009.7% $ 15. In addition.2 45.2 23.S.108. and the fair value of the liability recorded for these instruments was $233. all qualified plans are subject to the Employee Retirement Income Security Act (ERISA) minimum funding standard. 2008 and 2007 was $91. the number of LTIP performance units outstanding was equivalent to 2.69 45.S.S. A total of 453.70 per unit at the time of the grant. 2008 and 2007 were measured on the date of grant using the Black-Scholes option-pricing model.965 units were granted at $69.8 years.953 units vested with cash proceeds distributed to recipients and 45. $433 and $423.5% 3.3 22. the company recognizes the overfunded or underfunded status of each of its defined benefit pension and OPEB as an asset or liability on the Consolidated Balance Sheet. The company typically prefunds defined benefit plans as required by local regulations or in certain situations where prefunding provides economic advantages.6 21. 2009 Exercisable at December 31.019 $ 904 $ 63. The company does not typically fund U.0% 3. The company also sponsors other postretirement (OPEB) plans that provide medical and dental benefits.02 6.70 $ 57.2% 2.1% 3.5 million equivalent shares as of December 31.400.40 76. 2009.2% $ 8. units outstanding were 2. 2009 59. as well as life insurance for some active and qualifying retired employees. 668. the company continued its practice of issuing treasury shares upon exercise of these awards. During this period.

S.360) $(1.360) $(1.918 (2.395 250 499 – – – (62) – (955) – 8.494 245 – 7 (602) (245) 7.090 $ 3.S.550 Accumulated benefit obligations 8.698 60 Chevron Corporation 2009 Annual Report .891 3. U.891 266 128 481 292 – 7 1 10 – – 1.658 $ 3.300) (1. include: Pension Benefits 2009 U.436 $ 2.261) $(1.804 211 $ 2. Int’l. 2009.889 (60) 201 $ 4.015 $ $ 465 $ 410 (222) (323) 243 $ 87 The accumulated benefit obligations for all U.065) $ (2.181 $ 1. respectively. These amounts consisted of: Pension Benefits 2009 U.931 – – – – – – 187 188 145 152 (332) (340) – – $ (3.029.S. except per-share amounts Note 21 Employee Benefit Plans – Continued Pension Benefits 2009 U.702 3.S.454 and $5.857) (2.797 (68) $ 3. 2008 Int’l. Information for U. Other Benefits 2009 2008 Net actuarial loss Prior-service (credit) costs Total recognized at December 31 $ 4. 2008 Int’l.679) $ 4.S.480) $ 8.371 5.S. 2008 Int’l.931 $ 2.715 5.116 $ 8.065) $ (2. at December 31. and international pension plans were $8.448 2.291) $ – $ – (208) (209) (2.707 and $4. Int’l.722) $ (3.Notes to the Consolidated Financial Statements Millions of dollars.273. 2008. 2008 Int’l. U. Projected benefit obligations $ 9.729 $ 1.065 2.831 at the end of 2009 and 2008.S. at December 31. 2009 and 2008. and $7.292 2. Int’l.600 $(1.121 $ 2.235 $(2.092) – 577 – (955) 5. U. Other Benefits 2009 2008 Change in Benefit Obligation Benefit obligation at January 1 Service cost Interest cost Plan participants’ contributions Plan amendments Curtailments Actuarial loss (gain) Foreign currency exchange rate changes Benefits paid Special termination benefits Benefit obligation at December 31 Change in Plan Assets Fair value of plan assets at January 1 Actual return on plan assets Foreign currency exchange rate changes Employer contributions Plan participants’ contributions Benefits paid Fair value of plan assets at December 31 Funded Status at December 31 $ 8.S. Other Benefits 2009 2008 Deferred charges and other assets Accrued liabilities Reserves for employee benefit plans Net amount recognized at December 31 $ 6 $ 37 (66) (67) (2.291) $ 2.127 $ 3. U. 2009 and 2008.450) $(2.121 7. respectively. and international pension plans with an accumulated benefit obligation in excess of plan assets at December 31.633 132 292 9 32 – (104) (858) (246) 1 3.304 3.480) $ 6 (72) (2.906 2.679) $ 31 (61) (1.613) $(2. Int’l. respectively.931) Amounts recognized on the Consolidated Balance Sheet for the company’s pension and other postretirement benefit plans at December 31.S.664 4. was: Pension Benefits 2009 U.600 964 402 – 226 1.376 and $3.931) Amounts recognized on a before-tax basis in “Accumulated other comprehensive loss” for the company’s pension and OPEB plans were $6.939 43 44 180 178 145 152 20 – (5) – 56 (14) 27 (28) (332) (340) – – 3.448 $(2.539 1.102 Fair value of plan assets 7.892 (655) (662) 262 9 (246) 2.127 7.S.391 299 – 333 (602) (245) – – 9.

and eight years for other postretirement benefit plans.S. 13 and 10 years. 2008 Int’l.265 646 (79) 32 (24) 575 (160) (193) (301) (46) (700) 31 (82) 97 (20) 26 82 (27) 20 81 156 (42) (38) – 81 1 (401) (81) – 81 (401) $ 424 $2. Int’l. international pension and OPEB plans. 2009. the company estimates actuarial losses of $318. Chevron Corporation 2009 Annual Report 61 . pension. U.S. 2009 Other Benefits 2008 2007 Net Periodic Benefit Cost Service cost $ 266 Interest cost 481 Expected return on plan assets (395) Amortization of prior-service (credits) costs (7) Recognized actuarial losses 298 Settlement losses 141 Curtailment losses – Special termination benefit recognition – Total net periodic benefit cost 784 Changes Recognized in Other Comprehensive Income Net actuarial loss (gain) during period 823 Amortization of actuarial loss (439) Prior service cost (credit) during period 1 Amortization of prior-service credits (costs) 7 Total changes recognized in other comprehensive income 392 Recognized in Net Periodic Benefit Cost and Other Comprehensive Income $1. During 2010. the company estimates an additional $220 will be recognized from “Accumulated other comprehensive loss” during 2010 related to lump-sum settlement costs from U. pension. international pension and OPEB plans. the company estimates prior service (credits) costs of $(7).S.S. was approximately eight and 12 years for U. The weighted average amortization period for recognizing prior service costs (credits) recorded in “Accumulated other comprehensive loss” at December 31. respec- tively. international pension and OPEB plans are being amortized on a straight-line basis over approximately 11. 2009. and international pension plans.S. $102 and $26 will be amortized from “Accumulated other comprehensive loss” for U. During 2010. respectively.S. pension plans. respectively.624 (366) – 7 2. $27 and $(74) will be amortized from “Accumulated other comprehensive loss” for U.S. pension. These losses are amortized to the extent they exceed 10 percent of the higher of the projected benefit obligation or market-related value of plan assets. In addition.780 $ 830 $(296) $ 242 $ 320 $ 180 $(168) Net actuarial losses recorded in “Accumulated other comprehensive loss” at December 31. for the company’s U. The amount subject to amortization is determined on a plan-by-plan basis.176 $ 128 292 (203) 23 108 1 – – 349 $ 250 499 (593) (7) 60 306 – – 515 $ 132 292 (273) 24 77 2 – 1 255 $ 260 483 (578) 46 128 65 – – 404 $ 125 255 (266) 17 82 – 3 – 216 $ 43 180 – (81) 27 – (5) – 164 $ 44 178 – (81) 38 – – – 179 $ 49 184 – (81) 81 – – – 233 194 (109) 13 (23) 75 2. U. These amortization periods represent the estimated average remaining service of employees expected to receive benefits under the plans. 2007 Int’l.Note 21 Employee Benefit Plans – Continued The components of net periodic benefit cost and amounts recognized in other comprehensive income for 2009.S. respectively. 2008 and 2007 are shown in the table below: Pension Benefits 2009 U.

8% N/A 4. the annual increase to company contributions was capped at 4 percent.4% 6. The market-related value of assets of the major U. U.S. Assumed health care cost-trend rates can have a significant effect on the amounts reported for retiree health care costs. and the company’s estimated long-term rates of return are consistent with these studies.3% 4.5% Expected Return on Plan Assets The company’s estimated long-term rates of return on pension assets are driven primarily by actual historical asset-class returns.5% 6. the company selected a 5. pension plan assets was 7.5% 7.S.5% 6.S. and significant concentrations of risk within plan assets.7% 6.3% 4. There have been no changes in the expected long-term rate of return on plan assets since 2002 for U.8 percent for the U. the effect of fair-value measurements using unobservable inputs on changes in plan assets for the period.5% 7. and international pension and postretirement benefit plan obligations and expense reflect the prevailing rates available on high-quality.S.S. the estimated long-term rate of return on U. For this measurement at December 31. 2009. 2008 Int’l. plan. postretirement benefit plan. Other Benefit Assumptions For the measurement of accumulated postretirement benefit obligation at December 31.0% 6. the major categories of plan assets.8% 7. At December 31.3% 6. Discount Rate The discount rate assumptions used to determine U.S.8% 6. postretirement medical plan. fixed-income debt instruments.5% 6.5% 6.5% 7.3 percent discount rate for the U.3% N/A N/A 6.8% 4. pension plan and 5.5% 5.S. Int’l. This rate was based on a cash flow analysis that matched estimated future benefit payments to the Citigroup Pension Discount Yield Curve as of year-end 2009.5% 6.8% 4.8% 4. 2008. U. advice from external actuarial firms and the incorporation of specific asset-class risk factors.3% 4. an assessment of expected future performance.7% 7.3% 7.S. as opposed to the maximum allowable period of five years under U.3% 4. For other plans.S. A one-percentage-point change in the assumed health care cost-trend rates would have the following effects: 1 Percent Increase 1 Percent Decrease Effect on total service and interest cost components Effect on postretirement benefit obligation $ 10 $102 $ (9) $ (87) Plan Assets and Investment Strategy Effective December 31. The impact is mitigated by the 4 percent cap on the company’s medical contributions for the primary U. In both measurements. 2009.5% 6.9% N/A 6.0% 7.1% 6. the assumed health care cost-trend rates started with 7 percent in 2009 and gradually declined to 5 percent for 2017 and beyond. accounting rules. the assumed health care cost-trend rates start with 7 percent in 2010 and gradually decline to 5 percent for 2018 and beyond.8 percent.S. 2009 Other Benefits 2008 2007 Assumptions used to determine benefit obligations Discount rate Rate of compensation increase Assumptions used to determine net periodic benefit cost Discount rate Expected return on plan assets Rate of compensation increase 5.8% 6. the company implemented the expanded disclosure requirements for the plan assets of defined benefit pension and OPEB plans (ASC 715) to provide users of financial statements with an understanding of: how investment allocation decisions are made.S. which account for 69 percent of the company’s pension plan assets. 2009.Notes to the Consolidated Financial Statements Millions of dollars. The fair-value hierarchy of inputs the company uses to value the pension assets is divided into three levels: 62 Chevron Corporation 2009 Annual Report .3% N/A 4.S. except per-share amounts Note 21 Employee Benefit Plans – Continued Assumptions The following weighted-average assumptions were used to determine benefit obligations and net periodic benefit costs for years ended December 31: Pension Benefits 2009 U.5% 6. The discount rates at the end of 2008 and 2007 were 6.5% 6.4% 5. Management considers the three-month time period long enough to minimize the effects of distortions from day-today market volatility and still be contemporaneous to the end of the year.3 percent for the U. pension plan used in the determination of pension expense was based on the market values in the three months preceding the year-end measurement date. 2009. Asset allocations are periodically updated using pension plan asset/liability studies. the inputs and valuation techniques used to measure the fair value of plan assets. plans. 2007 Int’l. pension plan and the OPEB plan.8% 6.4% 5.3% 4. market value of assets as of year-end is used in calculating the pension expense. for the main U. At December 31.3% 7.S.

836 $ 506 371 2 19 230 102 131 207 16 $ 3. which are updates of third-party appraisals that occur at least once a year for each property in the portfolio. inputs other than quoted prices that are observable for the asset. 3 Mixed funds are composed of funds that invest in both equity and fixed income instruments in order to diversify and lower risk.S. independent pricing services and exchanges.S.304 $ 2. the Level 2 designation is based on the restriction that advance notification of redemptions. 4 The year-end valuations of the U. they are mostly index funds. Int’l Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Equities U. Equities Corporate Real Estate Other Total Total at December 31.S. dividends. 2009 1 2 $ 2.and tax-related receivables (Level 2). Level 3: Inputs to the fair value measurement are unobservable for these assets. For these index funds. insurance contracts and investments in private-equity limited partnerships (Level 3). interest.824 $ U. real estate assets are based on internal appraisals by the real estate managers. for International plans.259 $ – – 695 $ – – – – 18 2 – – – 131 – 1 152 564 430 149 90 326 – – – 16 $ 2. and inputs that are derived principally from or corroborated by observable market data by correlation or other means. The fair values for Level 2 assets are generally obtained from third-party broker quotes.115 977 1.115 977 3 149 – – – – 8 – 743 (57) $ 3. Collective Trusts/Mutual Funds for U. Level 2: Fair values of these assets are measured based on quoted prices for similar assets in active markets. Valuation may be performed using a financial model with estimated inputs entered into the model.938 $ – – 1.1 International Collective Trusts/Mutual Funds2 Fixed Income Government Corporate Mortgage-Backed Securities Other Asset Backed Collective Trusts/Mutual Funds2 Mixed Funds3 Real Estate4 Cash and Cash Equivalents Other5 Total at December 31. If the asset has a contractual term.261 $ – – – – – – – – – 479 – 51 530 $ 370 492 789 $ 370 492 94 54 17 – – 14 14 – 207 (3) $ 1.S. 2009. the Level 2 input is observable for substantially the full term of the asset.235 452 336 – 19 216 88 – – 18 $ 1.Note 21 Employee Benefit Plans – Continued Level 1: Fair values of these assets are measured using unadjusted quoted prices for the assets or the prices of identical assets in active markets that the plans have the ability to access. typically two business days. The effect of fair-value measurements using significant unobservable inputs on changes in Level 3 plan assets for the period are outlined below: Fixed Income MortgageBacked Securities U. Sales and Settlements Transfers in and/or out of Level 3 Total at December 31. 2008 Actual Return on Plan Assets: Assets held at the reporting date Assets sold during the period Purchases. 2009 $ 1 (1) – – – – $ 23 2 5 (12) – 18 $ 2 – – – – 2 $ 763 (178) 8 17 – 610 $ 52 – – – – 52 $ 841 (177) 13 5 – 682 $ $ $ $ $ $ Chevron Corporation 2009 Annual Report 63 .S.264 713 430 149 90 326 8 479 743 10 $ 7. is required. equities include investments in the company’s common stock in the amount of $29 at December 31. The fair value measurements of the company’s pension plans for 2009 are below: U.S. plans are entirely index funds. 5 The “Other” asset category includes net payables for securities purchased but not yet settled (Level 1). quoted prices for identical or similar assets in inactive markets.

