DBRS Confirms Chevron at AA, Rates Chevron’s Commercial Paper at R-1 (middle)

DBRS has today confirmed the rating for the Senior Unsecured Notes & Debentures of Chevron Corporation (CVX or the Company) at AA, and has assigned ratings of R-1 (middle) to the Commercial Paper of CVX and Chevron Funding Corporation, and ratings of AA to the Senior Unsecured Notes & Debentures of Chevron Canada Funding Company and Chevron Funding Corporation. All ratings have Stable trends. DBRS has also discontinued the Commercial Paper rating for Chevron Canada Capital Company as there is no commercial paper outstanding and CVX has no further plans to issue commercial paper in Canada. The ratings for Chevron Funding Corporation and Chevron Canada Funding Company are based on the guarantee of CVX, which is expected to have a stable business and conservative financial risk profile over the medium term. CVX’s ratings reflect the scale and diversity of the Company’s integrated operations as well as its very strong financial profile. Supported by high commodity prices, the Company has also maintained strong profitability over the past five years, in line with peer performance.

Total debt-to-capital and debt-to-cash flow ratios (including operating leases) were conservative at 12.3% and 0.41 times for the nine months ending September 30, 2007, which compares favorably with other large multi-national oil companies. The Company expects to spend $19.6 billion on capital spending in 2007, which should be internally funded, with more than half that amount ($10.6 billion) budgeted for international exploration and production. Cash flow has been more than sufficient to cover the Company’s capital spending, dividends and share repurchases, with both cash flow and other credit metrics benefiting largely from the acquisition of Unocal Corporation in August 2005 and strong oil prices. DBRS believes CVX’s recently announced share buyback program totaling $15 billion over three years will also be manageable within the context of its current ratings, as with previous common share buyback programs.

The Company has a large portfolio of upstream growth prospects in diversified mature and developing regions. Rising production from exploration success and development activities is expected to offset declining production from mature North American and North Sea basins, where CVX has been divesting its mature properties. Over the medium term, CVX expects production to rise 3% annually through 2010, largely due to new or increasing production from major projects in Azerbaijan (2008), Nigeria (2008 to 2012) and Australia (2008 to 2012). Reserve replacement is also expected to exceed 100% of production over the next few years as the Company books proved reserves related to these major projects. Earnings and cash flow will remain sensitive to fluctuations in crude oil and natural gas prices as well as volatile refined product margins. However, CVX continues to benefit from strong industry conditions, and is well positioned to manage an industry downturn should it arise. CVX’s per-unit production costs are increasing, reflecting industry trends, while poor internal reserve replacement performance has resulted in above-average reserve replacement costs, especially in the United States. Given the Company’s significant international presence, CVX is also exposed to further political interference including rising state ownership, resource nationalization, as well as sharply increased tax burdens as evidenced in countries such as Venezuela.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The ratings for Chevron Canada Capital Company, Chevron Canada Funding Company and Chevron Funding Corporation are based on the guarantee of Chevron Corporation.