2010



To Our Stockholders 

2010 was an outstanding year for Chevron. Once again our people delivered strong results in a challenging environment. We made significant advances in our queue of major capital projects, exceeded our goals for production growth, restructured our downstream business to enhance competitive performance and maintained our long-term leadership in total stockholder return. 

The company’s performance was grounded in a strong safety culture, which resulted in our safest year ever. The Macondo incident in the U.S. Gulf of Mexico underscored that safe operations are fundamental to our ability to operate. Following Macondo, we led the industry in working with regulators to enhance operating standards in the Gulf. We remain vigilant about safety, reliability and environmental stewardship wherever we operate. 

Our financial performance in 2010 contributed to a very strong balance sheet and competitive returns for investors. Net income in 2010 was $19 billion on sales and other operating revenues of $198 billion. We increased our annual dividend in 2010 for the 23rd consecutive year, initiated a stock repurchase program and maintained leadership in two key measures of financial performance. Return on capital employed was 17.4 percent — a direct outcome of disciplined capital investment — and the company led our major competitors in total stockholder return over the past five years. 

Our upstream business continues to deliver major capital projects from our industry-leading queue. Tahiti, our world-class deepwater project in the Gulf of Mexico, marked the first full year of production, and we continued ramp-ups of several new projects, including Frade in Brazil, Tombua-Landana in Angola and our Tengizchevroil joint venture in Kazakhstan. In 2010, total net oil- equivalent production in our upstream business increased 2 percent over 2009, after increasing 7 percent the previous year. We continued to build for future growth by sanctioning development of four large deepwater projects — Jack/St. Malo, Big Foot and Tahiti 2 in the Gulf of Mexico, and Papa-Terra in Brazil. 

We also continued building a high-impact natural gas business, most notably in Australia with two world-class liquefied natural gas (LNG) projects, Gorgon and Wheatstone. Construction of the Gorgon facility on Barrow Island progressed toward 2014 startup while Wheatstone engineering work continued. A majority of our equity natural gas resources in both Gorgon and Wheatstone has been committed under long-term LNG sales contracts. Almost half of our natural gas portfolio is located in the Asia-Pacific region, positioning us as a long-term supplier to growing Asian markets. 

Our exploration and business development programs created significant growth opportunities in 2010. We added new resource opportunities in China, Liberia, the Black Sea, eastern Europe and Canada. In addition, we acquired Atlas Energy in February 2011 to develop shale gas reserves in the prolific U.S. Marcellus Shale in Pennsylvania, bringing our total acreage additions since late 2009 to 14 million acres. 

In our downstream business, we responded to challenging market conditions by