494 and $245 to its U. and Other 0–5 percent. $110. are expected to be paid by the company in the next 10 years: Pension Benefits U. Chevron established a LESOP as a constituent part of the ESOP. long-term asset allocation policy benchmarks have been established. as compared with $187 paid in 2009. No contributions were required in 2009. In 2010. respectively. Actual asset allocation within approved ranges is based on a variety of current economic and market conditions and consideration of specific asset category risk. the U. 2008 and 2007. There are no significant concentrations of risk in plan assets due to the diversification of investment categories. Dividends paid on LESOP shares are reflected as a reduction of retained earnings. To assess the plan’s investment performance. respectively. 2008 and 2007. except per-share amounts Note 21 Employee Benefit Plans – Continued The primary investment objectives of the pension plans are to achieve the highest rate of total return within prudent levels of risk and liquidity. respectively.S.S. Int’l. The following benefit payments. and shares pledged as collateral are reported as “Deferred compensation and benefit plan trust” on the Consolidated Balance Sheet and the Consolidated Statement of Equity. which is described in the section that follows. the company contributed $1. regulatory environments and other economic factors. 2008 or 2007 as dividends received by the LESOP were sufficient to satisfy LESOP debt service. totaling $73. $35 and $8 were used in 2009. Real Estate 0–15 percent. to service LESOP debt. which are reviewed regularly: Equities 60–80 percent and Fixed Income and Cash 20–40 percent. the Chevron Board of Directors has established the following approved asset allocation ranges: Equities 40–70 percent. Other Benefits 2010 2011 2012 2013 2014 2015–2019 $ 855 $ 851 $ 861 $ 884 $ 913 $ 4. pension plan. represent open market purchases. The LESOP provides partial prefunding of the company’s future commitments to the ESIP. Both the U. the company expects contributions to be approximately $600 and $300 to its U. Charges to expense for the ESIP represent the company’s contributions to the plan. Total company matching contributions to employee accounts within the ESIP were $257. The other significant international pension plans also have established maximum and minimum asset allocation ranges that vary by plan. Of the dividends paid on the LESOP shares.K.S. and U. 2008 and 2007. $15 and $17 and charges to interest expense for LESOP debt of $12. Fixed Income and Cash 20–60 percent. Interest accrued on LESOP debt is recorded as interest expense. The company does not prefund its OPEB obligations. In 1989. $14 and $16. All LESOP shares are considered outstanding for earnings-per-share computations. respectively.K.707 $ 242 $ 271 $ 284 $ 296 $ 317 $ 1. As permitted by accounting standards for share-based compensation (ASC 718). 2008 and 2007. For the primary U. Board of Trustees has established the following asset allocation guidelines.969 $ 208 $ 213 $ 217 $ 222 $ 229 $ 1. 2008 and 2007. 64 Chevron Corporation 2009 Annual Report . Cash Contributions and Benefit Payments In 2009. and international pension plans. respectively.S. Additional funding may ultimately be required if investment returns are insufficient to offset increases in plan obligations. This cost was reduced by the value of shares released from the LESOP totaling $184. Actual contribution amounts are dependent upon plan-investment returns. and U. The net credit for the respective years was composed of credits to compensation expense of $15. Total credits to expense for the LESOP were $3. The company reports compensation expense equal to LESOP debt principal repayments less dividends received and used by the LESOP for debt service. For the U. the debt of the LESOP is recorded as debt. which are funded either through the purchase of shares of common stock on the open market or through the release of common stock held in the leveraged employee stock ownership plan (LESOP).S. The company’s U. and international pension plans. $40 and $33 in 2009.S. $1 and $1 in 2009. pension plan. and to provide adequate liquidity for benefit payments and portfolio management. respectively. Employee Stock Ownership Plan Within the Chevron ESIP is an employee stock ownership plan (ESOP). $231 and $206 in 2009.197 Employee Savings Investment Plan Eligible employees of Chevron and certain of its subsidiaries participate in the Chevron Employee Savings Investment Plan (ESIP). $191 and $173 in 2009. The company anticipates paying other postretirement benefits of approximately $208 in 2010. The remaining amounts.Notes to the Consolidated Financial Statements Millions of dollars. plans have an Investment Committee that regularly meets during the year to review the asset holdings and their returns. respectively.K. which include estimated future service.K. pension plans comprise 84 percent of the total pension assets. to diversify and mitigate potential downside risk associated with the investments. changes in pension obligations.

were as follows: Thousands 2009 2008 Allocated shares Unallocated shares Total LESOP shares 21. In 2007. respectively. Under the terms of these indemnities. Inc. in connection with the February 2002 sale of the company’s interests in those investments. if any. The company has also provided indemnities relating to contingent environmental liabilities related to assets originally contributed by Texaco to the Equilon and Motiva joint ventures and environmental conditions that existed prior to the formation of Equilon and Motiva or that occurred during the period of Texaco’s ownership interest in the joint ventures. In general. the environmental conditions or events that are subject to these indemnities must have arisen prior to December 2001. 2009 and 2008. This plan replaced other cash bonus programs. Over the approximate 16-year term of the guarantee. Shell delivered a letter to the company purporting to preserve unmatured claims for certain Equilon indemnities. on page 58. In 2009 and 2008. Claims had to be asserted by February 2009 for Equilon indemnities and must be asserted no later than February 2012 for Motiva indemnities. Management does not believe this letter or any other information provides a basis to estimate the amount. The company does not expect settlement of income tax liabilities associated with uncertain tax positions will have a material effect on its results of operations.636 24. which primarily included the Management Incentive Plan (MIP) and the Chevron Success Sharing program. Guarantees The company’s guarantee of approximately $600 is associated with certain payments under a terminal use agreement entered into by a company affiliate. The company intends to continue to pay its obligations under the benefit plans. including the deferred compensation and supplemental retirement plans. Awards under the LTIP consist of stock options and other share-based compensation that are described in Note 20. The trust will sell the shares or use the dividends from the shares to pay benefits only to the extent that the company does not pay such benefits. the company paid $48 under these indemnities and continues to be obligated for possible additional indemnification payments in the future.847 19. Texaco established a benefit plan trust for funding obligations under some of its benefit plans. The letter itself provides no estimate of the ultimate claim amount. Unocal established various grantor trusts to fund obligations under some of its benefit plans. Chevron also has the LTIP for officers and other regular salaried employees of the company and its subsidiaries who hold positions of significant responsibility.Note 21 Employee Benefit Plans – Continued Shares held in the LESOP are released and allocated to the accounts of plan participants based on debt service deemed to be paid in the year in proportion to the total of current-year and remaining debt service. At year-end 2009. charges to expense for cash bonuses were $561 and $757. were invested primarily in interest-earning accounts. These liabilities generally are subject to audit and are not finalized with the individual taxing authorities until several years after the end of the annual period for which income taxes have been calculated. Through the end of 2009.366 26.651 6. trust assets of $57 and $60. respectively. Chevron has recorded no liability for its obligation under this guarantee. In February 2009.. The company posts no assets as collateral and has made no payments under the indemnities. unit and individual performance in the prior year. Note 22 Other Contingencies and Commitments Income Taxes The company calculates its income tax expense and liabilities quarterly.2 million shares of Chevron treasury stock. At December 31. LESOP shares as of December 31.017 Note 15 beginning on page 53 for a discussion of the periods for which tax returns have been audited for the company’s major tax jurisdictions and a discussion for all tax jurisdictions of the differences between the amount of tax benefits recognized in the financial statements and the amount taken or expected to be taken in a tax return. the company could be required to make future payments up to $300. Prior to its acquisition by Chevron. The company would be required to perform if the indemnified liabilities become actual losses. Were that to occur. The shares held in the trust are not considered outstanding for earnings-per-share purposes until distributed or sold by the trust in payment of benefit obligations. The terminal is expected to be operational by 2012. Indemnifications The company provided certain indemnities of contingent liabilities of Equilon and Motiva to Shell and Saudi Refining. 2009 and 2008. a single annual cash bonus plan for eligible employees that links awards to corporate.211 3. There are numerous cross-indemnity agreements with the affiliate and the other partners to permit recovery of any amounts paid under the guarantee. The trustee will vote the shares held in the trust as instructed by the trust’s beneficiaries. the maximum guarantee amount will be reduced over time as certain fees are paid by the affiliate. Employee Incentive Plans Effective January 2008. the company established the Chevron Incentive Plan (CIP). of a range of loss or potential range of loss with respect to either the Equilon or the Motiva indemnities. there is no maximum limit on the amount of potential future payments. charges to expense for MIP were $184 and charges for other cash bonus programs were $431. the trust contained 14. Refer to 65 . Chevron Corporation 2009 Annual Report Benefit Plan Trusts Prior to its acquisition by Chevron. consolidated financial position or liquidity.

In the acquisition of Unocal. for any applicable incident. Chevron is solely responsible until April 2022. and pipelines. 2013 – $1. $820 related to the company’s U. Environmental Protection Agency (EPA) or other regulatory agencies under the provisions of the federal Superfund law or analogous state laws. including throughput and take-or-pay agreements. offsite disposal of contaminants. 2015 and after – $4. except per-share amounts Note 22 Other Contingencies and Commitments – Continued The amounts payable for the indemnities described in the preceding paragraph are to be net of amounts recovered from insurance carriers and others and net of liabilities recorded by Equilon or Motiva prior to September 30. 2012 – $1. Environmental The company is subject to loss contingencies pursuant to laws. crude-oil fields.100 in 2008 and $3.e. Long-Term Unconditional Purchase Obligations and Commitments. 2014 – $1. when the indemnification expires. federal Superfund sites and analogous sites under state laws.500. closed or divested. remediation and/or extraction of petroleum hydrocarbon liquid and vapor from soil. such as pipeline and storage capacity. onsite containment. or will have. Included in this balance were remediation activities at approximately 250 sites for which the company had been identified as a potentially responsible party or otherwise involved in the remediation by the U. closed or divested. the amount of additional future costs may be material to results of operations in the period in which they are recognized. and monitoring of the natural attenuation of the contaminants.400. The company manages environmental liabilities under specific sets of regulatory requirements. terminals. whether operating. The agreements typically provide goods and services. downstream operations. 2001. utilities. which in the United 66 Chevron Corporation 2009 Annual Report . to be used or sold in the ordinary course of the company’s business. soil excavation. the company assumed certain indemnities relating to contingent environmental liabilities associated with assets that were sold in 1997. after reaching the $200 obligation. some of which relate to suppliers’ financing arrangements. were primarily associated with the company’s plans and activities to remediate soil or groundwater contamination or both. including refineries and other plants.S. Also. land development areas. and mining operations.000. Of the remaining year-end 2009 environmental reserves balance of $1. The aggregate approximate amounts of required payments under these various commitments are: 2010 – $7.400. The federal Superfund law and analogous state laws provide for joint and several liability for all responsible parties. upstream ($369). the unknown timing and extent of the corrective actions that may be required. regulations. chemicals ($149) and other businesses ($70). The acquirer of those assets shared in certain environmental remediation costs up to a maximum obligation of $200. or international petroleum or chemical companies. The environmental conditions or events that are subject to these indemnities must have arisen prior to the sale of the assets in 1997. and the extent to which such costs are recoverable from third parties.100. These and other activities include one or more of the following: site assessment. drilling rigs. Such contingencies may exist for various sites. including MTBE.S. groundwater extraction and treatment. $5. Liabilities at all sites. Under the indemnification agreement. Total payments under the agreements were approximately $8. consolidated financial position or liquidity.S.300. service stations and terminals). Although the company has provided for known obligations under this indemnity that are probable and reasonably estimable.700. by the company or other parties. private claims and legal proceedings related to environmental matters that are subject to legal settlements or that in the future may require the company to take action to correct or ameliorate the effects on the environment of prior release of chemicals or petroleum substances. the amount of additional future costs may be material to results of operations in the period in which they are recognized.515. including. was $1. The company does not expect these costs will have a material effect on its consolidated financial position or liquidity. The company’s remediation reserve for these sites at yearend 2009 was $185. Any future actions by the EPA or other regulatory agencies to require Chevron to assume other potentially responsible parties’ costs at designated hazardous waste sites are not expected to have a material effect on the company’s results of operations.Notes to the Consolidated Financial Statements Millions of dollars. Chevron’s environmental reserve as of December 31. refineries. but not limited to. These future costs are not fully determinable due to such factors as the unknown magnitude of possible contamination. The company does not expect these costs will have a material effect on its consolidated financial position or liquidity. any significant impact on the company’s competitive position relative to other U. the determination of the company’s liability in proportion to other responsible parties. marketing locations (i. The remaining $695 was associated with various sites in international downstream ($107).. which had been reached at December 31.700 in 2007. and petroleum products. A portion of these commitments may ultimately be shared with project partners. 2009. 2011 – $4. Including Throughput and Take-or-Pay Agreements The company and its subsidiaries have certain other contingent liabilities relating to long-term unconditional purchase obligations and commitments. service stations.100 in 2009. Although the company has provided for known environmental obligations that are probable and reasonably estimable. whether operating. 2009. the company does not believe its obligations to make such expenditures have had.

