Chevron Reports Second Quarter Net Income of $6 Billion, Up 11 Percent from $5.4 Billion in Second Quarter 2007

Chevron Corporation (NYSE:CVX) today reported net income of $6.0 billion ($2.90 per share – diluted) for the second quarter 2008, compared with $5.4 billion ($2.52 per share – diluted) in the year-ago period. Earnings in the 2007 quarter included a net gain of approximately $500 million on the sale of an investment and redemption of debt. For the first half of 2008, net income was $11.1 billion ($5.38 per share – diluted), up 10 percent from $10.1 billion ($4.70 per share – diluted) in the first six months of 2007. Sales and other operating revenues in the second quarter 2008 were $81 billion, compared with $54 billion in the year-ago quarter. First-half 2008 sales and other operating revenues were $146 billion, versus $101 billion in the corresponding 2007 period. Earnings Summary     Three Months Ended June 30   Six Months Ended June 30 Millions of dollars       2008       2007         2008       2007   Income by Business Segment   Upstream – Exploration and Production $   7,248 $   3,639 $   12,376 $   6,546 Downstream – Refining, Marketing and Transportation (734 ) 1,298 (482 ) 2,921 Chemicals 41 104 84 224 All Other       (580 )     339         (835 )     404   Net Income1   $   5,975   $   5,380     $   11,143   $   10,095   1Includes foreign currency effects $ 126 $ (138 ) $ 81 $ (258 ) "Earnings for our upstream operations benefited from prices for crude oil that were significantly higher than a year ago,” said Chairman and CEO Dave O’Reilly. "Natural-gas prices also increased between periods, contributing to a doubling of upstream profits from last year’s second quarter.” "In our downstream business, the increase in the price of crude oil had an opposite effect,” O’Reilly added. "The higher cost of crude oil used in the refining process was not fully recovered in the price of gasoline and other refined products. As a result, our downstream operations incurred a loss in the second quarter, with most of the loss taking place in the United States.” O’Reilly said the effects of planned refinery downtime also contributed to the U.S. loss in the period. In the second quarter of this year, the company reported capital and exploratory expenditures of $5.2 billion, compared with $4.5 billion a year earlier. Common stock buybacks in the 2008 period totaled $2 billion. O’Reilly said continued strong cash flows from operations have enabled a record-level of reinvestment in the business. Among recent milestones for the company’s major development projects was the previously announced start-up of the 68 percent-owned Agbami Field in Nigeria. The total maximum oil-equivalent production at Agbami is estimated at 250,000 barrels per day by the end of 2009. UPSTREAM – EXPLORATION AND PRODUCTION Worldwide oil-equivalent production was 2.54 million barrels per day in the second quarter 2008, compared with 2.63 million barrels per day in the corresponding period in 2007. Absent the impact of higher prices on volumes recoverable under certain production-sharing and variable-royalty contracts outside the United States, production increased slightly between periods. U.S. Upstream   Three Months Ended June 30   Six Months Ended June 30 Millions of Dollars       2008       2007       2008       2007 Income   $   2,191   $   1,223   $   3,790   $   2,019 U.S. upstream income of $2.2 billion in the second quarter 2008 increased nearly $1 billion from the same period last year, driven by higher prices for crude oil and natural gas. Partially offsetting the benefit of higher prices were increases in operating expenses, the impact of lower production and the absence of gains on second quarter 2007 asset sales. The average sales price per barrel of crude oil and natural gas liquids was $109 in the second quarter 2008, up from $57 in the corresponding 2007 period. The average sales price per thousand cubic feet of natural gas increased $3.28 between quarters to $9.84. Net oil-equivalent production was 702,000 barrels per day in the 2008 second quarter, down about 7 percent from a year earlier on normal field declines. The net liquids component of production was down 6 percent at 438,000 barrels per day, and net natural-gas production declined 7 percent to 1.6 billion cubic feet per day. International Upstream     Three Months Ended June 30   Six