ChevronTexaco on track for strong financial performance
Posted: 1 August 2003
Chairman and Chief Executive Officer David J. O'Reilly, in a meeting
with security analysts, discussed the company's first-half 2003
strong financial performance and reviewed progress on strategic
initiatives to further strengthen the company across all its businesses.
Earlier, the company announced second-quarter net income of $1.6
billion.
O'Reilly said, "ChevronTexaco is making progress in a number
of areas. Besides strong earnings and cash flows in the first half
of this year, we've improved our debt position, raised the quarterly
dividend, achieved successful start-ups in major oil and gas projects,
formed a global gas business, and reorganized global downstream
operations. We are moving aggressively on several fronts to increase
the value of the company for our stockholders."
During the meeting, O'Reilly reiterated the company's objective
to be first among its peers in total stockholder return and said
the company continues to focus on closing the gap with its competitors
in return on capital employed. He also stated the company will be
focusing on those strategic assets that offer the greatest opportunity
to build value for stockholders and that ChevronTexaco expects to
sell $1 billion to $2 billion in non-strategic assets per year during
the next few years.
Upstream Strategies Moving Forward
O'Reilly said the company is gaining momentum in its efforts to
grow upstream earnings and maintain competitive returns by maximizing
the value of the base business and adding new core positions.
"We have a consistent, long-term strategic focus on the upstream,
a stable capital program, a commitment to improve capital efficiency
and a broad and deep portfolio. We will continue to deliver competitive
results in this business," said O'Reilly. He also cited a number
of strategically important exploration and production positions
held by the company, including:
- resource-rich regions where the company is the No. 1 producer,
including Kazakhstan, Angola and Indonesia;
- largest holder of uncommitted natural gas resources in Australia;
leadership positions in the Gulf of Mexico Shelf and San Joaquin
Valley;
- recent exploration successes in the Gulf of Mexico, Nigeria
and Angola;
- a significant and growing resource base of about 50 billion
barrels of oil and gas equivalent.
To focus its upstream portfolio, O'Reilly outlined the planned
divestment of non-strategic upstream portfolio assets, including
about 400 fields in North America, as well as interests in Papua
New Guinea and three fields in the North Sea.
Building the Global Gas Business
O'Reilly reported that ChevronTexaco also is making progress on
building a global, integrated gas business that targets attractive
markets and commercializes ChevronTexaco's large gas resource base.
He said that the company's already substantial gas business -- with
a focus on the United States and Asia as major markets -- positions
the company to build a global capability in liquefied natural gas
and capture market opportunities worldwide.
O'Reilly cited key gas projects and expected near-term milestones,
including:
- in the Pacific Basin, where the Greater Gorgon Area potential
resources exceed 40 trillion cubic feet of natural gas and where
the company expects a Barrow Island site decision by the end of
the year;
- in the Atlantic Basin, anchored by the Port Pelican Regasification
Project, where U.S. government permits are anticipated by the
end of 2003 for a terminal to handle natural gas imports from
West Africa and the Caribbean region.
Downstream Initiatives on Track
O'Reilly said ChevronTexaco is moving to improve downstream returns
by focusing on areas where it has strong brands, well-established
supply arrangements and competitive market shares. He cited the
North America West Coast, Asia and the U.S. Gulf Coast/Latin America
regions as areas of strength.
In commenting on the recently announced restructuring of downstream
into a global functional organization, which is targeting before-tax
profit improvements of $500 million by 2005, O'Reilly stated the
new organization will allow the company to leverage global scale
more fully to reduce costs and drive efficiency improvements.
Initiatives reported include:
- Twenty market areas are now considered non-strategic, including
refining and retail marketing interests in Europe, Australia,
the Andean countries and the Middle East, as well the Batangas
Refinery in the Philippines. ChevronTexaco will limit future investments
in these areas and evaluate alternatives.
- Selling company-owned or leased service stations to dealers
and third parties, about 550 in the United States and 900 in Asia
and Africa.
- Improving the refining network's performance, with a goal of
making refineries in Asia and North America top tier by 2005.
"We are transforming the downstream into a leaner, more efficient
business," said O'Reilly.
For more information see http://www.chevrontexaco.com.
Posted by Richard Price,
Editor Pipeline Magazine
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