2008 and 2007: 2009 2008 2007 Balance at January 1 Liabilities incurred Liabilities settled Accretion expense Revisions in estimated cash flows Balance at December 31 $ 9. and (3) the periodic review of the ARO liability estimates and discount rates. Other Contingencies Chevron receives claims from and submits claims to customers. These future costs are not fully determinable due to such factors as the unknown magnitude of possible contamination. Department of Energy. the amounts associated with “Revisions in estimated cash flows” reflect increasing costs to abandon onshore and offshore wells. These activities. sell.175 $ 8. The legal obligation to perform the asset retirement activity is unconditional even though uncertainty may exist about the timing and/or method of settlement that may be beyond the company’s control. (2) the subsequent accretion of that liability and depreciation of the asset. and the possible maximum net amount that could be owed to Chevron is estimated at about $150. A wide range remains for a possible net settlement amount for the four zones. The following table indicates the changes to the company’s before-tax asset retirement obligations in 2009. individually or together. For this range of settlement. In the table above.395 144 (757) 463 930 $10. may result in gains or losses in future periods. equipment and facilities. acquire or restructure assets to achieve operational or strategic benefits and to improve competitiveness and profitability. The company performs periodic reviews of its downstream and chemical long-lived assets for any changes in facts and circumstances that might require recognition of a retirement obligation. for the time when the remaining interests in these zones were owned by the U. for environmental remediation relating to past operations. Chevron estimates its maximum possible net before-tax liability at approximately $200.253 *Includes $175 for revision to the ARO liability retained on properties that had been sold. the company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. The legal obligations associated with the retirement of the tangible long-lived assets require recognition in certain circumstances including: (1) the present value of a liability and offsetting asset for an ARO. The longterm portion of the $10. It is likely that the company will continue to incur additional liabilities. exchange.Note 22 Other Contingencies and Commitments – Continued States include the Resource Conservation and Recovery Act and various state or local regulations. Refer to Note 23 for a discussion of the company’s asset retirement obligations. U.253 308 (973) 430 1. The company and its affiliates also continue to review and analyze their operations and may close.175 balance at the end of 2009 was $9. individually or together.S.S. state and local regulatory bodies. This uncertainty about the timing and/or method of settlement is factored into the measurement of the liability when sufficient information exists to reasonably estimate fair value.377 $ 9. California. ownership agreements may provide for periodic reassessments of equity interests in estimated crude-oil and natural-gas reserves. and suppliers. trading partners. governments. Note 23 Asset Retirement Obligations In accordance with accounting standards for asset retirement obligations (ASC 410). Equity Redetermination For oil and gas producing operations. may result in gains or losses that could be material to earnings in any given period. marketing and transportation (downstream) and chemical long-lived assets have been recognized. These activities. federal. The timing of the settlement and the exact amount within this range of estimates are uncertain. consolidated financial position or liquidity. Accounting standards for asset retirement obligations primarily affect the company’s accounting for crude-oil and natural-gas producing assets.395 $ 5. Chevron Corporation 2009 Annual Report 67 . individually and in the aggregate. No single remediation site at year-end 2009 had a recorded liability that was material to the company’s results of operations.773 178 (818) 399* 2. One such equity redetermination process has been under way since 1996 for Chevron’s interests in four producing zones at the Naval Petroleum Reserve at Elk Hills. may be significant and take lengthy periods to resolve. and the extent to which such costs are recoverable from third parties. No significant AROs associated with any legal obligations to retire refining. contractors. beyond those recorded. the unknown timing and extent of the corrective actions that may be required. insurers. as indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the associated ARO. abandon.721 $ 8.289. the determination of the company’s liability in proportion to other responsible parties. The amounts of these claims.

037 1 12 2. $210 and $113 were included in earnings for the years 2009. Other financial information is as follows: Year ended December 31 2009 2008 2007 company tested this goodwill for impairment during 2009 and concluded no impairment was necessary. 2008. $420 and $18 in 2009.618 in goodwill on the Consolidated Balance Sheet related to its 2005 acquisition of Unocal. were evaluated until the time of the Form 10-K filing with the Securities and Exchange Commission on February 25. 2009 and 2008.200 relating to the sale of nonstrategic properties. respectively. 2008 and 2007.931 2. LIFO (charges) profits of $(168).77 There was no effect of dividend equivalents paid on stock units or dilutive impact of employee stock-based awards on earnings.491 and $9. may be recorded directly to the company’s retained earnings instead of net income. aviation facilities. under the applicable accounting rules.000 relating to the sale of nonstrategic properties. approximately $600 and $400 related to downstream and upstream assets.24 $ 18. At December 31. Of this amount.992 $ 5.368 at December 31.991 1 1. Diluted EPS includes the effects of these items as well as the dilutive effects of outstanding stock options awarded under the company’s stock option programs (refer to Note 20. Replacement cost is generally based on average acquisition costs for the year. Total financing interest and debt costs Less: Capitalized interest Interest and debt expense Research and development expenses Foreign currency effects* $ 301 273 $ 28 $ 603 $ (744) $ 256 256 $ – $ 702 $ 862 $ 468 302 $ 166 $ 510 $ (352) Note 26 Earnings Per Share *Includes $(194).483 1. for the company’s share of equity affiliates’ foreign currency effects. 2008 and 2007.050 $ 11. 2009.038 $ 11. $252 of net properties. Earnings in 2007 included gains of approximately $2. Of this amount.67 $ 18. These assets were sold in 2009. Note 25 Assets Held for Sale At December 31.000 relating to the sale of nonstrategic properties. The excess of replacement cost over the carrying value of inventories for which the Last-In. respectively.117 1 14 2. Of this amount. Events subsequent to December 31. 2009.” beginning on page 58). The company has $4. respectively.001 $ 5. and commercial and industrial fuels business. 2010. 68 Chevron Corporation 2009 Annual Report . Assets in this category are related to groups of service stations. Under the accounting standard for goodwill (ASC 350). The table below sets forth the computation of basic and diluted EPS: Year ended December 31 2009 2008 2007 Basic EPS Calculation Earnings available to common stockholders – Basic1 Weighted-average number of common shares outstanding Add: Deferred awards held as stock units Total weighted-average number of common shares outstanding Per share of common stock Earnings – Basic Diluted EPS Calculation Earnings available to common stockholders – Diluted1 Weighted-average number of common shares outstanding Add: Deferred awards held as stock units Add: Dilutive effect of employee stock-based awards Total weighted-average number of common shares outstanding Per share of common stock Earnings – Diluted 1 $ 10. “Stock Options and Other Share-Based Compensation. approximately $1.132 $ 8. the company reported no assets as “Assets held for sale” (AHS) on the Consolidated Balance Sheet.Notes to the Consolidated Financial Statements Millions of dollars. except per-share amounts Note 24 Other Financial Information Earnings in 2009 included gains of approximately $1.688 2.037 1 2.26 $ 23.000 related to upstream assets.483 1.74 $ 23. which. approximately $1.118 $ 8.100 related to downstream assets and $680 related to the sale of the company’s investment in Dynegy.688 2. lubricants blending plants. respectively. Earnings in 2008 included gains of approximately $1.991 1 9 2.117 1 2.83 $ 10. Inc. plant and equipment were reported as AHS. the Basic earnings per share (EPS) is based upon Net Income Attributable to Chevron Corporation (“earnings”) less preferred stock dividend requirements and includes the effects of deferrals of salary and other compensation awards that are invested in Chevron stock units by certain officers and employees of the company and the company’s share of stock transactions of affiliates.931 2. First-Out (LIFO) method is used was $5.

Five-Year Financial Summary
Unaudited

Millions of dollars, except per-share amounts

2009

2008

2007

2006

2005

Statement of Income Data Revenues and Other Income Total sales and other operating revenues1,2 Income from equity affiliates and other income Total Revenues and Other Income Total Costs and Other Deductions Income Before Income Tax Expense Income Tax Expense Net Income Less: Net income attributable to noncontrolling interests Net Income Attributable to Chevron Corporation Per Share of Common Stock Net Income Attributable to Chevron 2 – Basic – Diluted Cash Dividends Per Share Balance Sheet Data (at December 31) Current assets Noncurrent assets Total Assets Short-term debt Other current liabilities Long-term debt and capital lease obligations Other noncurrent liabilities Total Liabilities Total Chevron Corporation Stockholders’ Equity Noncontrolling interests Total Equity
1 2

$ 167,402 4,234 171,636 153,108 18,528 7,965 10,563 80 $ 10,483

$ 264,958 8,047 273,005 229,948 43,057 19,026 24,031 100 $ 23,931

$ 214,091 6,813 220,904 188,630 32,274 13,479 18,795 107 $ 18,688

$ 204,892 5,226 210,118 178,072 32,046 14,838 17,208 70 $ 17,138

$193,641 4,559 198,200 172,907 25,293 11,098 14,195 96 $ 14,099

$ $ $

5.26 5.24 2.66

$ $ $

11.74 11.67 2.53

$ $ $

8.83 8.77 2.26

$ $ $

7.84 7.80 2.01

$ $ $

6.58 6.54 1.75

$ 37,216 127,405 164,621 384 25,827 10,130 35,719 72,060 $ 91,914 647 $ 92,561
$ 8,109 $ –

$ 36,470 124,695 161,165 2,818 29,205 6,083 35,942 74,048 $ 86,648 469 $ 87,117
$ 9,846 $ –

$ 39,377 109,409 148,786 1,162 32,636 6,070 31,626 71,494 $ 77,088 204 $ 77,292
$ 10,121 $ –

$ 36,304 96,324 132,628 2,159 26,250 7,679 27,396 63,484 $ 68,935 209 $ 69,144
$ 9,551 $ 6,725

$ 34,336 91,497 125,833 739 24,272 12,131 25,815 62,957 $ 62,676 200 $ 62,876
$ 8,719 $ 23,822

Includes excise, value-added and similar taxes: Includes amounts in revenues for buy/sell contracts; associated costs are in “Total Costs and Other Deductions.”

Chevron Corporation 2009 Annual Report

69

Five-Year Operating Summary
Unaudited

Worldwide – Includes Equity in Affiliates
Thousands of barrels per day, except natural gas data, which is millions of cubic feet per day 2009 2008 2007 2006 2005

United States Gross production of crude oil and natural gas liquids1 Net production of crude oil and natural gas liquids1 Gross production of natural gas Net production of natural gas2 Net oil-equivalent production Refinery input Sales of refined products3 Sales of natural gas liquids Total sales of petroleum products Sales of natural gas International Gross production of crude oil and natural gas liquids1 Net production of crude oil and natural gas liquids1 Other produced volumes Gross production of natural gas Net production of natural gas2 Net oil-equivalent production Refinery input Sales of refined products3 Sales of natural gas liquids Total sales of petroleum products Sales of natural gas Total Worldwide Gross production of crude oil and natural gas liquids1 Net production of crude oil and natural gas liquids1 Other produced volumes Gross production of natural gas Net production of natural gas2 Net oil-equivalent production Refinery input Sales of refined products3 Sales of natural gas liquids Total sales of petroleum products Sales of natural gas Worldwide – Excludes Equity in Affiliates Number of wells completed (net) 4 Oil and gas Dry Productive oil and gas wells (net) 4
1

523 484 1,611 1,399 717 899 1,403 161 1,564 5,901

459 421 1,740 1,501 671 891 1,413 159 1,572 7,226

507 460 1,983 1,699 743 812 1,457 160 1,617 7,624

510 462 2,115 1,810 763 939 1,494 124 1,618 7,051

499 455 1,860 1,634 727 845 1,473 151 1,624 5,449

1,857 1,362 26 4,519 3,590 1,987 979 1,851 111 1,962 4,062

1,751 1,228 27 4,525 3,624 1,859 967 2,016 114 2,130 4,215

1,751 1,296 27 4,099 3,320 1,876 1,021 2,027 118 2,145 3,792

1,739 1,270 109 3,767 3,146 1,904 1,050 2,127 102 2,229 3,478

1,676 1,214 143 2,726 2,599 1,790 1,038 2,252 120 2,372 2,450

2,380 1,846 26 6,130 4,989 2,704 1,878 3,254 272 3,526 9,963

2,210 1,649 27 6,265 5,125 2,530 1,858 3,429 273 3,702 11,441

2,258 1,756 27 6,082 5,019 2,619 1,833 3,484 278 3,762 11,416

2,249 1,732 109 5,882 4,956 2,667 1,989 3,621 226 3,847 10,529

2,175 1,669 143 4,586 4,233 2,517 1,883 3,725 271 3,996 7,899

1,265 14 50,817

1,648 12 51,291

1,633 30 51,528

1,575 32 50,695

1,365 26 49,508

Gross production represents the company’s share of total production before deducting lessors’ royalties and government’s agreed-upon share of production under a production-sharing contract. Net production is gross production minus royalties paid to lessors and the government. 2 Includes natural gas consumed in operations: United States 58 70 65 56 48 International 463 450 433 419 356 Total Includes volumes for buy/sell contracts (MBPD): United States International 4 Net wells include wholly owned and the sum of fractional interests in partially owned wells.
3

521 – –

520 – –

498 – –

475 26 24

404 88 129

70 Chevron Corporation 2009 Annual Report

Supplemental Information on Oil and Gas Producing Activities
Unaudited

In accordance with FASB and SEC disclosure and reporting requirements for oil and gas producing activities, this section provides supplemental information on oil and gas exploration and producing activities of the company in seven separate tables. Tables I through IV provide historical cost information pertaining to costs incurred in exploration, property acquisitions and development; capitalized costs; and results

of operations. Tables V through VII present information on the company’s estimated net proved-reserve quantities, standardized measure of estimated discounted future net cash flows related to proved reserves, and changes in estimated discounted future net cash flows. The Africa geographic area includes activities principally in Angola, Chad, Nigeria, Republic of the Congo and Democratic Republic

Table I – Costs Incurred in Exploration, Property Acquisitions and Development 1
Consolidated Companies Affiliated Companies TCO Other

Millions of dollars

U.S.

