UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993 Commission file number 1-27
T e x a c o I n c .
(Exact name of registrant as specified in its charter)
Delaware 74-1383447
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
2000 Westchester Avenue
White Plains, New York 10650
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 253-4000
-------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
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<S> <C>
Common Stock, par value $6.25 New York Stock Exchange
Midwest Stock Exchange
The Stock Exchange, London
Basle, Geneva and Zurich Exchanges
Amsterdam, Antwerp and Brussels Exchanges
Series C Variable Rate Cumulative
Preferred Stock New York Stock Exchange
Rights to Purchase Series D
Junior Participating
Preferred Stock New York Stock Exchange
6-7/8% Cumulative Guaranteed
Monthly Income Preferred Shares* New York Stock Exchange
8-1/2% Notes, due February 15, 2003** New York Stock Exchange
8-5/8% Debentures, due June 30, 2010** New York Stock Exchange
8.65% Notes, due January 30, 1998** New York Stock Exchange
9% Notes, due October 1, 1994** New York Stock Exchange
9% Notes, due November 15, 1996** New York Stock Exchange
9% Notes, due November 15, 1997** New York Stock Exchange
9% Notes, due December 15, 1999** New York Stock Exchange
9-3/4% Debentures, due
March 15, 2020** New York Stock Exchange
Extendible Notes, due June 1, 1999
(8-1/2% to June 1, 1998)** New York Stock Exchange
Extendible Notes, due March 1, 2000
(9.45% to March 1, 2000)** New York Stock Exchange
Extendible Notes, due
January 15, 2000
(8.95% to January 15, 2000)** New York Stock Exchange
<FN>
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* Issued by Texaco Capital LLC and the payments of dividends and payments
on liquidation or redemption are guaranteed by Texaco Inc.
** Issued by Texaco Capital Inc. and unconditionally guaranteed by
Texaco Inc.
</TABLE>
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The Registrant (1) HAS FILED all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months and (2) HAS BEEN subject to such filing requirements for the past
90 days.
Disclosure of delinquent filers in this Form 10-K, definitive proxy
statement or information statements incorporated by reference in Part III
of this Form 10-K pursuant to Item 405 of Regulation S-K IS NOT applicable.
The aggregate market value of Texaco Inc. Common Stock held by
non-affiliates at the close of business on February 28, 1994, based on the
New York Stock Exchange composite sales price, was approximately
$16,803,000,000. The market value of Series B ESOP Convertible Preferred
Stock held in the Employees Thrift Plan of Texaco Inc. at the close of
business on February 28, 1994, totaled approximately $669,901,000. The
liquidation value of Series F ESOP Convertible Preferred Stock held in the
Employees Savings Plan of Texaco Inc. at the close of business on February
28, 1994, totaled approximately $48,436,000.
As of February 28, 1994, there were 259,169,722 outstanding shares of
Texaco Inc. Common Stock -- par value $6.25.
Portions of the following documents are incorporated herein by reference:
Part of
Document Form 10-K
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Texaco Inc. Annual Report to Stockholders for the year 1993 I, II
Proxy Statement of Texaco Inc. relating to the 1994 Annual
Meeting of Stockholders III
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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Texaco Inc.
Texaco Inc. Year 1993 Texaco Inc.
Year 1993 Annual Report 1994
Form 10-K Item Form 10-K To Stockholders Proxy Statement
- -------------- --------- --------------- ---------------
PART I
<S> <C> <C> <C>
1. Business
Development and Description of Business 1-4 _ _
2. Properties
Exploration and Production Activities 5-16 _ _
Supplementary Exploration and Production Information 16-18 _ _
Manufacturing and Marketing Activities 19-29 _ _
Trading and Transportation Activities 29-30 _ _
Research and Development Activities 30-34 _ _
Alternate Energy Activities 34-36 _ _
Environmental, Health and Safety Activities 36-37 _ _
3. Legal Proceedings 38-39 _ _
4. Submission of Matters to a Vote of Security Holders 39 _ _
Executive Officers of the Registrant 40 _ _
PART II
5. Market for the Registrant's Common Equity
and Related Stockholder Matters 41 65 _
6. Selected Financial Data 41 64 _
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 41 24-33 _
8. Financial Statements 41 34-55 _
Supplementary Data - Oil and Gas Information 41 56-62 _
- Selected Quarterly Financial Results 41 63 _
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 41 _ _
PART III
10. Directors and Executive Officers of the Registrant 41 _ *
11. Executive Compensation 41 _ *
12. Security Ownership of Certain Beneficial Owners
and Management 41 _ *
13. Certain Relationships and Related Transactions 41 _ *
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 42-44 _ _
<FN>
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* Information provided under these captions will be contained in the forthcoming Proxy
Statement of Texaco Inc. relating to the 1994 Annual Meeting of Stockholders.
</TABLE>
<PAGE>
PART I
TEXACO INC.
Item 1. Business
DEVELOPMENT AND DESCRIPTION OF BUSINESS
Texaco Inc. was incorporated in Delaware on August 26, 1926, as The
Texas Corporation. Its name was changed in 1941 to The Texas Company and in
1959 to Texaco Inc. It is the successor of a corporation incorporated in
Texas in 1902. As used herein and within the portions of the documents
incorporated by reference, the term Texaco Inc. refers solely to Texaco Inc.,
a Delaware corporation. The use of such terms as "Texaco," "company,"
"division," "organization," "we," "us," "our" and "its," when referring
either to Texaco Inc. and its consolidated subsidiaries or to subsidiaries
and affiliates either individually or collectively, is only for convenience
and is not intended to describe legal relationships.
Texaco Inc. and its subsidiary companies, together with affiliates
owned 50% or less, represent a vertically integrated enterprise principally
engaged in the worldwide exploration for and production, transportation,
refining and marketing of crude oil, natural gas and petroleum products.
Texaco owns, leases, or has interests in extensive production, manufacturing,
marketing, transportation and other facilities throughout the world. A
description of the Company's worldwide operations follows in Item 2,
Properties, beginning on page 5. Additionally, information regarding sales
to significant affiliates and geographical financial data appear on pages 34
and 54, respectively, of Texaco Inc.'s 1993 Annual Report to Stockholders,
applicable portions of which are incorporated herein by reference. Except as
indicated under Items 1, 2, 3, 5, 6, 7, 8 and 14, no other data appearing in
the 1993 Annual Report to Stockholders are deemed to be filed as part of this
Annual Report on Form 10-K.
In the third quarter of 1993, Texaco made the determination that
substantially all of its worldwide chemical operations would be sold.
Memorandums of understanding were entered into with Huntsman Financial
Corporation ("Huntsman"), an affiliate of the Jon M. Huntsman Group of
Companies, for the sale of these operations. Except for the lubricant
additives portion of the chemical business, the sale to Huntsman is expected
to be completed in April 1994, subject to completing a definitive agreement
and obtaining any required governmental approvals. The sale of the lubricant
additives business is expected to take place by September 30, 1994. Texaco
has agreed to cooperate with Huntsman, at their request, to sell the lubricant
additives business to a third party.
In February 1989, Texaco completed the sale of its 78% interest in
Texaco Canada Inc., an integrated oil and gas company. Excluded from the
sale were a small number of former Texaco Canada Inc. properties that were
transfered to a newly formed company, Texaco Canada Petroleum Inc. In
December 1988, Texaco consummated the formation of Star Enterprise, a joint-
venture partnership for refining, distributing and marketing petroleum
products in 26 East and Gulf Coast states and the District of Columbia. In
June 1988, Texaco completed the sale of its 99.12% share of Deutsche Texaco
A.G., an integrated oil and gas company with operations in West Germany
and Dubai.
1
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Research Expenditures
Texaco Inc. and subsidiary companies' worldwide expenditures for
research, development and technical support for continuing operations amounted
to approximately $185 million in 1993 and $200 million in both 1992 and in
1991. These expenditures exclude amounts applicable to the discontinued
chemical operations of approximately $45 million in 1993 and $50 million in
both 1992 and 1991.
Environmental Expenditures
Information regarding capital expenditures of Texaco Inc. and
subsidiary companies, including equity in affiliates, during 1993, and
projections for 1994 and 1995, for air, water and solid waste pollution
abatement, and related environmental projects and facilities, is
incorporated herein by reference from page 29 of Texaco Inc.'s 1993
Annual Report to Stockholders.
Employees
The number of employees of Texaco Inc. and subsidiary companies
engaged in continuing operations as of December 31, 1993 totaled 32,514.
The comparable number of employees as of December 31, 1992 was 34,774. These
totals exclude some 2,400 employees in 1993 and 2,800 employees in 1992
involved in discontinued chemical operations.
Certain Factors Which May Affect Business
In recent years, a number of changes affecting the petroleum industry
have occurred both in the United States and abroad. In the United States and
other countries in which Texaco operates, various laws and regulations are
either now in force, in standby status or under consideration, dealing with
such matters as production restrictions, import and export controls, price
controls, crude oil and refined product allocations, refined product
specifications, environmental, health and safety regulations, retroactive and
prospective tax increases, cancellation of contract rights, expropriation of
property, divestiture of certain operations, foreign exchange rate changes
and restrictions as to convertibility of currencies, tariffs and other
international trade restrictions. The industry may also be affected by
strikes and other industrial disputes. All of these factors have contributed
to an environment of change both in the United States and abroad.
A number of legislative proposals are currently under consideration by
the U.S. Congress and various State legislatures. Although it is not possible
at this time to predict the ultimate form that any such proposals might take,
or the likelihood of their enactment, such legislation, if passed, could
adversely affect the petroleum industry and Texaco.
The world economy remained sluggish in 1993. Although the United
States economy grew at a modest 2.9% rate in 1993, Western Europe and Japan
slipped into recession, and the former Soviet Union continued to experience
large contractions in domestic output. The most robust economic expansion
continued to occur in the developing and newly-industrialized nations of the
Pacific Rim.
2
<PAGE>
Largely reflecting the recessions in Western Europe and Japan, and
economic depression in the former Soviet Union, world oil demand declined
from 67.1 million BPD in 1992 to 66.9 million BPD in 1993. Demand in the
industrial nations as a whole fell slightly: U.S. oil demand rose only 0.5%
in 1993 from 17.1 million BPD to 17.2 million BPD, while combined oil demand
in Western Europe and Japan declined by 0.2 million BPD, offsetting the small
U.S. gain.
<TABLE>
<CAPTION>
WORLD PETROLEUM DEMAND
(MILLION BPD)
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Industrial Nations 38.9 38.9 38.3
Developing Nations 21.2 20.1 18.9
Former Soviet Bloc 6.8 8.1 9.6
-------------------------------
TOTAL 66.9 67.1 66.8
</TABLE>
Mirroring the severe economic conditions in the former Soviet Union
and cutbacks in Russian exports, oil demand in the former Soviet bloc
(including Eastern Europe) averaged 6.8 million BPD in 1993, a drastic fall
of 17% versus 1992. On the other hand, demand in China and the other
developing countries continued to grow strongly.
On the supply side, total non-OPEC crude oil production continued its
decline of the last several years, slipping from 35.9 to 35.1 million BPD,
primarily because Russian output fell by over 1 million BPD from 1992
levels. However, non-OPEC crude production excluding Russia increased at
rates not seen in many years, buoyed by record levels of production in the
North Sea and significant increases in other areas.
Notwithstanding the decline in world oil consumption and renewed
expansion in non-OPEC supplies outside of the former Soviet Union, OPEC
crude production rose to 24.7 million BPD in 1993, 0.7 million BPD higher
than 1992 levels.
Crude oil prices were stable during the first half of 1993, but
declined sharply in the latter part of the year as a result of a general
market perception of surplus oil supplies, the steady accumulation of excess
oil inventories, and the continued possibility of Iraqi oil being added to
an already saturated oil market. The spot price for West Texas Intermediate
(WTI) dropped by almost 25% between June 1993 and December 1993, to a low of
$14.50 per barrel. For the year as a whole, WTI averaged $18.44 per barrel,
10% lower than the previous year.
Despite the weakness in global oil demand, refiners' margins showed
general improvement in most regions of the world, aided by lower crude
prices.
Near-Term Outlook
World economic growth is expected to pick up somewhat in 1994 as
the U.S. expansion accelerates and Western Europe and Japan emerge from
recession. Growth in much of the developing world should also continue to be
robust. However, the economies of the former Soviet Union are expected to
contract further in 1994, as economic restructuring continues.
Spurred by continued economic expansion and exceptionally cold
weather early in 1994, U.S. oil demand is expected to increase by about
0.3 million BPD to 17.5 million BPD. The beginnings of economic recovery in
Western Europe and Japan are expected to add another 0.2 million BPD to
world oil demand. As in 1993, the most significant growth in oil demand will
be in the developing countries, where demand is expected to grow by 0.7
million BPD. These increases will be partially offset by declines in oil
consumption in the former Soviet bloc, and world oil demand in total should
rise by about 0.6 million BPD in 1994.
<TABLE>
<CAPTION>
NEAR-TERM WORLD SUPPLY/DEMAND BALANCE
(MILLION BPD)
1994 1993
---- ----
<S> <C> <C>
Demand 67.5 66.9
Supply
Non-OPEC Crude 34.9 35.1
OPEC Crude 24.7 24.7
Other Liquids 7.9 7.7
------------------
Total Supply 67.5 67.5
Stock Change -- 0.6
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</TABLE>
3
<PAGE>
After the steady decline since the late 1980s, non-OPEC liquids
production is likely to remain more-or-less flat in 1994 at about the 40.5
million BPD level. Former Soviet oil output will continue to fall, but at a
slower rate than in 1993. The rate of decline in U.S. crude production
should also moderate. These declines will be offset by strong gains in the
U.K. sector of the North Sea and increases in many other non-OPEC producing
countries.
The outlook for OPEC production hinges largely on whether the OPEC
members, battered financially by recent price declines, exercise renewed
restraint. Posturing for an eventual resumption of Iraqi exports could well
influence the behavior of key Arabian Gulf producers.
After years of a market characterized by excess deliverability, the
U.S. natural gas supply/demand continued to move into closer balance in 1993.
Demand for natural gas is expected to grow as the U.S. economy strengthens
and requirements for this environmentally-preferred fuel expand. Domestic
natural gas supplies will continue to be augmented by imports from Canada.
-------------------
In addition to the above factors, operations and investments
in some foreign areas are subject to political and business risks. The
nature of these risks varies from country to country and from time to time.
The overall effect of the foregoing on Texaco cannot be predicted
with any certainty.
4
<PAGE>
Item 2. Properties
EXPLORATION AND PRODUCTION ACTIVITIES
Worldwide, Texaco had a strong reserve replacement ratio of 112% of its
combined net oil and natural gas production in 1993, continuing the five-
year trend in which it has replaced an average of 106% of production. Finding
and development costs of $3.84 per barrel of oil equivalent during the year
sustained the fine record of the past five years in which Texaco has averaged
a competitive $4.10 a barrel.
This performance reflects the success of a value-added strategy through
which pivotal investments of recent years--such as those in the United States,
the United Kingdom North Sea and Indonesia--are adding new reserves and
production.
Texaco's exploration and producing activities are conducted by
geographical divisions operating in the United States, Europe, Latin America
and West Africa, and the Middle East and Far East. The Frontier Exploration
Department has worldwide responsibility for new-venture exploration outside of
established producing areas.
UNITED STATES
In the United States, initiatives for developing and producing existing
oil and gas reserves as efficiently as possible, as well as exploiting new
growth opportunities, contributed to a strong performance in 1993:
o Daily net production in the United States averaged 423,000 barrels of crude
oil and natural gas liquids, and 1.7 billion cubic feet of natural gas
available for sale. On a total barrels of oil equivalent basis, this
reflects a 2% production decline from 1992, a significant improvement over
the historic rate of decline.
o A continuing drive to maximize the cash and earnings margins of each barrel
of oil equivalent produced has contributed to significant expense reductions
during the past three years, reinforcing the trend in which lifting costs
have declined 45 cents per barrel of oil equivalent.
o Empowered teams of employees, using innovative technologies, are keeping
the company at or near the top of its peer group in finding and development
costs.
Texaco is strategically positioned in a number of important areas of the
United States. They include:
o Onshore and offshore areas along the Gulf Coasts of Texas, Louisiana and
Alabama. This area provides approximately 32% of the company's U.S. oil
production and 66% of its natural gas.
o The Permian Basin of West Texas and New Mexico, a mature area with large
potential for additional development activity and enhanced recovery
programs.
o Southern California, where heavy oil production from steamflood operations
onshore, supplemented by offshore production from the Point Arguello field,
totaled 127,000 barrels of oil and 79 million cubic feet of natural gas
a day.
Gulf of Mexico
The Gulf Coast area is Texaco's largest production center in the United
States. These operations include substantial assets both on land and in state
and federal waters offshore.
5
<PAGE>
Supported by new field development, as well as revitalization efforts
on more mature properties, production in this area reached 135,000 barrels of
liquids and nearly 1.2 billion cubic feet of natural gas a day in 1993.
Here, as in other areas of the U.S. upstream, operations are managed by
multi-disciplinary teams of professionals who are responsible for the progress
and profitability of their asset portfolios.
Onshore
In the onshore operations along the Gulf Coast, efforts by these teams
are adding value to the reserve base and creating a leadership position for
Texaco.
o Texaco is capitalizing on its increasing expertise in horizontal drilling
to develop a 1983 discovery at the 100,000-acre Brookeland field in the
Austin Chalk play of East Texas. There, geologists and field engineers are
expanding on this technology by splitting each well into two horizontal
sections in the productive zones at a cost lower than drilling two separate
wells. At the end of 1993, production at Brookeland, a newly created core
production area for Texaco, was 27 million cubic feet of gas and 3,700
barrels of oil a day.
o The Port Neches field is the site of a breakthrough enhanced recovery
project in which carbon dioxide is being injected into field reservoirs.
This project, selected for funding by the U.S. Department of Energy, is
expected to provide information about future applications of CO2 injection
technology in the Gulf Coast area.
o At the McAllen Ranch field in South Texas, new technology continues to add
substantial value. It was Texaco's hydraulic fracturing technology, pioneered
in the 1970s, that made natural gas production possible here.
Now, a team of engineers and geologists, working with an integrated
reservoir management tool developed by Texaco research, is identifying new
pockets of potential recoverable reserves. Using data from a 3-D seismic
survey and other detailed reservoir information, they are modeling the field's
reservoirs in exacting detail. Aided by this advanced tool, they pinpointed
the locations of two new wells in 1993 and plan to identify more drilling
sites. Just as important, Texaco expects the computer modeling technique
to assist in identifying new oil and gas reserves in other mature fields
worldwide.
Offshore
Texaco has been involved in offshore operations in the Gulf of Mexico
since the 1950s and currently has equity interests in over 300 platforms.
Some of the most exciting technology in the industry is being applied in this
region, where the company has a strong acreage position.
Through the use of 3-D seismic surveys and new drilling, Texaco is re-
vitalizing currently productive properties, such as the Teal and Tiger Shoal
fields. At Tiger Shoal, efforts during 1993 resulted in reserve additions of
over 100 billion cubic feet of gas.
With applied technology, field engineers have been able to double the
potential recoverable reserves from the 50%-owned Tick field on the Garden
Banks Block 189. The Tick platform reached productive capacity of 10,000
barrels of oil a day in 1993.
A major development during 1994 will be the installation of a platform
in 773 feet of water on the one-third-owned Hercules Prospect, on the Ewing
Bank Block 873, which was discovered in 1991. The platform is expected to
reach peak production of 30,000 barrels of oil a day in 1996.
6
<PAGE>
The timely completion of this project, from discovery to first produc-
tion, reflects a commitment by Texaco to reduce cycle time in processing data
and initiating development projects. Facilitating that effort are the growing
number of computer workstations that are being used for this activity. This
transition from mainframe computing equipment is realizing significant
cost savings.
Texaco's leadership in offshore production technologies is exemplified
by its role in coordinating the DeepStar program, a cooperative effort by 16
major companies pooling technologies to recover potentially huge oil and gas
reserves farther from shore in the Gulf of Mexico. This approach is based in
part on Texaco's work to develop sophisticated metering and pumping systems
that will reduce the costs of offshore installations.
California
The Kern River field in California is one of the oldest in the United
States. It is also Texaco's largest U.S. reserve asset, with production in
1993 averaging over 80,000 barrels of oil a day. The flow of heavy crude from
some 4,600 producing wells in this giant field is assisted by the continuous
injection of steam into its shallow reservoirs through more than 1,000 inject-
ion wells.
Nearly everything associated with Kern River operations is large:
o Some 750,000 barrels of water a day are produced with the oil.
o Mixed in with the oil and water are about two tons of sand a day.
o The field maintenance shops repair an average of 900 well pumps each month.
The challenges posed by these numbers also offer opportunities on which
field management teams of engineers and operating and maintenance personnel
are capitalizing to cut costs and improve efficiency.
The Kern River field has one of the industry's finest automated well-
testing systems. Each of 172 automated well-test sites can measure the flow
of liquids and the oil content from 36 wells into a holding tank. By identify-
ing any wells in which production begins to drop off, this system facilit-
ates the maintenance process.
The Kern River operation is strengthened by its partnership with Texaco's
research organization, which provides the most advanced technologies for
increasing production and adding value to the reserves base. During 1993, the
researchers conducted pilot studies for a system to measure the temperature
in wells, a development that will provide new efficiencies through better
calibration of heat distribution and, as a result, a reduction in steam use
and utility costs.
Together, these and other advanced technologies developed at Kern River
have cut the cost of chemicals, labor and electricity at the field. Per barrel
production costs have declined by more than 16% since 1990.
The continuing development and refinement of technologies to better
manage the flow of steam through reservoirs, to reduce the associated
production of water with the crude oil, and to apply horizontal drilling all
have the potential for significantly improving the production and ultimate
recovery of oil.
7
<PAGE>
West Texas and New Mexico
Programs in the Permian Basin of West Texas and New Mexico, where Texaco
has operated for nearly 70 years, include blending a time-tested technique,
waterflooding, with modern approaches to field management.
Initiated in 1992, the Permian Basin waterflood program will include 24
individual waterflood projects over a 10-year period. This enterprise is ex-
pected to add as much as 11,000 barrels a day of new production by 2004, and
an estimated 64 million barrels of crude oil reserves.
There is also more potential for adding reserves in the Permian Basin
through low-risk exploration by applying 3-D seismic technology and new
wildcat drilling. Texaco has had a number of recent successes with this
program, including:
o The drilling of three successful discovery wells at the Wolfcamp Trend in
West Texas.
o Several wildcat discoveries in the Teague North field in New Mexico. A
drilling and development program at the field is expected to add more than
8.2 million barrels of new reserves.
While advanced seismic technologies are now a fundamental tool for oil
and gas exploration, the application of these techniques to exploitation
drilling in proven areas can also yield impressive results. Of particular
note is Texaco's focus on the development of natural gas reserves in proven
areas of West Texas. Between mid-1992 and the end of 1993, the company drilled
over 135 wells in the Conger and Ozona fields, adding some 109 billion cubic
feet of gas reserves, as well as 8.2 million barrels of liquid reserves, at
industry-competitive costs.
As prices for natural gas continue an upward trend, the expansion of
Texaco's activities in other areas of the United States reflects the commit-
ment to increase U.S. reserves. They include:
o Expanding production from the gas-rich Mobile Bay area of Alabama.
o Exploration drilling at the Stagecoach Draw prospect in Wyoming, where
Texaco is taking a fast-track approach to delineating the boundaries of a
1993 discovery.
Natural Gas Operations
Texaco's financial strength, natural gas reserves position and reliability
have traditionally held significant value for natural gas customers.
When the Federal Energy Regulatory Commission (FERC) implemented its
Order 636 in November 1993, the natural gas industry completed a transition
from a world of regulation and government oversight to a more market-responsive
environment characterized by open access transportation, individualized
pipeline services and deregulated commodity pricing.
To capitalize on the new growth opportunities flowing from the FERC action
and the strategic location of Texaco's resources and natural gas marketing
expertise in the Gulf Coast area, Texaco, early in 1994, formed the Gulf Coast
Star Center, a one-stop marketplace for consumers of natural gas and related
services. The Gulf Coast Star Center consists of Texaco's natural gas trans-
portation, storage, processing and marketing operations along the Gulf Coast.
8
<PAGE>
The centerpiece of this operation is the wholly owned Bridgeline Gas Distri-
bution LLC. Bridgeline is a local distribution company whose principal asset
is an intrastate pipeline system serving Louisiana's industrial corridor with
over 60 end-user interconnects and average on-system demand of nearly 2
billion cubic feet of natural gas a day. Bridgeline is the leading marketer
to Louisiana industrial customers. Bridgeline received FERC approval in 1993
to offer open-access transportation and storage services, allowing it to
receive and transport gas to both interstate and intrastate pipelines.
The system, including Bridgeline's 7.2 billion cubic foot storage facility
in Sorrento, Louisiana, now interconnects virtually every major pipeline in the
region. This provides the ability to move gas from the production area through
pipelines serving the densely populated industrial areas of the East Coast and
Midwest.
Texaco's pipeline grid serving the Gulf Coast area includes its Sabine Pipe
Line Company, an interstate pipeline which owns and operates the Henry Hub,
the official standard delivery mechanism for the New York Mercantile Exchange
natural gas futures contracts. Sabine interconnects with 38 interstate and
intrastate pipelines serving the Gulf Coast, the Midwest, the South and the
East Coast.
In addition to the strategic value provided by Bridgeline and Sabine, Texaco
also provides natural gas processing and natural gas liquids fractionation
services through its wholly owned Henry, Floodway and Paradis plants. In 1993,
these plants processed 708 million cubic feet of natural gas a day and fract-
ionated 11.2 million barrels of natural gas liquids.
Through its Gulf Coast Star Center, Texaco provides natural gas customers
with access to an array of products and services and "well-head to burner-
tip" expertise combining the reliability of a producer with the flexibility
of a marketer.
Sabine is further reinforcing its role as an administrator of natural gas
hubs and market centers by working with CNG Transmission Corporation to
establish and operate a market center on CNG's 7,400-mile interstate pipeline
system. CNG's strategic location and its large gas storage capability make it
an ideal location for the development of a market center in the northeastern
states.
Illustrative of an emerging Texaco strategy to aggressively seek out inter-
national natural gas and liquid petroleum gas (LPG) markets is the recent
expansion of the Ferndale LPG Storage Terminal near Anacortes, Washington, to
provide additional import and export capabilities. Growing demand for propane
and butane as fuels for heating, transportation and chemical feedstocks in
Latin American and Pacific Rim nations has created a profitable niche market
for the terminal, where annual throughput of LPG is expected to increase by
one million barrels.
OTHER WESTERN HEMISPHERE
Latin America
The acceleration of political and economic changes that encourage foreign
investment in many Latin American nations increasingly present excellent
opportunities for petroleum companies.
In 1993, Texaco's net production averaged more than 18,500 barrels of
oil and 117 million cubic feet of salable natural gas a day in Colombia and
Trinidad. Expansion of producing capacity, together with the growth of
infrastructure and demand in both countries, should contribute to a potential
increase in gas sales in the region.
The company is also pursuing exploration programs or new business
ventures in Argentina, Venezuela, Peru and Bolivia.
9
<PAGE>
In Colombia, Texaco's regional base of upstream operations in Latin
America, the company's position has been revitalized through the optimizat-
ion of its core businesses. At the giant Chuchupa gas field, Texaco completed
the country's first offshore horizontal well, adding more than 60 million
cubic feet of gas a day to the field's capacity.
During 1993, Texaco's daily net gas production from the area averaged
109 million cubic feet available for sale, up slightly from 1992. New markets
for this expanded production capacity are being developed. As the Colombian
Government continues to extend its gas transmission pipeline system into the
interior, for example, Texaco will be in a position to supply additional gas
for this growing market.
Texaco also operates four fields in the Colombian interior with in-
terests ranging from 50% to 100%. Texaco's net equity production from these
fields averaged 9,000 barrels of oil a day in 1993. The Teca, Nare and
Cocorna heavy oil fields in the Middle Magdalena Valley--under cyclic
steam injection since 1970--are Texaco's core production and reserve base
in Colombia. In 1992, Texaco initiated a pilot steam injection program in the
Nare field; expansion to the entire field will depend upon market conditions.
In an effort to add further value to its core businesses in Colombia,
the company has successfully negotiated the lifting of restrictions imposed
by the Government on its heavy oil production.
Expanding core production areas
A focus on low-risk exploration continues as a strategic thrust in areas
of Latin America that have high potential for expanding productive core areas.
The company plans to acquire new seismic data on its Puerto Boyaca block
on the south side of Colombia's Velasquez field, a mature property with
existing processing and transportation infrastructure.
In Trinidad, Texaco is evaluating a recent 3-D seismic survey to deter-
mine the potential for extending the limits of existing oil fields in the
Trinmar area, off the country's southwest coast. Trinmar, a mature producing
area one-third-owned by Texaco, is a joint venture with Petrotrin, the govern-
ment oil company. Texaco's net equity production averaged 9,500 barrels a day
in 1993.
