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FINANCIAL PERFORMANCE REVIEW A YEAR OF PROGRESS AND POSITIVE CHANGE

Weak global economies, restrained demand for petroleum products Despite many challenges, 2002 was a year of progress and positive
and lower production all took a toll on 2002 earnings. For the year, change. Perhaps the most important achievement was the successful
ChevronTexaco reported net income of $1.1 billion, compared with integration of the operations, organizations and people of Chevron
$3.3 billion in 2001. The company’s financial results were hurt by and Texaco. Throughout our global enterprise, we came together as
$3.3 billion of charges from special items. About $2.3 billion of a unified company with shared values and a common vision.
these charges were related to our 26 percent ownership of Dynegy
Inc., an energy trading company that saw a dramatic decline in Our employees are in contact with colleagues worldwide – learning
its market value due to the near collapse of the energy merchant from each other, developing better ways to operate and quickly
sector. applying new ideas throughout the entire enterprise. This empowered
organization is one of our greatest competitive strengths. Photos,
Exploration and production income of $4.6 billion was about top to bottom: Trading floor, London; Kern River oil field, San
6 percent higher than in 2001, reflecting lower asset write- Joaquin Valley, California
downs, which were offset partially by a decline in oil-equivalent
production and weaker U.S. natural gas prices. Refining, marketing We also marked several other milestones during the year:
and transportation posted a loss of nearly $400 million in 2002,
compared with income of $1.8 billion the previous year. The poor • Our exploration program benefited from the best technology,
2002 results reflected weak margins for refined products, which processes and practices of the pre-merger companies. Some of
early in the year fell to their lowest levels in more than a decade. our most notable successes were achieved in the deep waters
In chemicals, the combined income of Chevron Oronite, which of West Africa and the U.S. Gulf of Mexico, including the Usan
produces additives for fuels and lubricants, and our 50 percent- and Aparo discoveries offshore Nigeria, the Gabela and Negage
owned Chevron Phillips Chemical Company LLC was $86 million, discoveries offshore Angola, and the Tahiti and Great White
compared with a $128 million loss the previous year. Although discoveries in the Gulf of Mexico.
results improved, the commodity chemicals industry continues to
be affected by weak demand and excess manufacturing capacity.

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