Africa

Asia

Other

Total

Year Ended Dec. 31, 2009 Exploration Wells Geological and geophysical Rentals and other Total exploration Property acquisitions2 Proved Unproved Total property acquisitions Development3 Total Costs Incurred4 Year Ended Dec. 31, 20085 Exploration Wells Geological and geophysical Rentals and other Total exploration Property acquisitions2 Proved Unproved Total property acquisitions Development3 Total Costs Incurred Year Ended Dec. 31, 2007 Exploration Wells Geological and geophysical Rentals and other Total exploration Property acquisitions2 Proved Unproved Total property acquisitions Development3 Total Costs Incurred
5
1

$

361 62 153 576

$

140 114 92 346

$

45 49 60 154

$

429 103 316 848

$

975 328 621 1,924

$

– – – – – – – 265 265

$

– – – – – – – 69 69

3 29 32 3,338 $ 3,946

– – – 3,426 $ 3,772

– – – 2,698 $ 2,852

– – – 2,365 $ 3,213

3 29 32 11,827 $13,783

$

$

$

519 66 143 728

$

197 90 60 347

$

85 42 70 197

$

314 131 212 657

$ 1,115 329 485 1,929 257 859 1,116 15,187 $ 18,232

$

– – – – – – – 643 643

$

– – – – – – – 120 120

88 579 667 4,348 $ 5,743

– – – 3,723 $ 4,070

169 280 449 4,697 $ 5,343

– – – 2,419 $ 3,076

$

$

$

452 73 133 658

$

202 136 70 408

$

62 24 101 187

$

292 133 148 573

$ 1,008 366 452 1,826 338 180 518 13,407 $ 15,751

$

– – – – – – – 832 832

$

7 – – 7 – – – 64 71

243 113 356 5,210 $ 6,224

5 8 13 4,176 $ 4,597

92 35 127 2,190 $ 2,504

(2) 24 22 1,831 $ 2,426

$

$

Includes costs incurred whether capitalized or expensed. Excludes general support equipment expenditures. Includes capitalized amounts related to asset retirement obligations. See Note 23, “Asset Retirement Obligations,” on page 67. Includes wells, equipment and facilities associated with proved reserves. Does not include properties acquired in nonmonetary transactions. 3 Includes $121, $224 and $99 costs incurred prior to assignment of proved reserves in 2009, 2008 and 2007, respectively. Also includes $104 and $12 in 2009 for consolidated Other and affiliated Other, respectively. 4 Includes cost incurred for oil sands in consolidated Other and heavy oil in affiliated Other as a result of the update to Extractive Industries — Oil and Gas (Topic 932). 5 Geographic presentation conformed to 2009 consistent with the presentation of the oil and gas reserve tables.
2

Chevron Corporation 2009 Annual Report

71

990 $13. Amounts for Affiliated Companies – Other conformed to agreements entered in 2007 and 2008 for Venezuelan affiliates. Bangladesh.725 $ 113 6.960 26. Australia.638 70.404 947 – 284 7. Norway.423 2. Myanmar. Geographic presentation conformed to 2009 consistent with the presentation of the oil and gas reserve tables.574 424 35.226 23.360 576 9.012 603 3. Canada. The Asia geographic area includes activities principally in Azerbaijan.945 $ 2.372 $ 68.383 209 2.327 $ 16.430 $ 963 17.726 $ 20. and Thailand. beginning on page 50.118 13. the United Kingdom. Refer to Note 12.S.512 $17. 72 Chevron Corporation 2009 Annual Report . the Partitioned Zone between Kuwait and Saudi Arabia.243 357 11.794 $ 3.495 967 499 4. Indonesia.141 $ 73.572 25. Denmark.913 $ 21. 31. the Netherlands.951 64.321 198 2.575 2.967 1. 31. Africa Asia Other Total At Dec.617 690 14. Colombia. Amounts for TCO represent Chevron’s 50 percent equity share of Tengizchevroil.852 147.783 773 16. Trinidad and Tobago. 2009 Unproved properties Proved properties and related producing assets Support equipment Deferred exploratory wells Other uncompleted projects Gross Capitalized Costs Unproved properties valuation Proved producing properties – Depreciation and depletion Support equipment depreciation Accumulated provisions Net Capitalized Costs1 At Dec. Brazil. The Other geographic regions include activities in Argentina.210 $ 113 5.535 $ – 837 – – 101 938 – 163 – 163 775 6. China.748 32 $ – 1.300 27.320 51.602 523 7.369 845 30.267 648 861 5.991 888 – 501 7.311 390 11.773 60.649 356 10.007 $ 22.362 $ 321 20.582 810 762 2.275 54.355 29. Kazakhstan.538 $ 6.326 $ Includes net capitalized cost for oil sands in consolidated Other and heavy oil in affiliated Other as a result of the update to Extractive Industries — Oil and Gas (Topic 932).481 202 $ 3.853 2.520 170 15.637 1.936 37.552 1. an exploration and production partnership in the Republic of Kazakhstan.384 57.607 1. 20082.643 20.887 150 13.154 831 307 1.277 570 819 2.779 $ 6.Supplemental Information on Oil and Gas Producing Activities Table II Capitalized Costs Related to Oil and Gas Producing Activities of the Congo.493 29 282 – 282 $ 1.759 – – 58 1.581 $ 9.321 $ 1.351 $ 294 17.435 14.648 1.280 717 602 4.959 119.780 382 32.863 163 8.150 356 1.3 Unproved properties Proved properties and related producing assets Support equipment Deferred exploratory wells Other uncompleted projects Gross Capitalized Costs Unproved properties valuation Proved producing properties – Depreciation and depletion Support equipment depreciation Accumulated provisions Net Capitalized Costs 1 2 3 $ 2.167 $ 6.051 15.823 526 9.140 106. Table II – Capitalized Costs Related to Oil and Gas Producing Activities Consolidated Companies Affiliated Companies TCO Other Millions of dollars U.858 915 34.461 34. The affiliated companies Other amounts are composed of the company’s equity interests in Venezuela and Angola.080 74. Venezuela and other countries.495 46.817 – 1.097 1.411 $ 7. for a discussion of the company’s major equity affiliates.659 3.453 3. the Philippines.605 133.457 $ 20.

368 3.856 201 $ 3.024 17.125 23.911 $ 112 4.816 $ Geographic presentation conformed to 2009 consistent with the presentation of the oil and gas reserve tables.088 637 413 4.648 92.Table II Capitalized Costs Related to Oil and Gas Producing Activities – Continued Consolidated Companies Affiliated Companies TCO Other Millions of dollars U. 20072.237 298 9.159 13.523 $ 6.750 23 $ – 1.092 $13.127 – – 55 1.009 51.427 464 6.789 58.3 Unproved properties Proved properties and related producing assets Support equipment Deferred exploratory wells Other uncompleted projects Gross Capitalized Costs Unproved properties valuation Proved producing properties – Depreciation and depletion Support equipment depreciation Accumulated provisions Net Capitalized Costs 2 3 $ 2.279 $19.329 678 12.102 $ 8.894 850 368 6.286 491 665 2.625 567 8.706 $ 1. Chevron Corporation 2009 Annual Report 73 .918 $ 314 11.721 55.833 120 11.182 – 183 – 183 999 5. Africa Asia Other Total At Dec.511 1.100 1.S.633 6.502 118. 31.600 $59.333 1.660 14.050 44.764 644 267 934 $ 5.097 349 31.430 19.127 $17.355 214 2.090 1. Amounts for Affiliated Companies – Other conformed to agreements entered in 2007 and 2008 for Venezuelan affiliates.197 833 30.039 29.247 758 – 1.

360) $ 1.208) (53) (2. Refer to Note 23.971 (376) (41) (237) (2) – – 184 4.687 $ The value of owned production consumed in operations as fuel has been eliminated from revenues and production expenses.921) $ 2. 20085 Revenues from net production Sales Transfers Total Production expenses excluding taxes Taxes other than on income Proved producing properties: Depreciation and depletion Accretion expense3 Exploration expenses Unproved properties valuation Other income (expense) 4 Results before income taxes Income tax expense Results of Producing Operations 1 $ 2.111 (935) $ 2.015 (8.150 9.304 9.229 38. reflecting allowable deductions and tax credits.570 53.278 9.262 $ 4.213) (409) (1.969 7.753) $ 8.390) (284) (1.411 (3.115) (1.224) (836) (9.441) $ 3.142 $ 1.148 (2.258) $ 2.856) $ 7.286) (242) (370) (114) 707 10.697) $ 4. Consolidated Companies Affiliated Companies TCO Other Millions of dollars U.452) (59) (398) (8) 318 6. 3 Represents accretion of ARO liability.493) (194) (451) (228) 156 3.S.373 10.545) (409) (1.553 (1.214) $ 1.051) $ 1.480 (2.778 (1.772 $ 4.684 (969) (370) (1. 74 Chevron Corporation 2009 Annual Report .043 (363) (50) (381) (7) – – (131) 3. 2 Africa Asia Other Total Year Ended Dec. Net income from exploration and production activities as reported on page 48 reflects income taxes computed on an effective rate basis.907 (3.882 12.512) (7.559 $ 3. Income taxes in Table III are based on statutory tax rates.746 (3.971 – 4.279) (70) (113) (44) (327) 5.204 (3.599 – 1.039 (1.176) (60) (223) (13) (350) 7.095 (8.043 – 4.990 $ $ 4.951 (1.866 25.228) (163) $ 7.175) (66) (236) (11) 98 5. This has no effect on the results of producing operations.345) (132) $ 5.176 $ 938 – 938 (240) (96) (88) (3) – – 9 520 (258) 262 (3.926 10. gains and losses on property dispositions.133 11.045) $ 16.305 $ 19.767 7.096) (263) (2. 2008 and 2007 are shown in the following table.648 4.” on page 67.963 33.342) (311) (413) 17.051 (1.866 7.169) (171) 873 35. “Asset Retirement Obligations.173 3.750 (3. 5 Geographic presentation conformed to 2009 consistent with the presentation of the oil and gas reserve tables.295 (2.357) $ 3. and income from operating and technical service agreements.534 5. 31.418 $12.426 (5.223 (612) 611 (2.499 (1.533 (8.Supplemental Information on Oil and Gas Producing Activities Table III Results of Operations for Oil and Gas Producing Activities1 The company’s results of operations from oil and gas producing activities for the years 2009. 31.868 17.599 (125) (278) (77) (1) – – 105 1.281) (367) $ 1.729 $ 4.817 (19.071 (1. and the related volumes have been deducted from net production in calculating the unit average sales price and production cost.179 15. 2009 Revenues from net production Sales Transfers Total Production expenses excluding taxes Taxes other than on income Proved producing properties: Depreciation and depletion Accretion expense3 Exploration expenses Unproved properties valuation Other income (expense) 4 Results before income taxes Income tax expense Results of Producing Operations Year Ended Dec.574 (2.598) (79) (542) (28) (340) 2.738 (6.299) (48) (178) (36) 198 10. 4 Includes foreign currency gains and losses.822) (716) $ 2. Interest income and expense are excluded from the results reported in Table III and from the net income amounts on page 48. 2 Includes results of producing operations for oil sands in consolidated Other and heavy oil in affiliated Other as a result of the update to Extractive Industries — Oil and Gas (Topic 932).578 8.