Texaco's 50% interest, with British Gas, in the development of the large
Dolphin natural gas field off the eastern coast of Trinidad reflects a major
thrust of Texaco's worldwide upstream strategy.
Located 60 miles offshore, the Dolphin field is estimated to contain
reserves of more than one trillion cubic feet of gas. Development of this
field will involve placing a platform in 400 feet of water and connecting it
to an existing pipeline system 42 miles away.
First Dolphin field production is scheduled for 1996. With daily pro-
duction expected to peak at about 300 million cubic feet a day, of which
Texaco's net equity production would be 128 million cubic feet a day, Texaco
will be a major participant in the growing natural gas market of Trinidad and
Tobago.
Canada
Texaco Canada Petroleum Inc., 78% owned by Texaco, develops and markets
natural gas and crude oil production from fields in Western Canada. Texaco's
net equity daily production in 1993 was approximately 1,600 barrels of li-
quids and about 34 million cubic feet of natural gas available for sale.
10
<PAGE>
At the end of 1993, Texaco--through its 50%-owned B.C. Star Partners
affiliate--was conducting an exploratory drilling program on newly acquired
leases at the Nig Creek prospect in British Columbia. Additional seismic
study and drilling are likely in 1994.
In an ongoing rationalization program, Texaco Canada Petroleum has been
selling, acquiring and exchanging equity interests as part of a strategy to
dispose of non-strategic assets while adding reserves to a company-operated
core asset base. As a result of this program, production has increased, while
total operating costs have declined.
EUROPE
The strategy for Texaco's upstream operations in Europe focuses on
doubling the value of its business by the year 2000. The steps to achieving
that include accelerated development of new core productive areas; the best
use of existing production, processing and transportation infrastructure; and
aggressive exploration in areas where Texaco has already developed a sustain-
able competitive advantage.
Texaco participates in exploration and production licenses in eight
European countries: the United Kingdom, Denmark, the Netherlands, Norway,
Italy, Turkey, Bulgaria and Russia. All of its current production comes
from the North Sea, with the exception of a small natural gas field in the
Netherlands.
Replacement of production by additions and revisions to net proved
reserves was 302% in 1993, the seventh consecutive year in which European
reserves replacement exceeded production. These additions continue to be
made at industry-competitive finding and development costs.
United Kingdom
In the United Kingdom, where Texaco operates or has interests in 11
producing fields, the year 1993 highlighted the start of production, follow-
ing several years of intense investment and development activity, in several
new fields, as well as the restart of production at the Piper field.
Texaco's production from the offshore U.K. fields averaged 58,000 barrels
of oil and natural gas liquids and approximately 22 million cubic feet of sal-
able natural gas a day during the year. The bulk of the production was from the
wholly owned Tartan, Highlander and Petronella (THP) fields and the Claymore
(21.2% Texaco), Piper (23.5% Texaco) and Scapa (23.5% Texaco) fields. Produc-
tion from the 12-year-old THP complex has been declining, but a team of
engineers and geologists has been applying the latest advanced technology
to stem the decline and prolong production.
The Piper field came back on stream in February 1993. Besides providing
an important source of production, its platform also processes the oil and
gas produced from two new satellite fields, Saltire and Chanter, which began
operating during the second quarter of 1993. Texaco's equity production
through the Piper Bravo platform at the end of 1993 was approximately 32,000
barrels of oil a day.
In the Southern Gas Basin of the North Sea, first production began in
August from the Orwell field, with Texaco's share currently at 60 million
cubic feet of natural gas a day. Orwell is a subsea multi-well development
operated by remote control from 21 miles away through the world's longest
undersea "umbilical" cord.
The final addition in the string of successes during 1993 was the start
of production in December from Texaco's 67%-owned Strathspey field in the
northern area of the North Sea. Crude oil produced through a subsea template
and pumped through a 10-mile-long pipeline to Chevron's Ninian platform will
reach a level of 35,000 barrels a day during 1994.
Output from these new fields in 1994 is expected to double Texaco's 1992
production volumes from the North Sea.
11
<PAGE>
As its new fields were being brought into production in 1993, Texaco was
pursuing a successful field appraisal program in the Inner Moray Firth off
the coast of Scotland. Here, in the wholly owned Block 13/22a, an ambitious
drilling program was delineating the substantial Captain reservoir. On the
basis of a 12-well drilling program, Texaco has decided to begin development
of this 200-million-barrel field, with production expected to begin by 1996.
Denmark
New production records were set in Denmark during the year as the result
of a high level of development drilling and the startup of two new fields:
Regnar and Valdemar. The Danish Underground Consortium (DUC), in which Texaco
has a 15% interest, has used horizontal drilling to considerable advantage in
its chalk reservoirs. Texaco's net equity production from the DUC was 23,000
barrels of oil and more than 56 million cubic feet of salable natural gas a
day in 1993.
Texaco's share of DUC gas will nearly double to about 107 million cubic
feet a day by 1997 as the result of a large gas sales agreement with the nat-
ional gas company, Dansk Naturgas A/S.
Russia
Texaco expanded its upstream activities into one of the most significant
producing areas of the world in 1993 through an agreement with Sutorminskneft,
a Western Siberian oil and gas production association, to restore production
from idle wells in the Sutormin field in Western Siberia.
Located in the northern portion of the Tyumen region of Western Siberia,
the Sutormin field is approximately 1,500 miles east of Moscow. The field,
which has recoverable reserves of approximately one billion barrels, current-
ly produces about 140,000 barrels of oil a day. Approximately 40% of the
wells in the field are idle due to various technical reasons. As a service
contractor, Texaco has repaired and restored production to some 40 wells
since June 1993.
Texaco is also continuing negotiations on a production sharing agreement
with the Russian Government and potential industry partners for the explor-
ation and development of a large contract area some 1,100 miles northeast of
Moscow in Russia's Timan Pechora region above the Arctic Circle. These negoti-
ations could lead to a long-term development program in an area where 11 fields
have been discovered and studies indicate the potential for more than 2 billion
barrels of oil reserves.
Most recently, in Russia's far eastern area, Texaco, with Mobil, has
been awarded the rights to negotiate a production sharing agreement covering
the 2,700-square-mile Kirinsky block off the coast of Sakhalin Island.
Negotiations on the agreement began in January 1994.
OTHER EASTERN HEMISPHERE
Africa
Upstream operations in Africa are conducted by the company's Latin
America/West Africa Division. Texaco's net equity production from two
countries, Angola and Nigeria, totaled nearly 16,000 barrels a day in 1993,
and Texaco also conducted exploration operations during the year in Tunisia,
Egypt and Cameroon.
The success of Texaco's operations in Angola is best illustrated by the
exploration and development program on the 131,000-acre offshore Block 2,
where the company is the operator and holds a 20% interest.
12
<PAGE>
Since the late 1970s Texaco has drilled 66 exploration wells on this
block with a 30% commercial success ratio. Based on that drilling, Texaco
has brought seven of these fields into production, while the others are in
various stages of appraisal or development.
Despite the continuing civil war in Angola, Texaco's offshore net equity
production was maintained at an average of 6,000 barrels a day. Texaco's
share of liquids reserves in all of the Block 2 fields totaled more than 24
million barrels at the end of 1993.
Texaco has presented the Angolan Government with final development plans
for most of the currently undeveloped Block 2 fields. Production facilities
for the Bagre, Estrella, Chopa, Lombo North and Calafate fields have been
fabricated in the United States and will be shipped to Angola and installed
after political conditions in the country improve.
Plans are also in place for developing three other new fields, and the
company is evaluating three recent discoveries before committing to their
development. Peak total production rates of over 80,000 barrels a day, or
11,000 barrels a day of net equity production for Texaco, are estimated for
Angola with the development of all of the Block 2 fields.
Texaco also has a 16.33% interest in the FST block onshore in Angola,
where net equity production of 3,300 barrels a day was shut-in early in 1993
following its capture by rebel forces.
In addition, Texaco has joined with Shell Oil Company in exploring for
potentially large new oil fields in Angola's deepwater Block 16. The work
began in 1993 with 3-D seismic surveys of the area.
In Nigeria, where Texaco is the operator and holds a 20% working
interest, producing operations have not been affected by the ongoing politi-
cal instability. Net equity crude oil production by the Texaco-led consortium
operating the offshore Pennington, Middleton, North Apoi and Funiwa fields
has increased to approximately 10,000 barrels a day, as the result of well
workovers and new drilling.
In mid-1993, Texaco announced a wildcat discovery at its Madu No. 1 well,
30 miles offshore in Block OML 85. The development potential of this well,
which tested at a combined rate of over 5,000 barrels of oil a day, is under
evaluation.
Exploration teams in Nigeria are working to identify deeper productive
formations within the limits of currently producing fields. Negotiations are
under way toward obtaining new exploration acreage offshore.
MIDDLE EAST AND FAR EAST
The Texaco Middle East/Far East Division (ME/FE) explores for and produces
oil and gas in Indonesia, the Partitioned Neutral Zone between Saudi Arabia
and Kuwait, Australia and China. It manages operational and contractual
matters related to exploration programs by Texaco's Frontier Exploration
Department in Malaysia, Myanmar, Thailand, China, Pakistan and other count-
ries in the Middle East and Far East. The division contributed to Texaco's
earnings in 1993 through the net production of nearly 188,000 barrels of
liquids a day by Texaco subsidiaries and an affiliate, P.T. Caltex Pacific
Indonesia.
Indonesia
Texaco maintains a premier position in the Indonesian petroleum industry
through the exploration and producing activities of its 50%-owned affiliates,
P.T. Caltex Pacific Indonesia (CPI) and Amoseas Indonesia Inc.
13
<PAGE>
CPI is owned 50% each by Texaco and Chevron. It operates the Rokan
production sharing contract granted to it by Pertamina, the Indonesian
national oil company, as well as other production-sharing contracts granted
to Texaco and Chevron subsidiaries in Sumatra.
The Rokan contract, which includes the huge Minas waterflood and Duri
steamflood enhanced oil recovery projects, accounts for approximately 550,000
barrels of oil a day. More sophisticated oil recovery technologies tailored
to specific projects are being developed and will soon be tested to increase
the recoverable reserves from the fields.
CPI is the largest producing company in Indonesia and is responsible for
nearly one-half of the country's oil production. Four production sharing
contracts in Central Sumatra and one off the west coast of Sumatra cover some
11 million acres. Production in the areas covered by the contracts has been
sustained over the past several years at approximately 700,000 barrels of oil
a day, of which Texaco and Chevron each net about 120,000 barrels a day.
In the Belida field (25% Texaco), located in the Conoco operated Block B
portion of the Indonesian South Natuna Sea, Texaco's net share of oil produc-
tion averaged 15,000 barrels a day. Discovered in 1989, the field came on
production in October 1992.
Amoseas is responsible for the joint Texaco/Chevron interests in
Indonesia outside of Sumatra. It operates four petroleum contracts and one
geothermal contract. In addition, Amoseas administers two petroleum contracts
operated by other companies. These production sharing contracts cover some 20
million acres. One of the petroleum contracts produces oil, while five are
still in the exploration stage. Amoseas is pursuing the development of
Texaco's first geothermal venture in Java.
China
Texaco is one of the largest petroleum contract holders in China. Its
acreage, totaling over 7,700 square miles, is roughly equivalent in size to
the State of New Jersey.
A joint venture between Texaco, AGIP and Chevron--the ACT Operators
Group--and the China National Offshore Oil Corporation operates two produc-
ing fields in the South China Sea. ACT holds a 49% interest in this
operation, the first commercial production in the South China Sea by a
foreign company.
One of these fields began producing in September 1990, and the other
came on stream in late 1991; Texaco's share of combined production in 1993
was 8,000 barrels of oil a day. ACT is developing two other discoveries made
near these fields in 1991. The first production is expected in late 1995.
OTHER FAR EAST
In Malaysia, Texaco has a 50% interest and operates the offshore PM-14
concession in partnership with Santos and Clyde Petroleum. The first of six
exploratory wells, completed in March 1992, tested significant flows of oil.
Texaco has received an extension of its production-sharing contract to May
1997 to evaluate the potential for further exploration.
Australia
Texaco participates in Australian exploration and producing activities
primarily through its 28.6% interest in West Australian Petroleum Proprietary
Limited (WAPET). In 1993, Texaco's share of production averaged 13,000 barrels
of liquids and some 3 million cubic feet of salable natural gas a day.
14
<PAGE>
Exploration and development programs remain active in the prolific TP/3
permit area. The Saladin, Yammaderry and Cowle fields continue to perform
above initial expectations, and the Roller and Skate fields are being
developed, with first production scheduled during 1994.
The production decline in the mature Barrow field has been stabilized
through workovers, new drilling and development.
The interpretation of 3-D seismic data from the large Gorgon gas field
continues as part of a program to assess its development potential. Texaco is
focusing its efforts to commercialize the Gorgon gas through a development
plan that would involve liquefying the gas in Western Australia and exporting
it in specially designed ships to high-growth markets along the Pacific Rim.
Middle East
Through the wholly owned subsidiary, Saudi Arabian Texaco Inc., Texaco
holds a concession from Saudi Arabia covering 50% of the petroleum resources
in the onshore Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia.
Texaco is moving ahead aggressively on the reconstruction of the producing
facilities in the Zone that had sustained heavy damage during the Iraq/Kuwait
conflict.
A portion of Texaco's share of the restored production has been
processed in nearby refining facilities of the Kuwait Petroleum Corporation.
In addition, a contract for the sale of some of the crude directly to outside
buyers became effective in May 1993.
Recent reservoir studies indicate opportunities for adding significant
reserves through extensions and through pressure maintenance of existing
reservoirs. In 1993, Texaco drilled two rank wildcat wells to test
prospective zones below the currently producing PNZ fields. Well data
evaluation is underway.
FRONTIER EXPLORATION
The Frontier Exploration Department has responsibility for all
international frontier and new-venture exploration, encompassing all
discretionary exploratory activities outside of Texaco's currently held
assets and core business areas.
Working in partnership with the international operating divisions, the
frontier group follows a strategy for pursuing increasingly selective, higher
quality and lower risk opportunities in areas of strategic interest. They in-
clude China, Southeast Asia and other key areas where explor-
ation complements existing business activities.
During 1993, Texaco's frontier exploration activities included an
aggressive evaluation program that drilled 13 wildcat or appraisal wells.
Recent successful drilling included two discoveries that may represent
important additions to natural gas reserves:
o Two successful confirmation wells on the Yetagun Prospect (50% Texaco),
off the coast of Myanmar, where Texaco has already drilled two wildcat
discoveries. Further evaluation of these three blocks covering nearly 9
million acres, as well as wildcat drilling on additional prospects, is
planned for 1994.
o A potentially significant discovery in the Black Sea, off the coast of
Bulgaria. In 1994, Texaco will drill two more wells on this 20%-owned
500,000-acre block, in which it is the operator.
15
<PAGE>
A highly focused program of wildcat drilling will continue in 1994 with
planned wildcat and appraisal wells in nine countries including:
o Two wildcat wells in Thailand, one of which is offshore in the Gulf of
Thailand on a 50%-owned, 3.6-million-acre block.
o A wildcat well in the West Shetlands area of the U.K. North Sea where
Texaco has a one-third interest and is the operator on 607,000 acres. This
prospect lies on an emerging productive trend in which Texaco had an
interest in discoveries made in 1992.
o Five other medium-to-high-risk exploratory wells offshore Egypt and on
land in Turkey, Tunisia and Argentina.
o One wildcat well offshore China in the Bohai Bay on a 50%-owned, 1.2-
million-acre block southeast of Beijing. This area lies within a producing
basin which holds an estimated 14 billion barrels of recoverable reserves.
Texaco is the operator and a partner with AGIP and Maersk in the recent
acquisition of three contract areas covering 2 million acres for exploration
in the East China Sea. The group was among the first foreign contractors to
sign agreements for exploration in this major offshore area.
Early in 1994, Texaco and its four partners signed a petroleum contract
for exploration in Block 1 of the Tarim Basin onshore China. Although
exploration acreage has been available in limited areas since 1985, Block 1
and four others in the Tarim Basin represent the first large-scale opportuni-
ties for foreign participation in exploration projects in the highly
prospective Western China Basins.
SUPPLEMENTARY EXPLORATION AND PRODUCTION INFORMATION
The following information concerns the oil and gas exploration,
development and producing activities of Texaco Inc. and consolidated
subsidiaries, as well as Texaco's equity in P.T. Caltex Pacific Indonesia
(CPI), a 50%-owned affiliate operating in Other Eastern Hemisphere areas:
Estimates of Total Proved Net Oil and Gas Reserve Data Provided to
Other Governmental Bodies and Availability of Oil and Gas
Information concerning estimates of total proved net oil and gas
reserve data provided to other governmental bodies and availability of oil
and gas is incorporated herein by reference from pages 56 to 58 of Texaco
Inc.'s 1993 Annual Report to Stockholders.
Average Sales Prices and Production Costs - Per Unit
Information concerning average sales prices and production costs
on a per unit basis is incorporated herein by reference from page 61 of
Texaco Inc.'s 1993 Annual Report to Stockholders.
16
<PAGE>
<TABLE>
<CAPTION>
Oil and Gas Acreage
As of December 31, 1993
-----------------------
Thousands of acres Gross Net
------------------ ----- ---
<S> <C> <C>
Producing
Texaco Inc. and Consolidated Subsidiaries
United States 4,153 2,534
Other Western Hemisphere 518 157
Europe 193 76
Other Eastern Hemisphere 787 210
------- -------
Total Texaco Inc. and Consolidated Subsidiaries 5,651 2,977
Equity in an Affiliate-Other Eastern Hemisphere 207 103
------- -------
Total worldwide 5,858 3,080
------- -------
Undeveloped
Texaco Inc. and Consolidated Subsidiaries
United States 6,418 5,076
Other Western Hemisphere 19,444 15,666
Europe 6,366 2,433
Other Eastern Hemisphere 67,852 37,252
------- -------
Total Texaco Inc. and Consolidated Subsidiaries 100,080 60,427
Equity in an Affiliate-Other Eastern Hemisphere 2,239 1,120
------- -------
Total worldwide 102,319 61,547
------- -------
Total Oil and Gas Acreage 108,177 64,627
======= =======
Number of Wells Capable of Producing*
As of December 31, 1993
-----------------------
Gross Net
Oil wells ----- ---
Texaco Inc. and Consolidated Subsidiaries
United States 40,824 18,497
Other Western Hemisphere 2,264 482
Europe 220 55
Other Eastern Hemisphere 1,256 423
------- -------
Total Texaco Inc. and Consolidated Subsidiaries 44,564 19,457
Equity in an Affiliate-Other Eastern Hemisphere 3,780 1,890
------- -------
Total worldwide** 48,344 21,347
======= =======
Gas wells
Texaco Inc. and Consolidated Subsidiaries
United States 5,881 2,658
Other Western Hemisphere 264 60
Europe 45 11
Other Eastern Hemisphere 21 6
------- -------
Total Texaco Inc. and Consolidated Subsidiaries 6,211 2,735
Equity in an Affiliate-Other Eastern Hemisphere 22 11
------- -------
Total worldwide** 6,233 2,746
======= =======
<FN>
- ------------
* Producible well counts include active wells and wells temporarily shut-in. Consistent with
general industry practice, injection or service wells and wells shut-in that have been
identified for plug and abandonment have been excluded from the number of wells capable
of producing.
** Includes 333 gross and 216 net multiple completion oil wells and 95 gross and 87 net
multiple completion gas wells.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Oil, Gas and Dry Wells Completed For the years ended December 31,
------------------------------------------------------------------
1993 1992 1991
------------------ ------------------- -------------------
Oil Gas Dry Oil Gas Dry Oil Gas Dry
--- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net exploratory wells*
Texaco Inc. and Consolidated Subsidiaries
United States 24 29 29 16 24 20 17 46 18
Other Western Hemisphere _ _ 1 2 1 3 2 1 9
Europe _ _ 8 _ _ 4 _ _ 6
Other Eastern Hemisphere _ 1 8 1 _ 3 1 _ 6
--- --- --- --- --- --- --- --- ---
Total Texaco Inc. and Consolidated
Subsidiaries 24 30 46 19 25 30 20 47 39
Equity in an Affiliate-Other Eastern
Hemisphere 1 _ 1 1 _ _ 1 _ 1
--- --- --- --- --- --- --- --- ---
Total worldwide 25 30 47 20 25 30 21 47 40
=== === === === === === === === ===
Net development wells
Texaco Inc. and Consolidated Subsidiaries
United States 212 101 13 163 72 8 257 63 14
Other Western Hemisphere 8 2 2 3 1 1 28 2 1
Europe 7 1 _ 4 _ _ 2 _ 1
Other Eastern Hemisphere 14 _ _ 9 _ _ 10 _ _
--- --- --- --- --- --- --- --- ---
Total Texaco Inc. and Consolidated
Subsidiaries 241 104 15 179 73 9 297 65 16
Equity in an Affiliate-Other Eastern
Hemisphere 76 _ _ 159 _ 4 171 _ 10
--- --- --- --- --- --- --- --- ---
Total worldwide 317 104 15 338 73 13 468 65 26
=== === === === === === === === ===
<FN>
- ---------------
* Exploratory wells which identify oil and gas reserves, but have not resulted in recording of proved reserves
pending further evaluation, are not considered completed wells. Reserves which are identified by such wells are
included in Texaco's proved reserves when sufficient information is available to make that determination.
This is particularly applicable to deep exploratory areas which may require extended time periods to assess,
such as the U.K. sector of the North Sea.
</TABLE>
<TABLE>
<CAPTION>
Additional Well Data As of December 31, 1993
---------------------------------------------------------
Wells in the Pressure Maintenance
process of ----------------------------------
drilling Projects in
------------ Installations the process of
Gross Net in operation being installed
----- --- ------------- ---------------
<S> <C> <C> <C> <C>
Texaco Inc. and Consolidated Subsidiaries
United States 107 82 529 3
Other Western Hemisphere 1 1 14 _
Europe 29 19 13 _
Other Eastern Hemisphere 32 8 4 _
--- --- --- --
Total Texaco Inc. and Consolidated
Subsidiaries 169 110 560 3
Equity in an Affiliate-Other Eastern
Hemisphere 3 1 2 _
--- --- --- --
Total worldwide 172 111 562 3
=== === === ==
</TABLE>
18
<PAGE>
MANUFACTURING AND MARKETING ACTIVITIES
Consumers in more than 150 countries benefit from the high-quality
products and services of Texaco and its subsidiaries and affiliates. In
preferred markets of the United States, Europe, Latin America and West Africa,
the company focuses on the retail motor fuels and lubricants business, which
consistently offers the highest potential for profitability. Texaco is also
becoming a bigger player in the rapidly growing markets of the Pacific Rim
countries through its 50%-owned affiliate Caltex.
A network of modern, wholly or partly owned refineries situated near
principal markets provides support for the marketing operations. This
worldwide network is highly competitive in its conversion capacity, or
ability to produce high-value, light products from the heavy, high-sulfur
crude oils that prevail in world markets.
UNITED STATES
The manufacture and marketing of Texaco-branded products in the United
States is the responsibility of the company's wholly owned subsidiary Texaco
Refining and Marketing Inc. (TRMI) and its 50%-owned affiliate Star
Enterprise.
o TRMI sells motor fuels through a network of nearly 4,800 retail outlets
in the 23 states that comprise its Mid-Continent, Pacific West and Pacific
Northwest regions. In 1993, Texaco was the number three marketer of motor
fuels in these regions, with a 6.9% share of the market. In the states of
Oklahoma, Washington, Oregon, Arizona and Alaska, Texaco holds market shares
greater than 15%.
o Star Enterprise--formed late in 1988 as a joint venture between sub-
sidiaries of Texaco and the Saudi Arabian Oil Company--is by itself one of
the largest petroleum products manufacturing and marketing companies in the
United States. In the 26 Eastern and Gulf Coast states it serves, Star Enter-
prise ranks second in motor fuel sales through its nearly 9,500 Texaco-branded
retail outlets.
Manufacturing
Texaco's equity crude processing capacity at seven refineries in the
United States, including its 50% share of the three Star Enterprise plants,
was 661,000 barrels a day in 1993. All of these facilities pursued programs
in 1993 to increase conversion capacity, to meet regulatory mandates for fuel
composition and to cut operating costs.
The TRMI-operated facilities include:
o The El Dorado, Kansas, refinery, with an 80,000-barrel-a-day capacity and
full conversion capability for processing high-sulfur crude oils. A new
hydrotreater was added in 1993 to produce low-sulfur diesel mandated by the
U.S. Environmental Protection Agency.
o The Puget Sound plant at Anacortes, Washington, with 132,000-barrels-a-day
capacity and full conversion capability for running crudes from the Alaska
North Slope and Canada. Modifications completed in 1993 upgraded 20,000-
barrels-a-day capacity to produce low-sulfur diesel fuel mandated by the
U.S. Environmental Protection Agency.
o The Los Angeles (95,000 barrels a day) and Bakersfield (54,000 barrels a
day) refineries have high-conversion capabilities for running heavy, high-
sulfur California crudes. Investments completed at both refineries in 1993
upgraded capacity to produce low-sulfur/low-aromatics diesel fuel mandated
by the State of California.
The refineries operated by Star Enterprise are located at:
19
<PAGE>
o Port Arthur, Texas. Star's largest refinery has 235,000 barrels a day of
crude running capacity. A 2,200-ton-a-day delayed coking unit, which came
on stream late in 1992, significantly improved the competitiveness of this
plant. Port Arthur is also the site of one of the most efficient facilities
in the United States for manufacturing lubricant base oils. This plant
produced some 5.6 million barrels of base oils in 1993.
o Convent, Louisiana. Located on the Mississippi River, 80 miles upstream
from New Orleans, the Louisiana plant has 225,000-barrels-a-day capacity.
Its strategic location enables it to receive imported crude oil from the
Louisiana Offshore Oil Port and to ship refined products to markets on the
East Coast through the Colonial Pipe Line. The addition of a 25,000-barrel-
a-day diesel hydrotreater in 1993 further enhanced the capabilities of the
refinery, which is one of the most efficient in the United States.
o Delaware City, Delaware. With 140,000 barrels a day of crude capacity,
this efficient refinery is capable of processing heavy crudes to manufacture
all of its product slate as light products. More than half of its gasoline
is produced as premium-grade gasoline. Construction of units for making the
gasoline oxygenates, methyl tertiary butyl ether (MTBE), and tertiary amyl
methyl ether (TAME) was completed late in 1993 for startup early in 1994.
Planned investments during 1994 and 1995 at the Star Enterprise refine-
ries include enhancements to the fluid catalytic cracking units to achieve
increased yields of gasoline and middle distillates.
Marketing
In the first half of 1993, Texaco research scientists were completing
work on a new gasoline additive with attributes that would enable Texaco to
lay claim to a "new generation" gasoline. And planning was underway for the
launch of New CleanSystem3 gasoline in the first quarter of 1994.
Meanwhile, the TRMI and Star Enterprise marketing systems were paving
the way for the introduction of New CleanSystem3 with other initiatives to
strengthen the Texaco brand and build market share in motor fuels.
A major program to improve retail outlets and customer satisfaction in
1993 involved joint ventures with major fast-food franchisers, joining opera-
tions to maximize exposure and profitability for both partners. These combina-
tions of the Texaco Star with the McDonald's Golden Arches and other widely
recognized fast-food logos are still in an early stage, but the overall ini-
tiative gained considerable momentum in 1993.
Successful tests with McDonald's, Subway, Dunkin' Donuts, Hardee's, Taco
Bell and Kentucky Fried Chicken gave impetus to programs for further analysis
and development in 1994. Since the end of 1993, for example, Texaco has also
entered into test agreements with Pizza Hut and Burger King.
Few programs illustrate Texaco's commitment to its customers more than
the "100% Customer Satisfaction Guarantee" program. This test program,
initiated in 1991, has now been expanded to seven metro areas of the West
and Southwest. Further expansion is planned for 1994.
The "100% Satisfaction Guarantee" includes full money-back refunds,
along with reward coupons to settle non-monetary complaints and encourage
feedback. The main ingredients for a successful program are training and
orientation sessions for employees, retailers and wholesalers and the es-
tablishment of a consumer 1-800 telephone hotline. Results prove it is a
program that retains customers and nurtures brand loyalty, while providing
an effective means to encourage customer communication and to measure
customer feedback.
