Downstream Mike Wirth Executive Vice President Downstream
What We Delivered in 2006 Base Business Record safety Record utilization Record energy efficiency Record earnings - $4 Billion Selective Growth Pascagoula FCC expansion South Korea upgrade U.K. Caspian upgrade Refining investment in India 2
Delivering Competitive ROCE U.S. Downstream ROCE Rank 1 2 3 4 Non-U.S. Downstream ROCE Rank 1 2 3 4 5 2003 2004 2005 2006 2003 2004 2005 2006 Competitor Group: XOM, RDS, BP, COP (U.S. only) Calculated based on CVX estimates and public information handled on a consistent basis. Excludes special items. Reconciliation to non-gaap earnings measure is available at www.chevron.com under Investors. 3
Profitable Growth Effective Execution Right Strategies 4
We Have the Right Strategies Improve base business returns and selectively grow with a focus on integrated value creation Operational excellence in base business Disciplined growth in refinery scale/flexibility Focused portfolio high-grading 5
High-Grading Portfolio Asphalt U.S. Southwest Retail Fuels Scandinavia Nerefco Interest Netherlands Cumulative Proceeds $ Billions A/T 1.2 Retail Fuels Ecuador Retail Fuels Benelux 0.8 0.4 Retail Fuels Uruguay Divested Progressing Retail Fuels Paraguay 2004 2005 2006 6
Strong Focus on Improving Marketing Returns Standardization Increasing efficiency Supply Chain Optimizing product channels Premier Brands Leveraging topranked brands Focused Advertising Transport Alliances Gasoline Sales Volume YTD Oct. (2006 vs. 2005) 3% 1% Maintenance Partnerships -1% Market Global Centers -3% Majors PADD 5 core markets Source: Lundberg 7
Capitalizing on Demand Growth North America Asia-Pacific 2/3 of global demand growth 3/4 of CVX refining capacity Major CVX Refineries Under Construction Source: PFC Energy Supply/Demand Model 8
Superior Refining Assets Solomon Complexity 20 Chevron 15 Industry 10 Building further advantage in U.S. configuration 5 USWC USGC Asia-Pacific Including Korea upgrade Increasing complexity in Asia Solomon Net Cash Margin (Indexed) 140 100 60 20 USWC USGC Asia-Pacific Top quartile performer Improving through reliability, efficiency and investment 9
Effective Execution 10
Improved Utilization Utilization Loss 2005 2006 High-Value Product Volume (MBD) 1200-4% -8% 800 2005 2006 Chevron-Operated Refineries Focusing on continual and sustained improvements Building reliability refinery is a top priority 11
Sustaining High Reliability Unplanned Unit Outages (Number) Solomon Utilization (Indexed) 110 2005 avg. 100 2005 avg. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2005 2006 90 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2005 2006 Chevron-Operated Refineries Reliability focus driving down incident rate 2006 utilization consistently better than 2005 12
Maximizing Margins Through Optimization U.S. Crude Costs vs. WTI ($/bbl) 2002 2003 2004 2005 2006 $(2) $(4) Lower Feedstock Costs $(6) $(8) Asia Margins vs. Benchmarks ($/bbl) $0.8 $0.6 $0.4 Higher Value Yields $0.2 2002 2003 2004 2005 2006 13
Industry Leader in Energy Efficiency Energy Usage Refining Index 100% Base Index 100% Base 95% 95% 90% 90% 85% Better 85% 80% USWC USGC Asia-Pacific 80% 2002 2006 Chevron Industry Chevron System Top quartile U.S. Solomon energy efficiency 2006 performance was best ever 14
Integration Creates Advantage Versatile fuel supplies to Japan Gasoline stocks to U.S. Caspian Blend to U.K. High-mercury crudes to Pacific Basin refineries Chad Doba to U.K. Qatar GTL to U.K. Major CVX Refineries Under Construction 15
Profitable Growth 16
Constrained Industry Refining Capacity Global Capacity & Product Demand 90 70 50 30 10 MMBD Surplus Capacity Product Demand Source: Pervin & Gertz, PFC Energy, IEA 2000 2005 2010 2015 Road Transportation Fuel Demand 40 MMBD 35 30 25 2005 2007 2009 2011 2013 2015 Source: PFC Energy Supply & Demand Model Response to Constraints Industry Significant capacity builds (risked assessment) Capacity additions expected to peak in 2010-2011 Chevron Build reliability refinery Pursue capacity creep Invest to expand margins Reliance ahead of peak 17
Investing to Further Expand Margins Average Crude Slate API (Indexed) Average Crude Slate Sulfur (Indexed) 100 96 Base 140 120 92 88 Heavier 100 Base Higher Sulfur 84 80 80 2007 2008 2009 60 2007 2008 2009 2 API gravity improvement 25% increase in %wt sulfur 18
Larger-Scale Flexible Refining Atlantic Basin U.S. West Coast & Asia-Pacific Pascagoula Pembroke El Segundo Richmond South Korea India 2007 Caspian Blend Expansion 1 Heavy Sour Resid Upgrade 1 2008 Capacity Expansion FID Heavy Sour New Build Online 2009 CCR Capacity Expansion CCR Opportunity for 29% 2010 Caspian Blend Expansion 2 Resid Upgrade 2 Flexibility Organic Creep Acquisition 19
Focus and Execution Are Key High-grading portfolio Building reliability refinery Cost-effective capacity creep Expanding flexibility/margins Capturing integration value 20
Our Continued Commitment to Earnings and Returns Portfolio High-Grading 2007 South Korea Upgrade 2007 U.K. Caspian Upgrade 2007 Improve Utilization by 6% 2008 Pascagoula Expansion FID 2008 Reliance 29% Opportunity 2009 21