633) $ 12.399) (522) (2.323) (444) (877) 25.276) (258) (511) (132) 36 7.778 8.233 10.580 $ 1.226 $ 16.290 – 1.923 12.264 (920) (273) (1.979 $ 3.753 (13.852 (6.051 $ 1. Refer to Note 23.992) $ 2.413 3.851 7. 20072 Revenues from net production Sales Transfers Total Production expenses excluding taxes3 Taxes other than on income Proved producing properties: Depreciation and depletion Accretion expense4 Exploration expenses Unproved properties valuation Other income (expense)5 Results before income taxes Income tax expense Results of Producing Operations 1 $ 4. and the related volumes have been deducted from net production in calculating the unit average sales price and production cost.S.241 (3.327 – 3. 3 Includes $10 costs incurred prior to assignment of proved reserves in 2007.292 26. 5 Includes foreign currency gains and losses.” on page 67.290 (92) (163) (94) (2) – – 7 946 (462) $ 484 The value of owned production consumed in operations as fuel has been eliminated from revenues and production expenses.070) (35) (374) (259) (115) 4.193) (375) (1.836 5.179 (2.964) (923) (6. This has no effect on the results of producing operations.938 (887) $ 2.560 42.008 14. “Asset Retirement Obligations. and income from operating and technical service agreements.599) $ 4.753) (79) (2.135) $ 3.810 6.907) $ 1.759 (1.114 (4.218 (1.242 (4. 2 Geographic presentation conformed to 2009 consistent with the presentation of the oil and gas reserve tables. Chevron Corporation 2009 Annual Report 75 . 31. 4 Represents accretion of ARO liability.201) (49) (171) (41) (351) 8. Africa Asia Other Total Year Ended Dec.335 $ 6. gains and losses on property dispositions.120 $ 3.327 (248) (31) (127) (1) – – 18 2.Table III Results of Operations for Oil and Gas Producing Activities1 – Continued Consolidated Companies Affiliated Companies TCO Other Millions of dollars U.588 (892) (49) (646) (33) (267) (12) (447) 6.

4 Geographic presentation conformed to 2009 consistent with the presentation of the oil and gas reserve tables.76 4. During the year. 2009 Average sales prices Liquids.12 $ 85. This has no effect on the results of producing operations. The RAC manages its activities through two operating company-level reserves managers. and government regulations.42 $ 87. confirm that proved reserves are recognized in accordance with SEC guidelines.92 3.85 12. 3 I ncludes oil sands in consolidated Other and heavy oil in affiliated Other as a result of the update to Extractive Industries — Oil and Gas (Topic 932).01 $ 64.55 8. 20074 Average sales prices Liquids.97 $ 47. 2 Natural gas converted to oil-equivalent gas (OEG) barrels at a rate of 6 MCF = 1 OEG barrel.56 The value of owned production consumed in operations as fuel has been eliminated from revenues and production expenses.Supplemental Information on Oil and Gas Producing Activities Table IV Results of Operations for Oil and Gas Producing Activities — Unit Prices and Costs1. and the related volumes have been deducted from net production in calculating the unit average sales price and production cost. Proved developed reserves are the quantities expected to be recovered through existing wells with existing equipment and operating methods.52 $ 64.72 $ 69.20 8.54 3.42 $ 88. Net proved reserves exclude royalties and interests owned by others and reflect contractual arrangements and royalty obligations in effect at the time of the estimate.33 1.98 6.85 $ 54. per thousand cubic feet Average production costs.49 $ 79. and maintain the Corporate Reserves Manual. Proved oil and gas reserves are the estimated quantities that geoscience and engineering data demonstrate with reasonable certainty to be economically producible in the future from known reservoirs under existing economic conditions.00 $ 83. The company’s annual reserve activity is also reviewed with the Board of Directors.10 8. All RAC members are knowledgeable in SEC guidelines for proved reserves classification. whose members include the Chief Executive Officer and the Chief Financial Officer. per barrel Natural gas. Due to the inherent uncertainties and the limited nature of reservoir data.83 4. For reserves estimates to be classified as proved. operating methods.35 0. Proved reserves are classified as either developed or undeveloped. Table V Reserve Quantity Information Reserves Governance The company has adopted a comprehensive reserves and resource classification system modeled after a system developed and approved by the Society of Petroleum Engineers. those matters would also be discussed with the Board.18 1. 20084 Average sales prices Liquids. As part of the internal control process related to reserves estimation.71 $ 50. The system classifies recoverable hydrocarbons into six categories based on their status at the time of reporting – three deemed commercial and three noncommercial.56 5. they must meet all SEC and company standards. The RAC has the following primary responsibilities: provide independent reviews of the business units’ recommended reserve changes.S.44 6. per thousand cubic feet Average production costs. determine that reserve volumes are calculated using consistent and appropriate standards. Within the commercial classification are proved reserves and two categories of unproved: probable and possible.85 $ 91.2 Consolidated Companies U.26 $ 62. per barrel Year Ended Dec. the com76 Chevron Corporation 2009 Annual Report pany maintains a Reserves Advisory Committee (RAC) that is chaired by the corporate reserves manager. per barrel Natural gas.79 8. per thousand cubic feet Average production costs. . procedures and technology.47 0.58 $ 62.02 10.73 12.94 9. the World Petroleum Congress and the American Association of Petroleum Geologists. 31.52 3. the RAC is represented in meetings with each of the company’s upstream business units to review and discuss reserve changes recommended by the various asset teams. per barrel 1 $ 54. per barrel3 Year Ended Dec.12 12.11 1.71 – 10. Africa Asia Other Total Affiliated Companies TCO Other Year Ended Dec.44 3. If major changes to reserves were to occur between the annual reviews.65 3.71 4.48 4.95 6.90 – 7. per barrel Natural gas.24 $ 69.07 8.08 6.67 4.89 3.43 7.82 $ 59. who is a member of a corporate department that reports directly to the vice chairman responsible for the company’s worldwide exploration and production activities. 31.32 $ 63. The corporate reserves manager has more than 30 years experience working in the oil and gas industry and a Master’s of Science in Petroleum Engineering. These two reserves managers are not members of the RAC so as to preserve the corporate-level independence.36 6.16 6.90 15. The noncommercial categories are also referred to as contingent resources.63 $ 56. Major changes are also reviewed with the company’s Strategy and Planning Committee and the Executive Committee.98 $ 51. Proved reserves are estimated by company asset teams composed of earth scientists and engineers.71 $ 60. which provides standardized procedures used corporatewide for classifying and reporting hydrocarbon reserves.98 5. estimates of reserves are subject to change as additional information becomes available. 31.36 3.98 0.

344 2.758 3.578 239 426 245 105 1.051 11. However.151 4.523 10.238 1.438 986 138 8.086 1. on page 79.209 4.709 1.399 807 176 2. modifying the definition of geographic area for disclosure of reserve estimates and production.273 263 4. permitting the use of new reliable technologies to establish reasonable certainty of proved reserves.087 451 1.176 754 9.247 – – – 270 270 – 210 480 726 384 2.S. the SEC issued its final rule.382 7. Modernization of Oil and Gas Reporting (Release Nos.863 2. The final rule changes a number of oil and gas reserve estimation and disclosure requirements under SEC Regulations S-K and S-X. Africa Asia Other Total Consolidated Affiliated Companies TCO Other Total Consolidated and Affiliated Companies Proved Undeveloped Consolidated Companies U.256 97 4.762 117 13. Summary of Net Oil and Gas Reserves 20091 20082 Crude Oil Condensate NGLs Natural Gas Crude Oil Condensate NGLs 20072 Natural Gas Liquids and Synthetic Oil in Millions of Barrels Natural Gas in Billions of Cubic Feet Crude Oil Condensate NGLs Synthetic Oil Natural Gas Proved Developed Consolidated Companies U.075 386 742 301 150 1. Effect of New Rules The most significant effect of the company’s adopting the new guidance was the inclusion of Canadian oil sands as synthetic oil in the consolidated companies reserves.043 2.238 758 722 368 3.163 11. allowing optional disclosure of probable and possible reserves.699 1. the FASB updated Extractive Industries – Oil and Gas (Topic 932) to align the oil and gas reserves estimation and disclosure requirements with the SEC’s final rule.369 263 4.350 441 1.015 690 54 1. 33-8995.968 2.308 1. 34-59192. These reviews include an examination of the proved-reserve records and documentation of their alignment with the Corporate Reserves Manual.759 6.135 1. and disclosure of the qualifications of the chief technical person who oversees the company’s overall reserves estimation process.S.314 978 5.003 990 12. the use of the 12-month average price had an upward effect on reserves related to production-sharing and variable-royalty contracts as the 12-month average price for crude oil and Chevron Corporation 2009 Annual Report 77 .062 3. an additional 460 million BOE were included at year-end 2009.465 7. Subsequently.839 1. Revised Oil and Gas Reporting In December 2008. expanding proved undeveloped reserves disclosures. and does not represent additional reserves.579 716 170 2. Based on year-end prices. amending disclosures of proved reserve quantities to include separate disclosures of synthetic oil and gas. The synthetic oil reported for affiliated companies represents volumes reclassified from heavy crude oil to synthetic oil.226 7.657 7.798 5. including discussion of proved undeveloped reserves that have remained undeveloped for five years or more.Table V Reserve Quantity Information – Continued RAC subteams also conduct in-depth reviews during the year of many of the fields that have the largest proved reserves quantities. 2009.113 23.226 1.049 312 596 362 129 1.158 789 1.999 124 13.748 1.962 1.830 73 13.978 11.122 820 926 267 3. As indicated in Table V.140 Based on 12-month average price. Among the principal changes in the final rule are requirements to use a price based on a 12-month average for reserve estimation and disclosure instead of a single end-ofyear price.405 1.741 26.898 2. FR-78).622 3.336 1.183 1. expanding the definition of oil and gas producing activities to include nontraditional sources such as bitumen extracted from oil sands. Africa Asia Other Total Consolidated Affiliated Companies TCO Other Total Consolidated and Affiliated Companies Total Proved Reserves 1 2 1.094 295 3.488 – – – 190 190 – 56 246 2. It was impracticable to estimate the remaining impact of the new rules because of the cost and resources required to prepare detailed field-level calculations.562 22. The disclosure requirements under the final rule became effective for the company with its Form 10-K filing for the year ending December 31.847 3.

The balance is attributed to synthetic oil in Venezuela in the Other regions. oil-equivalent reserves for the company’s consolidated operations were 8. In 2009. which included construction on a gas processing 78 Chevron Corporation 2009 Annual Report facility in Thailand and development drilling at a steamflood project in Indonesia. regulations or government policies. which was primarily related to plant capacity limitations. including offshore development projects in Nigeria and Angola. and the completion of a Nigerian natural gas processing project.1 billion barrels. Proved undeveloped reserves decreased for affiliated companies. The ability to use new technologies in reserves determination did not impact reserves significantly.7 billion barrels corresponds to proved undeveloped oil-equivalent reserves that have remained undeveloped for five years or more.9 billion were made by consolidated companies and equity affiliates to advance the development of proved undeveloped reserves. 2009.5 billion.Supplemental Information on Oil and Gas Producing Activities Table V Reserve Quantity Information – Continued natural gas for 2009 was lower than the 2009 year-end spot prices applicable under the old rules. Africa. $2. The consistent completion of major capital projects has kept the ratio in a narrow range over this time period. which advanced development drilling. Proved Undeveloped Reserves for 5 Years or More Reserves that remain proved undeveloped for five or more years are a result of several physical factors that affect optimal project development and execution. eight major development projects that were placed into service resulted in the recognition of proved developed reserves.5 billion was expended on various projects. proved undeveloped oil-equivalent reserves for consolidated companies totaled 3. expenditures totaled $1. Synthetic oil accounted for the balance of the reserves and were located in Canada in the Other regions.4 billion barrels at year-end 2009. The largest increase for consolidated companies was in the Other regions. condensate and NGLs represented 58 percent of the total reserves. Investment to Convert Proved Undeveloped to Proved Developed Reserves During 2009. 1. compression projects that are pending reservoir pressure declines. worldwide proved undeveloped oil-equivalent reserves increased by 480 million barrels for consolidated companies and decreased 19 million barrels for equity affiliates. The Other regions held about 100 million barrels related to compression projects in Australia. The Asia region held approximately 100 million barrels related to compression and contract restrictions. In the United States. In the Other regions. which reclassified reserves to proved developed. The decrease at TCO was partially offset by increased proved undeveloped reserves in Venezuela and for Angola LNG due to reservoir performance and additional drilling opportunities. physical limitations of infrastructure or plant capacities that dictate project timing. Natural gas represented 26 percent of the total. this assessment did not result in any material changes in reserves classified as proved undeveloped. For 2009. Annually.3 billion barrels.7 billion for three offshore development projects in the Gulf of Mexico and various smaller development projects. At year-end. Proved undeveloped reserves of equity affiliates amounted to 1. During the year. In the Asia region.) Approximately 22 percent of the total reserves were located . Approximately 58 percent of the reserves are attributed to natural gas. investments totaling about $6. Asia and the United States. Proved undeveloped reserves decreased in Asia. such as changes to development plans. Crude oil. such as the complex nature of the development project in adverse and remote locations. and the United States. as a result of development drilling and other activities. There were no material downward revisions of proved undeveloped reserves for consolidated or affiliated companies. At year end. The balance relates to capacity constraints and various projects in the United States. Proved undeveloped oil-equivalent reserves for consolidated and affiliated companies totaled 4.2 billion for a variety of projects including development activities in Australia and the United Kingdom.0 billion barrels of proved undeveloped reserves over five years. with the TCO affiliate accounting for the majority of the amount. with the largest concentration of these reserves in Africa. Proved Undeveloped Reserve Quantities At the end of 2009. Proved Reserve Quantities At December 31. of which about half were located in Australia in the Other regions. expenditures during the year totaled $1. and contractual limitations that dictate production levels. Of this total. development expenditures totaled $1. which would warrant a revision to reserve estimates. The balance related to capacity limitations at a synthetic oil project in Venezuela. TCO accounted for 800 million oil-equivalent barrels of reserves. resulting primarily from initial recognition of reserves for the Gorgon Project in Australia and addition of synthetic oil reserves related to Canadian oil sands with adoption of the new definition of oil and gas activity. (Refer to the term “Reserves” on page 8 for the definition of oil-equivalent reserves. crude oil. with over half of these reserves at TCO. as most reserve additions and revisions were based on conventional technologies. Consolidated companies held approximately 700 million barrels of the proved undeveloped reserves over five years. Over the past three years. approximately 400 million barrels were related to deepwater projects under development. In Africa. the company assesses whether any changes have occurred in facts or circumstances.3 billion oil-equivalent barrels. the ratio of proved undeveloped reserves to total proved reserves has ranged between 35 and 39 percent. In the Africa region. affiliated companies held about 1. condensate and NGLs accounted for about 33 percent of the total. This was primarily associated with a 146 million barrel reclassification to proved developed as a result of the TCO production capacity added with the completion of the Sour Gas Injection/Second Generation Plant Projects (SGI/SGP).