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Other marketing initiatives begun or expanded during 1993 included:
o Stepped-up quality monitoring throughout the United States, further assuring
customers of the integrity of the Texaco brand wherever Texaco motor fuels
are sold.
o Creation of the Star Marketer Acceptance Corporation (Star MAC), a finan-
cial institution for wholesalers established by Texaco and Star Enterprise
along with National Westminster Bank and Texas Commercial Bank. Star MAC is
a low-cost source of business improvement loans for Texaco-branded
wholesalers.
o The introduction by Texaco and Star Enterprise of a Voluntary Insurance
Program (VIP) for Texaco-branded wholesale and retail marketers. The VIP
will provide all of their insurance needs with competitive coverage
and premiums. Sedgwick James of Texas, Inc., the third largest insurance
broker in the United States, will administer the program.
o Further momentum in the franchising of Star Mart convenience stores. At
the end of 1993, 185 Star Marts were operating in the United States, in-
cluding 10 franchise stores. Marketing the Star Mart franchise will be a
major initiative in 1994.
Also, during 1994, Texaco will begin testing the acceptance of regional
bank-issued ATM cards in several cities as an alternative consumer payment
option at Texaco locations.
Texaco Lubricants Company
Texaco is the largest marketer of premium motor oils among the major
integrated oil companies. An arm of Texaco Refining and Marketing Inc.,
Texaco Lubricants Company (TLC) is best known for its Havoline Formula3 motor
oils, which are sold in all 50 states at Texaco-branded retail outlets, as
well as distributorships and such mass merchandisers as Kmart, WalMart and
its Sam's Club.
To establish Texaco as a strong competitor in the rapidly growing niche
market for synthetic motor oils, TLC introduced its Havoline Synthetic Motor
Oil SAE 5W-40 early in 1993.
TLC also offers a wide range of commercial and industrial lubricants,
greases and antifreeze products. Recently, an enhanced promotional campaign
has helped the company to secure a larger share of the agricultural lubri-
cants market.
Texaco operates six wholly owned blending plants which accounted for
over 80% of its 1993 sales volume. The company supplements this equity
lubricants and antifreeze blending capacity with production from contractors
which meets Texaco's strict specifications.
Texaco plans to launch a major used oil recycling program by mid-1994,
upon completion of a $7.2-million plant in Marrero, Louisiana, which will be
capable of converting 147,000 gallons a day of used lubricants into dis-
tillate. TLC, through licensed used oil collection companies, will collect
the used oil from commercial and industrial firms and public recycling
centers.
Chemical Operations
The sale of substantially all of Texaco's worldwide chemical operations
to the Jon M. Huntsman Group of Companies ("Huntsman") is expected to be
completed in April 1994 with the lubricant additives business sale expected
to be completed later in 1994. Texaco will cooperate with Huntsman to effect
the sale of the lubricant additives business to a third party.
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The decision to sell the chemical operations, including the lubricant
additives business, was based on Texaco's continuing efforts to maximize
shareholder value through assessments of market conditions, future capital
requirements, return on investment and alternative investment opportunities.
Texaco is retaining its fuel additives business, which is key to the
production of the company's advanced New CleanSystem3 gasoline. Texaco is
also retaining some solvent and intermediate chemicals production at its
refinery in El Dorado, Kansas, and at the Delaware City Plant of Star
Enterprise.
In addition, Texaco continues to hold a 100% leasehold interest in a
plant under construction at Port Neches, Texas, which will produce 400 million
pounds a year of propylene oxide (PO) and 14,000 barrels a day of the gasoline
oxygenate, methyl tertiary butyl ether (MTBE). Propylene oxide is used in the
manufacture of many chemical-based products. This plant is expected to be on
stream in late 1994. Texaco expects to use this plant to supply a portion of
the company's MTBE requirements on a continuing basis. The balance of the MTBE,
as well as the PO, will be marketed to third parties, and Texaco is currently
entering into these contractual arrangements.
As part of the purchase of Texaco's chemical operations, Huntsman is
acquiring a two-year option to purchase either a 50% or 100% interest in the
PO/MTBE plant.
OTHER WESTERN HEMISPHERE
Latin America
Through subsidiaries, Texaco manufactures and markets petroleum products in
over 40 Latin American countries. The region's business potential continues
to expand with the strengthening of local economies, the spread of privati-
zation and the intense competition for foreign investment in the petroleum
sector. Texaco is a long-established market leader and the company of choice
in many of the Latin American countries.
Manufacturing
The refineries that supply Texaco's growing markets in the region operate
at levels that closely mesh with market demand for gasolines, kerosine, jet
fuel, diesel and fuel oil.
The Panama refinery, with average throughput of 34,000 barrels a day in
1993, processes Venezuelan and Ecuadorian crudes. A $77.6-million project now
underway, with completion expected in 1995, will substantially increase
efficiencies and improve yields.
A wholly owned refinery in Guatemala and an interest in a refinery in
Martinique have combined equity capacity of 17,000 barrels a day.
Texaco's lubricant manufacturing capacity in Latin America reached 3.25
million barrels a year with improvements at major blending plants in Puerto
Rico, El Salvador and Brazil.
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Marketing
Texaco is well represented throughout Latin America in fuels and
lubricants businesses that are conducted largely through a network of nearly
5,000 retail outlets, as well as in operations providing petroleum products
for industry and agriculture.
In its strongest Latin American markets, Texaco holds a 28% share of the
retail business and 24% of lubricants in the Caribbean region, and it supplies
25% of the fuels and 36% of the lubricants in Central America. These results
flow from selective investments made in recent years to modernize manufactur-
ing, distribution and retail facilities, as well as aggressive marketing
programs.
The Caribbean markets although small individually, together represent
an important business segment of Texaco, with over 750 retail outlets selling
some 11 million barrels of products in 1993.
In Puerto Rico, where Texaco is the market leader, the launch of System3
gasoline in 1993 resulted in a 21% increase in sales volume, with most of the
increase retained after the promotion. During the year, Texaco added six more
Star Marts to its stations in Puerto Rico.
Other major markets in the Caribbean region include the Dominican
Republic, where Texaco is the retail market leader with nearly 150 stations,
some with modern conveniences including Star Marts and Star Lubes, and
Jamaica, where the local subsidiary operates more than 80 retail outlets.
In Haiti, a profitable and expanding market for Texaco has been inter-
rupted by political instability and U.S. economic sanctions.
Texaco's Eastern Caribbean markets include Barbados, the Leeward Islands,
French West Indies, Trinidad and Tobago, and Guyana.
Consistent with its regional emphasis on improving margins and com-
petitiveness through cost reductions, Texaco's Caribbean subsidiaries were
negotiating strategic joint ventures during 1993 to share facilities with other
operators in selected markets. In Puerto Rico, for example, a joint venture
will supply fuel efficiently at the San Juan International Airport from the
nearby Texaco terminal.
The completion of a 100,000-barrel refined product import terminal in El
Salvador and the conversion of Texaco's refinery in Honduras to an ocean
terminal operation also illustrate a commitment to improved efficiency and
reduced distribution costs throughout Central America.
Texaco's Central American subsidiaries operate about 460 service
stations in the major markets of Guatemala, Panama, El Salvador, Honduras,
Nicaragua and Belize. Texaco is rebuilding a retail network in San Jose,
Costa Rica, where, under more liberalized market conditions, it has opened
five new outlets with Star Marts since 1991.
Large and long-established businesses in a number of South American
nations include:
o Brazil, one of Texaco's largest marketing subsidiaries, which sold 37.7
million barrels of petroleum products in 1993 through a network of 2,887 re-
tail outlets and consumer accounts. It supplied some 21.5% of the country's
lubricants.
o Colombia, where Texaco supplied 17.2% of the country's gasoline market in
1993 through 266 stations. Following the introduction of its first Star
Mart there in 1991, another five were added by the end of 1993.
o Uruguay, where Texaco supplies some 19% of the gasoline market through 82
stations.
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o Chile, where Texaco's investment in 10 modern service stations--eight with
Star Marts--in the capital city of Santiago present opportunities for
further expansion.
o Ecuador, where 42% of the country's lubricants were supplied by Texaco in
1993. This high brand awareness provides a base for possible future entry
into the retail motor fuels business.
Lubricants
Texaco's 250,000 barrel-a-year lube blending and packaging plant in
Guayanilla, Puerto Rico, is a modern facility that manufactures a full line of
products. It is an efficient regional supply source for markets throughout the
Caribbean, as well as Puerto Rico. Texaco has similar regional supply points
to serve markets in the Andean Region and the Southern Cone.
In El Salvador, a modern blending plant provides a full line of pro-
ducts, supplying some 40% of El Salvador's lubricants market through an
extensive network of distributors and modern service stations. Early in 1994,
Texaco completed a new 100,000-barrel refined product import terminal at
Puerto de Acajutla to improve efficiency and lower distribution costs.
Texaco Brasil S.A. operates a fully integrated blending, packaging and
additives complex in Rio de Janeiro and a state-of-the-art grease manu-
facturing facility in Sao Paulo. With private-brand blending operations
supplementing its Texaco-brand production, the highly efficient plant in Rio
de Janeiro has production of 1.6 million barrels of lubricants a year.
EUROPE
In 1993, Texaco Europe committed itself to customer-oriented strategies
aimed at creating "the company of choice" by the turn of the century: a company
which delivers uncompromised, outstanding value to customers.
In Europe, Texaco sells a full range of products in retail and commer-
cial markets in the United Kingdom, Ireland, the Netherlands, Belgium,
Luxembourg, Denmark, Norway, Sweden, Spain and Greece. Lubricants are the
primary products sold in France, Italy, Turkey, Portugal, Iceland, Eastern
Europe and Russia.
Texaco Europe has interests in two refineries located in the United
Kingdom and the Netherlands. Lube blending facilities are strategically
located in markets in seven other countries.
Manufacturing
While economic growth is projected to remain slow in Europe, emerging
European Community (EC) directives and environmental mandates are expected to
exert increasing pressure on refiners to manufacture "cleaner" products and to
meet more stringent air and water quality standards.
Further, EC environmental regulations requiring catalytic converters on
all new autos to reduce vehicle exhaust emissions will increase the demand for
unleaded gasoline significantly. Texaco's manufacturing facilities have the
technology in place to handle the increasing demand for high-octane, unleaded
and desulfurized fuels.
The wholly owned Pembroke Refinery in Wales has a rated crude distilla-
tion capacity of 180,000 barrels a day, and is integrated with Texaco's share
of the throughput of the Pembroke Cracking Company which operates the largest
catalytic cracking and alkylation units in Europe.
This combination results in one of the most competitive refineries in
Europe. Its yield of gasoline is about 50% of total product output, which is
more than twice the average for all European refiners. The plant can produce
all of its gasoline as high-octane unleaded.
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Texaco also owns 35% of the 399,000-barrel-a-day Nerefco refinery in
Rotterdam. The joint venture combines the catalytic reforming and hydro-
treating capabilities of Texaco's Pernis plant, located near Rotterdam, with
the catalytic cracking capacity of BP's Europoort Refinery. Projects in 1993
included the expansion of the catalytic cracking unit and construction of an
MTBE unit to produce additional high-octane gasoline components.
The Pembroke and Rotterdam refineries, combined with a long-term product
purchase agreement with the Skandinaviska Raffinaderij (Scanraff) in Sweden,
enable Texaco to meet approximately 80% of its fuels requirements from equity
supply, providing flexibility for economically attractive products trading.
Lubricants, marketed in 15 countries, are supplied primarily from six
equity plants, including four wholly owned facilities--in Valencia, Spain;
Ghent, Belgium; Copenhagen, Denmark; and Skaramanga, Greece--and 50% ven-
tures with Viscosud in Bari, Italy and Texaco Marketing AB in Gothenburg,
Sweden. In the United Kingdom, Century Oil provides lubricants for Texaco
Limited under a long-term supply agreement.
Marketing
Texaco's efforts to create "the company of choice" in all of its European
markets are expected to yield measurable competitive advantages and increased
profitability. These efforts include ensuring that Texaco fuels embody the
best technologies in the industry and are responsive to customers' require-
ments. As an element of that, System3 gasoline was introduced in Denmark in
1993, supported by a strong advertising campaign. Motor gasoline sales in the
country increased by 12% over the previous year, improving Texaco's market
share by more than one full percent.
By continuing to rationalize low-margin and non-standard retail outlets,
and to upgrade high-potential units in the network of Texaco-branded retail
outlets in Europe, the company has significantly increased the average
throughput per station of gasoline and diesel fuel. Average monthly volume
at each of the company's 1,400 investment stations in Europe exceeded 52,000
gallons.
Texaco is working to significantly enhance service station profitability
by continuing to add convenience stores, car washes, express lube centers and
other non-conventional services valued by customers at retail outlets through-
out Europe. In Europe, as in the United States, Texaco is also exploring
strategic alliances with major global companies such as McDonald's to bring
additional conveniences and services to customers. In the extremely
competitive European market, establishing relations with business partners
whose strengths and resources complement Texaco's will be a key to promoting
growth by serving customers better.
Lubricant brand awareness has been enhanced by the redesign and repackag-
ing of Texaco products in anticipation of single market distribution. Based
on its high visibility and reputation for reliability of supply and product
quality in the 15 countries where it markets directly, Texaco is well
positioned for fairly low-risk entry into the developing markets of Eastern
Europe.
Texaco has entered the market in Poland through a 50% joint venture which
sells automotive and industrial lubricants through garages, shops, retail out-
lets and distributors. Texaco has established relationships with sales agents
in Slovakia, Hungary, Slovenia and in Romania, where the company is the top
seller of lubricants. Texaco's Greek subsidiary markets lubricants in Bulgaria.
During 1993, through a joint effort with the Nizhni Novgorod Production
Association, Texaco Volga Marketing manufactured Havoline motor oil in Russia.
Further cooperation with the Production Association is continuing at a level
commensurate with the business risks that exist in Russia today.
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WEST AFRICA
Effective January 1, 1994, responsibility for managing downstream
operations in West Africa was transferred from the Texaco Latin America/West
Africa Division to Texaco Europe. The primary reason behind the move was to
have management closer to operations in the face of increasing competitive
pressures.
Total product sales for Texaco in West Africa during 1993 totaled 8.3
million barrels, including 190,000 barrels of lubricants.
In Nigeria, Texaco supplied about 10% of the country's motor fuels through
a network of more than 340 service stations. The company, through its 60%
equity in Texaco Nigeria PLC, also operates a lubricants blending facility,
an LPG plant and airport fueling services.
Texaco has substantially increased its presence in the region by merging
with the marketing operations of AGIP Petroli in Cameroon. The merger in-
creased the number of Texaco-branded retail outlets from 57 to 114, and
Texaco's share of the market from 13.6% to 22%.
In the Ivory Coast, where Texaco operates a 120,000 barrel-a-year
capacity lubricant blending plant, the company supplies more than 14% of the
motor fuels market. Texaco also participates in joint marketing ventures in
Mali, Niger and Burkina Faso. Downstream activities in the area also include
supply and trading, as well as international and domestic aviation
businesses.
CALTEX
Caltex Petroleum Corporation, a 50% joint venture with Chevron, operates
in the world's fastest growing markets for petroleum products. Formed in 1936,
it is recognized as one of the most successful joint ventures in business
history.
Caltex, which manufactures and markets in 63 countries, primarily east
of Suez, is pursuing an ambitious program to enhance its refining system and
marketing network to fully capitalize on the key growth markets of the Asia-
Pacific region.
While slow economic growth in the industrialized Western nations con-
tinues to dampen petroleum demand, the Caltex operating area is experiencing
robust economic growth, which contributed to strong product margins and high-
er refined product sales in 1993. Caltex sales of refined products increased
by over 7% in 1993 to about 1.25 million barrels a day, despite lower volumes
in Japan caused by a weakening economy.
Manufacturing
Over the past five years, oil demand in the Pacific Rim area has grown
nearly 6% annually, consistently outpacing the expansion of regional refining
capacity. The current market shortfall of some 1.9 million barrels a day is
being met by imports.
Demand is particularly strong for higher value light end products:
gasoline, diesel oil and other middle distillates. Despite industry plans to
add 4.5 million barrels a day of capacity by the year 2000, product demand
should continue to exceed local supply, suggesting strong markets well into
the future.
Caltex has interests in 14 refineries that are strategically located in
the Asia-Pacific region, Africa and the Middle East, with total equity
capacity of almost one million barrels a day. Ten of these plants are in the
Pacific Rim area.
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Caltex's capital investment, including its share in affiliates, over the
period 1994 to 1998 is expected to exceed $6 billion, approximately two-thirds
of it targeted for refining. Major refinery upgrading and expansion projects
will enable Caltex to process a wide array of lower-cost, heavy crude oils,
while meeting the growing demand in the Pacific Rim for higher value light
products that meet increasingly strict environmental standards. By incorporat-
ing the best technologies and operating practices, Caltex intends to be the
most efficient, low-cost manufacturer in its major markets.
Marketing
With average market share of 18% in motor fuels and 20% in lubricants,
Caltex continued to direct over half of its marketing investments in 1993 to
adding and improving retail outlets, especially in the Pacific Rim. Caltex
supplies motor fuels to nearly 18,000 retail outlets in 30 countries.
With its Retail Pacesetter Initiative, Caltex is improving its marketing
effectiveness and profitability through a strategy of product differentia-
tion, value-added marketing and enhancement of brand image. As an element of
that initiative, Caltex introduced the popular Havoline brand motor oil in its
retail markets in March 1994.
MOST OF CALTEX'S CURRENT AND EXPECTED FUTURE EARNINGS COME FROM THE
FOLLOWING OPERATIONS:
Japan
The largest concentration of Caltex refining capacity is in Japan, where
it has 50% interests in Nippon Petroleum Refining Company (NPRC) and Koa Oil
Company. NPRC and Koa sell refined products to the Nippon Oil Company,
Caltex's partner in NPRC. The Caltex-Nippon Group accounts for 16% of the
petroleum products sold in Japan.
Caltex is making substantial investments in additional diesel hydro-
treating and desulfurizing capacity to meet requirements for lower-sulfur
fuels. The Japanese affiliates have also made major petrochemical investments
in recent years to maximize the value of the refinery production streams.
Korea
In the rapidly growing Korean market, Caltex has a 50% interest in the
Honam Oil Company, which operates a 365,000 barrel-a-day refinery and petro-
chemical complex at Yocheon, and a network of nearly 1,800 retail outlets
serving over 25% of the country's motor fuels market. Honam is adding a 50,000
barrel-a-day residuum fluid catalytic cracking unit at Yocheon to meet the
growing demand for light products.
Thailand
A new $1.7 billion, 130,000-barrel-a-day grassroots refinery is planned to
come on stream in 1996 in Thailand, where the petroleum market is expected to
grow by nearly 10% a year. Caltex will have access to 64% of the refinery's
output, which will be marketed through its expanding retail network, current-
ly numbering more than 550 stations.
Singapore
A major hub for Caltex, Singapore is the site of a broad spectrum of
activities in fuels and lubricants manufacturing, oil trading, retail
marketing and the supply of marine and aviation products. Caltex supplies its
local subsidiary, as well as export markets, through a one-third interest in
the Singapore Refining Company, which operates a sophisticated 220,000 barrel-
a-day refinery. Investments underway include the expansion of crude-running
capacity by 60,000 barrels a day and the addition of catalytic cracking,
alkylation and MTBE capacity.
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Hong Kong
Caltex operates a highly profitable retail service station network,
which supplies about 30% of Hong Kong's motor fuel market. The Caltex terminal
on Tsing Yi Island has a storage capacity of more than two million barrels of
products.
China
Home to more than one billion people, China offers huge potential, and
Caltex is exploring opportunities to selectively increase its current rela-
tively limited presence in China. Caltex currently markets in the Shenzhen
area of China through joint ventures with local companies, and participates
in a joint-venture lube blending and marketing company near Shanghai.
Philippines
With almost 1,000 retail outlets serving one-third of the motor fuels
market, Caltex is adding capacity at its wholly owned Batangas refinery to
meet growing demand for light products. The regulated, but profitable,
Philippines market--together with an improving political and economic
climate--offers potential opportunities to expand refining and marketing
operations.
Bahrain
Caltex has a 40% interest in the 253,000 barrel-a-day Bahrain refinery,
in partnership with the government. Its share of the refinery's production is
sold through Caltex's own international trading operations. The partnership
is considering plans to modernize the refinery.
South Africa
Through its 1,000 stations, Caltex Oil South Africa is the leading
gasoline retailer in South Africa, with an 18% share of the overall motor fuel
market. Caltex operates a wholly owned refinery in Capetown and has a 34%
share in a plant in Durban, which makes lube base oils. Caltex plans to
upgrade the Capetown refinery to increase its gasoline yield and to expand
the retail network.
India
Caltex re-entered the petroleum market in India in 1993 through the
formation of a lubricants blending and marketing joint venture with IBP, a
local oil company.
The Caltex strategic plan for the 1990s is to keep in step with the strong
economic and petroleum demand growth expected in its operating areas. Invest-
ment will be focused on profitable, high-growth markets, including some nations
which are only beginning to open their markets to foreign investment.
WORLDWIDE MARKETERS
International Aviation Sales
Texaco's International Aviation Sales Department provides fuel for
airlines and general aviation at more than 500 airports in 58 countries.
International Aviation Sales will continue to focus on maintaining its
strong presence in this business while continuing to reduce overhead costs and
use risk management techniques to enhance its customer portfolio. A great
strength of the company's general aviation business lies in its relationships
with prestigious fixed-base operators at airports around the world.
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Texaco Fuel and Marine Marketing
Operating from 20 offices in 14 countries around the globe, Texaco Fuel
and Marine Marketing (TFAMM) sells 60% of its volume in the marine bunker
market to shipping companies, and the remainder to utilities and other
commercial customers.
While Texaco's current marine fuels and lubricants and bulk sales are
projected to contribute the largest share of total TFAMM earnings, approximate-
ly one-third is expected to flow from strategic initiatives in used oil
recycling, environmental services and new businesses, including:
o Texaco's patented "Trailblazer" used oil recycling plants, the first planned
for completion in April 1994 and located in Marrero, Louisiana. Additional
plants are planned for locations in the United States, Europe and the Far
East.
o Opportunities to expand on the company's expertise with utility and marine
customers to secure long-term sales agreements with developers of power
generation projects.
o Developing technologies and commercial markets that add profitability to
lower value heavy crude oils by conversion to profitable fuel oils.
TRADING AND TRANSPORTATION ACTIVITIES
Texaco's worldwide oil trading and transportation activities provide
for the efficient movement of raw materials and refined products, and also
serve as midstream profit centers for the company.
Oil trading and supply
Texaco Oil Trading and Supply Company (TOTS) is responsible for buying
and selling crude oil, feedstocks and refined products at competitive prices
in international markets to meet the needs of Texaco's various operating
divisions.
In the area of risk management, TOTS provides advice, counsel, contract
execution and position management to many of Texaco's operating divisions.
On a daily basis, TOTS trades about one million "physical" barrels and
two million "paper" barrels, employing a portfolio of trading tools such as
futures, options and various derivative products. These tools help minimize
price risk for Texaco. To maintain this level, TOTS deals with 25 oil
producing nations and 200 trading partners that handle over 85 different
varieties of crude oil and products.
In 1993, TOTS contributed to Texaco's profitability by supplementing
local crude suppliers of the company's refineries with low-cost imported
crude.
U.S. TRADING AND TRANSPORTATION
Texaco Trading and Transportation Inc. (TTTI), a wholly owned subsidiary of
Texaco based in Denver, has interests in a 28,000-mile pipeline network and
trucking operations in 31 states and Canada. These pipeline and trucking
operations moved a daily average of about 3 million barrels of crude oil and
refined products during 1993.
The synergies of TTTI's combined pipeline, trucking and marketing
capabilities, which move oil from thousands of individual lease sites to
customers, set it apart from other operators.
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TTTI's responsibilities include:
o Handling purchases, trades and resales of crude for Texaco in the United
States.
o Marketing Texaco's equity and company-operated production in the United
States.
TTTI pursues a value-added strategy to maximize the use of Texaco's
proprietary pipelines, while seeking to develop profitable global hydrocarbon
marketing and transportation opportunities.
TTTI has upgraded its pipeline delivery systems to ensure the most
economical transportation and supply of crude oil and intermediate products
for the Texaco refineries in California and Kansas. It also established a
connection for a dormant 22-inch-diameter pipeline between Port Arthur,
Texas, and the Louisiana Offshore Oil Port to profitably supply crude oil for
another refiner.
A state-of-the-art operations center in Denver controls all of Texaco's
U.S. mainlines and storage terminals. Tracking data electronically from more
than 10,000 points in the system, the control center is a key to TTTI's
success as a cost-effective, safe and environmentally sound mover of
petroleum.
Marine
The primary responsibility of Texaco's marine operations is to ensure that
the company has access to cost-effective tanker transportation which meets or
exceeds industry and regulatory standards governing ship safety and environ-
mental protection.
At year-end 1993, Texaco's marine fleet included 29 oceangoing tankers,
either owned or under term charter, totaling about 4.2 million deadweight
tons.
Texaco's marine business strategy continues to focus on aligning the
size of the fleet to meet equity needs and the replacement of older, less
efficient ships with more modern and environmentally sound vessels that will
meet the legislative requirements of the 1990s and beyond.
In 1993, Texaco replaced older units trading in the inland waterways of
the U.S. Gulf with two double hull, 25,000-barrel barges.
Through its wholly owned subsidiary, Texaco Marine Services Inc.,
marine operations inspect all vessels worldwide prior to their use by Texaco.
This vessel inspection and approval program assesses the operational and
environmental risks of vessels that are under charter to, calling at facili-
ties that belong to, or carrying cargoes for Texaco.
As part of Texaco's commitment to the environment, marine operations
participate in numerous initiatives, including local and national oil spill
response drills to assure the readiness of emergency procedures.
RESEARCH AND DEVELOPMENT ACTIVITIES
In 1989, when Texaco's research department formulated the pacesetting System3
gasoline, it set the industry standard for engine intake cleanliness. Not con-
tent with that achievement, Texaco chemists at the Beacon, New York, facility
immediately set out to develop the next generation of high-performance, clean
gasolines.
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Formulated in 1993 and introduced to the public in March 1994, New Clean-
System3 goes a step further in cleaning engine deposits by keeping piston tops
and cylinder heads clean, and by removing existing deposits inside the combust-
ion chamber. Not only does this help prevent deposits from forming on new cars,
but it can reduce existing deposits on older cars. Engines running at peak
efficiency, protected from the degrading effects of deposits, produce fewer
emissions and contribute to a cleaner, healthier environment--an important
social consideration and a powerful marketing claim for this product, which has
the added attraction, like its predecessor, of being available in all octane
grades.
Building on its success with New CleanSystem3, Texaco scientists continue
to seek further improvements in gasoline technology. Their tools include the
most sophisticated laser and photographic techniques to understand in minute
detail the reactions that take place during and after combustion inside an
engine.
PURSUING BUSINESS OBJECTIVES
Texaco's technology group closely coordinates its work with the company's
business units in order to best serve their needs. As a result, a number of
improvements in motor fuels, motor oils and lubricants were introduced in 1993.
For example:
o Texaco researchers developed a new, additive-treated diesel fuel that far
exceeds the standards for the European market.
o Acting in close cooperation with marketers from abroad, scientists at the
Beacon, New York, and Ghent, Belgium, laboratories developed Havoline
Synthetic Motor Oil SAE 5W-40. This product, based on 100% synthetic base
stocks of highly refined, pure component chemicals, combined with advanced
lubricant additives, meets or exceeds the stringent requirements of today's
gasoline and light-duty diesel passenger car engines.
o To round out Texaco Lubricants Company's Syn-Star line of industrial
synthetic lubricants, researchers developed new gear lubricants for high-
temperature and extreme-pressure applications, as well as a new product for
high-temperature, chain-drive operations.
o Texaco researchers responded to the auto industry's need for a filled-for-
life, service-free engine coolant by developing a product that combines
efficient heat-transfer fluids with an anti-corrosion additive package.
After exhaustive fleet testing, Ford of Europe has approved Texaco's new
coolant for factory fill and service fill. Texaco's research effort also
led to the production of depletion-free, organic, corrosion inhibitor
packages--including one that is highly biodegradable and low in toxicity
for use in ethylene glycol and propylene glycol coolants, as well as for
water-based fluids.
o Texaco researchers collaborated on the development of a line of biodegrad-
able hydraulic fluids for use by industries such as forestry, farming and
construction, which operate in environmentally sensitive areas. Based on
rapeseed oil and the latest additive technology, these products meet or
exceed European and U.S. requirements for biodegradability and water
toxicity while providing excellent hydraulic fluid properties.
o Since waste minimization is a basic concern of industrial customers, Texaco
researchers have created a fluid management service that can assist customers
in proper product selection and use, monitoring and testing of lubricants in
service, reclamation and refortification of used oils, and disposal of spent
fluids.
Other emerging technologies include:
o A newly developed refinery process called T-STAR. This process for removing
sulfur from fuel oils can be fitted to existing manufacturing units for just
10 to 15% of the cost of a new sulfur recovery unit.
31
<PAGE>
o Texaco researchers have spent years developing unique membrane technology
products and processes for water removal that allow for the economical reuse
of solvents, eliminating waste disposal problems and increasing operational
efficiency. The membrane technology is being offered commercially in North
America and will soon be available in Europe.
o And development is nearly complete for a process to remove most of the
sulfur from naphtha, an important gasoline component, without loss of
octane.
