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Chevron's Strategic Planning.

Chevron's goals for the five-year period 2000 through 2004 is to be No 1 in total stockholder return relative to its peers and to achieve a minimum 12 per cent return on capital employed while continuing to grow. Success requires profitable earnings-per-share growth greater than our competitors', and they are convinced that they have the organisation and the will to succeed.

Priorities driving our (Chevron's) success. Achieving these goals will require superior performance in four areas: operational excellence, cost reduction, capital stewardship and profitable growth - all driven by organisational capability.

1. Operational excellence: Safe, reliable, efficient operations companywide are essential to achieving our objectives. They are, in fact, the foundation for growth. This is Job No. 1 for all of us day in and day out. We are committed to ensuring continued and sustainable improvements in our operations.

2. Cost reduction: We will build on last year's $500 million cost-reduction effort, much of which will continue to show rewards in the coming years. For example, we are just starting to reap the benefits from our new global procurement process and from our restructured support functions.

3. Capital stewardship: We reinvest about $5 billion annually in our business. It's essential that we be wise stewards of our investors' money. We have a world-class project-management process that is helping us improve greatly in two areas: decision quality - ensuring that the right people have the right data when deciding whether a project should proceed; and project execution - excelling in engineering, construction and start-up so that we employ capital most efficiently. The start-up of Angola's deepwater Kuito Field - under budget and just two and a half years after discovery - was a remarkable achievement and is evidence of progress in this area.

4. Profitable growth: Delivering on operational excellence, cost reduction and capital stewardship will provide earnings growth. But we must do more.

We will seek continued profitable growth in our core businesses, particularly international upstream. We will seek acquisitions and alliances that enhance growth. In February, we announced a joint venture between our chemicals business and that of Phillips Petroleum Company. The new $6 billion company will be a world-class competitor in petrochemicals. We will also capture new opportunities. Currently, we're growing in the power and gas business through Dynegy, in which we hold a 28 per cent interest. We're also investing in new process technologies, including a method for converting natural gas to liquids. (Chevron annual report, April 2000)
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Publication:APS Review Oil Market Trends
Date:Oct 9, 2000
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