294 (146) 20 60 10 (9) (564) 4. the pattern of net reserve changes shown in the following tables are not necessarily indicative of future trends.S.470 63 2 6 – (3) (177) 1. which are about evenly split between liquids and natural gas. Reserves associated with Canada. Africa Asia Synthetic Oil (1.456 (121) – 3 – – (167) 1.624 (16) 5 17 1 (7) (154) 1. Condensate. oil-equivalent reserves were 3. These properties were geographically dispersed.665 536 27 33 1 (7) (520) 4. located in the United States. areas represent the remaining 34 percent of U. Natural Gas Liquids and Synthetic Oil a continuous steamflooding process. the company’s ability to add proved reserves is affected by. and Australia. 2008 and 2009 are shown in the following table and on page 81.S. Canada.989 249 – – – – (62) 2. some fields utilize enhanced recovery methods. reserves. 2009.3) Other Millions of barrels U.S. 80 percent of which were associated with the company’s 50 percent ownership in TCO. The company’s estimated net proved oil and natural gas reserves and changes thereto for the years 2007.950 92 – – – – (53) 1. For the three years ending December 31. respectively.735 355 50 52 – (9) (573) 4.751 (5) 9 36 10 (9) (168) 1. South America. For the company’s interests in equity affiliates. West Africa. with most classified as heavy oil.8 billion barrels. which in the aggregate accounted for approximately 48 percent of the company’s total proved reserves. Other U. OPEC constraints. California properties accounted for approximately 44 percent of the U. 32 percent and 26 percent for consolidated companies for 2009. the Middle East. 1. geopolitical uncertainties and civil unrest. 31. reserves. 20084 Changes attributable to: Revisions Improved recovery Extensions and discoveries Purchases Sales6 Production Reserves at Dec.698 (89) 7 6 – – (122) 1. the producing operations are capital intensive in nature. 31.350 168 86 52 – (9) (674) 6. no single property accounted for more than 5 percent of the company’s total oil-equivalent proved reserves.500 2 1 3 – – (121) 1.2) Other Total Total Consolidated and Affiliated Companies Reserves at Jan. PSC-related reserve quantities are 26 percent. Production operations are mostly offshore and.946 562 11 – – 316 (432) (24) 433 18 10 – – – (22) 439 (269) – – – – (19) 151 7. For production of crude oil. Southeast Asia.361 1. as a result. reserves. 2008 and 2007. 2009. About 25 other individual properties in the company’s portfolio of assets each contained between 1 percent and 5 percent of the company’s oil-equivalent proved reserves. total oil-equivalent reserves at year-end 2009 were 1. such as delays in government permitting.806 (43) 20 60 326 (441) (641) 7. Chevron Corporation 2009 Annual Report 79 .610 1.S.973 – 460 – – – – – 460 – 266 – – – – – 266 Prospective reporting effective December 31. including waterflood and CO2 injection. 20074 Changes attributable to: Revisions Improved recovery Extensions and discoveries Purchases Sales6 Production Reserves at Dec. 4 Included are year-end reserve quantities related to production-sharing contracts (PSC) (refer to page 8 for the definition of a PSC). Consolidated Companies Affiliated Companies TCO Synthetic Oil (1. Most of the company’s heavy-oil fields in California employ Net Proved Reserves of Crude Oil.385 (46) 48 10 – – (151) 1. 2007 Changes attributable to: Revisions Improved recovery Extensions and discoveries Purchases5 Sales6 Production Reserves at Dec. Aside from the Tengiz Field in the TCO affiliate. are also capital intensive. 20094 1 2 3 1.023 574 18 5 – – (164) 1. partner approvals of development plans. with liquids representing about 15 percent of reserves. Because of heavy oil’s high viscosity and the need to employ enhanced recovery methods.Table V Reserve Quantity Information – Continued in the United States.S. 31. Reserves associated with Venezuela that were reported in other as heavy oil in 2008 and 2007. The Gulf of Mexico region contains about 22 percent of the U.0 billion barrels.087 803 37 33 1 (7) (604) 7. events and circumstances that are outside the company’s control. In the United States.171 586 2 – 18 – – (88) 518 (24) 3 8 – – (81) 424 (1) – 33 – (6) (78) 372 5. 5 Includes reserves acquired through nonmonetary transactions. 6 Includes reserves disposed of through nonmonetary transactions.176 (184) 36 – – – (82) 1.259 (54) 4 – – – (186) 1. declines in oil and gas prices.246 1. Apart from acquisitions. among other things.

the largest increase was in the Asia region. For affiliated companies. For consolidated companies. Asia. mainly for the deepwater Tahiti and Mad Dog fields in the Gulf of Mexico. The largest additions were 36 million barrels in the United States. extensions and discoveries increased consolidated company reserves 33 million barrels worldwide. 266 million barrels of heavy crude oil were reclassified to synthetic oil for the activities in Venezuela. The majority of the increase was in the Partitioned Zone. For consolidated companies. In Indonesia. The United States increased reserves 17 million barrels. improved recovery increased worldwide liquids volumes by 37 million barrels. the largest downward net revisions were 89 million barrels in Africa and 54 million barrels in Asia. as well as a result of development drilling and improved waterflood and steamflood performance. Affiliated companies increased reserves 36 million barrels due to improvements related to the TCO SGI/SGP facilities. Affiliated companies increased reserves 10 million barrels due to improved secondary recovery at Boscan. reserves increased 63 million barrels as a result of development drilling and performance revisions. In 2009. Upward revisions were also recorded in Kazakhstan and Azerbaijan and were mainly associated with the effect of lower year-end prices on the calculation of reserves associated with production-sharing and variable-royalty contracts. improved recovery increased liquids volumes by 86 million barrels worldwide. which added 574 million barrels. Sales In 2007. In 2008. The Africa. Africa and the United States accounted for 10 million barrels and 6 million barrels. 80 Chevron Corporation 2009 Annual Report . Improved Recovery In 2007. respectively. and Indonesia. the largest addition was in the Asia region related to gas reinjection in Kazakhstan. In Asia. For consolidated companies. No addition was individually significant. For affiliated companies. In 2008. extensions and discoveries increased liquids volumes by 52 million barrels worldwide. For Other affiliated companies. primarily in the Gulf of Mexico.Supplemental Information on Oil and Gas Producing Activities Table V Reserve Quantity Information – Continued Noteworthy amounts in the categories of liquids provedreserve changes for 2007 through 2009 are discussed below: Revisions In 2007. For consolidated companies. Purchases In 2007. TCO declined by 184 millionbarrels primarily due to the effect of higher 12-month average prices on royalty determination. net revisions decreased reserves by 146 million barrels for worldwide consolidated companies and increased reserves by 103 million barrels for equity affiliates. In Africa. decreases in Indonesia and Azerbaijan were driven by the effect of higher 12-month average prices on the calculation of reserves associated with production-sharing contracts and the effect of reservoir performance revisions. In 2009. In 2009. The largest addition was related to improved secondary recovery in Nigeria. due to lower year-end prices. the 249 million-barrel increase for TCO was due to the effect of lower year-end prices on the royalty determination and facility optimization at the Tengiz and Korolev fields. affiliated company sales of 432 million barrels related to the dissolution of a Hamaca equity affiliate in Venezuela. extensions and discoveries increased liquids volumes by 60 million barrels worldwide. Consolidated companies accounted for 50 million barrels. In the United States. The largest additions were 33 million barrels in Other regions related to the Gorgon Project in Australia and delineation drilling in Argentina. reserves increased due mainly to the impact of lower year-end prices on the reserve calculations for production-sharing contracts. the largest increase was 460 million barrels in the Other regions due to the inclusion of synthetic oil related to Canadian oil sands. The increases were partially offset by decreases of 121 million barrels in Asia and 46 million barrels in Africa. as a result of a concession extension. acquisitions of 316 million barrels for equity affiliates related to the formation of a new Hamaca equity affiliate in Venezuela. net revisions increased reserves by 536 million barrels for worldwide consolidated companies and increased reserves by 267 million barrels for equity affiliates. reserves in Nigeria declined as a result of higher prices on production-sharing contracts and reservoir performance. and Other regions increased reserves 16 million barrels with no one country resulting in additions greater than 5 million barrels. Extensions and Discoveries In 2007. improved recovery increased liquids volumes by 20 million barrels worldwide. In 2008. These increases were offset by downward revisions in the United States and Other regions. net revisions increased reserves by 355 million barrels for worldwide consolidated companies and decreased reserves by 187 million barrels for equity affiliates.

Table V Reserve Quantity Information – Continued Net Proved Reserves of Natural Gas Consolidated Companies Affiliated Companies TCO Other Billions of cubic feet U. In 2008. In the United States. 2007 Changes attributable to: Revisions Improved recovery Extensions and discoveries Purchases1 Sales3 Production Reserves at Dec.677 (28) – 108 66 (124) (549) 3.S.207 1.708) 22.876) 23.137 1. net revisions increased reserves for consolidated companies by 395 BCF and increased reserves for affiliated companies by 73 BCF.022 569 – 4.910 395 1 518 141 (76) (1. net revisions increased reserves for consolidated companies by 1. 3 Includes reserves disposed of through nonmonetary transactions. net increases of 346 BCF in Asia and 209 BCF in the United States were partially offset by downward revisions of 160 BCF in Africa and Other regions.153 2.820 33 – 4. drilling activities in Thailand added 360 BCF.166 – 132 507 (124) (1.063 22.102 346 – 358 91 – (690) 7. For the TCO affiliate in Kazakhstan. respectively.073 BCF for consolidated companies.4 1 2 4. The Other regions had net downward revisions of 19 BCF. 2008 and 2007.075 525 – 4.028 209 – 86 50 (76) (620) 3. For consolidated companies.860 5. PSC-related reserve quantities are 31 percent. Includes year-end reserve quantities related to production-sharing contracts (PSC) (refer to page 8 for the definition of a PSC). Other large upward revisions were recorded for the Pattani Field in Thailand due to a successful drilling campaign.796) 19. 31. In the Asia region.574 (19) 1 63 – – (415) 5. improved reservoir performance for many fields contributed to the increase with the largest portion in the mid-continent areas.884 468 1 518 352 (251) (1.387 – (117) (1.748 498 – – – – (71) 3. A 185 BCF downward revision in Australia due to drilling results and other smaller declines were mostly offset by improved reservoir performance in Trinidad and Tobago which added 188 BCF. TCO had an upward revision of 75 BCF associated with improved reservoir performance and development activities.130 BCF.387 – (117) (1.574 19.140 2.204 61 – 1 – – (446) 4. 20082 Changes attributable to: Revisions Improved recovery Extensions and discoveries Purchases Sales Production Reserves at Dec. Reserves associated Chevron Corporation 2009 Annual Report 81 . due mainly to the effects of low year-end prices on the production-sharing contract and the results of development drilling and improved recovery.752) 19.206 (141) – 11 – – (27) 3. Almost half of the increase was attributed to the Karachaganak Field in Kazakhstan. which were partially offset by downward revisions in Azerbaijan and Kazakhstan due to the impact of higher prices. In the Asia region.833 231 (2) – – 211 (175) (10) 255 632 – – – – (9) 878 193 – – – – (8) 1.996 493 – 54 – – (683) 7. positive revisions totaled 1.743 75 – – – – (70) 2.832) 22.056 4 – 3 – – (42) 3.049 60 – – – – (53) 3.021 7. an increase of 498 BCF reflected the impacts of lower year-end prices on royalty determination and facility optimization. Decreases in Africa were primarily due to a 136 BCF downward revision in Nigeria resulting from field performance.698 3. 40 percent and 37 percent for consolidated companies for 2009. 31.150 39 – 53 – (33) (511) 2. Noteworthy amounts in the categories of natural gas proved-reserve changes for 2007 through 2009 are discussed below: Revisions In 2007.073 – 23 441 – (748) 7. This upward revision was net of a negative impact due to higher year-end prices on royalty determination. Africa Asia Other Total Total Consolidated and Affiliated Companies Reserves at Jan 1. 31.049 Includes reserves acquired through nonmonetary transactions. 20072 Changes attributable to: Revisions Improved recovery Extensions and discoveries Purchases Sales3 Production Reserves at Dec. 20092.277 – (84) (472) 8.166 BCF and increased reserves for affiliated companies by 1.821) 26.296 – 132 507 (124) (1.175 (237) – – – – (105) 2.