ENVIRONMENTAL BENEFITS
Removal of sulfur from fuels is important because of concern for the
environment, a major consideration in all research and development projects
today. But some research is undertaken solely with the environment in mind.
Texaco's work in the area of bioremediation is one example.
Bioremediation research is aimed at finding ways to accelerate the cleanup
of hydrocarbons in soil from the naturally occurring action of microorganisms.
Researchers have conducted field tests at Texaco's Bakersfield, California,
refinery on a process that corrects for nutrient imbalances and the absence of
oxygen, conditions that slow the natural bioremediation process. These tests
have succeeded in reducing hydrocarbon contamination of soil by 40%, and labor-
atory testing of other promising methods for improving bioremediation rates is
continuing.
EXPLORATION AND PRODUCTION TECHNOLOGY
Application of the latest subsea technology has been capped by the
installation of a state-of-the-art manifold in the Strathspey field 450 feet
beneath the surface of the North Sea. The giant subsea structure collects oil
and natural gas from 14 producing wells in two different reservoirs and sends
it by pipeline to a platform nine miles away for processing and transportation
to the mainland. Without the advances in subsea technology applied by Texaco
at Strathspey, the field's estimated recoverable reserves of 80 million
barrels of oil, 10 million barrels of natural gas liquids and 334 billion
cubic feet of natural gas would have remained locked in the earth, too costly
to produce.
Texaco reserves that are now inaccessible or uneconomical to produce may
become valuable producing properties, and existing fields suffering from de-
clining production rates may have their productive lives prolonged, as a result
of several promising developments:
o Researchers at Texaco's flow research facility near Humble, Texas, are
working on subsea metering and pumping technology, including an "extended
reach" subsea system that will make it possible to transport unseparated
mixtures of crude oil, natural gas and water over distances of more than 30
miles in pipelines laid on the sea floor. Such a system could draw on
reserves of oil and natural gas in deep water, far from existing infrastruc-
ture. And a field test in 1993 of multiphase pump technology at two existing
oil wells in Trinidad's North Soldado field successfully pressure-boosted
production by 150 percent.
o Sumatra's Duri field, operated by the affiliate P.T. Caltex Pacific Indonesia
(CPI), is today the largest steamflood-enhanced oil recovery project in the
world. Advanced steamflooding techniques developed at Duri will be applied
at the shallow Rindu reservoir and at other Sumatran fields that contain the
viscous Duri-grade crude.
o CPI's producing fields in Sumatra may be the first and greatest beneficiaries
of an enhanced oil recovery technology that Texaco researchers have been
perfecting for over a decade. The technology uses lignin, a by-product of
pulp and paper industry operations, as a surfactant flooding agent. Lignin
has several advantages over the petroleum-derived chemicals usually employed
in surfactant flooding, including: it is inexpensive, and it is available in
the enormous quantities needed for flooding operations. Texaco is working
with CPI to determine if lignin technology will be economically attractive
to increase the oil recovery in the light oil fields of Sumatra.
32
<PAGE>
o While the potential of lignin is great, it will not be applicable in every
location. Texaco researchers continue to work on advances in chemical
flooding, such as the use of polymer thickening agents, to increase
production from the Captain Field, now under development in the North Sea.
o Texaco has made use of carbon dioxide as a flooding agent to reverse
declining production from existing fields, most notably at the Mabee Field
in West Texas, where production has increased from 3,000 to 6,500 barrels
a day since 1991. CO2 technology is now being applied at the Bob Slaughter
Block in West Texas, where a new technique for computer simulation predicts
results even better than those at the Mabee Field.
In cooperation with the U.S. Department of Energy (DOE), the company has
combined CO2 flooding with horizontal drilling, another technology in which it
is an industry leader, at the Port Neches Field in East Texas. DOE chose the
project because of its technical merits. Texaco will share information acquired
at Port Neches, along with an easy-to-use personal computer-based simulator,
with the rest of the industry.
SUBSURFACE IMAGING
Management of oil and gas fields can only be as good as the knowledge on
which decisions are based. "Seeing" a true picture of the world beneath the
earth's surface is crucial to low-cost, high-volume production. The team of
engineers, geoscientists and managers assigned to Texaco's large gas cycling
project at Hatter's Pond Field in Alabama found a way to picture the reservoir
there in greater detail than ever before possible by combining a complex,
computerized geological model of the field with the latest three-dimensional
visualization technology, and by developing another computer-driven flow model
that simulates the movement of natural gas in the reservoir. Similarly, new
technology in the science of geostatistics was recently developed to help
engineers and geologists at Texaco's large Kern River steamflood operation in
California "see" sub-surface shale barriers that can cause injected steam to
be wasted, a major operating expense. This development in geostatistics is a
very new technology, yet it is already used routinely to improve the
productivity and profitability of the California field.
Kern River is also home to Texaco's Environmental Oil Alert System (EOA),
an important advance in water purification technology developed by Texaco
researchers. Enormous quantities of water produced along with oil must be
separated, purified and either injected back into underground reservoirs or
discharged above ground. The automatic EOA system uses light beams carried by
fiber optic probes to measure oils and solids in water 20 times a second, 24
hours a day, providing instant notice of impurities in all types of produced
water.
At Kern River, the EOA efficiently maintains water quality by auto-
matically increasing the injection rate of purifying chemicals when it detects
a rise in oil levels in water, and decreases the rate when oil levels fall. The
EOA monitors the purity of 350,000 barrels of produced water that Texaco pro-
vides daily for irrigation in the nearby San Joaquin Valley.
The success of the environmental oil alert system at Kern River is now
being replicated on Texaco producing platforms in the Gulf of Mexico.
IMPROVED EXPLORATION TECHNIQUES
Getting the most out of existing reserves and producing properties is one of
two ways to add value upstream; the other, of course, is discovering new
reserves of oil and natural gas. Texaco researchers made two advances in 1993
that will prove important to explorationists: an airborne sensor for both
exploration and environmental applications, and a magnetic mapping technique
that should prove attractive to a broad spectrum of energy and minerals
companies.
33
<PAGE>
o TEEMS (Texaco Exploration and Environmental Multispectral Spectrometer)
will examine the earth's surface from an airplane, searching for signatures
from the electromagnetic spectrum that indicate the possibility of hydro-
carbon reserves beneath the surface. Now in the final stages of assembly,
TEEMS is a highly advanced technology that will improve the results gained
from remote sensing devices carried by satellites, especially in detecting
natural hydrocarbon seeps; identifying and mapping rock formations;
monitoring the environmental impact of operations; and planning for seismic
programs, drilling sites, pipelines and physical plants.
o STARMAG is a patented magnetic mapping technique, co-developed by Texaco
researchers, that uses artificial intelligence technology to provide faster
magnetic interpretation and more accurate mapping of basement features.
Described as the first significant breakthrough in aeromagnetic interpreta-
tion in 20 years, STARMAG will generate greater efficiency and lower costs
by reducing the need for seismic data acquisition, particularly in frontier
areas, and decreasing the time spent on mapping and interpretation.
ALTERNATE ENERGY
Through a diverse slate of business initiatives, including cogeneration
operations, gasification projects and technology licensing, the Alternate
Energy group complements Texaco's position as a fully integrated, customer-
focused energy company.
COGENERATION
Texaco's expertise in cogeneration--the simultaneous production of two
energy streams, electricity and steam, from a single fuel source--grew out of
the company's experience in generating energy for its own producing and
refinery operations. Today, cogeneration has grown to become a significant
business, providing cost savings for Texaco's production and refining
divisions.
Together with joint-venture partners, Texaco owns and operates nine
cogeneration facilities located in California, Nevada and Washington with a
combined capacity of 1,057 megawatts--enough electricity to light more than
one million homes. At the same time, these facilities produce 4.8 million
pounds per hour of steam for producing and refining oil, and 825,000 pounds
per hour of process heat for other industrial uses.
Strategic alliances with key energy partners position Texaco for further
growth in expanding cogeneration markets in the United States and overseas.
Texaco is working with Caltex toward a potential cogeneration application at
the Batangas refinery in the Philippines, and a second cogeneration project in
Thailand.
Texaco's record of success in cogeneration extends to day-to-day oper-
ations as well. In 1993, General Electric cited Texaco's Kern River and
Sycamore Cogeneration facilities for superior operations and the highest
level of turbine reliability of all of GE's large, 75-megawatt Frame 7 turbine
customers worldwide. Another award, for predictive maintenance activities at
the Kern River and Sycamore cogeneration plants, was conferred by the
Reliability Based Maintenance Association at its 1993 Technology Conference.
Superior environmental performance is a key element in Texaco's approach
to power generation. Texaco's Sargent Canyon and Salinas River plants in Cali-
fornia, for example, are the first commercial cogeneration facilities to
implement state-of-the-art technology that not only reduces emissions of
nitrogen oxides, but also conserves groundwater.
The Sargent Canyon facility also installed a pioneering approach to
efficient energy use in 1993. Here, surplus electric power produced during
low-load nighttime hours is used to produce ice, which is then stored for use
during hot periods to cool air in the plant's combustion turbine. This cooler,
denser air improves turbine output efficiency by up to 8%, increasing the
amount of electricity the turbine produces without increasing the amount
of gas.
34
<PAGE>
The Alternate Energy Group's partnership strategy continues to drive
opportunities for the development of new cogeneration projects. For example,
the 1993 sale of a 50% partnership interest in Texaco's 85-MW Black Mountain
facility in Nevada to Destec Energy, a leading independent power producer,
opened opportunities for further joint ventures with Destec in power generat-
ion in Nevada and elsewhere.
GASIFICATION
In addition to cogeneration, Texaco's Alternate Energy group develops and
licenses facilities incorporating Texaco's proprietary and environmentally
advanced gasification technology, which converts feedstocks, including coal,
heavy oil, petroleum coke, orimulsion and wastes into clean synthetic gas to
produce electricity, chemicals, fuel gas, methanol, fertilizer and other pro-
ducts. Worldwide, Texaco-owned and licensed gasification facilities in operat-
ion or under development will produce more than 2.5 billion standard cubic feet
a day of "syngas" for refinery operations, utilities and other industrial
purposes.
Since 1991, Texaco's Alternate Energy group has issued licenses for the
development of five Texaco Gasification Power Systems (TGPS) facilities in the
United States and Italy.
Strict environmental regulations in Italy limit the use of high-sulfur
heavy oil. The Texaco Gasification Process has achieved success in Italy be-
cause it can use this feedstock to produce electricity and other products with-
out the negative environmental impacts typically associated with the fuel. The
latest project under development in Italy will gasify 20,000 barrels a day of
high-sulfur heavy oil residue to produce electricity, hydrogen and steam for
refinery use. Additional electric power will be sold to the local utility
company and the facility will produce sulfur as a by-product for export.
In the United States, Texaco continued to support through a new engineer-
ing contract, the 260-MW coal-fueled Integrated Gasification Combined Cycle
(IGCC) power plant to be built in Polk County, Florida. Tampa Electric Company
will operate the facility. Altogether, Texaco-licensed gasification power
facilities under development will generate more than 1,800 MW of electricity.
While the Texaco Gasification Process is gaining wider acceptance as an
environmentally superior power technology, it continues to enjoy success in the
production of chemicals, one of the original applications of the technology.
Texaco recently completed a license agreement for an eleventh gasification
facility in China. At the Shanghai Coking and Chemical Plant, Texaco's gasific-
ation technology will be used to convert coal to syngas for the production of
acetic acid. This new gasifier will join another, already under construction,
which will convert coal into town gas for residential heating and cooking.
Texaco is now exploring opportunities to develop TGPS facilities in China to
meet a rapidly growing demand for clean energy using indigenous resources.
As part of its initiative to further expand applications for gasification,
the Alternate Energy group continues research in the use of waste materials as
feedstocks for future gasification power generation projects.
For example, Texaco is planning a gasification facility that will convert
refinery waste and low-value petroleum coke into electricity and steam for
refinery operations. Research is also continuing at Texaco's gasification
research lab into producing syngas, power and chemicals from municipal sewage
sludges, household plastics, used oil, tires and a variety of refining and in-
dustrial waste streams.
In one of its most striking experiments, Texaco collected tires from
racing teams at the Indianapolis Raceway in 1993. The tires were liquefied
in motor oil and converted into clean syngas at Texaco's gasification research
laboratory in Montebello, California, in a dramatic demonstration of the en-
vironmental potential of the Texaco Gasification Process.
35
<PAGE>
TECHNOLOGY LICENSING
In conjunction with its cogeneration and gasification initiatives, the
Alternate Energy group offers a portfolio of technologies available for
licensing worldwide. These technologies provide refiners with the most ad-
vanced commercial means of producing lube oils and clean transportation fuels.
Texaco technologies such as T-Star, H-Oil, HyTex and hydrotreating enable
refiners and chemical manufacturers to produce and market high-quality products
and feedstocks in a clean, safe and efficient manner.
In 1993, Texaco executed licensing agreements for refinery and lube oil
technology in Thailand, Russia and Poland.
STRATEGIES
Building on a solid foundation of experience, technical know-how and
creative business strategies, Texaco's Alternate Energy group provides the
company with an expanded portfolio of state-of-the art, environmentally
advanced and commercially attractive energy opportunities.
Supporting the utility, producing, refining and chemical industries, the
Alternate Energy group has established a reputation as a quality-driven
organization with a focus on customer service and technological innovation.
In industrialized nations as well as in developing countries and those in
transition to free market economies, the demand for clean, efficient and cost-
effective energy technologies offers Texaco an opportunity to further
strengthen its role as a leading worldwide supplier of energy products and
technologies.
ENVIRONMENTAL, HEALTH AND SAFETY ACTIVITIES
As a major international energy supplier, Texaco must balance the demands
of its customers for plentiful, affordable energy with heightened expectations
that we will be effective stewards of the environment, as well as protectors
of employee health and safety and that of the communities that surround
Texaco's workplaces. Toward that end, Texaco's Environment, Health and Safety
Division is supported by hundreds of skilled professionals in the company's
operating departments around the world.
In 1993, Texaco spent nearly $800 million on air, water and solid waste
management programs worldwide, bringing its total for the past three years
to $2.1 billion. During the year, Texaco's concentrated efforts to strengthen
environmental, health and safety performance included:
o Greater coordination of companywide audits to improve operating performance,
accident prevention and compliance with government regulations. In 1993,
corporate audit teams, supported by independent consultants, conducted 160
environmental, health and safety audits worldwide, as well as 100 hazard
assessments. Recently, the environmental consultant Arthur D. Little, Inc.
certified Texaco's corporate environmental audit program for the fourth
consecutive year as one of the leading audit programs in our industry.
o Expansion of Texaco's global oil spill cleanup capabilities. In 1993, Texaco
strengthened its worldwide network for oil spill response by introducing a
sophisticated strike force capability that can help Texaco react more quickly
to any major spill, whether in West Africa, the Middle East or the Far East.
36
<PAGE>
o Reductions of emissions from plant sites. These reductions, in support of
the U.S. Environmental Protection Agency programs calling for reductions in
the release of 17 specific toxic chemicals from plant sites, surpassed the
goal by achieving an aggregate emissions cut of 37%.
o Continued random drug testing for safety-sensitive positions as part of
Texaco's progress toward making the workplace safer. Of the more than 5,000
U.S. employees tested in 1993, only 0.48% tested positive, well below the
average rate for comparable companies. In random testing of employees on
the company's international tanker fleet, no one tested positive for drug
use.
Texaco also made progress during 1993 in a number of environmental, health
and safety areas related to its products, workplaces and employee medical
programs. By promoting aggressive safety practices, Texaco once again achieved
a lost-time injury and illness record that was among the most favorable in
U.S. industry.
Concern about the impact of Texaco's operations on the communities in
which it operates extends to its ongoing remediation of waste sites, including
efforts at Superfund sites where Texaco has been designated a potentially
responsible party.
Because provisions in the Superfund legislation are unfair, cleanups have
been delayed and a large portion of the money spent by industry has gone for
legal and administrative costs. Texaco is a strong proponent of Superfund
reform, and has been active in the public policy debate on the reforms
needed to make the Superfund law more equitable, efficient and effective.
Through its Alternate Energy group, Texaco is exploring ways to use
gasification technology to convert industrial, commercial and residential
waste streams, including contaminated soils, into clean energy. This will
add greater value to Texaco's technology while providing an environmentally
superior solution to the challenges of waste management. Texaco recently
completed a cooperative program with the U.S. Environmental Protection
Agency to demonstrate the technical feasibility of using the Texaco
Gasification Process to remediate Superfund wastes.
Texaco is also working with peer companies throughout the business world
to help governments at every level frame more cost-effective approaches to
meet society's environmental expectations.
37
<PAGE>
Item 3. Legal Proceedings
Litigation - Information relative to legal proceedings pending against
Texaco Inc. and subsidiary companies is presented in Note 18, Contingent
Liabilities, on page 53 of Texaco Inc.'s 1993 Annual Report to Stockholders,
which note is incorporated herein by reference.
As of December 31, 1993, Texaco Inc. and its subsidiaries were
parties to various proceedings instituted by governmental authorities arising
under the provisions of applicable laws or regulations relating to the
discharge of materials into the environment or otherwise relating to the
protection of the environment, none of which is material to the business or
financial condition of the Company. The following is a brief description of
proceedings which, because of the amounts involved, require disclosure under
applicable Securities and Exchange Commission regulations.
The Virgin Islands Water and Power Authority ("WAPA") filed suit
against Texaco Inc., Texaco Caribbean Inc. and Texaco Puerto Rico Inc.
("TPRI") in December 1991, in the U.S. District Court for the District of
the Virgin Islands alleging that a leak from an underground storage tank
at a Texaco service station in St. Croix contaminated a WAPA water well.
In addition to unspecified damages, WAPA is seeking civil penalties of up
to $10,000 per day. The company is contesting liability.
In an administrative proceeding pending before the State of
Pennsylvania Department of Environmental Resources, the State alleges that
hydrocarbons were discharged into groundwaters at the Pittsburgh Terminal,
formerly owned by Texaco Refining and Marketing Inc. ("TRMI"), in
violation of the State's Clean Streams Act and Solid Waste Disposal
Act. The State is seeking penalties of $450,000. The company is
contesting liability.
An administrative complaint was served on Texaco Chemical Company
("TCC") by the U.S. Environmental Protection Agency ("EPA"), Region VI on
June 9, 1992, alleging certain violations of the State Implementation Plan
at TCC's Port Neches, Texas chemical plant. The EPA is seeking penalties
of $149,000. TCC is contesting liability.
An administrative complaint was served on TCC by the EPA, Region VI,
on December 28, 1992, alleging hazardous waste, PCB, release notification
and reporting violations by TCC's Port Neches chemical plant. The EPA is
seeking civil penalties of $3.8 million. TCC is contesting liability.
In June 1993, the South Coast Air Quality Management District issued
four Notices of Violations against TRMI in connection with an explosion
and fire that occurred at TRMI's Los Angeles Refinery on October 8, 1992.
The District is seeking civil penalties of $3.5 million under California's
Health and Safety Code, alleging environmental nuisance and permit
violations. The company is contesting liability.
In September 1993, the Northwest Air Pollution Control Agency
("Agency") instituted an administrative proceeding alleging that emissions
from TRMI's fluid catalytic cracking unit at the Puget Sound Refinery
exceeded the standards established under the state permit provisions of
the Federal Clean Air Act. The Agency is seeking civil penalties of $3.3
million. The company is contesting liability.
38
<PAGE>
In December 1993, TPRI settled an administrative proceeding
instituted in March 1993 by the EPA, Region II, alleging that TPRI's
gasoline terminal at Catano, Puerto Rico violated the Clean Water Act by
exceeding the effluent limitation of its National Pollutant Discharge
Elimination System permit and by failing to comply with certain monitoring
and reporting requirements. TPRI paid a $42,000 penalty and agreed to
upgrade the pollution control equipment at its facility.
In January 1994, TRMI settled the claim against it in a suit that was
brought against it and six unrelated parties in February 1993 by the U.S.
Department of Justice and the EPA. The suit alleged noncompliance with an
EPA Unilateral Administrative Order issued under the Resource Conservation
and Recovery Act to clean up the Powder River Crude Processors Site in
Glenrock, Wyoming. Upon the expiration of a public comment period, a
proposed Consent Decree will be presented to the Court for its approval.
On February 1, 1994, Texaco Inc. and the EPA, Region II filed with
the U.S. District Court for the District of New Jersey a proposed consent
decree terminating a suit that had been filed in 1991 by the EPA against
Texaco and six unrelated parties. The suit alleged violations of the
Comprehensive Environmental Response, Compensation, and Liability Act,
because of the defendants' alleged failure to comply with a 1985
administrative order. The consent decree calls for Texaco to pay a portion
of EPA's cleanup costs and is expected to be approved by the court
following a public comment period.
In addition, Texaco Inc. on behalf of itself and its subsidiaries and
affiliates has agreed to participate in the U.S. Environmental Protection
Agency's Toxic Substances Control Act ("TSCA") Section 8(e) Compliance Audit
Program. There are 125 participants in this program. As a participant, Texaco
has agreed to audit its files for materials which under current EPA
guidelines would be subject to substantial risk notification under Section
8(e) of TSCA and to pay stipulated penalties for each such report submitted
under this program. Based on its audit to date, Texaco estimates that its
liability will be in excess of $100,000, but is unable to calculate the exact
amount at this time. However, under this program, Texaco's liability cannot
exceed $1 million in the aggregate. No administrative proceeding is pending;
however, Texaco will be required to enter an Administrative Order On Consent
pursuant to this program in late 1994 or 1995.
-------------------
On February 22, 1994, the U.S. District Court for the Middle District
of Louisiana approved a global settlement of the suit which had been
initiated in 1987, in which the State of Louisiana had sought payment of
alleged underpaid royalties on State gas leases, interest, cancellation of
the leases, double royalties and attorneys' fees. The settlement, for which
sufficient financial reserves had been established, provides for payments by
Texaco totaling $250 million, $150 million of which was paid on February 28,
1994, and two $50 million payments to be made over the next two years. Texaco
also agreed to cause $152 million to be spent over the next five years on
activity and investment affecting state-owned oil and gas properties in which
Texaco has interests. Texaco and the State exchanged comprehensive releases
of all pending and related claims.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
-------------------
39
<PAGE>
Executive Officers of Texaco Inc.
The executive officers of Texaco Inc. as of March 28, 1994 are:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Alfred C. DeCrane, Jr. 62 Chairman of the Board and Chief Executive Officer
Allen J. Krowe 61 Vice Chairman and Chief Financial Officer
Peter I. Bijur 51 Senior Vice President
C. Robert Black 58 Senior Vice President
James L. Dunlap 56 Senior Vice President
William K. Tell, Jr. 60 Senior Vice President
Stephen M. Turner 55 Senior Vice President and General Counsel
John D. Ambler 59 Vice President
J. Donald Annett 59 Vice President
Clarence P. Cazalot, Jr. 43 Vice President
David C. Crikelair 46 Vice President
Ralph S. Cunningham 53 Vice President
Carl B. Davidson 60 Vice President and Secretary
Richard R. Dickinson 63 Vice President
William P. Doyle 62 Vice President
Patrick J. Lynch 56 Vice President
Thomas M. Matthews 50 Vice President
Donald H. Schmude 58 Vice President
Elizabeth P. Smith 44 Vice President
Robert A. Solberg 48 Vice President
Glenn F. Tilton 45 Vice President
Michael N. Ambler 57 General Tax Counsel
Robert C. Oelkers 49 Comptroller
Robert W. Ulrich 60 Treasurer
</TABLE>
For more than five years, each of the officers of Texaco Inc. listed
above, except Stephen M. Turner and Ralph S. Cunningham, has been actively
engaged in the business of Texaco Inc. or one of its subsidiary or affiliated
companies.
Mr. Turner joined Texaco in 1989 as Senior Vice President and General
Counsel. Prior to joining Texaco, Mr. Turner was a partner of Squire, Sanders
& Dempsey and had been with that firm for twenty-one years. Mr. Cunningham
joined Texaco in 1990 after having served as Chairman and Chief Executive
Officer of Clark Oil & Refining Corporation in 1989 and early 1990. Prior to
that, he had been President and Chief Executive Officer of Tenneco Processing
and Marketing.
There is no family relationship among any of the officers of Texaco Inc.
40
<PAGE>
PART II
The following information, contained in Texaco Inc.'s 1993 Annual
Report to Stockholders, is incorporated herein by reference. The page
references indicated are to the actual and complete paper document version
of Texaco Inc.'s 1993 Annual Report to Stockholders, as provided to each
stockholder:
<TABLE>
<CAPTION>
1993
Annual Report to
Stockholders
Form 10-K Item Page Reference
- -------------- ----------------
<S> <C>
Item 5. Market for Texaco Inc.'s Common Equity and Related
Stockholder Matters 65(a)
Item 6. Selected Financial Data 64
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 24-33
Item 8. Financial Statements and Supplementary Data
Statement of Consolidated Income 34
Statement of Consolidated Retained Earnings 34
Consolidated Balance Sheet 35
Statement of Consolidated Stockholders' Equity 36
Statement of Consolidated Cash Flows 37
Notes to Consolidated Financial Statements 38-54
Report of Independent Public Accountants 55
Supplemental Information on Oil and Gas Producing Activities 56-62
Selected Quarterly Financial Data 63
Item 9. Changes in and Disagreements with Accountants on Not
Accounting and Financial Disclosure Applicable
<FN>
- -------------
(a) Only data provided under the captions Market Information and Common Stock Dividends
are deemed to be filed as part of this Annual Report on Form 10-K.
</TABLE>
PART III
Information provided under the following captions, which will be
contained in the forthcoming Proxy Statement of Texaco Inc. relating to the
1994 Annual Meeting of Stockholders, is incorporated herein by reference:
Item 10. Directors and Executive Officers of Texaco Inc.
- Information Concerning the Board of Directors and its Committees and
Compensation of Directors
- Item 1 - Election of Directors
Item 11. Executive Compensation
- Information Concerning the Board of Directors and its Committees and
Compensation of Directors
- Compensation Committee Report
- Summary Compensation Table
- Option Grants in 1993
- Aggregated Option Exercises in 1993 and Year-End Option Values
- Five-Year Comparison -- Cumulative Return to Shareholders
- Six-Year Comparison -- Cumulative Return to Shareholders
- Retirement Plan
Item 12. Security Ownership of Certain Beneficial Owners and Management
- Voting Securities
- Security Ownership of Directors and Management
Item 13. Certain Relationships and Related Transactions
- Other Relationships
41
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following information, contained in Texaco Inc.'s 1993 Annual Report
to Stockholders, is incorporated herein by reference. The page references
indicated are to the actual and complete paper document version of Texaco
Inc.'s 1993 Annual Report to Stockholders, as provided to each stockholder:
<TABLE>
<CAPTION>
1993
Annual Report
To Stockholders
Page Reference
---------------
(a) The following documents are filed as part of this report:
<S> <C>
1. Financial Statements (incorporated by reference from the indicated
pages of Texaco Inc.'s 1993 Annual Report to Stockholders)
Statement of Consolidated Income for the three years
ended December 31, 1993 34
Statement of Consolidated Retained Earnings for the three years
ended December 31, 1993 34
Consolidated Balance Sheet at December 31, 1993 and 1992 35
Statement of Consolidated Stockholders' Equity
for the three years ended December 31, 1993 36
Statement of Consolidated Cash Flows for the three years
ended December 31, 1993 37
Notes to Consolidated Financial Statements 38-54
Report of Independent Public Accountants 55
1993 Annual Report
2. Financial Statement Schedules on Form 10-K
------------------
Report of Independent Public Accountants on Financial
Statement Schedules 45
Schedule V - Properties, Plant and Equipment, at Cost 46
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Properties, Plant and Equipment 47-48
Caltex Group of Companies Combined Financial Statements and
Schedules, the investments in which are accounted for on the
equity method and are filed as part of this report.
</TABLE>
Financial statements and schedules of certain affiliated companies
have been omitted in accordance with the provisions of Rule 3.09 of
Regulation S-X.
Schedules I, II, III, IV, VII, VIII, IX, X, XI, XII, XIII and XIV are
omitted as permitted under Rule 4.03 and Rule 5.04 of Regulation S-X.
3. - Exhibits
- (3.1) Copy of Restated Certificate of Incorporation of
Texaco Inc., as amended to and including December
22, 1992, including Certificate of Designations,
Preferences and Rights of Series B ESOP Convertible
Preferred Stock, Series C Variable Rate Cumulative
Preferred Stock, Series D Junior Participating
Preferred Stock, Series E Variable Rate Cumulative
Preferred Stock, Series F ESOP Convertible
Preferred Stock and Series G, H, I and J Market
Auction Preferred Shares, filed as Exhibit 3.1 to
Texaco Inc.'s Annual Report on Form 10-K for 1992
dated March 17, 1993, incorporated herein by
reference.