Months Ended June 30 Millions of Dollars       2008       2007         2008         2007   Income1   $   5,057   $   2,416     $   8,586     $   4,527   1Includes foreign currency effects $   80   $   (111 ) $   (87 )   $   (230 ) International upstream earnings of $5.1 billion in the second quarter 2008 increased $2.6 billion from the year-ago period due primarily to higher prices for crude oil. Natural-gas prices also increased between periods. Partially offsetting the benefit of higher prices was a reduction of crude-oil sales volumes. Foreign currency effects benefited earnings by $80 million in the 2008 quarter, compared with a $111 million reduction to earnings a year earlier. The average sales price per barrel of crude oil and natural gas liquids was $110 in the 2008 quarter, up $49 from the year-ago period. The average sales price per thousand cubic feet of natural gas increased $1.80 between periods to $5.44. Net oil-equivalent production of 1.84 million barrels per day in the 2008 second quarter was about 2 percent lower than the year-ago quarter. Absent the impact of higher prices on volumes recoverable under certain production-sharing and variable-royalty contracts, production increased between periods. The net liquids component of production decreased by 95,000 barrels per day to 1.23 million. Natural-gas production was 3.6 billion cubic feet per day in the 2008 period, an increase of about 300 million cubic feet per day from a year earlier. DOWNSTREAM – REFINING, MARKETING AND TRANSPORTATION U.S. Downstream     Three Months Ended June 30   Six Months Ended June 30 Millions of Dollars       2008         2007       2008         2007 (Loss)/Income   $   (682 )   $   781   $   (678 )   $   1,131 U.S. downstream incurred a loss of $682 million in the second quarter 2008, compared with income of $781 million in the year-ago period. The loss was mainly associated with sharply higher costs of crude-oil feedstocks used in the refining process that could not be fully recovered in the sales price of gasoline and other refined products. Operating expenses were also higher between periods, including expenses associated with planned shutdowns for refinery maintenance. Refinery crude-input of 816,000 barrels per day in the second quarter 2008 was 65,000 barrels lower than the year-ago period. The decline was primarily due to the effects of a planned crude-unit shutdown for maintenance at the company’s refinery in Pascagoula, Mississippi, and suspension of crude processing for asphalt production at the refinery in Perth Amboy, New Jersey. Crude-input volumes increased between periods at the refinery in El Segundo, California. Refined-product sales volumes declined 8 percent from the second quarter of 2007 to 1.38 million barrels per day, primarily the result of lower gasoline and gas-oil sales. Branded gasoline sales volumes were down 5 percent between quarters to 596,000 barrels per day. International Downstream     Three Months Ended June 30   Six Months Ended June 30 Millions of Dollars       2008         2007         2008       2007   (Loss)/Income1   $   (52 )   $   517     $   196   $   1,790   1Includes foreign currency effects $   46   $   (35 ) $   157   $   (30 ) International downstream incurred a loss of $52 million in second quarter 2008, compared with income of $517 million in the corresponding 2007 period. Margins on the sale of refined products were significantly lower in most areas, due mainly to an increase in costs for crude-oil feedstocks. Foreign currency effects benefited earnings by $46 million in the 2008 quarter, compared with a $35 million reduction in earnings a year earlier. Refinery crude-input was 952,000 barrels per day in the 2008 second quarter, up 10,000 from the year-ago period. Volumes increased at the GS Caltex refinery in South Korea and the company’s refinery in Cape Town, South Africa. Inputs were lower at the company’s Pembroke refinery in the United Kingdom due to unplanned shutdowns. Total refined-product sales volumes of 2.07 million barrels per day in the 2008 second quarter were 6 percent higher than the corresponding quarter of 2007. Excluding the impact of 2007 asset sales in Europe, sales volumes were up 8 percent between periods on increased trading activities. CHEMICALS   Three Months Ended June 30   Six Months Ended June 30 Millions of Dollars       2008       2007       2008       2007   