Affiliated company purchases of 211 BCF related to the formation of a new Hamaca equity affiliate in Venezuela and an initial booking related to the Angola LNG project. net increases were 493 BCF in Asia primarily as a result of reservoir studies in Bangladesh and development drilling in Thailand. which include the acquisition of an additional interest in the Bibiyana Field in Bangladesh. The calculations are made as of December 31 each year and should not be relied upon as an indication of the company’s future cash flows or value of its oil and gas reserves. worldwide sales of 117 BCF were related to consolidated companies. In Asia. respectively. less the tax basis of related assets. Estimates of provedreserve quantities are imprecise and change over time as new information becomes available. These rates reflect allowable deductions and tax credits and are applied to estimated future pretax net cash flows. In Other regions. is calculated in accordance with the requirements of the FASB. extensions and discoveries accounted for an increase of 518 BCF worldwide. development drilling in Thailand accounted for the majority of the increase. improved reservoir performance and compression in Australia was partially offset by the effect of higher prices on production-sharing contracts in Trinidad. The affiliated company sales related to the dissolution of a Hamaca equity affiliate in Venezuela. Moreover. Sales In 2007. The largest addition was 330 BCF in Bangladesh.Supplemental Information on Oil and Gas Producing Activities with the Angola LNG project accounted for a majority of the 632 BCF increase in Other affiliated companies. Estimated future cash inflows from production are computed by applying 12 month-average prices for oil and gas to year-end quantities of estimated net proved reserves. In 2009. Estimated future income taxes are calculated by applying appropriate year-end statutory tax rates. In the United States. This decline was partially offset by performance and drilling opportunities related to the Angola LNG project. For equity affiliates. assuming continuation of year-end economic conditions. Future price changes are limited to those provided by contractual arrangements in existence at the end of each reporting year. The sale of properties in the Gulf of Mexico accounted for the majority of the 33 BCF decrease in the United States. related to the preceding proved oil and gas reserves. are excluded from the calculations. development drilling in the Gulf of Mexico was partially offset by performance revisions in the California and mid-continent areas. and include estimated costs for asset retirement obligations. sales were 76 BCF and 175 BCF for consolidated companies and equity affiliates. the result of drilling activities. Other additions were not individually significant. net revisions increased reserves by 569 BCF for consolidated companies and decreased reserves by 44 BCF for affiliated companies. Discounting requires a year-by-year estimate of when future expenditures will be incurred and when reserves will be produced. 82 Chevron Corporation 2009 Annual Report . Extensions and Discoveries In 2007.387 BCF were attributed to consolidated companies. The United States and Other regions increased reserves 39 BCF and 33 BCF. Future development and production costs are those estimated future expenditures necessary to develop and produce yearend estimated proved reserves based on year-end cost indices. Table VI Standardized Measure of Discounted Future Net Cash Flows Related to Proved Oil and Gas Reserves The standardized measure of discounted future net cash flows. respectively. In the United States. probable and possible reserves. These results were partially offset by a downward revision due to the impact of higher prices on production-sharing contracts in Myanmar. worldwide extensions and discoveries of 4. In 2009. a downward revision of 237 BCF at TCO was due to the effect of higher prices on royalty determination and an increase in gas injection for SGI/SGP facilities. For the Other regions. the sale of properties in Argentina accounted for 84 BCF. purchases of natural gas reserves were 141 BCF for consolidated companies. In 2009. Discounted future net cash flows are calculated using 10 percent midperiod discount factors. delineation drilling in California accounted for the majority of the increase. For consolidated companies. In the following table. which may become proved in the future. The information provided does not represent management’s estimate of the company’s expected future cash flows or value of proved oil and gas reserves.277 BCF additions in the Other regions. The Gorgon Project in Australia accounted for essentially all of the 4. The arbitrary valuation prescribed by the FASB requires assumptions as to the timing and amount of future development and production costs. Purchases In 2007. “Standardized Measure Net Cash Flows” refers to the standardized measure of discounted future net cash flows.

321 $132.793 $ 23.133) $ 41.762 $ 657.408) (7.502) (2.861) (8.803) (51.Table VI Standardized Measure of Discounted Future Net Cash Flows Related to Proved Oil and Gas Reserves – Continued Consolidated Companies Affiliated Companies TCO Other Millions of dollars U.462 (7.715) (22.643) (17.224 $ 62.519) $ 35.968 (14.838 (17.460 (1.386 $ 2.172) 31.639 $ 75.302) (19.001 (132.170) 166.417) $ 13.543) 40.220) (43.707) (11.738) (6.516) (74.139) $ 2.445) (103.357 (31.220 (103. 2008 Future cash inflows from production 2 Future production costs Future development costs Future income taxes Undiscounted future net cash flows 10 percent midyear annual discount for timing of estimated cash flows Standardized Measure Net Cash Flows At December 31.345) 280.850 $ 51. 2007 Future cash inflows from production 2 Future production costs Future development costs Future income taxes Undiscounted future net cash flows 10 percent midyear annual discount for timing of estimated cash flows Standardized Measure Net Cash Flows Based on 12-month average price.884) (18.408 (15.276 $ 231.001) (9.298) (10.832 (2. Africa Asia Other Total Total Consolidated and Affiliated Companies At December 31.593) 11.781 (115.055 (14.138 (41.512 $ 297.843) (12.861 (69.143 (115.722) $ 16.831 (83.114 (42.206) (16.174 (45.787) (45.777 (131.339) (162.765) (8.332 $ 349.817) (15.361 (11.966) $ 1. 2009 Future cash inflows from production1 Future production costs Future development costs Future income taxes Undiscounted future net cash flows 10 percent midyear annual discount for timing of estimated cash flows Standardized Measure Net Cash Flows At December 31.600) 100.541 (64.348 (8.459) (14.243 (16.171) $ 16.884 $ 91.110) $ 138.318) $ 6.132) (4.883 (17.580) (1.093 4.223) 19.661 $ 468.246 (2.928 $ 75.450 (15.099) (5.917 (142.338 (22.450) $ 471.091) $ 25.427) 24.992 $162.850) (35.526 $ 66.581) 3.152 $ 101.825 (6.363) (3.252 $ 13.S.261) $ 7.875 (11.822) $ 16.855 (33.779 $ 52.190) (3.506) $ 7.091) 9.078 $ 29.662) 25.932) $ 50.993 (31.628) 160. 2 Based on year-end prices.923) (4.517) (5.491) (63.515 13.497) 94.909 $ 37.344 (20.080) (39.206 (8.503) 15.323 7.042) $ 9.905) 28.027) (13.774) 59.319) $ 77.332 (35.996 (7.269) (72.367) 41.845 (10.295) (7.420 $110.402 $ 24.094) (215.208 (43.180 (28.140) (1.041) (55.779) $ 5.408) (1.395 (143.789 $ 159.986) (23.807 Chevron Corporation 2009 Annual Report 83 .812) $ 97.551) $ 25.806) (32.283) 64.840) 72.175) (39.300 (34.749 (29.357) (7.049 $ 97.754) (18.661 (5.150) (10.052) $ 6.937) (4.319) (10.278) 16.882) $ 9.989) (29.497) (45. 1 $ 81.044 (4.778) $ 35.551) (7.529) (8.575) (13.212 (14.791) 22.

2007 Sales and transfers of oil and gas produced net of production costs Development costs incurred Purchases of reserves Sales of reserves Extensions. 2009 $ 65.452 $ 138.711 (7.402 (31.” Total Consolidated and Affiliated Companies Millions of dollars Consolidated Companies Affiliated Companies Present Value at January 1.196 (27.554) 15.976 14.616 3.758 (5.767) – (1. reflect changes in estimated proved-reserve quantities and prices and assumptions used in forecasting production volumes and costs.357 8.468 780 (425) 3.696) 5.134) 98.209) 335 – – 697 (4.491 (8. development and production costs Accretion of discount Net change in income tax Net change for the year Present Value at December 31.820 (34.276 $ $ $ $ 26.223 41.682 233 (542) 646 37.596) 31.135 (1.282 (20. 2007 Sales and transfers of oil and gas produced net of production costs Development costs incurred Purchases of reserves Sales of reserves Extensions. discoveries and improved recovery less related costs Revisions of previous quantity estimates Net changes in prices.768) 11.694 (28.434 87.123 (103.889 (32.388) $ 25.236 $ 92.957) 10.791 – (285) 3. which can be significant.656) 14.312) 17.718 (51.661 (27.113) 82.559) 10.122) 42.017) 9.230 51.516 15.229 $ 97.333) 23.745 (7.664 (9.810) 24.571 (220.807 (49.049 (43.445 233 (542) 729 41.801) 74.458 72.192) 3.355 (39.234 (71. Changes in the timing of production are included with “Revisions of previous quantity estimates.150) 46.853 (169. discoveries and improved recovery less related costs Revisions of previous quantity estimates Net changes in prices.126 – (285) 4. 2008 Sales and transfers of oil and gas produced net of production costs Development costs incurred Purchases of reserves Sales of reserves Extensions.443 5. development and production costs Accretion of discount Net change in income tax Net change for 2009 Present Value at December 31. discoveries and improved recovery less related costs Revisions of previous quantity estimates Net changes in prices.741 (4. development and production costs Accretion of discount Net change in income tax Net change for 2008 Present Value at December 31.412 (7.041) 11.495 27.343) 30.110 $ 77.Supplemental Information on Oil and Gas Producing Activities Table VII Changes in the Standardized Measure of Discounted Future Net Cash Flows From Proved Reserves The changes in present values between years.742) 23.915 1.941 (35.906) 13.528 4.405) $ 35.438 3.535 (4.664 (7.046) 17.900 12.084) 889 7.615 $ 50.750) 763 – – 83 3.512 84 Chevron Corporation 2009 Annual Report .

and changed name to ChevronTexaco Corporation.S.Chevron History 1879 1900 191 1 1926 1936 Incorporated in San Francisco. Formed the Caltex Group of Companies. This acquisition provided inroads to Asian natural gas markets. to San Ramon. Became the second-largest U.-based energy company. where the company was a major producer. obtaining the Signal brand name and adding 2. natural gas producers. Rockefeller’s original Standard Oil Company. Acquired Pacific Oil Company to become Standard Oil Company of California (Socal). Gulf of Mexico. becoming one of the largest U. stronger and more unified presence in the global marketplace. Changed name to Chevron Corporation to convey a clearer. Gulf of Mexico and Caspian regions. as the Pacific Coast Oil Company.S. an independent crude oil and natural gas exploration and production company. Unocal’s upstream assets bolstered Chevron’s already-strong position in the Asia-Pacific. to manage exploration and production interests of the two companies in the Middle East and Indonesia and provide an outlet for crude oil through The Texas Company’s European markets. California. Formed Tengizchevroil. a major petroleum products marketer in five southeastern states. Acquired Rutherford-Moran Oil Corporation. Supreme Court decision to divide the Standard Oil conglomerate into 34 independent companies. Acquired Signal Oil Company. Gulf of Mexico crude oil and natural gas properties. Merged with Texaco Inc. Acquired Standard Oil Company (Kentucky). California. a joint venture with the Republic of Kazakhstan. Changed name to Chevron Corporation to identify with the name under which most products were marketed. California. Acquired Unocal Corporation. Emerged as an autonomous entity — Standard Oil Company (California) — following U. Purchased Tenneco Inc.’s U.000 retail stations in the western United States.S. to develop and produce the giant Tengiz Field. Acquired Gulf Corporation — nearly doubling the size of crude oil and natural gas activities — and gained significant presence in industrial chemicals. natural gas liquids and coal.S. U. jointly owned by Socal and The Texas Company (later became Texaco). becoming the first major Western oil company to enter newly independent Kazakhstan. to provide outlets for crude oil from southern Louisiana and the U.S. 1947 1961 1984 1988 1993 1999 2001 2002 2005 Chevron Corporation 2009 Annual Report 85 . Acquired by the West Coast operations of John D.S. Relocated corporate headquarters from San Francisco.