- (3.2) Copy of By-Laws of Texaco Inc., as amended to and
including February 26, 1993, filed as Exhibit 3.2
to Texaco Inc.'s Annual Report on Form 10-K for
1992 dated March 17, 1993, incorporated herein
by reference.
- (4) Instruments defining the rights of holders of long-
term debt of Texaco Inc. and its subsidiary
companies are not being filed, since the total
amount of securities authorized under each of such
instruments does not exceed 10 percent of the total
assets of Texaco Inc. and its subsidiary companies
on a consolidated basis. Texaco Inc. agrees to
furnish a copy of any instrument to the Securities
and Exchange Commission upon request.
42
<PAGE>
- (10(iii)(a)) Texaco Inc.'s Stock Incentive Plan, incorporated by
reference to pages A-1 through A-8 of Texaco Inc.'s
proxy statement dated April 5, 1993, SEC File
No. 1-27.
- (10(iii)(b)) Texaco Inc.'s Stock Incentive Plan, incorporated by
reference to pages IV-1 through IV-5 of Texaco
Inc.'s proxy statement dated April 10, 1989, as
such Plan was amended by Exhibit A to Texaco Inc.'s
proxy statement dated March 29, 1991, incorporated
herein by reference, SEC File No. 1-27.
- (10(iii)(c)) Texaco Inc.'s Incentive Bonus Plan, incorporated by
reference to page IV-5 of Texaco Inc.'s proxy
statement dated April 10, 1989, SEC File No. 1-27.
- (10(iii)(d)) Description of Texaco Inc.'s Supplemental Pension
Benefits Plan, incorporated by reference to pages
8 and 9 of Texaco Inc.'s proxy statement dated
March 17, 1981, SEC File No. 1-27.
- (10(iii)(e)) Description of Texaco Inc.'s Revised Supplemental
Plan, incorporated by reference to pages 24 through
27 of Texaco Inc.'s proxy statement dated March 9,
1978, SEC File No. 1-27.
- (10(iii)(f)) Description of Texaco Inc.'s Revised Incentive
Compensation Plan, incorporated by reference to
pages 10 and 11 of Texaco Inc.'s proxy statement
dated March 13, 1969, SEC File No. 1-27.
- (11) Computation of Earnings Per Share of Common Stock
of Texaco Inc. and Subsidiary Companies.
- (12.1) Computation of Ratio of Earnings to Fixed Charges
of Texaco on a Total Enterprise Basis.
- (12.2) Definitions of Selected Financial Ratios.
- (13) Copy of those portions of Texaco Inc.'s 1993 Annual
Report to Stockholders that are incorporated by
reference into this Annual Report on Form 10-K.
- (21) Listing of significant Texaco Inc. subsidiary
companies and the name of the state or other
jurisdiction in which each subsidiary was organized.
- (23) Consent of Arthur Andersen & Co.
- (24) Powers of Attorney for the Directors and certain
Officers of Texaco Inc. authorizing, among other
things, the signing of Texaco Inc.'s Annual Report
on Form 10-K on their behalf.
43
<PAGE>
(b) - Reports on Form 8-K.
During the fourth quarter of 1993, Texaco Inc. filed Current Reports on
Form 8-K relating to the following events:
1. October 20, 1993 (date of earliest event reported: October 20, 1993)
Item 5. Other Events--reported that Texaco issued an Earnings Press
Release for the third quarter and first nine months of 1993. Texaco
appended as an exhibit thereto a copy of the Press Release entitled
"Texaco Reports Results for the Third Quarter and First Nine Months
of 1993" dated October 20, 1993.
2. October 28, 1993 (date of earliest event reported: October 27, 1993)
Item 5. Other Events--reported that Texaco Capital LLC, a wholly
owned finance subsidiary of Texaco Inc. issued $350 million of
Cumulative Guaranteed Monthly Income Preferred Shares ("MIPS"),
Series A in a public offering. The MIPS were offered at $25 per
share with an annual dividend rate of 6-7/8% and are callable at par
after five years. Texaco appended as exhibits thereto copies of the
Certification of Designation of Rights and Preferences of Texaco
Capital LLC's 6-7/8% Cumulative Guaranteed Monthly Income Preferred
Shares, Series A and the Press Release entitled "Texaco Announces
Public Issuance of $350 Million in Preferred Shares" dated October
27, 1993.
3. December 23, 1993 (date of earliest event reported: December
22, 1993)
Item 5. Other Events--reported that the United States Tax Court
issued an opinion favorable to Texaco on a claim by the Internal
Revenue Service arising out of the company's handling of crude oil
purchased through Aramco from Saudi Arabia during the years 1979
through 1982, the so-called "Aramco Advantage" period. Texaco
appended as an exhibit thereto a copy of the Press Release entitled
"Texaco Comments on Tax Court's Favorable Decision In So-Called
'Aramco Advantage' Case" dated December 22, 1993.
44
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO TEXACO INC.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Texaco Inc.'s Annual Report
to Stockholders incorporated by reference in this Form 10-K, and have issued
our report thereon dated February 24, 1994. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
Financial Statement Schedules on pages 46 through 48 are the responsibility
of the Company's management and are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as
a whole.
Arthur Andersen & Co.
New York, N.Y.
February 24, 1994.
45
<PAGE>
SCHEDULE V
<TABLE>
<CAPTION>
TEXACO INC. AND SUBSIDIARY COMPANIES
SCHEDULE V - PROPERTIES, PLANT AND EQUIPMENT, AT COST
For the Years Ended December 31, 1993, 1992 and 1991
(In Millions of Dollars)
- -----------------------------------------------------------------------------------------------------------------
Balance at Other Balance
beginning Additions Retirements changes, add at end of
Description of period at cost or sales (deduct)(a) period
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1993 (b)
Exploration and production $24,840 $ 1,116 $ 1,161 $ (36) $24,759
Manufacturing 2,538 230 15 179 2,932
Marketing 2,946 324 117 (30) 3,123
Marine 414 4 39 - 379
Pipe lines 990 38 5 (108) 915
Petrochemical 1,885 91 24 (1,952) -
Other 1,040 41 38 (2) 1,041
------- ------- -------- --------- -------
Total $34,653 $ 1,844 $ 1,399 $ (1,949) $33,149
======= ======= ======== ======== =======
Year 1992
Exploration and production $24,969 $ 1,181 $ 1,307 $ (3) $24,840
Manufacturing 2,280 277 20 1 2,538
Marketing 2,759 313 111 (15) 2,946
Marine 445 4 35 - 414
Pipe lines 965 27 7 5 990
Petrochemical 1,685 213 14 1 1,885
Other 1,000 61 19 (2) 1,040
------- ------- -------- -------- -------
Total $34,103 $ 2,076 $ 1,513 $ (13) $34,653
======= ======= ======== ======== =======
Year 1991
Exploration and production $24,223 $ 1,388 $ 616 $ (26) $24,969
Manufacturing 2,021 272 7 (6) 2,280
Marketing 2,512 370 106 (17) 2,759
Marine 474 5 35 1 445
Pipe lines 939 33 3 (4) 965
Petrochemical 1,510 186 9 (2) 1,685
Other 912 92 12 8 1,000
------- -------- -------- -------- -------
Total $32,591 $ 2,346 $ 788 $ (46) $34,103
======= ======== ======== ======== =======
<FN>
- --------------
(a) This column represents net transfers and adjustments.
(b) The column"other changes" also includes the reclassification, effective September 30, 1993, of Properties,
Plant and Equipment of discontinued petrochemical operations and dedicated pipeline assets to a separate
balance sheet line caption "Net assets of discontinued operations." Petrochemical assets which will be
retained by Texaco have been transferred to manufacturing.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VI
TEXACO INC. AND SUBSIDIARY COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTIES, PLANT AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
(In Millions of Dollars)
- -----------------------------------------------------------------------------------------------------------------
Balance at Additions Other Balance
beginning charged to Retirements changes, add at end of
Description of period income(a)(d) or sales (deduct)(b) period
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1993 (c)
Exploration and production $15,807 $ 1,218 $ 1,065 $ (30) $15,930
Manufacturing 918 106 13 30 1,041
Marketing 812 150 77 (12) 873
Marine 264 20 30 - 254
Pipe lines 533 24 3 (36) 518
Petrochemical 748 61 24 (785) -
Other 345 50 32 (1) 362
------- -------- -------- -------- -------
Total $19,427 $ 1,629 $ 1,244 $ (834) $18,978
======= ======== ======== ======== =======
Year 1992
Exploration and production $15,820 $ 1,187 $ 1,198 $ (2) $15,807
Manufacturing 831 96 10 1 918
Marketing 758 137 85 2 812
Marine 275 20 31 - 264
Pipe lines 506 30 5 2 533
Petrochemical 672 92 14 (2) 748
Other 297 63 15 - 345
------- -------- -------- -------- -------
Total $19,159 $ 1,625 $ 1,358 $ 1 $19,427
======= ======== ======== ======== =======
Year 1991
Exploration and production $15,211 $ 1,179 $ 557 $ (13) $15,820
Manufacturing 749 87 7 2 831
Marketing 717 130 87 (2) 758
Marine 280 21 24 (2) 275
Pipe lines 481 30 3 (2) 506
Petrochemical 613 64 5 - 672
Other 263 46 13 1 297
------- -------- --------- -------- -------
Total $18,314 $ 1,557 $ 696 $ (16) $19,159
======= ======== ========= ======== =======
<FN>
- -----------------
(a) Reference is made to Note 1, Description of Significant Accounting Policies_Properties, Plant and Equipment
and Depreciation, Depletion and Amortization, on page 38, included in Texaco Inc.'s 1993 Annual Report to
Stockholders for a description of the methods used in computing the annual provision for depreciation,
depletion and amortization of properties, plant and equipment. In view of the numerous depreciation
classifications of properties, Texaco deems it impracticable to furnish a schedule of depreciation rates.
(b) This column represents net transfers and adjustments.
(Footnotes are continued on next page.)
47
<PAGE>
(Footnotes continued from prior page.)
(c) The column "other changes" also includes the reclassification, effective September 30, 1993, of
Accumulated Depreciation and Amortization of Properties, Plant and Equipment of discontinued
petrochemical and dedicated pipeline assets to a separate balance sheet line caption "Net assets of
discontinued operations." Amounts associated with petrochemical assets which will be retained by Texaco
have been transferred to manufacturing.
(d) Additions charged to income, as shown above, are reconciled with amounts included in the statement of
consolidated income, as follows:
In Millions of Dollars
----------------------------
1993 1992 1991
---- ---- ----
Continuing Operations
---------------------
Depreciation, Depletion and Amortization expense
per Statement of Consolidated Income $1,568 $1,536 $1,496
Less - Amortization credited directly to the asset accounts 2 2 3
------ ------ ------
Total Continuing Operations 1,566 1,534 1,493
Discontinued Operations
-----------------------
Amounts of Depreciation and Amortization included in net
income (loss) from discontinued operations 63 91 64
------ ------ ------
Additions charged to income $1,629 $1,625 $1,557
--------------------------- ====== ====== ======
</TABLE>
48
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the Town of
Harrison, State of New York, on the 28th day of March, 1994.
TEXACO INC.
(Registrant)
Carl B. Davidson
By ----------------------------
(Carl B. Davidson)
Vice President and Secretary
Attest:
R. E. Koch
By -------------------------
(R. E. Koch)
Assistant Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the date indicated.
Alfred C. DeCrane, Jr. Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
Allen J. Krowe Vice Chairman and Chief Financial Officer
(Principal Financial Officer)
Robert C. Oelkers Comptroller
(Principal Accounting Officer)
Directors:
Robert A. Beck Allen J. Krowe
John Brademas Thomas S. Murphy
Willard C. Butcher Charles H. Price, II
Edmund M. Carpenter Robin B. Smith
Admiral William J. Crowe, Jr. William C. Steere, Jr.
Alfred C. DeCrane, Jr. Thomas A. Vanderslice
Franklyn G. Jenifer William Wrigley
James W. Kinnear
R. E. Koch
By ----------------------------------------
(R. E. Koch)
Attorney-in-fact for the above-named
officers and directors
March 28, 1994
49
<PAGE>
CALTEX GROUP OF COMPANIES
COMBINED FINANCIAL STATEMENTS
AND SCHEDULES
December 31, 1993
<PAGE>
CALTEX GROUP OF COMPANIES
COMBINED FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1993
INDEX
Schedule
Number Page
General Information 1-2
Independent Auditors' Report 3
Combined Balance Sheet 4-5
Combined Statement of Income 6
Combined Statement of Retained Earnings 7
Combined Statement of Cash Flows 7
Notes to Combined Financial Statements 8-17
Property, Plant and Equipment V 18
Accumulated Depreciation, Depletion and
Amortization VI 19
NOTE: All other schedules are omitted as permitted by Rule 4.03 and Rule
5.04 of Regulation S-X.
<PAGE>
CALTEX GROUP OF COMPANIES
GENERAL INFORMATION
The Caltex Group of Companies (Group) is jointly owned 50% each by
Chevron Corporation and Texaco Inc. The private joint venture was created
in Bahrain in 1936 by its two owners to produce, refine and market crude
oil and refined products. Headquartered in Irving, Texas, the Group is
comprised of the following companies:
o Caltex Petroleum Corporation, a company incorporated in Delaware,
that through its many subsidiaries and affiliates, conducts refining
and marketing activities in the Eastern Hemisphere;
o P. T. Caltex Pacific Indonesia, an exploration and production company
incorporated and operating in Indonesia;
o American Overseas Petroleum Limited, a company incorporated in the
Bahamas, that, through its subsidiaries, manages certain exploration
and production operations in Indonesia in which Chevron and Texaco
have interests, but not necessarily jointly nor in the same properties.
A brief description of each company's operations and the Group's
environmental activities follows:
Caltex Petroleum Corporation (Caltex)
- -------------------------------------
Through its subsidiaries and affiliates, Caltex operates in 63
countries with some of the highest economic and petroleum growth rates in
the world, principally in Africa, Asia, the Middle East, New Zealand and
Australia. Certain refining and marketing operations are conducted through
joint ventures, with equity interests in 14 refineries in 11 countries.
Caltex' share of refinery inputs approximated 869,000 barrels per day in
1993. Caltex continues to improve its refineries with investments designed
to provide higher yields and meet environmental regulations. Construction
of a new 130,000 barrels per day refinery in Thailand is progressing with
completion anticipated in 1996. At year end 1993, Caltex had over 7,800
employees, of which about 3% were located in the United States.
With a strong presence in its principal operating areas, Caltex has an
average market share of 17.3% with refined product sales of approximately
1.3 million barrels per day in 1993. Caltex built 130 new branded retail
outlets during 1993 and refurbished 294 existing locations in its aim to
upgrade its retail distribution network.
Caltex conducts international crude oil and refined product logistics
and trading operations from a subsidiary in Singapore. Other offices are
located in London, Bahrain and Tokyo. The company has an interest in a
fleet of vessels and owns or has equity interests in numerous pipelines,
terminals and depots. Currently, Caltex is active in the petrochemical
business, particularly in Japan and South Korea.
P. T. Caltex Pacific Indonesia (CPI)
- ------------------------------------
CPI holds a Production Sharing Contract in Central Sumatra for which
the Indonesian government granted an extension to the year 2021 during
1992. CPI also acts as operator for four other petroleum contract areas
in Sumatra, which are jointly held by Chevron and Texaco. Exploration is
pursued throughout an area comprising 2.446 million acres with production
established in the giant Minas and Duri fields, along with more than 80
smaller fields. Gross production from fields operated by CPI for 1993 was
674,000 barrels per day. CPI entitlements are sold to its shareholders,
who use it in their systems or sell it to third parties. In addition,
during 1993 CPI began gas exploration activities in the Nias block held
jointly by Chevron and Texaco. At year end 1993, CPI had over 6,400
employees, all located in Indonesia.
1
<PAGE>
CALTEX GROUP OF COMPANIES
GENERAL INFORMATION
American Overseas Petroleum Limited (AOPL)
- ------------------------------------------
In addition to coordinating the CPI activities, AOPL, through its
subsidiary Amoseas Indonesia Inc., manages Texaco's and Chevron's undivided
interest holdings which include ten contract areas in Indonesia, excluding
Sumatra. Production is currently established in two contract areas, while
exploration is being pursued in seven others. One in Darajat in West Java
contains geothermal reserves sufficient to supply a 55-megawatt power
generating plant for over 30 years. Production of the geothermal reserves
is expected to begin in 1994 while the state owned utility company
completes construction of an associated power station. AOPL's 1993 share
of production amounted to 38,400 barrels per day. At year end, AOPL had
281 employees, of which about 15% were located in the United States.
Environmental Activities
- ------------------------
The Group's activities are subject to environmental, health and
safety regulations in each of the countries in which it operates.
Such regulations vary significantly in degree of scope, standards
and enforcement. The Group's policy is to comply with all applicable
environmental, health and safety laws and regulations. The Group has
an active program to ensure its environmental standards are maintained,
which includes closely monitoring applicable statutory and regulatory
requirements, as well as enforcement policies, in each of the countries
in which it operates, and conducting periodic environmental compliance
audits. At December 31, 1993, the Group had accrued $12 million for
various remediation activities. The environmental guidelines and
definitions promulgated by the American Petroleum Institute provide
the basis for reporting the Group's expenditures. For the year ended
December 31, 1993, the Group, including its equity share of nonsubsidiary
companies, incurred capital costs of $147 million and nonremediation
related operating expenses of $92 million. The major component of the
Group's expenditures is for the prevention of air pollution. Based upon
existing statutory and regulatory requirements, investment and operating
plans and known exposures, the Group believes environmental expenditures
will not materially affect its liquidity, financial position or results
of operations.
2
<PAGE>
Independent Auditors' Report
----------------------------
To the Stockholders
The Caltex Group of Companies:
We have audited the accompanying combined balance sheets of the Caltex
Group of Companies as of December 31, 1993 and 1992, and the related
combined statements of income, retained earnings, and cash flows for
each of the years in the three-year period ended December 31, 1993. In
connection with our audits of the combined financial statements, we also
have audited the financial statement schedules as listed in the accompanying
index. These combined financial statements and financial statement
schedules are the responsibility of the Group's management. Our
responsibility is to express an opinion on these combined financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of the
Caltex Group of Companies as of December 31, 1993 and 1992 and the results
of its operations and its cash flows for each of the years in the three-
year period ended December 31, 1993, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedules, when considered in relation to the basic combined financial
statements taken as a whole, present fairly, in all material respects,
the information set forth therein.
As discussed in Notes 1 and 6 to the combined financial statements,
effective January 1, 1992, the Group adopted the provisions of the
Financial Accounting Standards Board's Statements of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" and No. 109, "Accounting for Income Taxes."
February 15, 1994
3
<PAGE>
<TABLE>
<CAPTION>
CALTEX GROUP OF COMPANIES
COMBINED BALANCE SHEET - DECEMBER 31, 1993 AND 1992
(MILLIONS OF DOLLARS)
ASSETS
1993 1992
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (including time deposits
of $64 in 1993 and $121 in 1992) $ 166 $ 239
Notes and accounts receivable, less allowance for
doubtful accounts of $14 in 1993 and $15 in 1992:
Trade 950 1,020
Other 155 115
Nonsubsidiary companies 112 173
------ ------
1,217 1,308
Inventories:
Crude oil 148 239
Refined products 532 512
Materials and supplies 56 55
------ ------
736 806
Deferred income taxes 4 25
------ ------
Total current assets 2,123 2,378
INVESTMENTS AND ADVANCES:
Nonsubsidiary companies at equity 1,796 1,427
Miscellaneous investments and long-term receivables,
less allowance of $7 in 1993 and 1992 195 173
------ ------
1,991 1,600
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Producing 3,027 2,783
Refining 1,483 1,259
Marketing 2,252 2,107
Marine 35 35
Capitalized leases 119 113
------ ------
6,916 6,297
Less: Accumulated depreciation, depletion and
amortization 2,878 2,628
------ ------
4,038 3,669
PREPAID AND DEFERRED CHARGES 237 216
Total assets $8,389 $7,863
====== ======
<FN>
See accompanying Notes to Combined Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CALTEX GROUP OF COMPANIES
COMBINED BALANCE SHEET - DECEMBER 31, 1993 AND 1992
(MILLIONS OF DOLLARS)
LIABILITIES AND STOCKHOLDERS' EQUITY
1993 1992
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable to banks and other
financial institutions $ 966 $ 830
Long-term debt due within one year 51 51
Accounts payable:
Trade and other 967 1,081
Stockholder companies 87 229
Nonsubsidiary companies 149 76
------ ------
1,203 1,386
Accrued liabilities 86 91
Estimated income taxes 105 95
------ ------
Total current liabilities 2,411 2,453
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 530 486
ACCRUED LIABILITY FOR EMPLOYEE BENEFITS 98 92
DEFERRED CREDITS 646 605
DEFERRED INCOME TAXES 263 270
MINORITY INTEREST IN SUBSIDIARY COMPANIES 146 138
STOCKHOLDERS' EQUITY:
Common stock 355 355
Additional paid-in capital 2 2
Retained earnings 3,688 3,310
Currency translation adjustment 250 152
------ ------
Total stockholders' equity 4,295 3,819
COMMITMENTS AND CONTINGENT LIABILITIES _____ _____
Total liabilities and stockholders' equity $8,389 $7,863
====== ======
<FN>
See accompanying Notes to Combined Financial Statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
CALTEX GROUP OF COMPANIES
COMBINED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
SALES AND OTHER OPERATING REVENUES(1) $15,409 $17,281 $15,445
OPERATING CHARGES:
Cost of sales and operating expenses(2) 13,431 15,348 13,394
Selling, general and administrative expenses 496 479 444
Depreciation, depletion and amortization 295 263 257
Maintenance and repairs 170 165 156
------ ------- -------
14,392 16,255 14,251
------- ------- -------
Operating income 1,017 1,026 1,194
OTHER INCOME (DEDUCTIONS):
Equity in net income of nonsubsidiary
companies 140 163 188
Dividends, interest and other income 99 83 288
Foreign exchange, net 23 21 (5)
Interest expense (93) (102) (131)
Minority interest in subsidiary companies (8) (13) (8)
------- ------- -------
161 152 332
------- ------- -------
Income before provision for income taxes
and cumulative effects of changes in
accounting principles 1,178 1,178 1,526
------- ------- -------
PROVISION FOR INCOME TAXES:
Current 433 456 649
Deferred 25 53 38
------- ------- -------
Total provision for income taxes 458 509 687
------- ------- -------
Income before cumulative effects of changes
in accounting principles 720 669 839
Cumulative effects of changes in
accounting principles - 51 -
------- ------- -------
Net income $ 720 $ 720 $ 839
======= ======= =======
(1) Includes sales to:
Stockholder companies $ 907 $ 835 $1,124
Nonsubsidiary companies $2,684 $3,075 $2,610
(2) Includes purchases from:
Stockholder companies $3,333 $3,917 $3,181
Nonsubsidiary companies $2,618 $2,198 $2,217
<FN>
See accompanying Notes to Combined Financial Statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
CALTEX GROUP OF COMPANIES
COMBINED STATEMENT OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $3,310 $2,955 $2,518
Net income 720 720 839
Cash dividends (342) (365) (402)
------ ------ ------
Balance at end of year $3,688 $3,310 $2,955
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $720 $720 $839
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effects of changes in
accounting principles - (51) -
Depreciation, depletion and amortization 295 263 257
Dividends from nonsubsidiary companies,
less than equity in net income (103) (133) (162)
Asset sales (4) (4) (200)
Deferred income taxes 25 53 38
Prepaid charges and deferred credits (41) 25 45
Changes in operating working capital 31 (58) 127
Other 10 (46) 5
--- --- ---
Net cash provided by operating activities 933 769 949
--- --- ---
INVESTING ACTIVITIES:
Capital expenditures (763) (711) (640)
Investments in and advances to
nonsubsidiary companies (149) (17) (1)
Net purchases of investment instruments (21) (11) (14)
Proceeds from asset sales 73 144 85
--- --- ---
Net cash used in investing activities (860) (595) (570)
--- --- ---
FINANCING ACTIVITIES:
Proceeds from borrowings having original terms
in excess of three months 745 831 643
Repayments of borrowings having original terms
in excess of three months (704) (857) (553)
Net increase (decrease) in other borrowings 140 94 (37)
Dividends paid, including minority interest (342) (365) (407)
--- --- ---
Net cash used in financing activities (161) (297) (354)
--- --- ---
Effect of exchange rate changes on cash
and cash equivalents 15 (8) (17)
--- --- ---
Net change in cash and cash equivalents (73) (131) 8
Cash and cash equivalents at beginning of year 239 370 362
--- --- ---
Cash and cash equivalents at end of year $166 $239 $370
==== ==== ====
<FN>
See accompanying Notes to Combined Financial Statements.
</TABLE>
7
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
Principles of Combination
The combined financial statements of the Caltex Group of Companies
(Group) include the accounts of Caltex Petroleum Corporation and
subsidiaries, American Overseas Petroleum Limited and subsidiaries and
P.T. Caltex Pacific Indonesia after the elimination of intercompany
balances and transactions. A subsidiary of Chevron Corporation and two
subsidiaries of Texaco Inc. (stockholders) each own 50% of the outstanding
common shares. The Group is primarily engaged in exploring, producing,
refining and marketing crude oil and refined products in the Eastern
Hemisphere. The Group employs accounting policies that are in accordance
with generally accepted accounting principles in the UnitedStates.
Translation of Foreign Currencies
The U.S. dollar is the functional currency for all principal
subsidiary operations. Nonsubsidiary companies in Japan and Korea use
the local currency as the functional currency.
Inventories
Crude oil and refined product inventories are stated at the lower
of cost (primarily determined on the last-in, first-out (LIFO) method) or
current market value. Costs include applicable purchase and refining
costs, duties, import taxes, freight, etc. Materials and supplies are
valued at average cost.
Investments and Advances
Investments in and advances to nonsubsidiary companies in which 20%
to 50% of the voting stock is owned by the Group, or in which the Group
has the ability to exercise significant influence, are accounted for by
the equity method. Under this method, the Group's equity in the earnings
or losses of these companies is included in current results, and the
related investments reflect the equity in the book value of underlying net
assets. Investments in other nonsubsidiary companies are carried at cost
and related dividends are reported as income.
Property, Plant and Equipment
Exploration and production activities are accounted for under the
"successful efforts" method. Depreciation, depletion and amortization
expenses for capitalized costs relating to the producing area, including
intangible development costs, are computed using the unit-of-production
method.
All other assets are depreciated by class on a uniform straight line
basis. Depreciation rates are based upon the estimated useful life of each
class of property. In view of the numerous depreciation classifications,
it is not practical to provide a schedule of depreciation rates.
Maintenance and repairs necessary to maintain facilities in operating
condition are charged to income as incurred. Additions and betterments
that materially extend the life of properties are capitalized. Upon
disposal of properties, any net gain or loss is included in other income.
8
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies - Continued
Deferred Income Taxes
Effective January 1, 1992, deferred income taxes are recognized
according to the asset and liability method specified in Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes"
by applying individual jurisdiction tax rates applicable to future years
to differences between the financial statement and tax basis carrying
amounts of assets and liabilities. The effect of tax rate changes on
previously recorded deferred taxes is recognized in the current year.
Deferred income taxes for 1991 were recognized under the method specified
in SFAS No. 96.
No provision has been made for possible income taxes that might be
payable if accumulated earnings of subsidiary companies and nonsubsidiary
companies accounted for by the equity method were distributed, since such
earnings have been or are intended to be indefinitely reinvested.
Environmental Matters
Compliance with environmental regulations is determined in relation
to the existing laws in each of the countries in which the Group operates
and the Group's own internal standards. The Group capitalizes expenditures
that create future benefits or contribute to future revenue generation.
Remediation costs are accrued based on estimates of known environmental
exposure even if uncertainties exist about the ultimate cost of the
remediation. Such accruals are based on the best available nondiscounted
estimated costs using data developed by third party experts. Costs of
environmental compliance for past and ongoing operations, including
maintenance and monitoring, are expensed as incurred. Recoveries from
third parties are recorded as assets when realization is determined to
be probable.
Reclassifications
Certain amounts have been reclassified for preceding periods to
conform with the current year's presentation.
(2) Inventories
The excess of current cost over the stated value of inventory
maintained on the LIFO basis was approximately $40 million and $91 million
at December 31, 1993 and 1992, respectively. The reduction of LIFO
inventories in certain countries resulted in an increase in the earnings
of consolidated subsidiaries and nonsubsidiary companies at equity of
approximately $1 million in 1993. Previous reductions in LIFO inventories
resulted in a decrease in earnings of $2 million in 1992 and an increase in
earnings of $4 million in 1991.
Charges of $104 million and $25 million reduced income in 1993 and
1991, respectively, to reflect a market value of certain inventories lower
than their LIFO carrying value. Earnings of $14 million were recorded in
1992 to reflect a partial recovery of the 1991 charge.
