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CHEVRON CEO EMPHASIZES COST CUTTING, SHIFT OVERSEAS; '92 SPENDING PLANS TRIMMED BY $600 MILLION TO $4.7 BILLION

 CHEVRON CEO EMPHASIZES COST CUTTING, SHIFT OVERSEAS;
 '92 SPENDING PLANS TRIMMED BY $600 MILLION TO $4.7 BILLION
 NEW YORK, April 8 /PRNewswire/ -- Chevron Corporation will emerge from its aggressive cost-cutting program and an increasing business shift abroad "leaner, better focused and well-positioned to take advantage of any turnaround in oil industry fundamentals," Chairman and CEO Kenneth T. Derr told a group of analysts here today.
 At a meeting with about 100 analysts who follow Chevron and the oil industry, Derr and other senior executives outlined steps the company is taking to ensure a stronger competitive position and improved results, including better return to stockholders:
 -- Planned capital and exploratory spending this year is being cut to $4.7 billion, down 11 percent from a previously announced budget of $5.3 billion. The new budget enables Chevron to pursue its most attractive investments while acknowledging that current industry conditions constrain the company from pursuing all opportunities.
 -- Cost-cutting throughout the company is expected to reduce operating expenses by at least $600 million or $.50 per barrel by the third quarter of 1993. "Operating costs are being attacked everywhere in the company, with an eye on achieving significant, permanent cost reductions," said Derr. "We've taken aim at all high- cost work processes, looking to eliminate unnecessary work that doesn't help us produce or sell products and to improve the way we do the work that remains."
 (Last January, Derr held a live teleconference by satellite with thousands of employees to explain the need to reduce operating expenses. Chevron has since announced an early retirement incentive to some 35,000 U.S. employees, and a major streamlining of its Port Arthur, Texas, refinery.)
 -- In exploration and production ("upstream") activities, Chevron is continuing to shift its focus from the United States. This year, some 60 percent of Chevron's upstream spending will be outside the United States, where the company is concentrating on several important oil production and development opportunities, among them projects in Papua New Guinea, Indonesia, Angola, Nigeria, Australia and the U.K. North Sea.
 Chevron Overseas Petroleum Company President Richard Matzke told the group that growth in international oil and gas production is expected to be about 25 percent in the coming five years. He also pointed out that Chevron increased its proved oil and gas reserves outside the United States in 1991, and that non-U.S. production was 6 percent higher in 1991 than it was in 1990.
 In the U.S. upstream, Chevron is in the midst of a previously announced major asset sale and restructuring program that will leave the company with about 400 strategically important U.S. oil and natural gas fields -- down from about 3,400 fields in 1985 after Chevron acquired Gulf. Derr pointed out that just three years ago, 80 percent of the company's upstream assets were in the United States, while today, about two thirds are in the U.S.
 One major goal is to cut the cost of each barrel of oil produced to improve competitiveness. Chevron U.S.A. Production Company President Ray Galvin stressed to analysts, however, that the expected sale this year of 60 percent of Chevron's remaining U.S. fields will reduce the company's U.S. oil reserves and production by only about 20 percent.
 "Someday in the not too distant future, we'll look back at the late '80s and early '90s as a period of historic, fundamental change for the U.S. oil industry," said Derr of the dramatic transition the business is undergoing. "Simply put, the oil business is mostly moving overseas, partly by choice, but mostly because we have no choice. High potential areas for finding new reserves are now off limits to us. We have a responsibility to our stockholders to pursue business opportunities that make commercial sense, and most of those opportunities are outside the United States.
 -- In the refining and marketing business ("downstream"), the company continues to rationalize its operations in order to ensure a stronger competitive position and to reduce that part of the company's need for future major capital outlays. Derr cited previously announced steps, such as the major restructuring of the Port Arthur refinery.
 Chevron U.S.A. Products Company President Dave Hoyer told analysts that profitability in the U.S. downstream business will improve as supplies of refined products tighten. He predicted that supplies will tighten for a variety of reasons, the biggest being the requirement that U.S. refiners spend some $15 billion to $20 billion in the next five years to comply with marginally beneficial but costly environmental regulations covering motor fuels such as gasoline and diesel.
 Hoyer said requirements for cleaner-burning products will make it harder for imported fuels to meet U.S. specifications, and that the huge capital investments required to bring U.S. refineries into compliance will force marginal plants to close, putting pressure on supplies.
 Derr told analysts that actions Chevron is taking now, plus any upturn in currently depressed industry conditions -- such as low crude oil and natural gas prices -- will improve the company's financial results. He said he believes depressed prices already have hit bottom, and will improve.
 He also pointed to several bright spots, such as:
 -- Chevron ranked first among its competitors for 1989 through the first quarter of this year with a total annual return to stockholders of 16 percent.
 -- The company's quarterly dividend to stockholders has increased in each of the last four years and is up 37.5 percent during that time.
 -- Petroleum earnings were up outside the United States last year, and the company's 50-percent joint venture, Caltex Petroleum Corporation, is expected to increase sales and maintain its strong market share in the eastern hemisphere.
 -0- 4/8/92
 /CONTACT: Jan Golon, 212-303-3833; Sherri Zippay, 415-894-4581; or Bonnie Chaikind, 415-894-1200, all of Chevron/
 (CHV) CO: Chevron Corporation ST: California IN: OIL SU:


RM -- SF010 -- 6320 04/08/92 14:01 EDT
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Date:Apr 8, 1992
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