Income1   $   41   $   104   $   84   $   224   1Includes foreign currency effects $   1   $   -   $   -   $   (1 ) Chemical operations earned $41 million in the second quarter of 2008, compared with $104 million in the year-ago quarter. Earnings of the 50 percent-owned Chevron Phillips Chemical Company LLC (CPChem) and Chevron’s Oronite subsidiary were both lower between periods. CPChem margins on the sale of commodity chemicals were squeezed due to higher feedstock costs. Utility expenses increased as a result of higher natural-gas prices, and maintenance expenses increased due to planned shutdowns at various U.S. manufacturing facilities. For the Oronite subsidiary, margins on sales of lubricant additives and fuel additives were lower between periods. ALL OTHER   Three Months Ended June 30   Six Months Ended June 30 Millions of Dollars       2008         2007       2008         2007 (Charges) Income – Net1   $   (580 )   $   339   $   (835 )   $   404 1Includes foreign currency effects $   (1 )   $   8   $   11   $   3 All Other consists of mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies, and the company’s interest in Dynegy Inc. prior to its sale in May 2007. Net charges in the second quarter 2008 were $580 million, compared with income of $339 million in the year-ago period. The year-ago period included a $680 million gain on the sale of the company’s investment in Dynegy, a $160 million loss on the redemption of debt and net favorable corporate tax items. Results in 2008 included net unfavorable corporate tax items and increased charges for environmental remediation costs associated with sites that previously had been closed or sold. CAPITAL AND EXPLORATORY EXPENDITURES Capital and exploratory expenditures in the first six months of 2008 were $10.3 billion, compared with $8.6 billion in the corresponding 2007 period. The amounts included approximately $900 million and $1.1 billion, respectively, for the company’s share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream projects represented 82 percent of the companywide total in 2008. NOTICE Chevron’s discussion of second quarter 2008 earnings with security analysts will take place on Friday, August 1, 2008, at 8:00 a.m. PDT. A webcast of the meeting will be available in a listen-only mode to individual investors, media, and other interested parties on Chevron’s Web site at www.chevron.com under the "Investors” section. Additional financial and operating information will be contained in the Earnings Supplement that will be available under "Events and Presentations” in the "Investors” section on the Web site. Chevron will post selected third quarter 2008 interim performance data for the company and industry on its Web site on Thursday, October 9, 2008, at 2:00 p.m. PDT. Interested parties may view this interim data at www.chevron.com under the "Investors” section. CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This press release contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates, and projections about the petroleum, chemicals, and other energy-related industries. Words such as "anticipates,” "expects,” "intends,” "plans,” "targets,” "projects,” "believes,” "seeks,” "schedules,” "estimates,” "budgets” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are crude-oil and natural-gas prices; refining, marketing and chemicals margins; actions of competitors; timing of exploration expenses; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude-oil and natural-gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude-oil production quotas that might be imposed by OPEC (Organization of Petroleum Exporting Countries); the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from pending or future litigation; the company’s acquisition or disposition of assets; gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading "Risk Factors” on pages 32 and 33 of the company’s 2007 Annual Report on Form 10-K/A. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements. CHEVRON CORPORATION - FINANCIAL REVIEW (Millions of Dollars, Except Per-Share Amounts)           CONSOLIDATED STATEMENT OF INCOME (unaudited) Three Months Six Months Ended June 30 Ended June 30 REVENUES AND OTHER INCOME 2008 2007 2008 2007 Sales and other operating revenues 1 $ 80,962 $ 54,344 $ 145,621 $ 100,646 Income from equity affiliates 1,563 894 2,807 1,831 Other income 464 856 507 1,844 Total Revenues and Other Income 82,989 56,094 148,935 104,321 COSTS AND OTHER DEDUCTIONS Purchased crude oil and products, operating and other expenses 63,250 39,051 111,833 72,228 Depreciation, depletion and amortization 2,275 2,156 4,490 4,119 Taxes other than on income 1 5,699 5,743 11,142 11,168 Interest and debt expense - 63 - 137 Minority interests 34 19 62 47 Total Costs and Other Deductions 71,258 47,032 127,527 87,699 Income Before Income Tax Expense 11,731 9,062 21,408 16,622 Income tax expense 5,756 3,682 10,265 6,527 NET INCOME $ 5,975 $ 5,380 $ 11,143 $ 10,095   PER-SHARE OF COMMON STOCK Net Income - Basic $ 2.91 $ 2.52 $ 5.41 $ 4.72 - Diluted $ 2.90 $ 2.52 $ 5.38 $ 4.70 Dividends $ 0.65 $ 0.58 $ 1.23 $ 1.10   Weighted Average Number of Shares Outstanding (000's) - Basic 2,050,773 2,127,763 2,058,596 2,136,591 - Diluted 2,064,888 2,141,583 2,072,549 2,149,686   1 Includes excise, value-added and similar taxes. $ 2,652 $ 2,609 $ 5,189 $ 5,023 CHEVRON CORPORATION - FINANCIAL REVIEW (Millions of Dollars)             INCOME BY MAJOR OPERATING AREA Three MonthsEnded June 30 Six MonthsEnded June 30 (unaudited) 2008   2007 2008   2007 Upstream – Exploration and Production United States $ 2,191 $ 1,223 $ 3,790 $ 2,019 International 5,057   2,416 8,586   4,527 Total Exploration and Production 7,248   3,639 12,376   6,546 Downstream – Refining, Marketing and Transportation United States (682 ) 781 (678 ) 1,131 International (52 ) 517 196   1,790 Total Refining, Marketing and Transportation (734 ) 1,298 (482 ) 2,921 Chemicals 41 104 84 224 All Other 1 (580 ) 339 (835 ) 404 Net Income $ 5,975   $ 5,380 $ 11,143   $ 10,095     SELECTED BALANCE SHEET ACCOUNT DATA June 30, 2008 Dec. 31, 2007 (unaudited) Cash and Cash Equivalents $ 8,180 $ 7,362 Marketable Securities $ 427 $ 732 Total Assets $ 163,066 $ 148,786 Total Debt $ 6,664 $ 7,232 Stockholders' Equity $ 82,268 $ 77,088     Three MonthsEnded June 30 Six MonthsEnded June 30 CAPITAL AND EXPLORATORY EXPENDITURES 2 2008   2007 2008   2007 United States Exploration and Production $ 1,239 $ 970 $ 2,690 $ 1,890 Refining, Marketing and Transportation 528 325 900 558 Chemicals 21 38 127 67 Other 142   133 265   396 Total United States 1,930   1,466 3,982   2,911   International Exploration and Production 2,887 2,579 5,723 4,826 Refining, Marketing and Transportation 325 460 554 809 Chemicals 13 11 22 22 Other 2   - 3   3 Total International 3,227   3,050 6,302   5,660 Worldwide $ 5,157   $ 4,516 $ 10,284   $ 8,571   1 Includes mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies and the company's interest in Dynegy Inc. prior to its sale in May 2007. 2 Includes interest in affiliates: United States $ 50 $ 40 $ 172 $ 72 International 391   582 769   1,024 Total $ 441   $ 622 $ 941   $ 1,096 CHEVRON CORPORATION - FINANCIAL REVIEW           Three Months Ended June 30 Six Months Ended June 30   OPERATING STATISTICS (1) NET LIQUIDS PRODUCTION (MB/D): 2008 2007   2008 2007   United States 438 468 437 464 International 1,207 1,297 1,218 1,307 Worldwide 1,645 1,765 1,655 1,771   NET NATURAL GAS PRODUCTION (MMCF/D): (2)   United States 1,588 1,703 1,627 1,713 International 3,621 3,314 3,695 3,293 Worldwide 5,209 5,017 5,322 5,006   OTHER INTERNATIONAL PRODUCTION - OIL SANDS (MB/D): 24 29 26 31   TOTAL NET OIL-EQUIVALENT PRODUCTION (MB/D): (3) United States 702 752 708 750 International 1,835 1,878 1,860 1,887 Worldwide 2,537 2,630 2,568 2,637   SALES OF NATURAL GAS (MMCF/D): United States 7,631 8,153 7,817 8,004 International 4,205 3,839 4,190 3,865 Worldwide 11,836 11,992 12,007 11,869   SALES OF NATURAL GAS LIQUIDS (MB/D): United States 167 170 156 155 International 127 123 131 116 Worldwide 294 293 287 271   SALES OF REFINED PRODUCTS (MB/D): United States 1,383 1,506 1,408 1,477 International (4) 2,066 1,956 2,059 2,009 Worldwide 3,449 3,462 3,467 3,486   REFINERY INPUT (MB/D): United States 816 881 855 805 International 952 942 960 1,006 Worldwide 1,768 1,823 1,815 1,811   (1) Includes interest in affiliates. (2) Includes natural gas consumed on lease (MMCF/D): United States 69 52 80 60 International 424 411 454 420 (3) Oil-equivalent production is the sum of net liquids production, net gas production and other produced liquids. The oil-equivalent gas conversion ratio is 6,000 cubic feet of natural gas = 1 barrel of crude oil.     (4) Includes share of affiliate sales (MB/D): 511 464 504 469