9
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(3) Nonsubsidiary Companies at Equity
Investments in and advances to nonsubsidiary companies at equity at
December 31 include the following (in millions):
<TABLE>
<CAPTION>
Equity Share 1993 1992
------------ ---- ----
<S> <C> <C> <C>
Nippon Petroleum Refining Company, Ltd. 50% $829 $727
Koa Oil Company, Ltd. 50% 310 268
Honam Oil Refinery Company, Ltd. 50% 423 357
All other Various 234 75
------ ------
$1,796 $1,427
====== ======
</TABLE>
Shown below is summarized combined financial information for these
nonsubsidiary companies (in millions):
<TABLE>
<CAPTION>
100% Equity Share
-------------- ---------------
1993 1992 1993 1992
------ ------ ------ ------
<S> <C> <C> <C> <C>
Current assets $4,680 $5,149 $2,316 $2,564
Other assets 6,147 4,851 2,975 2,410
Current liabilities 4,900 4,946 2,349 2,470
Other liabilities 2,306 2,173 1,146 1,078
Net worth 3,621 2,881 1,796 1,426
</TABLE>
<TABLE>
<CAPTION>
100% Equity Share
---------------------- ----------------------
1993 1992 1991 1993 1992 1991
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $10,679 $10,502 $10,267 $5,304 $5,216 $5,102
Operating income 494 645 839 242 319 416
Net income 281 326 380 140 163 188
</TABLE>
Retained earnings at December 31, 1993, includes $1.2 billion
representing the Group's share of undistributed earnings of nonsubsidiary
companies at equity.
Cash dividends received from these nonsubsidiary companies were $37
million, $30 million, and $26 million in 1993, 1992 and 1991, respectively.
Sales to the other 50 percent owner of Nippon Petroleum Refining
Company, Ltd. of products refined by Nippon Petroleum Refining Company,
Ltd. and Koa Oil Company, Ltd. were approximately $1.9 billion, $2 billion,
and $2.1 billion in 1993, 1992, and 1991, respectively.
10
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(4) Notes Payable
Information regarding short-term financing, consisting primarily of
demand loans, promissory notes, acceptance credits and overdrafts, is shown
below (dollars in millions):
<TABLE>
<CAPTION>
Weighted Maximum Weighted Average
Average Outstanding Average Interest Rate
Borrowings At Interest Rate At Any Amount On Average
Year End At Year End Month End Outstanding Outstanding
------------- ------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
1993 $966 4.7% $1,041 $902 4.6%
1992 830 5.0 1,063 898 5.7
1991 907 7.2 996 875 9.9
<FN>
Unutilized lines of credit available for short-term financing totaled
$814 million at December 31, 1993.
</TABLE>
(5) Long-Term Debt and Capital Lease Obligations
Long-term debt and capital lease obligations, with related interest
rates at December 31, 1993 and 1992, consist of the following (in millions):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
U.S. dollars:
Variable interest rate term loans $173 $155
Fixed interest rate term loans
with 7.6% average rate 220 205
Australian dollars:
Debentures with interest rates at 12.5%
due 1995 - 1996 8 11
Promissory notes payable with
4.9% average rate 76 65
Capital lease obligations 33 33
New Zealand dollars:
Term loans with interest
rates 6 - 6.35% due 1996-1997 14 -
Other 6 17
---- ----
$530 $486
==== ====
</TABLE>
At December 31, 1993 and 1992, $101 million and $110 million,
respectively, of notes payable were classified as long-term debt.
Settlement of these obligations is not expected to require the use of
working capital in 1994, as the Group has both the intent and ability to
refinance this debt on a long-term basis. At December 31, 1993 and 1992,
$101 million and $110 million, respectively, of long-term committed credit
facilities were available with major banks to support notes payable
classified as long-term debt.
Maturities subsequent to December 31, 1993 follow (in millions):
1994 - $51 (included on the combined balance sheet as a current liability);
1995 - $151; 1996 - $147; 1997 - $37; 1998 - $86; 1999 and thereafter -
$109.
11
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(6) Employee Benefits
The Group has retirement plans covering substantially all eligible
employees. Generally, these plans provide defined benefits based on final
or final average pay, as defined. The benefit levels, vesting terms and
funding practices vary among plans.
The funded status of retirement plans, primarily foreign and inclusive
of nonsubsidiary companies at equity, at December 31 follows (in millions):
<TABLE>
<CAPTION>
Assets Exceed Accumulated
Accumulated Benefits
Funding Status Benefits Exceed Assets
-------------- ------------- -------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $280 $240 $117 $100
Accumulated benefit obligation 309 264 137 117
Projected benefit obligation 484 432 195 170
Amount of assets available for benefits:
Funded assets at fair value $450 $403 $ 39 $ 26
Net pension (asset) liability recorded (11) (8) 128 123
---- ---- ---- ----
Total assets $439 $395 $167 $149
==== ==== ==== ====
Assets less than projected benefit obligation $(45) $(37) $(28) $(21)
Consisting of:
Unrecognized transition net assets
(liabilities) 31 38 (2) (4)
Unrecognized net losses (44) (42) (23) (16)
Unrecognized prior service costs (32) (33) (3) (1)
Weighted average rate assumptions:
Discount rate 9.5% 11.1% 6.5% 6.5%
Rate of increase in compensation 7.4% 9.0% 4.7% 4.7%
Expected return on plan assets 10.3% 11.4% 5.5% 4.9%
</TABLE>
<TABLE>
<CAPTION>
Expenses (Funded & Unfunded Combined) 1993 1992 1991
-------- ---- ---- ----
<S> <C> <C> <C>
Cost of benefits earned during the year $27 $26 $21
Interest cost on projected benefit obligation 58 54 49
Actual return on plan assets (59) (9) (64)
Net amortization and deferral 16 (38) 22
--- --- ---
$42 $33 $28
=== === ===
</TABLE>
The Group adopted SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" effective January 1, 1992,
using the immediate recognition option. SFAS No. 106 requires accrual,
during the employees' service with the Group, of the cost of their retiree
health and life insurance benefits. Prior to 1992, postretirement benefits
were included in expense as the benefits were paid.
12
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(6) Employee Benefits - Continued
Certain companies within the Group provide health care and life
insurance benefits to retired employees. The plans which provide these
benefits are unfunded. As of December 31, 1993 and 1992, the accumulated
postretirement benefit obligation amounted to $47 million and $43 million,
respectively, with related accruals of $44 million and $43 million,
respectively. The net periodic postretirement benefit costs amounted to
$6 million for each of the years ending December 31, 1993 and 1992.
In November 1992 the Financial Accounting Standards Board issued SFAS
No. 112 "Employers' Accounting for Postemployment Benefits." This new
standard requires companies to accrue, no later than 1994, for the cost
for benefits provided to former or inactive employees after employment but
prior to retirement. Adoption of this new standard is not expected to
materially impact the combined financial statements of the Group.
(7) Operating Leases
The Group has various operating leases involving service stations,
equipment and other facilities for which net rental expense was $110
million, $95 million, and $53 million in 1993, 1992 and 1991, respectively.
Future net minimum rental commitments under operating leases having
noncancelable terms in excess of one year are as follows (in millions):
1994 - $42; 1995 - $42; 1996 - $42; 1997 - $37; 1998 - $31; 1999 and
thereafter - $146.
(8) Contingent Liabilities
On January 25, 1990, Caltex Petroleum Corporation and certain of its
subsidiaries were named as defendants, along with privately held Philippine
ferry and shipping companies and the shipping company's insurer, in a
lawsuit filed in Houston, Texas State Court. After removal to Federal
District Court in Houston, the litigation's disposition turned on questions
of federal court jurisdiction and whether the case should be dismissed for
forum non conveniens. The plaintiffs' petition purported to be a class
action on behalf of at least 3,350 parties, who were either survivors of,
or next of kin of persons deceased in a collision in Philippine waters on
December 20, 1987. One vessel involved in the collision was carrying Group
products in connection with a freight contract. Although the Group had no
direct or indirect ownership or operational responsibility for either
vessel, various theories of liability were alleged against the Group. No
specific monetary recovery was sought although the petition contained a
variety of demands for various categories of compensatory as well as
punitive damages. These issues were resolved in the Group's favor by the
Federal District Court in March 1992, and that decision is now final.
However, the plaintiffs had separately filed another lawsuit, alleging the
same causes of action as in the Texas litigation, in Louisiana State Court
in New Orleans in late 1988 but never served the Group until late December
of 1993, after the decision in the Texas litigation became final.
Subsequent to receipt of the service, the Group has removed this case to
Federal District Court in New Orleans and has moved for its dismissal.
Management is contesting this case vigorously. It is not possible to
estimate the amount of damages involved, if any.
The Group may be subject to loss contingencies pursuant to
environmental laws and regulations in each of the countries in which it
operates that, in the future, may require the Group to take action to
correct or remediate the effects on the environment of prior disposal or
release of petroleum substances by the Group. The amount of such future
cost is indeterminable due to such factors as the nature of the new
regulations, the unknown magnitude of any possible contamination, the
unknown timing and extent of the corrective actions that may be required,
and the extent to which such costs are recoverable from third party
insurance.
13
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(8) Contingent Liabilities - Continued
The Group is also involved in certain other litigation and Internal
Revenue Service tax audits that could involve significant payments if such
items are all ultimately resolved adversely to the Group.
While it is impossible to ascertain the ultimate legal and financial
liability with respect to the above mentioned contingent liabilities, the
aggregate amount that may arise from such liabilities is not anticipated to
be material in relation to the Group's combined financial position, results
of operations, or liquidity.
(9) Financial Instruments
Certain Group companies are parties to financial instruments with
off-balance sheet credit and market risk, principally interest rate risk.
As of December 31, the Group had commitments outstanding for interest
rate swaps and foreign currency transactions for which the notional or
contractual amounts are as follows (in millions):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Interest rate swaps $344 $317
Commitments to purchase foreign currencies $338 $141
Commitments to sell foreign currencies $ 89 $ 20
</TABLE>
The interest rate swaps are intended to hedge against fluctuations in
interest rates on debt, and their effects are recognized in the statement
of income at the same time as the interest expense on the debt to which
they relate.
Commitments to purchase and sell foreign currencies are made to
provide exchange rate protection for specific transactions and to maximize
economic benefit based on expected currency movements. The above purchase
and sale commitments are at year end exchange rates and mature during the
following year. These commitments are marked to market and the resulting
gains and losses are recognized in current year income unless the contract
is a specific hedge of an identifiable transaction. There were no material
differences between the notional and estimated fair value for these
commitments.
The Group's long-term debt, excluding capital lease obligations, of
$497 million and $453 million at December 31, 1993 and 1992, respectively,
had fair values of $511 million and $462 million at December 31, 1993 and
1992, respectively. The fair value estimates were based on the present
value of expected cash flows discounted at current market rates for similar
obligations. The reported amounts of financial instruments such as Cash
and cash equivalents, Notes and accounts receivable, and all current
liabilities approximate fair value because of their short maturity.
Certain Group companies were contingently liable as guarantors for $7
million and $12 million at December 31, 1993 and 1992, respectively. The
Group also had commitments of $36 million and $96 million at December 31,
1993 and 1992, respectively, in the form of letters of credit which have
been issued on behalf of Group companies to facilitate either the Group's
or other parties' ability to trade in the normal course of business.
Financial instruments exposed to credit risk consist primarily of
trade receivables. These receivables are dispersed among the countries
in which the Group operates, thus limiting concentrations of such risk.
The Group performs ongoing credit evaluations of its customers and
generally does not require collateral. Letters of credit are the principal
security obtained to support lines of credit when the financial strength
of a customer or country is not considered sufficient. Credit losses have
been historically within management's expectations.
14
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(10) Other Income/Deductions
In 1991, dividends, interest and other income included gains from
asset sales on a before and after tax basis of $200 million and $120
million, respectively. Asset sales in 1993 and 1992 were not significant.
Net foreign exchange (exclusive of the currency translation
adjustment) for consolidated subsidiaries and nonsubsidiary companies at
equity, after applicable income taxes, amounted to gains of $32 million
and $43 million in 1993 and 1992, respectively. The gain in 1991 was less
than $1 million.
(11) Taxes
Taxes charged to income consist of the following (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Taxes other than income taxes:
Duties, import and excise taxes $1,978 $1,891 $1,802
Other 29 29 29
------ ------ ------
Total taxes other than income taxes 2,007 1,920 1,831
Provision for income taxes 458 509 687
------ ------ ------
$2,465 $2,429 $2,518
====== ====== ======
</TABLE>
The provision for income taxes, substantially all foreign, has been
computed on an individual company basis at rates in effect in the various
countries of operation. The actual tax expense differs from the "expected"
tax expense (computed by applying the U.S. Federal corporate tax rate to
income before provision for income taxes) as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Computed "expected" tax expense 35.0% 34.0% 34.0%
Effect of recording equity in net
income of nonsubsidiary companies
on an after tax basis (4.2) (4.9) (4.2)
Effect of dividends received
from subsidiary and
nonsubsidiary companies 4.2 3.8 3.3
Foreign income subject to foreign taxes
in excess of U.S. statutory tax rate 7.4 11.6 10.4
Decrease in deferred tax asset valuation
allowance (3.1) (.4) -
Other (.4) (.9) 1.5
----- ----- -----
38.9% 43.2% 45.0%
===== ===== =====
</TABLE>
15
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(11) Taxes - Continued
Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of assets and
liabilities. Temporary differences and tax loss carryforwards which give
rise to deferred tax assets and liabilities at December 31, 1993 and 1992
are as follows (in millions):
<TABLE>
<CAPTION>
Deferred Deferred
Tax Assets Tax Liabilities
------------- ---------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Inventory $ 10 $ 27 $ 18 $ 17
Depreciation - - 298 275
Retirement plans 33 28 3 2
Tax loss carryforwards 29 36 - -
Other 28 30 34 30
---- ---- ---- ----
100 121 353 324
Valuation allowance (6) (42) - -
---- ---- ---- ----
Total deferred taxes $94 $79 $353 $324
==== ==== ==== ====
</TABLE>
The valuation allowance has been established to record deferred tax
assets at amounts where recoverability is more likely than not. Net
income was increased by $36 million and $5 million for changes in the
deferred tax asset valuation allowance during 1993 and 1992, respectively.
Undistributed earnings for which no deferred income tax provision has
been made approximated $3.6 billion at December 31, 1993. Such earnings
have been or are intended to be indefinitely reinvested. These earnings
would become taxable in the U.S. only upon remittance as dividends. It is
not practical to estimate the amount of tax that might be payable on the
eventual remittance of such earnings. On remittance, certain foreign
countries impose withholding taxes which, subject to certain limitations,
are then available for use as tax credits against a U.S. tax liability,
if any.
(12) Cash Flows
For purposes of the statement of cash flows, all highly liquid debt
instruments with original maturities of three months or less are considered
cash equivalents.
The "Changes in Operating Working Capital" consists of the following
(in millions):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Notes and accounts receivable $82 $(45) $418
Inventories 66 (114) 62
Accounts payable (147) 212 (317)
Accrued liabilities 16 (27) (2)
Estimated income taxes 14 (84) (34)
--- ---- ----
Total $31 $(58) $127
=== ==== ====
</TABLE>
16
<PAGE>
CALTEX GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(12) Cash Flows - Continued
"Net Cash Provided by Operating Activities" includes the following
cash payments for interest and income taxes (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest paid (net of capitalized
interest) $ 92 $106 $132
Income taxes paid $391 $528 $662
</TABLE>
In 1991, an asset sale was funded with receivables of $120 million,
which were subsequently collected in 1992. No other significant non-cash
investing or financing transactions occurred in 1993, 1992 or 1991.
(13) Investments in Debt and Equity Securities
In May 1993, the Financial Accounting Standards Board issued SFAS
No. 115 "Accounting For Certain Investments in Debt and Equity Securities."
This new standard requires companies, no later than 1994, to classify debt
and equity securities into one of three categories: held-to-maturity,
available-for-sale, or trading. Debt which will be held to maturity will
be carried at amortized cost. Certain securities considered available-for-
sale shall be carried at fair value and unrealized holding gains and losses
shall be carried as a net amount in a separate component of stockholders'
equity until realized. Securities classified as trading shall be carried
at fair value and unrealized holding gains and losses shall be included
in earnings.
Adoption of this new standard will not materially impact the combined
financial position or the results of operations of the Group.
(14) Oil and Gas Exploration, Development and Producing Activities
The financial statements of Chevron Corporation and Texaco Inc.
contain required supplementary information on oil and gas producing
activities, including disclosures on equity affiliates. Accordingly,
such disclosures are not presented herein.
17
<PAGE>
<TABLE>
<CAPTION>
CALTEX GROUP OF COMPANIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
Other
Balance At Changes Balance
Beginning Additions Retirements Add At End
Classification Of Period At Cost Or Sales (Deduct) Of Period
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1993
Producing $2,783 $247 $ 3 $ - $3,027
Refining 1,259 237 6 (7)(1) 1,483
Marketing 2,107 262 108 (9)(2) 2,252
Marine 35 - - - 35
Capitalized leases 113 8 2 - 119
------ ---- ---- ---- ------
Total $6,297 $754 $119 $(16) $6,916
====== ==== ==== ==== ======
Year ended
December 31, 1992
Producing $2,462 $322 $ 1 $ - $2,783
Refining 1,111 166 18 - 1,259
Marketing 1,915 253 46 (15)(3) 2,107
Marine 55 - 20 - 35
Capitalized leases 113 - - - 113
------ ---- ----- ---- ------
Total $5,656 $741 $ 85 $(15) $6,297
====== ==== ===== ==== ======
Year ended
December 31, 1991
Producing $2,179 $284 $ 1 $ - $2,462
Refining 1,008 105 2 - 1,111
Marketing 1,689 243 39 22(1) 1,915
Marine 54 1 - - 55
Capitalized leases 111 3 1 - 113
------ ---- ----- ---- ------
Total $5,041 $636 $ 43 $ 22 $5,656
====== ==== ===== ==== ======
<FN>
(1) Reclassification
(2) Currency translation adjustment $(4) and reclassification $(5)
(3) Currency translation adjustment
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
CALTEX GROUP OF COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
Additions Other
Balance At Charged To Changes Balance
Beginning Costs and Retirements Add At End
Classification Of Period Expenses Or Sales (Deduct) Of Period
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1993
Producing $1,158 $128 $ 1 $ - $1,285
Refining 646 51 6 (2)(1) 689
Marketing 736 104 32 (2)(2) 806
Marine 7 2 - - 9
Capitalized leases 81 10 2 - 89
------ ---- --- --- ------
Total $2,628 $295 $41 $(4) $2,878
====== ==== === === ======
Year ended
December 31, 1992
Producing $1,051 $106 $(1) $ - $1,158
Refining 614 47 15 - 646
Marketing 672 98 25 (9)(3) 736
Marine 23 2 18 - 7
Capitalized leases 73 10 2 - 81
------ ---- --- --- ------
Total $2,433 $263 $59 $(9) $2,628
====== ==== === === ======
Year ended
December 31, 1991
Producing $ 940 $111 $ - $ - $1,051
Refining 567 49 2 - 614
Marketing 609 85 22 - 672
Marine 21 2 - - 23
Capitalized leases 64 10 1 - 73
------ ---- --- --- ------
Total $2,201 $257 $25 $ - $2,433
====== ==== === === ======
<FN>
(1) Reclassification
(2) Currency translation adjustment $(1) and reclassification $(1)
(3) Currency translation adjustment
</TABLE>
19
<PAGE>
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL INCLUDED IN EXHIBIT 13 - TEXACO INC.'S 1993
ANNUAL REPORT TO STOCKHOLDERS.
The following information is depicted in graphic form in Texaco Inc.'s 1993
Annual Report to Stockholders filed as Exhibit 13 to this Annual Report on
Form 10-K and all page references included in the following descriptions
are to the actual and complete paper format version of Texaco Inc.'s 1993
Annual Report to Stockholders as provided to Texaco Inc.'s shareholders:
1. The first graph is located in the top left margin next to the
Consolidated Highlights table on page 24. The bar graph is entitled
"Rates of Return on Average Stockholders' Equity." The Y axis depicts
percentages from 0% to 20% with 5% increments. The X axis depicts the
years 1991, 1992 and 1993. Each year has 2 bar graphs, side by side,
representing rate of return excluding special items (blue) and rate of
return based on net income as reported (red) with applicable percentages
shown on top of each graph. The plot points are as follows:
<TABLE>
<CAPTION>
Excluding
Special Items As Reported
------------- -----------
<S> <C> <C>
1991 12.8% 13.5%
1992 12.0% 10.9%
1993 11.3% 12.5%
</TABLE>
Below the graph a footnote appears which states "Returns exclude
discontinued operations and the 1992 cumulative effect of accounting
changes."
2. The second graph is located in the middle left margin next to the
Consolidated Highlights table on page 24. The bar graph is entitled
"Total Debt to Total Borrowed And Invested Capital." The Y axis depicts
percentages from 0% to 50% with 10% increments. The X axis depicts the
years 1991, 1992 and 1993 with applicable percentages shown on top of
each graph. The plot points are as follows:
<TABLE>
<S> <C>
1991 39.4%
1992 39.3%
1993 38.7%
</TABLE>
- 1 -
<PAGE>
3. The third graph is located in the top left margin next to the first
paragraph on page 25. The bar graph is entitled "Revenues." The Y
axis depicts dollars in billions from $0 to $50 with $10 increments.
The X axis depicts the years 1991, 1992 and 1993. Each years' bar
graph is segmented into 4 colors representing the sources of revenues
from refined products (blue), crude oil (red), natural gas (green) and
equity and other income (including services) (yellow) and shows only
yearly totals on top of each bar graph. The revenues, in billions of
dollars, for each year and segment are depicted as follows:
<TABLE>
<CAPTION>
Equity and
Refined Crude Natural Other Income
Products Oil Gas (including services) Total
-------- ----- ------- -------------------- -----
<S> <C> <C> <C> <C> <C>
1991 $17.9 $13.8 $1.8 $3.7 $37.2
1992 $18.4 $12.8 $1.9 $3.4 $36.5
1993 $17.5 $11.1 $2.3 $3.2 $34.1
</TABLE>
Below the graph a footnote appears which states "Excludes revenues for
discontinued operations."
4. The fourth graph is located in the middle left margin next to the third
and fourth paragraphs on page 25. The bar graph is entitled "Costs and
Expenses." The Y axis depicts dollars in billions from $0 to $50 with
$10 increments. The X axis depicts the years 1991, 1992 and 1993.
Each years' bar graph is segmented into 2 colors representing purchases
and other costs (blue) and expenses (red) and shows only yearly totals
on top of each bar graph. Purchases and other costs and expenses, in
billions of dollars, for each year and segment are depicted as follows:
<TABLE>
<CAPTION>
Purchases and
Other Costs Expenses Total
------------- --------- -----
<S> <C> <C> <C>
1991 $27.1 $8.6 $35.7
1992 $27.0 $8.2 $35.2
1993 $24.7 $8.2 $32.9
</TABLE>
Below the graph a footnote appears which states "Excludes amounts for
discontinued operations."
5. The fifth graph is located in the bottom left margin next to the fifth
and sixth paragraphs on page 25. The bar graph is entitled "Operating
Earnings by Geographic Area." The Y axis depicts dollars in millions
from $0 to $2500 with $500 increments. The X axis depicts the years
1991, 1992 and 1993. Each years' bar graph is segmented into 2 colors
representing operating earnings in the United States (red) and
International (blue) as well as yearly totals on top of each bar graph.
The plot points are as follows:
- 2 -
<PAGE>
<TABLE>
<CAPTION>
United
States International Total
------ ------------- -----
<S> <C> <C> <C>
1991 $772 $1037 $1809
1992 $809 $ 698 $1507
1993 $708 $ 760 $1468
</TABLE>
Below the graph a footnote appears which states "Operating earnings
exclude corporate and nonoperating costs, cumulative effect of
accounting changes and discontinued operations."
6. The sixth graph is located in the top left margin next to the
Exploration and Production - United States earnings table on page 26.
The bar graph is entitled "Exploration And Production Total Operating
Earnings." The Y axis depicts dollars in millions from $0 to $2000
with $500 increments. The X axis depicts the years 1991, 1992 and 1993.
Each years' bar graph is segmented into 2 colors representing operating
earnings in the United States (red) and International (blue) as well as
yearly totals on top of each bar graph. The plot points are as follows:
<TABLE>
<CAPTION>
United
States International Total
------ ------------- -----
<S> <C> <C> <C>
1991 $605 $421 $1026
1992 $543 $416 $ 959
1993 $510 $322 $ 832
</TABLE>
7. The seventh graph is located in the middle left margin next to the first
and second paragraph, on page 26. The line graph is entitled "Average
Crude Oil Selling Prices-Per Quarter" and is shown in dollars per barrel
by quarter for the years 1991, 1992 and 1993. The Y axis depicts dollars
per barrel from $5 to $30 with $5 increments. The X axis depicts the
calendar quarters for 1991, 1992 and 1993. Each quarter has 2 points
plotted with the red line points representing average crude oil selling
prices in the United States and the yellow line points representing
average International crude oil selling prices. The plot points are
depicted as follows:
- 3 -
<PAGE>
<TABLE>
<CAPTION>
United
States International
----------------- -----------------
<S> <C> <C>
First Quarter 1991 $17.66 per barrel $19.63 per barrel
Second Quarter 1991 $16.48 per barrel $17.12 per barrel
Third Quarter 1991 $16.97 per barrel $17.92 per barrel
Fourth Quarter 1991 $17.09 per barrel $19.08 per barrel
First Quarter 1992 $14.48 per barrel $16.52 per barrel
Second Quarter 1992 $16.70 per barrel $17.47 per barrel
Third Quarter 1992 $17.81 per barrel $18.42 per barrel
Fourth Quarter 1992 $16.50 per barrel $18.01 per barrel
First Quarter 1993 $15.46 per barrel $16.90 per barrel
Second Quarter 1993 $15.70 per barrel $17.01 per barrel
Third Quarter 1993 $13.55 per barrel $15.49 per barrel
Fourth Quarter 1993 $12.36 per barrel $14.05 per barrel
</TABLE>
8. The eighth graph is located in the bottom left margin next to the third
and fourth paragraphs on page 26. The line graph is entitled "Average
U.S. Natural Gas Selling Price-Per Quarter" and is shown in dollars per
thousand cubic feet by quarter for the years 1991, 1992 and 1993. The
Y axis depicts dollars per thousand cubic feet from $1.00 to $3.00 with
$0.50 increments. The X axis depicts the calendar quarters for the
years 1991, 1992 and 1993. The plot points are depicted as follows:
<TABLE>
<S> <C>
First Quarter 1991 $2.00 Per MCF
Second Quarter 1991 $1.48 Per MCF
Third Quarter 1991 $1.35 Per MCF
Fourth Quarter 1991 $1.72 Per MCF
First Quarter 1992 $1.72 Per MCF
Second Quarter 1992 $1.51 Per MCF
Third Quarter 1992 $1.83 Per MCF
Fourth Quarter 1992 $2.40 Per MCF
First Quarter 1993 $1.99 Per MCF
Second Quarter 1993 $2.26 Per MCF
Third Quarter 1993 $2.17 Per MCF
Fourth Quarter 1993 $2.34 Per MCF
</TABLE>
9. The ninth graph is located in the top left margin next to the first
and second paragraphs on page 27. The bar graph is entitled
"Manufacturing, Marketing and Distribution Total Operating Earnings."
The Y axis depicts dollars in millions from $0 to $1000 with $200
increments. The X axis depicts the years 1991, 1992 and 1993. Each
years' bar graph is segmented into 2 colors representing operating
earnings in the United States (red) and International (blue) as well as
yearly totals on top of each bar graph. The plot points are as follows:
- 4 -
<PAGE>
<TABLE>
<CAPTION>
United
States International Total
------ ------------- -----
<S> <C> <C> <C>
1991 $187 $647 $834
1992 $267 $300 $567
1993 $215 $434 $649
</TABLE>
10. The tenth graph is located in the middle left margin next to the
Manufacturing, Marketing and Distribution - United States earnings
table on page 27. The bar graph is entitled "Refined Product
Sales-U.S. by Principal Products." The Y axis depicts barrels in
thousands per day from 0 to 1000 with increments of 200. The X axis
depicts the years 1991, 1992 and 1993. Each years' bar graph is
segmented into 5 colors representing sales of gasolines (blue), middle
distillates (red), avjets (green), residuals (purple) and other
(yellow) and shows only yearly totals on top of each graph. Refined
product sales, in thousands of barrels a day for each year and
segment, are depicted as follows:
<TABLE>
<CAPTION>
Middle
Gasolines Distillates Avjets Residuals Other Total
--------- ----------- ------ --------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
1991 431 168 97 107 66 869
1992 441 172 98 100 69 880
1993 425 180 84 61 80 830
</TABLE>
Below the graph a footnote appears which states "Includes equity in
an affiliate."