4) Linnet F. He had been Chairman of the Board and Chief Executive Officer since 2000 and a Director and Vice Chairman since 1998. Previously he was President and Chief Operating Officer of Teledyne. with a degree in chemical engineering. 3) Kevin W. a global defense and technology company. an operating subsidiary of Astellas Pharma Inc. Ireland. Wesco Financial Corporation. since 2005. He is President Emeritus of The University of Texas at Dallas.Board of Directors John S. Chair 2) Public Policy: Sam Nunn. 66 Director since 2001. 4) Ronald D. Previously he was elected a Director and Vice Chairman in 2009. and the General Electric Company. 3) Charles R. a manufacturer of beverages. Previously he was Senior Adviser to the Chief Executive Officer of The Coca-Cola Company and President of The Coca-Cola Company’s Africa Group. He is a Director of McDonald’s Corporation. Rice. Senator from Georgia for 24 years. (3. Franklin Resources. Previously he was President and Chief Operating Officer of Northrop Grumman. Executive Vice President. He is Co-Chairman and Chief Executive Officer of the Nuclear Threat Initiative. He also is a Director of The New York Times Company. She served as a Deputy U. He was responsible for implementing the mergers with Texaco Inc. He is a Director and a Member of the Executive Committee of the American Petroleum Institute. 3) Robert E. Watson.. Chief Executive Officer and President of Inter-Con Security Systems. 71 Director since 1993. and also received an honorary doctor of science degree from University College in 2002. he is responsible for global exploration. (2. He is a Director of The Coca-Cola Company. (2. Sugar. He served as a U. Callaway Golf Company. 62 Director since 2007. an independent research. a global security services provider. Previously she was Vice Chairman of Charles Schwab Corporation. (2. Chief Executive Officer and President of Amgen. 86 Chevron Corporation 2009 Annual Report . (2. Shoemate. and Fomento Económico Mexicano. Previously he was President of Howard University and Chancellor of the Massachusetts Board of Regents of Higher Education. Chevron Overseas Petroleum Inc. 64 Director since 2004. (3. and President. a manufacturer of food products. (1) Franklyn G.S. 2009. Nordstrom. 59 Vice Chairman of the Board since January 2010 and Executive Vice President. Consolidated and Cummins Inc. O’Reilly. He is a Partner in the law firm of Munger. Vice President and Chief Financial Officer.A. Armacost. 4) Sam Nunn. (2. (1) George L. Joined Chevron in 1980. Armacost. She is a Director of Honeywell International Inc. O’Reilly graduated from University College – Dublin. (3. Production Company. 54 Director since 2008. He also is Distinguished Professor at the Sam Nunn School of International Affairs.S. 64 Director since 2006. Chair 4) Management Compensation: Robert J. Strategic Planning. Global Upstream and Gas. He is Chairman of the Board of SRI International. Previously he was a Managing Director of Weiss. Previously Corporate Vice President and President. He is a Director of Coca-Cola Bottling Co. Inc. 70 Director since 2005. technology development and commercialization organization. He is retired Executive Vice President of The Coca-Cola Company.S. 71 Director since 1997. Peck & Greer LLC. 4) Carl Ware. and Wells Fargo & Company. Sharer.. and Exponent. 70 Director since 1998. Inc. Corporate Vice President and President. Tolles & Olson LLP.S. 70 Director since 2000. Kirkland. Shoemate. Trade Representative and U. Chair Donald B. Chevron International Exploration and Production Company. Enrique Hernandez Jr. a manufacturer of automobiles. Previously he was Chairman of the Board and Chief Executive Officer of Chrysler Corporation. Inc. Denham. 61 Director since 2005. He is retired Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation. S. Previously he was an associate in the law firm of Brobeck. Georgia Institute of Technology. Jenifer. He is retired Chairman of the Board of Management of DaimlerChrysler AG. He is a Director of Northrop Grumman Corporation. 4) Retiring Director David J. Inc. in 2001 and Unocal Corporation in 2005. Joined Chevron in 1974. Previously he was President and Chief Operating Officer of Amgen and President of the Business Markets Division of MCI Communications Corporation. Strategy and Development. (1) Committees of the Board 1 ) Audit: Charles R.. Eaton. a charitable organization. Chair 3) Board Nominating and Governance: Samuel H. In addition to Board responsibilities. Phleger & Harrison. Previously he was Chairman and Chief Executive Officer of Salomon Inc. 63. Eaton. Inc. after a 41-year career with Chevron. Deily. Inc. Dell Inc. He is Chairman. He is retired Chairman of the Board.. He also is a Director of Del Monte Foods Com pany. elected to retire December 31. Former Chairman of the Board and current President and Chief Executive Officer of Agensys... President and Chief Executive Officer of Bestfoods. Inc. (1) Robert J. a biotechnology company. 71 Lead Director since 2006 and a Director since 1982. production and gas activities. He is Chairman of the Board.A. 53 Chairman of the Board and Chief Executive Officer since January 2010. Samuel H.V. He joined the corporation in 1968 and was elected a Vice President in 1991. de C.. Chevron U. Ambassador to the World Trade Organization from 2001 to June 2005. He is a Director of Vulcan Materials Company and Wells Fargo & Company. and Corporate Vice President.

Joe W. Charles A. Strategic Planning. Day. Environment and Safety. 57 Vice President. Comptroller. Joined Chevron in 1982. Paul K. Antitrust Division. Responsible for guiding and directing corporatewide tax activities and managing Chevron’s Tax department. U. Joined Chevron in 2009. James. Beebe. and Chair.C. Previously President. Previously the company’s Vice President. Chevron Global Gas. Global Downstream. and emergency response. Corporate Vice President. Thomas R. procurement. McDonald. Washington. President. and Assistant Attorney General. 52 Vice President. John E. compliance assurance. R. Chevron Nigeria Limited/Nigerian National Petroleum Company joint venture. and Managing Director. allocating capital and other resources. including mergers and acquisitions. Previously Chair. Responsible for corporatewide accounting. Foehr. since 2008. Hunton & Williams LLP. Chevron Australia Pty Ltd. Chevron Corporation 2009 Annual Report 87 . Asia/Middle East/ Africa Strategic Business Unit.C. since 2007. Joined Chevron in 1982. Joined the company in 1974. International Upstream. Health. R. Previously General Manager. Global Downstream. Corporate Vice President. environment and safety. Department of Justice. Wirth. Hewitt Pate. since 2006. Beebe.S. Responsible for the company’s global human resources and medical services function. U. Zygocki. Joined Chevron in 1980. Chevron Upstream Europe. since 2007. Chevron North America Exploration and Production Company. Lydia I. counseling the Board of Directors and senior management on corporate governance.. 47 Vice President and General Counsel since August 2009. financial reporting and analysis. lubricants. Executive Committee John S. Asia South Business Unit and Chevron Offshore (Thailand) Ltd. and Vice President. Global Upstream and Gas. Chevron Canada Limited. Human Resources. Texaco Exploration and Production. Responsible for managing the Corporate Governance Department. 55* Executive Vice President since 2009. Joined the company in 1980. Southern Africa Strategic Business Unit. and Comptroller. Watson. Responsible for HES strategic planning and issues management. Serves on the San Francisco Federal Reserve’s Board of Directors. Responsible for worldwide manufacturing. large-scale upstream and downstream business opportunities. and Vice President. Finance. Taylor. marketing. Policy. James. John D. Responsible for advising senior management in setting the company’s strategic direction. Corporate Business Development. Responsible for the company’s natural gas business. Previously the company’s Assistant General Tax Counsel. Previously Managing Director. and Managing Director. Joined Chevron in 2002. 51 Vice President. all aspects of communications. Reavis & Pogue.. supply and trading.Corporate Officers Lydia I.S. Responsible for identifying and developing new. Joined Chevron in 1979. chemicals and Oronite additives. and President. Pierre R. 52 Vice President. Corporate Human Resources and Labor Affairs. Oversees U. George L.. Global Downstream. 62 General Tax Counsel since 2002. Responsible for Chevron’s three technology companies: Energy Technology. 58 Vice President and Chief Technology Officer since 2008. Chevron Corporation. Marketing. Secretary. *Retiring effective May 2010. 45 Vice President and Treasurer since 2009. Responsible also for the Project Resource Company. 58 Corporate Vice President and President. power and pipeline operations. Managing Director. since 2006. shipping company. Joined Chevron in 1980. Marketing. Director of Sasol Chevron. Responsible for the company’s worldwide legal affairs and compliance. Nigeria/Mid-Africa Strategic Business Unit and Chevron Nigeria Ltd. Joined the company in 2008. Previously Vice President. and overseeing stockholder services for Chevron and its subsidiaries. since 2003. Investor Relations. Rhonda I. and international government relations. John W. Antitrust Division. Bethancourt. Chevron Phillips Chemical Company LLC. Joined the company in 1974. Health. D. Information Technology and Technology Ventures. Previously Senior Manager. Finance. Michael K. health. Joined Chevron in 1977. 49 Executive Vice President. Previously Corporate Vice President. Patricia E. since 2008. Europe Upstream Strategic Business Unit. Previously Corporate Vice President. Breber. Laymon. Gulf of Mexico Offshore Division. and determining operating unit performance measures and targets. Caltex Corporation. Strategic Planning. and Adviser to the Chairman of the Board. Deepwater Exploration and Projects. 54 Vice President and Chief Financial Officer since 2009. 52 Vice President and Comptroller since April 2010. Strategic Planning. Schuttish. Finance. Finance. Antitrust and Trade Regulation Practice — Jones. Siegele. Previously Vice President. Matthew J. Competition Practice. and Manager. internal controls. Charles A. Corporate Vice President and Treasurer. Bethancourt. 52 Vice President. and Finance Shared Services. Yarrington. and the company’s worldwide efforts to protect and enhance its reputation. President. and Texaco Corporate Vice President and President. Joined the company in 1975. Wirth and Patricia E. Global Supply and Trading. Chevron Australia Pty Ltd.S. Kirkland. Chevron Tax Department. Government and Public Affairs. Pryor. Michael K. Joined the company in 1989. Department of Justice. Human Resources. Gass. Charles A. Previously Chevron Vice President and General Counsel. and mining operations. Policy. Previously Group Vice President. Environment and Safety (HES). 58 Executive Vice President. Previously a Director. Yarrington. Government and Public Affairs. President and Managing Director. Chevron Products Company. Ford Motor Company. D. Washington. Chevron Overseas Petroleum Inc. since 2003. Technology and Services. business and real estate services. Jay R. John E. 57 Corporate Secretary and Chief Governance Officer since 1995. Previously Managing Director. Joined the company in 1980. Joined Chevron in 1980. Previously Vice President. Hewitt Pate. Manager. Production Operations. Assistant Attorney General.

TX 77002-7308 Electronic Access In an effort to conserve natural resources and reduce the cost of printing and shipping proxy materials next year.. Enrollment is revocable until each year’s Annual Meeting record date. 2010. containing additional financial and operating data.” Stockholder Information Questions about stock ownership.m. Chevron. CA 94583-2324 88 Chevron Corporation 2009 Annual Report . we encourage stockholders to register to receive these documents via email and vote their shares on the Internet. Dividend Payment Dates Quarterly dividends on common stock are paid. changes of address. The symbol is “CVX. distributed in April. June.) Annual Meeting The Annual Meeting of stockholders will be held at 8:00 a. Wednesday. For information. Box 358015 Pittsburgh. for electronic access. September and December. Stockholders of record may sign up on our Web site.com/shareowner The BNY Mellon Shareowner Services Program features dividend reinvestment. are available on the company’s Web site.html.com Publications and Other News Sources The Annual Report. on or about the 10th day of March. CA 94583-2324 925 842 5690 Email: invest@chevron. A3201 San Ramon. contact BNY Mellon Shareowner Services.Stockholder and Investor Information Stock Exchange Listing Chevron common stock is listed on the New York Stock Exchange. Investor Information Securities analysts.com/ cvx/index. Chevron’s Annual Report to the United States Securities and Exchange Commission on Form 10-K and the Supplement to the Annual Report. at: Chevron Corporation 1500 Louisiana Street Houston.icsdelivery. optional cash investments of $50 to $100. or Broadridge Financial Solutions at: www. portfolio managers and representatives of financial institutions may contact: Investor Relations Chevron Corporation 6001 Bollinger Canyon Road San Ramon. May 26.com/cvx/index.000 a year and automatic stock purchase. icsdelivery. (See Stockholder Information. following declaration by the Board of Directors. summarizes the company’s financial performance in the preceding year and provides an overview of the company’s major activities. Direct deposit of dividends is available to stockholders.bnymellon.com. Beneficial stockholders may be able to request electronic access by contacting their broker or bank.O. or copies may be requested by writing to: Comptroller’s Department Chevron Corporation 6001 Bollinger Canyon Road. dividend payments or direct deposit of dividends should be directed to Chevron’s transfer agent and registrar: BNY Mellon Shareowner Services P.html. PA 15252-8015 800 368 8357 www. www.

visit Chevron’s Web site. PHOTOGRAPHY Cover: Courtesy of Transocean — photographer: Ken Childress. For additional information about the company and the energy industry.The Corporate Responsibility Report is available in May on the company’s Web site. Government and Public Affairs Chevron Corporation 6001 Bollinger Canyon Road. 3: Eric Myer. but are not guarantees of future results. each of which manages its own affairs. Chevron. Chevron.chevron.” etc.” “intends. SGS-COC-005612 CHEVRON CORPORATION 2009 ANNUAL REPORT 2009 Annual Report Recycled Recyclable 91 2. — that reflect management’s current estimates and beliefs.com.com. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies. CA 94583-2324 925 842 1000 Chevron Corporation 6001 Bollinger Canyon Road San Ramon.com. PROduCed bY Policy.” “projects.com Cert no. CA 94583-2324 Information about charitable contributions is available in the second half of the year on Chevron’s Web site. the Proxy Statement and the complete text of this Annual Report.” “we” and “us” may refer to one or more of its consolidated subsidiaries or to all of them taken as a whole.” “our. or a copy may be requested by writing to: Policy. notice As used in this report. Government and Public Affairs and Comptroller’s Departments. speeches. or by writing to: Policy. (right) Tina Toriello. news releases. Government and Public Affairs Chevron Corporation 6001 Bollinger Canyon Road. CA 94583-2324 Details of the company’s political contributions for 2009 are available on the company’s Web site.com. Corporate Headquarters 6001 Bollinger Canyon Road San Ramon. California The Value of Partnership 2009 Corporate Responsibility Report 2009 Corporate Responsibility Report .” “the corporation. Chevron Corporation desIGn Design One — San Francisco. Pages 1. CA 94583-2324 USA www. Please see “Cautionary Statement Relevant to Forward-Looking Information for the Purpose of ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995” on Page 9 for a discussion of some of the factors that could cause actual results to differ materially. Chevron. It includes articles. quarterly earnings information. Chevron. California PRInTInG ColorGraphics — Los Angeles. the term “Chevron” and such terms as “the company. A2177 San Ramon. A21 14 San Ramon. Inside Front Cover: Robin Davies.. Page 6: (left) Myriad Media Ltd.0953 2009 Annual Report 2009 Supplement to the Annual Report 2009 Supplement to the Annual Report This Annual Report contains forward-looking statements — identified by words such as “expects.

SGS-COC-005612 Recycled Recyclable 91 2. CA 94583-2324 USA www.chevron.com Cert no.Chevron Corporation 6001 Bollinger Canyon Road San Ramon.0953 .