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    Net Income Up at ChevronTexaco

    Downstream earnings decrease due to refinery downtime.

    SAN RAMON, Calif. -- ChevronTexaco Corp. reported net income of $2.7 billion for the first quarter 2005, compared with net income of $2.6 billion in the year-ago period. The 2004 quarter included a special-item charge of $55 million related to a litigation matter.

    Sales and other operating revenues in the first quarter 2005 were $40 billion, up 22 percent from the same period in 2004, mainly as a result of higher prices for crude oil, natural gas and refined products.

    “Quarterly profits for our upstream operations again benefited from strong prices for both crude oil and natural gas,” said chairman and CEO Dave O'Reilly. “Our downstream earnings in the quarter, however, were adversely affected by the impacts of planned and unplanned downtime at several of our refineries.”

    U.S. refining, marketing and transportation earnings of $58 million decreased $218 million from last year's first quarter. The company's refined-product margins were lower in the 2005 period, primarily for West Coast operations. Included in the lower margins was the effect of planned and unplanned downtime at the company's refineries in El Segundo and Richmond, Calif. Margins in the East were modestly higher, despite planned downtime at the company's Pascagoula, Miss., refinery. Total operating expenses were higher in the 2005 period, largely due to costs for refinery maintenance.

    Sales volumes for refined products were essentially unchanged at 1,462,000 barrels per day. Sales of branded gasoline increased 7 percent from the 2004 quarter to 583,000 barrels per day. The increase was attributable to the reintroduction of the Texaco brand in the Southeast, the company reported.

    On a conference call with investors, Randy Richards, manager of investor relations for Chevron Texaco, also noted that despite consumer trends toward cheaper, unbranded gasoline, the company picked up market share during the quarter relative to other major competitors.

    “A Year of Great Accomplishment”

    Earlier in the week, O'Reilly told stockholders at the company's 2005 annual meeting that 2004 was a year of great accomplishment and that the execution of sound corporate strategies was driving the company in the right direction.

    "We have the right strategies, the right people, a strong queue of projects and great momentum," O'Reilly said.

    O'Reilly said that the recently announced Unocal Corp. acquisition will provide immediate and long-term value for stockholders, increasing proved oil-equivalent reserves about 15 percent to approximately 13 billion barrels and boosting expected net oil-equivalent production to about 3 million barrels per day in 2006.

    "This is a rare opportunity to acquire a unique independent with supermajor assets that complement our strategies and core assets," O'Reilly said. "We are building on tremendous financial strength, a strong asset base, our world-class people, and our commitment to a successful long-term strategic direction and partnerships around the world."

    Patricia Woertz, executive vice president, Downstream, said business improvements in ChevronTexaco's refining organization supplemented strong market conditions to deliver record performance and earnings. "In 2004 our refinery utilization rate was 2 percent higher than in 2003," she said, adding that the company had been able to create additional value by improving operating efficiencies.

    Woertz said other important highlights in 2004 included ChevronTexaco regaining the right to market fuels in the United States under the Texaco brand; the Chevron fuel brand becoming the first in the United States and Canada to be named "TOP TIER" by four of the world's leading automakers; and the signing of a preliminary agreement in China that will lead to the expansion of the Caltex brand there.

    ChevronTexaco, based in San Ramon, Calif., has a total of 24,000 service stations in 90 countries worldwide.

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