11. The eleventh graph is located in the top left margin next to the
first and second paragraphs on page 29. The bar graph is entitled
"Environmental-Cash Expenditures." The Y axis depicts dollars in
millions from $0 to $1000 with increments of $200. The X axis depicts
the years 1991, 1992 and 1993. Each years' bar graph is segmented
into 2 colors representing capital expenditures (green) and other
(yellow) and shows only yearly totals on top of each graph.
Environmental cash expenditures, in millions of dollars, for each
year and segment are depicted as follows:
<TABLE>
<CAPTION>
Capital
Expenditures Other Total
------------ ----- -----
<S> <C> <C> <C>
1991 $253 $435 $688
1992 $270 $403 $673
1993 $302 $475 $777
</TABLE>
Below the graph a footnote appears which states "Includes equity in
affiliates."
- 5 -
<PAGE>
12. The twelfth graph is located in the top left margin next to the first
and second paragraphs on page 30. The pie chart is entitled "1993
Sources of Cash and Cash Equivalents" and is shown in billions of
dollars. The pie chart is segmented with 4 colors depicting the 1993
sources of cash and cash equivalents. The four sources are operations
(blue), borrowings (red), issuance of preferred stock by subsidiaries
(green) and asset sales (yellow). For each source shown there is a
corresponding dollar amount in billions, as well as a percent of each
source to the total. The plot points and percentages are as follows:
<TABLE>
<CAPTION>
1993 Sources of Cash Billions of
and Cash Equivalents Dollars Percent
-------------------- ----------- -------
<S> <C> <C> <C>
Operations $3.1 62%
Borrowings $1.1 22%
Issuance of Preferred Stock
by Subsidiaries $0.4 8%
Asset Sales $0.4 8%
----
Total $5.0
</TABLE>
13. The thirteenth graph is located in the middle left margin next to the
third and fourth paragraphs on page 30. The pie chart is entitled
"1993 Uses of Cash and Cash Equivalents" and is shown in billions of
dollars. The pie chart is segmented with 4 colors depicting the 1993
uses of cash and cash equivalents. The four uses are capital and
exploratory (capex) (blue), dividends (red), repayments of borrowings
and other uses (green) and outflows unrelated to current year operations
(yellow). For each use shown there is a corresponding dollar amount in
billions, as well as a percent of each use to the total. The plot points
and percentages are as follows:
<TABLE>
<CAPTION>
1993 Uses of Cash Billions of
and Cash Equivalents Dollars Percent
-------------------- ----------- -------
<S> <C> <C> <C>
Capex $2.3 47%
Dividends $1.0 20%
Repayments of Borrowings and
Other Uses $1.0 19%
Outflows Unrelated To Current
Year Operations $0.7 14%
------
Total $5.0
</TABLE>
14. The fourteenth graph is located in the bottom left margin next to the
fifth paragraph on page 30. The bar graph is entitled "Debt Profile."
The Y axis depicts numerical values from 0 to 15 with increments of 3.
The X axis depicts two sets of bar graphs for the years 1991, 1992 and
1993. The first set of bar graphs represent the average interest
rate percentages (blue) at each year-end. The second set of bar
graphs represent the average maturity years (red) at each year-end.
The applicable plot points are as follows:
- 6 -
<PAGE>
<TABLE>
<CAPTION>
Average Average
Interest Rate Maturity
------------- --------
<S> <C> <C>
1991 7.9% 7.5 years
1992 7.2% 9.0 years
1993 7.1% 12.3 years
</TABLE>
15. The fifteenth graph is located in the top left margin next to the
first and second paragraphs on page 31. The bar graph is entitled
"Total Production and Reserve Additions." The Y axis depicts barrels
of oil equivalent, in millions, from 0 to 600 with increments of 100.
The X axis depicts the years 1991, 1992 and 1993. Each year has 2 bar
graphs, side by side. The first bar (blue) represents total produc-
tion with the total shown on top of each year's graph. The second bar
depicts reserve additions and is segmented into 2 colors representing
extensions, discoveries and additions (red) and revisions (green) and
shows only yearly totals on top of each graph. The production and
reserve additions, in million barrels of oil equivalent, for each year
and segment are shown or depicted as follows:
<TABLE>
<CAPTION>
Reserve Additions
-------------------------------------------
Extensions,
Total Discoveries Total Reserve
Production and Additions Revisions Additions
---------- ------------ --------- -------------
<S> <C> <C> <C> <C>
1991 432 258 166 424
1992 404 215 167 382
1993 402 303 147 450
</TABLE>
Below the graph a footnote appears which states "Includes equity in
an affiliate."
16. The sixteenth graph is located in the bottom left margin on page 31.
The bar graph is entitled "Capital and Exploratory Expenditures."
The Y axis depicts dollars in billions from $0 to $5 with increments
of $1. The X axis depicts two sets of bar graphs for the years 1991,
1992 and 1993. The first set of bar graphs segments the expenditures
by function representing exploration and production (blue),
manufacturing, marketing and distribution (yellow) and other (red) and
shows only yearly totals on top of each graph. The second set of bar
graphs segments the expenditures geographically representing the
United States (green) and International (purple) and shows only yearly
totals on top of each graph. Capital and exploratory expenditures,
in millions of dollars, for each year and segment are depicted
as follows:
- 7 -
<PAGE>
<TABLE>
<CAPTION>
Exploration Manufacturing,
and Marketing
Production and Distribution Other Total
-------------- ---------------- ----- -----
<S> <C> <C> <C> <C>
1991 $2.0 $1.2 $0.2 $3.4
1992 $1.7 $1.2 $0.1 $3.0
1993 $1.7 $1.1 $0.1 $2.9
</TABLE>
Capital and exploratory expenditures, in millions of dollars,
segregated geographically are depicted as follows:
<TABLE>
<CAPTION>
United
States International Total
------ ------------- ------
<S> <C> <C> <C>
1991 $1.8 $1.6 $3.4
1992 $1.4 $1.6 $3.0
1993 $1.3 $1.6 $2.9
</TABLE>
Below the graph a footnote appears which states "Includes equity in
affiliates and excludes amounts for discontinued operations."
17. The seventeenth graph is located in the top left margin next to the
first paragraph on page 32. The bar graph is entitled "Exploratory
Expenses." The Y axis depicts dollars in millions from $0 to $600
with increments of $100. The X axis depicts two sets of bar graphs
for the years 1991, 1992 and 1993. The first set of bar graphs
segments the expenses by category representing dry hole (blue)
and geological, geophysical and other (red) and shows only yearly
totals on top of each bar graph. The second set of bar graphs
segments the expenses geographically representing the United
States (green) and International (purple) and shows only yearly
totals on top of each bar graph. Exploratory expenses, in millions
of dollars, for each year and segment are depicted as follows:
<TABLE>
<CAPTION>
Geological,
Geophysical
Dry Hole and Other Total
-------- ----------- -------
<S> <C> <C> <C>
1991 $179 $257 $436
1992 $118 $231 $349
1993 $175 $177 $352
</TABLE>
<TABLE>
<CAPTION>
United
States International Total
------ ------------- -------
<S> <C> <C> <C>
1991 $137 $299 $436
1992 $126 $223 $349
1993 $115 $237 $352
</TABLE>
- 8 -
<PAGE>
INDEX TO EXHIBITS
The exhibits designated by an asterisk are incorporated herein by
reference to documents previously filed by Texaco Inc. with the Securities
and Exchange Commission, SEC File No. 1-27.
Exhibits Page
-------- ----
(3.1) Copy of Restated Certificate of Incorporation of
Texaco Inc., as amended to and including December
22, 1992, including Certificate of Designations,
Preferences and Rights of Series B ESOP Convertible
Preferred Stock, Series C Variable Rate Cumulative
Preferred Stock, Series D Junior Participating
Preferred Stock, Series E Variable Rate
Cumulative Preferred Stock, Series F ESOP Convertible
Preferred Stock and Series G, H, I and J Market
Auction Preferred Shares, filed as Exhibit 3.1 to
Texaco Inc.'s Annual Report on Form 10-K for 1992
dated March 17, 1993, incorporated herein by reference. *
(3.2) Copy of By-Laws of Texaco Inc., as amended to and
including February 26, 1993, filed as Exhibit 3.2 to
Texaco Inc.'s Annual Report on Form 10-K for 1992 dated
March 17, 1993, incorporated herein by reference. *
(10(iii)(a)) Texaco Inc.'s Stock Incentive Plan, incorporated by
reference to pages A-1 through A-8 of Texaco Inc.'s
proxy statement dated April 5, 1993. *
(10(iii)(b)) Texaco Inc.'s Stock Incentive Plan, incorporated by
reference to pages IV-1 through IV-5 of Texaco Inc.'s
proxy statement dated April 10, 1989, as such Plan was
amended by Exhibit A to Texaco Inc.'s proxy statement
dated March 29, 1991, incorporated herein by reference. *
(10(iii)(c)) Texaco Inc.'s Incentive Bonus Plan, incorporated by
reference to page IV-5 of Texaco Inc.'s proxy statement
dated April 10, 1989. *
(10(iii)(d)) Description of Texaco Inc.'s Supplemental Pension Benefits
Plan, incorporated by reference to pages 8 and 9 of Texaco
Inc.'s proxy statement dated March 17, 1981. *
(10(iii)(e)) Description of Texaco Inc.'s Revised Supplemental Plan,
incorporated by reference to pages 24 through 27 of
Texaco Inc.'s proxy statement dated March 9, 1978. *
(10(iii)(f)) Description of Texaco Inc.'s Revised Incentive
Compensation Plan, incorporated by reference to pages
10 and 11 of Texaco Inc.'s proxy statement dated
March 13, 1969. *
(11) Computation of Earnings Per Share of Common Stock of
Texaco Inc. and Subsidiary Companies.
(12.1) Computation of Ratio of Earnings to Fixed Charges of
Texaco on a Total Enterprise Basis.
<PAGE>
Page
----
(12.2) Definitions of Selected Financial Ratios.
(13) Copy of those portions of Texaco Inc.'s 1993
Annual Report to Stockholders that are incorporated
by reference into this Annual Report on Form 10-K.
(21) Listing of significant Texaco Inc. subsidiary
companies and the name of the state or other
jurisdiction in which each subsidiary was organized.
(23) Consent of Arthur Andersen & Co.
(24) Powers of Attorney for the Directors and certain
Officers of Texaco Inc. authorizing, among other
things, the signing of Texaco Inc.'s Annual Report
on Form 10-K on their behalf.
EXHIBIT 11
<TABLE>
<CAPTION>
TEXACO INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
----------------------------------------------------
(Millions of dollars, except per share amounts)
<S> <C> <C> <C>
Primary Net Income Per Common Share 1993 1992* 1991*
- ----------------------------------- ---- ---- ----
Net income from continuing operations, before
cumulative effect of accounting changes $ 1,259 $ 1,038 $ 1,292
Net income (loss) from discontinued operations (191) (26) 2
Cumulative effect of accounting changes _ (300) _
--------- --------- ---------
Net income 1,068 712 1,294
Less: Preferred dividend requirements 101 99 103
--------- --------- ---------
Primary net income available for common stock $ 967 $ 613 $ 1,191
========= ========= =========
Average number of primary common shares
outstanding (thousands) 258,923 258,656 258,410
========= ========= =========
Primary net income per common share $ 3.74 $ 2.37 $ 4.61
========= ========= =========
Fully Diluted Net Income Per Common Share
- -----------------------------------------
Net income $ 1,068 $ 712 $ 1,294
Preferred stock dividend requirements
of non-dilutive issues and
adjustments to net income
associated with dilutive securities (64) (100) (66)
--------- --------- ---------
Fully diluted net income $ 1,004 $ 612 $ 1,228
========= ========= =========
Average number of primary common shares
outstanding (thousands) 258,923 258,656 258,410
Additional shares outstanding assuming full
conversion of dilutive convertible
securities into common stock, (thousands):
Convertible debentures 148 159 169
Series B ESOP Convertible
Preferred Stock 10,499 _ 10,654
Series F ESOP Convertible
Preferred Stock _ _ 686
Other 81 96 152
--------- --------- ---------
Average number of fully diluted common
shares outstanding (thousands) 269,651 258,911 270,071
========= ========= =========
Fully diluted net income per common share $ 3.72 $ 2.36 $ 4.55
========= ========= =========
<FN>
* Results for 1992 and 1991 have been reclassified to separately identify discontinued operations.
</TABLE>
EXHIBIT 12.1
<TABLE>
<CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
OF TEXACO ON A TOTAL ENTERPRISE BASIS (UNAUDITED)
FOR EACH OF THE FIVE YEARS ENDED DECEMBER 31, 1993 (a)
(in millions of dollars)
Years Ended December 31,
1993 1992 1991 1990 1989 (b)
<S> <C> <C> <C> <C> <C>
Income from continuing operations, before provision or
benefit for income taxes and cumulative effect of
accounting changes effective 1-1-92 $1,392 $1,707 $1,744 $2,448 $2,888
Dividends from less than 50% owned companies
more or (less) than equity in net income (8) (9) 5 (7) (12)
Minority interest in net income 17 18 16 12 2
Previously capitalized interest charged to
income during the period 33 30 23 16 14
------ ------ ------ ------ ------
Total earnings 1,434 1,746 1,788 2,469 2,892
------ ------ ------ ------ ------
Fixed charges:
Items charged to income:
Interest charges 546 551 644 676 798
Interest factor attributable to operating
lease rentals 91 94 76 58 40
Preferred stock dividends of subsidiaries
guaranteed by Texaco Inc. 4 _ _ _ _
------ ------ ------ ------ ------
Total items charged to income 641 645 720 734 838
Interest capitalized 57 109 80 50 54
Interest on ESOP debt guaranteed by Texaco Inc. 14 18 26 38 42
------ ------ ------ ------ ------
Total fixed charges 712 772 826 822 934
------ ------ ------ ------ ------
Earnings available for payment of fixed charges $2,075 $2,391 $2,508 $3,203 $3,730
====== ====== ====== ====== ======
(Total earnings + Total items charged to income)
Ratio of earnings to fixed charges of Texaco
on a total enterprise basis 2.91 3.10 3.04 3.90 3.99
====== ====== ====== ====== ======
<FN>
(a) Excludes discontinued chemical operations.
(b) Excluding the gains from the sale of Texaco Canada Inc. and the sale of a 20% stock interest in a
subsidiary, as well as the 1989 restructuring charges, the ratio of earnings to fixed charges on a total
enterprise basis approximated 2.14.
</TABLE>
EXHIBIT 12.2
DEFINITIONS OF SELECTED FINANCIAL RATIOS
CURRENT RATIO
- -------------
Current assets divided by current liabilities.
RETURN ON AVERAGE STOCKHOLDERS' EQUITY
- --------------------------------------
Net income divided by average stockholders' equity. Average stockholders'
equity is computed using the average of the monthly stockholders' equity
balances.
RETURN ON AVERAGE CAPITAL EMPLOYED
- ----------------------------------
Net income plus minority interest plus after-tax interest expense divided
by average capital employed. Capital employed consists of stockholders'
equity, total debt and minority interest. Average capital employed is
computed on a four-quarter average basis.
TOTAL DEBT TO TOTAL BORROWED AND INVESTED CAPITAL
- -------------------------------------------------
Total debt, including capital lease obligations, divided by total debt
plus minority interest liability and stockholders' equity.
EXHIBIT 13
Financial Review
Consolidated Highlights
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEMS 1, 2.
<TABLE>
<CAPTION>
Millions of dollars, except
per share and ratio data 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Revenues from continuing
operations $34,071 $36,530 $37,162
Net income from
continuing operations,
before cumulative effect
of accounting changes $ 1,259 $ 1,038 $ 1,292
Discontinued chemical
operations:
Net income (loss)
from operations (17) (26) 2
Net loss on disposal (174) -- --
------- ------- -------
(191) (26) 2
Cumulative effect of
accounting changes -- (300) --
------- ------- -------
Net income $ 1,068 $ 712 $ 1,294
Total assets $26,626 $25,992 $26,182
Total debt $ 6,826 $ 6,581 $ 6,504
Per common share (dollars)
Net income (loss) before
cumulative effect of
accounting changes:
Continuing
operations $ 4.47 $ 3.63 $ 4.60
Discontinued chemical
operations (.73) (.10) .01
Cumulative effect of
accounting changes -- (1.16) --
------- ------- -------
Net income $ 3.74 $ 2.37 $ 4.61
Cash dividends $ 3.20 $ 3.20 $ 3.20
Current ratio 1.44 1.33 1.05
Return on average
stockholders' equity* 12.5% 10.9% 13.5%
Return on average
capital employed* 9.4% 8.5% 10.4%
Total debt to total borrowed
and invested capital 38.7% 39.3% 39.4%
======= ======= =======
<FN>
*Returns exclude discontinued chemical operations and the 1992 cumulative effect
of accounting changes.
</TABLE>
Consolidated worldwide net income for the year 1993
was $1,068 million, or $3.74 per common share, com-
pared with $712 million, or $2.37 per common share for
the year 1992 and $1,294 million, or $4.61 per common
share for the year 1991.
These results include special gains and charges as
well as Discontinued Chemical Operations. Also, results
for 1992, including Texaco's equity in the Caltex group
of companies and Star Enterprise, reflect the cumulative
effect of the adoption of Statement of Financial Account-
ing Standards (SFAS) 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," and
SFAS 109, "Accounting for Income Taxes." The adoption
of these two Standards resulted in a net cumulative
charge as of January 1, 1992 of $300 million, or $1.16
per common share. The year 1991 has not been restated
for these accounting changes. Excluding the cumula-
tive effect of accounting changes, net income for 1992
amounted to $1,012 million, or $3.53 per common share.
Discontinued Chemical Operations
Texaco Inc. entered into memorandums of understand-
ing to sell Texaco Chemical Company, a wholly owned
subsidiary, and substantially all of its worldwide chemi-
cal operations to Huntsman Financial Corporation
("Huntsman"), an affiliate of the Jon M. Huntsman
Group of Companies. Except for the additive business,
the sale is expected to take place in the first quarter of
1994. The sale of the additives portion of the chemical
business is expected to take place by September 30, 1994.
Texaco is cooperating with Huntsman, at their request, to
sell the additives portion of the business to a third party.
The combined purchase price of the chemical businesses
is $1,045 million. The results for such chemical opera-
tions have been classified as discontinued operations.
Net income for discontinued operations in 1991
amounted to $2 million, or $15 million before special
charges relating to environmental reserves and other
issues. Although special charges were also recorded in
1992 and 1993, operating results before these charges
were in a loss position. The 1992 results were impacted
by depressed margins for olefins and ethylene oxide
derivatives coupled with scheduled maintenance down-
time on major processing units. In 1993, the loss from
operations was principally due to feedstock and energy
costs for products not being fully recovered in a period
of oversupply in the marketplace.
Summary statements and other detailed financial
information on discontinued chemical operations can be
found in Note 3 to the Consolidated Financial Statements
on page 40 of this Report.
Texaco Inc. 1993 Annual Report to Stockholders page 24.
Results of Operations
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEMS 3, 4, 5.
Continuing Operations
The following relates to Texaco's consolidated and func-
tional results for continuing operations.
Revenues
Consolidated worldwide revenues from continuing
operations were $34.1 billion in 1993 as compared to
$36.5 billion in 1992 and $37.2 billion in 1991. Revenues
for 1993 decreased principally due to lower prices for
crude oil and refined products, partially offset by higher
natural gas prices during the year. Revenues in 1993 also
decreased due to lower international crude oil sales vol-
umes. In the United States, lower sales of less profitable
unbranded gasolines and aviation fuels were partly offset
by higher sales of branded gasolines. Refined product
sales volumes in the Caltex area of operations increased
more than 7% over 1992 levels, resulting in higher equity
in income of the affiliate.
In 1992, revenues declined slightly as compared
with 1991 reflecting generally lower prices for crude oil
and refined products, partially offset by higher refined
product sales volumes and improved natural gas prices.
Costs and Expenses
Purchases and other costs for 1993 of $24.7 billion were
$2.3 billion below that for 1992, reflecting the impact
of lower worldwide crude oil prices and the reduced
costs of petroleum products. Costs for 1992 remained
relatively flat compared with 1991, due to the offsetting
impact of lower prices and higher volumes. Crude oil
prices, as reflected by the benchmark, West Texas
Intermediate, declined over $2 per barrel in 1993 as
compared to 1992, after a somewhat smaller decrease
of almost $1 per barrel in 1992 as compared to the
earlier year.
Texaco continued to realize the benefits of its qual-
ity initiatives in controlling expenses during 1993. Over
the last three years total expenses including special
items, have declined more than 5% in spite of general
inflationary pressures. Operating and overhead expenses
(before special items, dry hole expense and depreciation,
depletion and amortization) were successfully reduced
by 4% in 1993. This improvement follows a 4% expense
reduction in 1992 as compared with 1991. Expense
reductions occurred in both 1993 and 1992 in all of
the company's operating units and staff departments.
Additionally, during the period 1991 to 1993, employee
levels dropped by almost 4,200, a decrease of 11%.
These results reflect the value of the company's ongoing
commitment to improve productivity through the
redesign of business processes and the restructuring
of operations.
Texaco also lowered its borrowing costs over the
past three years. While Texaco's debt level has remained
relatively constant with some small increases reflected
in 1993, interest expense has declined by nearly 18%
from $558 million for the year 1991 to $459 million for
the year 1993. This savings was accomplished through
aggressive efforts to refinance high-cost debt issues at
significantly lower rates while lengthening maturities.
Net Income
Consolidated net income from continuing operations
includes special gains and charges in addition to net
income more directly related to the current production,
manufacturing and marketing of products and services
of the company. The elements of consolidated net
income from continuing operations are provided below.
Explanations of net income are shown in the functional
analysis which follows.
<TABLE>
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Net income, before
special items $1,132 $1,138 $1,228
Tax law changes 152 -- --
Special charges (235) (140) (160)
Gains from tax benefits
and asset sales 210 40 224
------ ------ ------
Net income from
continuing operations,
before cumulative effect
of accounting changes $1,259 $1,038 $1,292
====== ====== ======
</TABLE>
The Consolidated Financial Statements and related
Notes should be read in conjunction with this financial
review.
Functional Analysis
Worldwide net income from continuing operations in
the following table is segregated between operating and
corporate/nonoperating. Net operating results are fur-
ther segregated functionally and geographically.
<TABLE>
Net Income
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Operating earnings (losses)
Petroleum and natural gas
Exploration and production
United States $ 510 $ 543 $ 605
International 322 416 421
------ ------ ------
Total 832 959 1,026
Manufacturing, marketing
and distribution
United States 215 267 187
International 434 300 647
------ ------ ------
Total 649 567 834
Total petroleum
and natural gas 1,481 1,526 1,860
Nonpetroleum (13) (19) (51)
------ ------ ------
Total operating
earnings 1,468 1,507 1,809
Corporate/nonoperating (209) (469) (517)
------ ------ ------
Net income from continuing
operations, before cumulative
effect of accounting
changes $1,259 $1,038 $1,292
====== ====== ======
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 25.
Financial Review continued
Petroleum and Natural Gas
Exploration and Production
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEMS 6, 7, 8.
<TABLE>
United States
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Operating earnings, before
special items $548 $576 $619
Tax law change (32) -- --
Special charges (6) (33) (14)
---- ---- ----
Total operating earnings $510 $543 $605
Selected Operating Data
Net production of crude
oil and NGL's (000 BPD) 423 432 456
Net production of natural
gas--available for sale
(000 MCFPD) 1,729 1,782 1,933
Natural gas sales
(000 MCFPD) 2,735 2,705 2,879
===== ===== =====
</TABLE>
Operating earnings were $510 million in 1993 com-
pared with $543 million in 1992. This decrease resulted
primarily from lower crude oil and natural gas liquids
prices and volumes which were partially offset by higher
natural gas prices. Production of natural gas decreased
by about 3% from 1992; however, sales volumes
remained virtually flat. For the year 1993, production of
crude oil and NGL's was down by about 2% to 423 thou-
sand barrels per day as compared to a decline of approxi-
mately 5% for 1992 versus 1991. The company has made
significant progress in slowing the rate of decline in
production from its older and more mature producing
fields through utilization of its proprietary advanced
technologies for enhanced oil recovery.
Also, benefits were derived from a decline in
operating expenses, before taxes and special items, of
$67 million in 1993 as compared with 1992 primarily as
a result of successful restructuring programs and busi-
ness process initiatives to reduce producing and over-
head expenses.
Total operating earnings for 1992 decreased com-
pared with 1991 reflecting reduced crude oil and natural
gas production from maturing fields, coupled with lower
crude oil prices, particularly in the first quarter. Higher
natural gas prices and decreased operating expenses par-
tially offset the decrease in earnings.
Total operating earnings for 1993 included a
deferred tax charge of $32 million due to the increase
in the U.S. tax rate to 35% effective January 1, 1993 and a
special charge of $6 million related to staff reductions.
Special charges in 1992 included $14 million for
employee benefit costs, primarily related to staff reduc-
tions, $7 million for property damage associated with
Hurricane Andrew and $12 million for environmental
and other issues. Total operating earnings for 1991
included special charges related to environmental reme-
diation and certain oil and gas lease issues.
<TABLE>
International
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Operating earnings, before
special items $212 $414 $350
Tax law change 169 -- --
Special charges (59) (8) (11)
Gain from tax benefits -- 10 82
---- ---- ----
Total operating earnings $322 $416 $421
Selected Operating Data
Net production of crude oil
and NGL's, including CPI
(000 BPD) 305 304 334
Net production of natural
gas--available for sale
(000 MCFPD) 238 213 198
Natural gas sales
(000 MCFPD) 255 223 205
==== ==== ====
</TABLE>
Texaco's total operating earnings in 1993 outside the
United States were $322 million compared with $416
million for 1992. This decrease is attributable to lower
worldwide crude oil prices and benefits recorded in
1992 under SFAS 109 of approximately $110 million due
primarily to the currency exchange impact of the Pound
Sterling on deferred income taxes. Results for 1993 bene-
fited from higher production from the Belida field in
Indonesia and improved production in the North Sea and
the Partitioned Neutral Zone, an area located between
Saudi Arabia and Kuwait.
Texaco's 1992 operating results as compared with
1991 included the aforementioned 1992 benefits under
SFAS 109 due to currency translation. These benefits
were partially offset by the impact of lower crude oil
prices, principally in the first quarter of 1992, and
decreased production in the North Sea due to the shut-in
of production platforms for scheduled maintenance and
the installation of safety equipment. Earnings for 1992
also benefited from lower exploratory expenses in the
U.K. North Sea.
Texaco Inc. 1993 Annual Report to Stockholders page 26.
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEMS 9, 10.
Total operating earnings for 1993 included a benefit
of $169 million related to the change in the tax treatment
of certain items under the U.K. Petroleum Revenue Tax
and the tax rate reduction of this tax from 75% to 50 %.
Special charges of $59 million were recorded relating to
staff reductions and the reduction in the carrying value
of certain assets, principally in the North Sea, brought
about by a change in the Petroleum Revenue Tax laws.
Special items for 1992 included a gain related to the
favorable settlement of a Danish tax issue and special
charges for employee benefit costs primarily related to
staff reductions. Total operating earnings for 1991
included gains related to a Canadian tax refund and
special charges related to prior period income tax
adjustments.
Manufacturing, Marketing and Distribution
<TABLE>
United States
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Operating earnings, before
special items $306 $288 $241
Tax law change (4) -- --
Special charges (87) (21) (54)
---- ---- ----
Total operating earnings $215 $267 $187
Selected Operating Data--
including interest in an
affiliate
Refinery input (000 BPD) 658 652 661
Refined product sales
(000 BPD) 830 880 869
==== ==== ====
</TABLE>
Total operating earnings for 1993 were $215 million
as compared with $267 million for 1992. Total operating
earnings for 1993 included a charge of $4 million due to
the increase in the U.S. tax rate to 35% effective January 1,
1993 and special charges of $87 million for staff reduc-
tions and reserves for environmental remediation costs.
Excluding special items, 1993 operating results reflected
higher marketing margins on the East and Gulf coasts of
the United States. Branded gasoline sales grew during
the year 1993 as compared with 1992. Increased sales
volumes in this preferred class of trade and lower
refinery feedstock costs benefited operating results for
1993. Operating results were negatively impacted by
refinery downtime.
Operating results for 1992 reflected improved prod-
uct margins on the West Coast, particularly in the fourth
quarter, as opposed to the depressed levels of 1991. Also,
increased sales volumes of branded gasoline and lower
operating expenses contributed to the improved earnings
for the year 1992. These improved results were partly
offset by weak refining margins on the East and Gulf
Coasts, mainly caused by an oversupply of products in
the marketplace.
Total operating earnings for 1992 included special
charges of $18 million for employee benefit costs,
primarily related to staff reductions, and $12 million
for property damage associated with a fire at the
Los Angeles refinery, partially offset by a benefit of
$9 million relating to other issues. Operating earnings for
1991 included special charges for financial reserves relat-
ing to environmental remediation, expected resolution of
environmental and other issues and a reduction in the
carrying value of certain assets.
<TABLE>
International
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Operating earnings, before
special items $464 $335 $578
Special charges (30) (35) (27)
Gains from tax benefits and
asset sales -- -- 96
----- ----- -----
Total operating earnings $434 $300 $647
Selected Operating Data--
including interests
in affiliates
Refinery input (000 BPD) 812 769 713
Refined product sales
(000 BPD) 1,504 1,454 1,335
===== ===== =====
</TABLE>
Operating earnings outside the United States were
$434 million in 1993 compared with $300 million in
1992. This increase reflects strong margins in areas
served by the company's affiliate, Caltex, including most
Pacific Rim countries and South Africa. Partially offset-
ting this improvement was a 1993 charge to Texaco's
earnings of $51 million recorded by Caltex to recognize
that the market value of inventories is lower than the
LIFO carrying value. Strong margins were also realized
in the Latin American operating areas, mainly Brazil.
Results from operations in 1992 outside the United
States decreased as compared with 1991 reflecting signif-
icantly lower refinery margins in Europe, due mainly to
an excess of product supply, as well as unit downtime at
the Pembroke refinery in Wales. In the Pacific Rim,
Caltex margins weakened during the year 1992. In the
first quarter of 1991, Caltex results benefited from
particularly strong margins in Japan. The year 1992
included benefits under SFAS 109 of approximately
$25 million due to currency translation. This resulted
primarily from lower U.K. deferred income taxes due to
the weakness of the Pound Sterling versus the U.S. Dollar.
Texaco Inc. 1993 Annual Report to Stockholders page 27.
Financial Review continued
Total operating earnings for 1993 included special
charges of $30 million related to staff reductions and the
reduction in the carrying value of certain marketing
assets.
Special charges in 1992 included $6 million for
employee benefit costs, primarily related to staff reduc-
tions and $29 million for financial reserves for the
expected resolution of environmental and other issues
and the write-down of the carrying value of certain
assets. Operating earnings for 1991 included special
gains of $37 million related to a Canadian tax refund and
$59 million, included in 1991 Caltex equity earnings,
from the sale of surplus properties in Japan, partially
offset by charges of $27 million related to costs associ-
ated with pension benefits and prior period taxes.
<TABLE>
Nonpetroleum
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Operating losses, before
special items $ (9) $ (1) $(37)
Tax law change (4) -- --
Special charges -- (18) (14)
---- ---- ----
Total operating
losses $(13) $(19) $(51)
==== ==== ====
</TABLE>
Operating results for 1991 through 1993 reflect
developmental expenses in the company's alternate
energy area. The impact of these charges was signifi-
cantly reduced in 1992 by profits from the licensing
of technology relating to gasification. These licensing
profits were somewhat less in 1993.
The year 1993 included a charge of $4 million due
to the increase in the U.S. tax rate to 35% effective
January 1, 1993. The year 1992 included special charges
by the company's insurance subsidiary for property
damage related to a fire at the Los Angeles refinery
and Hurricane Andrew. The year 1991 included special
charges related to financial reserves for the expected
resolution of environmental issues.
<TABLE>
Corporate/Nonoperating
<CAPTION>
Millions of dollars 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Corporate/nonoperating,
before special items $(389) $(474) $(523)
Tax law change 23 -- --
Special charges (53) (25) (40)
Gains from tax benefits and
asset sales 210 30 46
----- ----- -----
Total $(209) $(469) $(517)
===== ===== =====
</TABLE>
Corporate/nonoperating includes interest expense,
general corporate expenses as well as interest income,
dividends and other nonoperating income.
During 1993, corporate/nonoperating results
showed significant improvement over 1992 results due to
the company's overhead expense reduction efforts as well
as the impact of lower overall interest costs.
In 1992, corporate/nonoperating results also showed
improvement as compared with those of the preceding
year due to the impact of lower overall corporate interest
rates, interest income on U.K. and Danish tax refunds,
and the reduction of overhead expenses from the com-
pany's expense control efforts.
The year 1993 included current and deferred tax
benefits realizable through the sale of interests in a sub-
sidiary, benefits from a tax law change, a windfall profits
tax refund, special charges relating to staff reductions
and charges primarily relating to oil and gas issues.
The year 1992 included a gain related to the sale
of an interest in a subsidiary and special charges for
employee benefit costs, primarily related to staff reduc-
tions, and the write-down of the carrying value of certain
assets. The year 1991 included gains arising from interest
income on a Canadian tax refund and from the sale of an
interest in an Australian uranium property, and special
charges related to asset writedowns and the settlement of
tax and other issues.
Texaco Inc. 1993 Annual Report to Stockholders page 28.
Environmental Matters
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEM 11.
Texaco has an active program to ensure that the com-
pany's high environmental standards are maintained,
which includes closely monitoring U.S. Federal, state and
local, and international regulatory requirements. Texaco's
activities concerning environmental, health and safety
matters are overseen by the Public Responsibility
Committee of the Board of Directors. The worldwide
responsibilities for these activities are coordinated by a
corporate officer whose department's mission includes
carrying out environmental audits of facilities. Texaco is
committed to conducting its operations in a manner that
minimizes the environmental impact of the company's
operations and maximizes safety and the protection of
health. The company works closely with governmental
agencies to ensure compliance with the various environ-
mental laws and regulations.
Texaco is a member in over 30 oil spill coopera-
tives, including the Oil Spill Response Limited and
supports the Marine Spill Response Corporation.
Additionally, Texaco underwrites its own regional and
international oil spill response teams and its emergency
response assistance team as part of the company's emer-
gency planning. Texaco's involvement in other proactive
organizations that define and promote environmental
standards include the American Petroleum Institute and
the International Chamber of Commerce.
Texaco makes substantial capital and operating
expenditures concerning the environment. These expen-
ditures relate to the prevention of the release of pollu-
tants into the air and water and to the disposal of wastes.
These expenditures also include costs associated with
remediation obligations at company operated sites,
previously operated sites and at certain third party sites.
The discussion that follows details environmental
expenditures and reserve information relative to Texaco
and its equity in affiliates.
In 1993, Texaco's capital environmental expenditures
amounted to $302 million. The major portion of these
expenditures related to investments required by regula-
tions under the U.S. Clean Air Act. Expenditures in 1993
included initial capital investments to meet reformulated
gasoline standards and completion of capital investments
at refineries to reduce sulfur levels in diesel fuels. Further
investments will be required in the future as more provi-
sions of the Clean Air Act become effective. Capital
expenditures for 1994 and 1995 projected for the company
amount to $399 million and $410 million, respectively. Of
these 1994 and 1995 capital expenditures, approximately
69% will relate to operations in the United States.
Texaco spent and expensed approximately $276
million in 1993 associated with prevention of pollution in
the company's ongoing operations and in the manage-
ment of the company's environmental programs, includ-
ing Superfund taxes. A similar level of expenditures is
expected in 1994.
Expenditures in 1993 relating to remediation
amounted to $147 million. The company had financial
reserves of $821 million at the end of 1993 for the esti-
mated future costs of its environmental remediation pro-
grams. These expenditures and reserves principally
relate to remediation activities at refineries, terminals
and service stations, and to third party waste sites in
which Texaco has been named as a responsible party.
Since the enactment of the Comprehensive
Environmental Response, Compensation and Liability
Act (commonly referred to as Superfund), the Environ-
mental Protection Agency (EPA), other regulatory agen-
cies and groups have identified Texaco as a potentially
responsible party (PRP) for cleanup of hazardous waste
sites. Texaco has determined that it may have potential
exposure, though limited in certain cases, at about 200
multiparty hazardous waste sites, of which 85 sites are on
the EPA's National Priority List. Although liability under
Superfund is joint and several, the company is actively
pursuing and/or participating in sharing of Superfund
costs with other identified PRPs using weight, volume
and toxicity factors of the material contributed by the
PRPs. The expenditures in 1993 relating to remediation
included $21 million for multiparty waste sites. The
financial reserves for environmental remediation include
$82 million relative to multiparty waste sites. This
reserve is based on the company's analysis of develop-
ments at various of these sites for which costs can
reasonably be estimated. However, there are potential
additional costs for waste sites for which a range of
exposures cannot reasonably be estimated until further
information develops. In many cases, the amounts
and types of wastes are still under investigation by
regulatory agencies.
In addition to the environmental remediation
reserves, the company also provides financial reserves
to cover the cost of restoration and abandonment of
its oil and gas producing properties. These reserves at
December 31, 1993 totaled $816 million. Expenditures
in 1993 for restoration and abandonment amounted to
$52 million.
In summary, Texaco has provided, to the extent
reasonably measurable, financial reserves for its probable
environmental remediation liabilities. The recording of
these obligations is based on technical evaluations of the
currently available facts, interpretation of the regula-
tions and the company's experience with similar sites.
Additional financial reserve requirements relative to
existing and new remediation sites may be necessary in
the future when more facts are known. In addition, capi-
tal and other environmental expenditures may be
required in the future as the result of new or revised reg-
ulations. The potential also exists for further legislation
to provide limitations on liability. It is not possible to
project the costs or a range of costs for environmental
items beyond that disclosed above due to uncertainty
surrounding future developments, both in relation to
remediation exposure and to regulatory initiatives.
However, while future environmental expenditures that
will be incurred by the petroleum industry may certainly
be significant in the absolute, they will be a cost of doing
business that will have to be recovered in the market-
place. The fact that Texaco has taken a proactive
approach to prevention, detection and remediation of
environmental problems gives the company a competi-
tive position in our industry with respect to future envi-
ronmental costs. Moreover, it is not believed that such
future costs will be material to the company's financial
position nor to its operating results over any reasonable
period of time.
Texaco Inc. 1993 Annual Report to Stockholders page 29.
Financial Review continued
Liquidity and Capital Resources
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEMS 12, 13, 14.
The company's cash, cash equivalents and short-term
investments totaled $536 million at December 31, 1993
as compared with the year-end 1992 level of $482
million.
Texaco's net cash provided by operating activities
for 1993 (as presented on the Statement of Consolidated
Cash Flows) was impacted by significant items not
directly related to current period operations. Among
these items were outflows relating to environmental
expenditures, legal settlements and tax payments relating
to prior years. Also, the company's accounts receivable
sales facility was not utilized at the end of 1993 but was
fully utilized at year-end 1992. In the aggregate, these
items decreased Texaco's 1993 cash flow by some $700
million. Excluding these items, cash generated from nor-
mal operating activities of some $3.1 billion remained
comparable to the prior year though somewhat lower
than 1991 due to continuing weak oil prices.
Cash generated from normal operating activities,
proceeds from asset sales of $373 million, mainly
through the formation of U.S. producing joint ventures,
as well as financing activities discussed below, totaled
some $5 billion. These sources of cash were used to sup-
port Texaco's capital and exploratory program of $2.3 bil-
lion, for the payment of dividends to common, preferred
and minority shareholders of $1.0 billion and for work-
ing capital, the retirement of debt and other general
corporate purposes.
Cash generated by financing activities included
the issuance by Texaco Capital LLC, a finance subsidiary,
of $350 million of Cumulative Guaranteed Monthly
Income Preferred Shares, Series A, in a public offering.
The shares were sold at $25 per share with an annual
dividend rate of 6 7/8%, and are callable at par after five
years. Additionally, a producing subsidiary of Texaco
issued $75 million of its preferred stock in a private
placement.
Total debt at December 31, 1993 amounted to
$6.8 billion as compared to $6.6 billion at year-end 1992.
Texaco's ratio of total debt to total borrowed and invested
capital was 38.7% at December 31, 1993, lower than the
39.3% and 39.4% at year-end 1992 and 1991, respectively.
The company continued restructuring its debt portfolio
during 1993, reducing its average interest cost over the
past three years by nearly one percentage point to 7.1%,
while increasing its average maturity over the same
period by nearly five years to 12.3 years. In 1993, the
company completed public long-term debt offerings
totaling $732 million, which included $200 million of
30-year debt, $200 million of 40-year debt, $200 million
of 50-year debt and $132 million under its medium-term
note program. The 50-year debt issue helped reestablish
the market for 50- to 100-year corporate debt.
Texaco maintains revolving credit facilities with
commitments of $2.35 billion which remained unused at
year-end 1993. Texaco also maintains an accounts receiv-
able sales facility of approximately $400 million which
was not utilized at December 31, 1993.
During 1993, Texaco entered into memorandums
of understanding to sell Texaco Chemical Company
and substantially all of its worldwide petrochemical
operations for $1,045 million, of which $850 million
of this transaction, consisting of cash of approximately
$650 million and a note of approximately $200 million,
is expected to be completed in the first quarter of 1994.
The sale of the additives portion of the chemical
business is expected to take place by September 30,
1994. It is anticipated that the proceeds from these
sales will be used in support of Texaco's investment
programs in its core business as well as other general
corporate purposes.
Subsequent to year-end, Texaco reached an out-of-
court global settlement ending a long-standing royalty
dispute with the state of Louisiana. The settlement calls
for Texaco to pay the state of Louisiana $250 million,
consisting of a $150 million payment in February, 1994
and $50 million payments in 1995 and 1996. In addition,
Texaco will embark on an economic expansion program
in which it will cause $152 million to be spent over the
next five years on expanded activity and investments
affecting state-owned oil and gas properties in which
Texaco has interests.
The company considers its financial position suffi-
cient to meet its anticipated future financial requirements.
Texaco Inc. 1993 Annual Report to Stockholders page 30.
Reserves
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEM 15.
Texaco's worldwide net proved reserves at year-end 1993,
including equity in P.T. Caltex Pacific Indonesia (CPI), an
affiliate, totaled 3.7 billion barrels of oil equivalent, of
which 59% were in the United States. The worldwide
reserves include 2.7 billion barrels of crude oil and nat-
ural gas liquids, and 6.1 trillion cubic feet of natural gas.
On a worldwide basis, including equity reserves and
excluding purchases and sales, the company added new
volumes to its reserve base equal to 112% of combined
liquid and gas production in 1993, 94% in 1992 and 98%
in 1991. The three-year average for 1991-1993 was 101%
and the five-year average for 1989-1993 was 106%.
Texaco's worldwide finding and development costs
were $3.84 in 1993, $4.53 over the three-year period
1991-1993 and $4.10 over the five-year period 1989-1993.
In 1993, reserve additions in the United States
replaced 89% of the combined oil and gas production
versus 82% in 1992. Outside the United States, reserve
additions in 1993 replaced 155% of the combined oil
and gas production versus 120% in 1992.
Capital and Exploratory Expenditures
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEM 16.
Worldwide capital and exploratory expenditures for con-
tinuing operations, including equity in such expenditures
of affiliates, were $2.9 billion for the year 1993 as com-
pared to $3.0 billion in 1992 and $3.4 billion in 1991. The
declines in 1993 and 1992 as compared to 1991 reflect
the impact of continuing depressed crude oil prices and
low refined product margins. The company continuously
reexamines its capital and exploratory program and sys-
tematically reprioritizes the timing of projects in an
effort to add value for its shareholders. Texaco remains
committed to adding to the company's underground
reserve base through a balanced portfolio approach
which mixes a selection of low, medium and high risk
exploration opportunities together with those opportuni-
ties where established reserves entail sophisticated tech-
nology to exploit. Texaco also remains committed to
upgrading refinery facilities to enhance the production of
valuable light-end products and improve product distrib-
ution through investments in retail class-of-trade market-
ing outlets. Many of these opportunities are in the
international sector as evidenced by the increase in
expenditures outside the United States from 48% of the
total expenditures in 1991 to 54% in 1993.
United States
Upstream capital and exploratory expenditures increased
in 1993 as compared to 1992 representing higher drilling
and workover activity. These expenditures, however,
remained below the 1991 level primarily due to lower
crude prices. Downstream expenditures in 1993 by
Texaco and its affiliate, Star Enterprise, declined as com-
pared to recent years primarily due to the completion of
refinery upgrade projects that began in 1991. The decline
also reflects expenditures related to service station acqui-
sitions in 1991. Expenditures in 1993 for other operations
continued to decline due to the completion of joint-ven-
ture cogeneration facilities under construction in 1991
and 1992. These facilities efficiently produce steam and
electricity from clean-burning gas.
Texaco Inc. 1993 Annual Report to Stockholders page 31.
Financial Review continued
International
GRAPHIC MATERIALS APPEAR HERE.
SEE APPENDIX GRAPHIC AND IMAGE IMAGE MATERIAL ITEM 17.
Upstream capital and exploratory expenditures in 1993
declined as compared with 1992 and 1991 reflecting the
completion of several development projects in the U.K.
North Sea where new production was placed on stream,
as well as reduced exploratory expenses in many inter-
national areas. The year 1991 also included lease acquisi-
tions in Canada. These declines were partially offset
by increased appraisal drilling in the U.K. North Sea
and higher investments in Indonesia and Australia.
Downstream expenditures in 1993 increased as com-
pared to 1992 and 1991 reflecting refinery upgrades and
modernization by the company's affiliate, Caltex, which
conducts operations in the Middle East and Far East.
This increase was partially offset by the completion of a
refinery upgrade project at Pembroke in the United
Kingdom in early 1993.
1994 Capital and Exploratory Expenditures
Texaco's capital and exploratory spending level, including
equity in such expenditures of affiliates, is projected to
approximate $3 billion during 1994. Of this amount, 56%
has been designated for upstream opportunities and 44%
for downstream and other activities. On a geographical
basis, 53% will be directed to international areas and
47% to the U.S.
Upstream opportunities include Texaco's on-going
risk-balanced exploration portfolio, expenditures for
natural gas projects in the U.S. and Europe, continued
offshore developments in the North Sea and Indonesia
and worldwide enhanced reserve recovery projects.
These projects will utilize state-of-the-art technological
applications such as 3-D seismic imaging of the earth's
sub-surface, CO2 injection, horizontal drilling and steam-
flooding applications.
Downstream investments will concentrate on meet-
ing U.S. reformulated gasoline and other environmental
requirements, refinery expansions and upgrades, par-
ticularly in the Pacific Rim and Panama, and selective
investments in marketing growth areas and transpor-
tation facilities.
<TABLE>
Capital and Exploratory Expenditures
<CAPTION>
Millions of dollars
For the years ended December 31 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Texaco Inc. and subsidiary
companies
United States
Exploration $ 194 $ 190 $ 234
Production 602 545 670
Manufacturing, marketing
and distribution 347 363 396
Other 37 60 80
------ ------ ------
Total 1,180 1,158 1,380
------ ------ ------
International
Exploration 280 254 401
Production 475 607 548
Manufacturing, marketing
and distribution 291 318 332
Other 6 16 12
------ ------ ------
Total 1,052 1,195 1,293
------ ------ ------
Total Texaco Inc. and
subsidiary
companies 2,232 2,353 2,673
------ ------ ------
Equity in affiliates
United States
Exploration and
production 3 3 1
Manufacturing, marketing
and distribution 147 246 292
Other 7 17 106
------ ------ ------
Total 157 266 399
------ ------ ------
International
Exploration and
production 151 148 159
Manufacturing, marketing
and other* 352 237 194
------ ------ ------
Total 503 385 353
------ ------ ------
Total equity
in affiliates 660 651 752
------ ------ ------
Total continuing
operations 2,892 3,004 3,425
Discontinued operations 84 160 144
------ ------ ------
Total worldwide $2,976 $3,164 $3,569
====== ====== ======
<FN>
*Excludes expenditures of Caltex's affiliated companies.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 32.
Industry Review
Review of 1993
The world economy remained sluggish in 1993. Although
the United States economy grew at a modest 2.9% rate in
1993, Western Europe and Japan slipped into recession,
and the former Soviet Union continued to experience
large contractions in domestic output. The most robust
economic expansion continued to occur in the develop-
ing and newly-industrialized nations of the Pacific Rim.
Largely reflecting the recessions in Western Europe
and Japan, and economic depression in the former Soviet
Union, world oil demand declined from 67.1 million BPD
in 1992 to 66.9 million BPD in 1993. Demand in the indus-
trial nations as a whole fell slightly: U.S. oil demand rose
only 0.5% in 1993 from 17.1 million BPD to 17.2 million
BPD, while combined oil demand in Western Europe and
Japan declined by 0.2 million BPD, offsetting the small
U.S. gain.
<TABLE>
World Petroleum Demand
<CAPTION>
Million BPD 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Industrial nations 38.9 38.9 38.3
Developing nations 21.2 20.1 18.9
Former Soviet bloc 6.8 8.1 9.6
---- ---- ----
Total 66.9 67.1 66.8
==== ==== ====
</TABLE>
Mirroring the severe economic conditions in the
former Soviet Union and cutbacks in Russian exports, oil
demand in the former Soviet bloc (including Eastern
Europe) averaged 6.8 million BPD in 1993, a drastic fall
of 17% versus 1992. On the other hand, demand in China
and the other developing countries continued to grow
strongly.
On the supply side, total non-OPEC crude oil pro-
duction continued its decline of the last several years,
slipping from 35.9 to 35.1 million BPD, primarily because
Russian output fell by over 1 million BPD from 1992
levels. However, non-OPEC crude production excluding
Russia increased at rates not seen in many years, buoyed
by record levels of production in the North Sea and
significant increases in other areas.
Notwithstanding the decline in world oil consump-
tion and renewed expansion in non-OPEC supplies out-
side of the former Soviet Union, OPEC crude production
rose to 24.7 million BPD in 1993, 0.7 million BPD higher
than 1992 levels.
Crude oil prices were stable during the first half of
1993, but declined sharply in the latter part of the year as
a result of a general market perception of surplus oil sup-
plies, the steady accumulation of excess oil inventories,
and the continued possibility of Iraqi oil being added to
an already saturated oil market. The spot price of West
Texas Intermediate (WTI) dropped by almost 25%
between June 1993 and December 1993, to a low of
$14.50 per barrel. For the year as a whole, WTI averaged
$18.44 per barrel, 10% lower than the previous year.
Despite the weakness in global oil demand, refin-
ers' margins showed general improvement in most
regions of the world, aided by lower crude prices.
Near-Term Outlook
World economic growth is expected to pick up somewhat
in 1994 as the U.S. expansion accelerates and Western
Europe and Japan emerge from recession. Growth in
much of the developing world should also continue to be
robust. However, the economies of the former Soviet
Union are expected to contract further in 1994, as eco-
nomic restructuring continues.
Spurred by continued economic expansion and
exceptionally cold weather early in 1994, U.S. oil demand
is expected to increase by about 0.3 million BPD to 17.5
million BPD. The beginnings of economic recovery in
Western Europe and Japan are expected to add another
0.2 million BPD to world oil demand. As in 1993, the
most significant growth in oil demand will be in the
developing countries, where demand is expected to grow
by 0.7 million BPD. These increases will be partially off-
set by declines in oil consumption in the former Soviet
bloc, and world oil demand in total should rise by about
0.6 million BPD in 1994.
<TABLE>
Near-Term World Supply/Demand Balance
<CAPTION>
Million BPD 1994 1993
- -------------------------------------------------
<S> <C> <C>
Demand 67.5 66.9
Supply
Non-OPEC Crude 34.9 35.1
OPEC Crude 24.7 24.7
Other Liquids 7.9 7.7
---- ----
Total Supply 67.5 67.5
---- ----
Stock Change -- 0.6
==== ====
</TABLE>
After the steady decline since the late 1980's, non-
OPEC liquids production is likely to remain more-or-less
flat in 1994 at about the 40.5 million BPD level. Former
Soviet oil output will continue to fall, but at a slower rate
than in 1993. The rate of decline in U.S. crude production
should also moderate. These declines will be offset by
strong gains in the U.K. sector of the North Sea and
increases in many other non-OPEC producing countries.
The outlook for OPEC production hinges largely
on whether the OPEC members, battered financially by
recent price declines, exercise renewed restraint. Postur-
ing for an eventual resumption of Iraqi exports could well
influence the behavior of key Arabian Gulf producers.
After years of a market characterized by excess
deliverability, the U.S. natural gas supply/demand contin-
ued to move into closer balance in 1993. Demand for
natural gas is expected to grow as the U.S. economy
strengthens and requirements for this environmentally-
preferred fuel expand. Domestic natural gas supplies will
continue to be augmented by imports from Canada.
Texaco Inc. 1993 Annual Report to Stockholders page 33.
<TABLE>
Statements of Consolidated Income
and Retained Earnings
<CAPTION>
Millions of dollars
--------------------------
For the years ended December 31 1993 1992* 1991*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
Revenues Sales and services (includes transactions with significant
affiliates of $3,027 million in 1993, $3,672 million in 1992
and $4,124 million in 1991) $ 33,245 $ 35,687 $ 36,112
Equity in income of affiliates, income from dividends,
interest, asset sales and other 826 843 1,050
-------- -------- --------
34,071 36,530 37,162
-------- -------- --------
Deductions Purchases and other costs (includes transactions with
significant affiliates of $1,709 million in 1993,
$1,838 million in 1992 and $2,062 million in 1991) 24,667 26,961 27,070
Operating expenses 3,086 3,072 3,306
Selling, general and administrative expenses 1,783 1,792 1,841
Maintenance and repairs 418 446 466
Exploratory expenses 352 349 436
Depreciation, depletion and amortization 1,568 1,536 1,496
Interest expense 459 477 558
Taxes other than income taxes 549 530 551
Minority interest 17 18 16
-------- -------- --------
32,899 35,181 35,740
-------- -------- --------
Income from continuing operations, before income taxes and
cumulative effect of accounting changes 1,172 1,349 1,422
Provision for (benefit from) income taxes (see Note 13) (87) 311 130
-------- -------- --------
Net income from continuing operations, before cumulative effect of
accounting changes 1,259 1,038 1,292
Discontinued operations
Net income (loss) from operations (17) (26) 2
Net loss on disposal (174) -- --
-------- -------- --------
(191) (26) 2
Cumulative effect of accounting changes -- (300) --
-------- -------- --------
Net Income $ 1,068 $ 712 $ 1,294
======== ======== ========
Preferred stock dividend requirements $ 101 $ 99 $ 103
-------- -------- --------
Net income available for common stock $ 967 $ 613 $ 1,191
======== ======== ========
Net Income Per
Common Share (dollars)
Net income (loss) before cumulative effect of accounting changes
Continuing operations $ 4.47 $ 3.63 $ 4.60
Discontinued operations (.73) (.10) .01
Cumulative effect of accounting changes -- (1.16) --
-------- -------- --------
Net income $ 3.74 $ 2.37 $ 4.61
======== ======== ========
Average Number of
Common Shares
Outstanding (thousands) 258,923 258,656 258,410
======== ======== ========
Retained Earnings Balance at beginning of year $ 7,312 $ 7,514 $ 7,150
Add: Net income 1,068 712 1,294
Tax benefit on unallocated ESOP Convertible Preferred Stock
dividends 13 13 --
Deduct: Dividends declared on
Common stock ($3.20 per share in 1993, 1992 and 1991) 828 828 827
Preferred stock 102 99 103
-------- -------- --------
Balance at end of year $ 7,463 $ 7,312 $ 7,514
======== ======== ========
<FN>
*Results for 1992 and 1991 have been reclassified to separately identify
discontinued operations (see Note 3).
See accompanying notes to consolidated financial statements.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 34.
<TABLE>
Consolidated Balance Sheet
<CAPTION>
Millions of dollars
--------------------
As of December 31 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
Assets Current Assets
Cash and cash equivalents $ 488 $ 461
Short-term investments--1993 at fair value, 1992 at cost,
which approximates market 48 21
Accounts and notes receivable (includes receivables from significant
affiliates of $199 million in 1993 and $259 million in 1992),
less allowance for doubtful accounts of $28 million in 1993 and
$24 million in 1992 3,529 3,390
Inventories 1,298 1,461
Net assets of discontinued operations (see Note 3) 1,180 --
Deferred income taxes and other current assets 322 278
------- -------
Total current assets 6,865 5,611
Investments and Advances 4,984 4,533
Net Properties, Plant and Equipment 14,171 15,226
Deferred Charges 606 622
------- -------
Total $26,626 $25,992
======= =======
Liabilities and
Stockholders' Equity
Current Liabilities
Notes payable, commercial paper and current portion of long-term debt $ 669 $ 140
Accounts payable and accrued liabilities (includes payables to
significant affiliates of $81 million in 1993 and $80 million
in 1992) 3,324 3,177
Estimated income and other taxes 763 908
------- -------
Total current liabilities 4,756 4,225
Long-Term Debt and Capital Lease Obligations 6,157 6,441
Deferred Income Taxes 1,162 1,370
Employee Retirement Benefits 1,104 1,102
Deferred Credits and Other Noncurrent Liabilities 2,636 2,693
Minority Interest in Subsidiary Companies 532 188
------- -------
Total 16,347 16,019
Stockholders' Equity
Variable Rate Cumulative Preferred Stock 648 648
Market Auction Preferred Shares 300 300
ESOP Convertible Preferred Stock 536 543
Unearned employee compensation (337) (385)
Common stock--274,293,417 shares issued 1,714 1,714
Paid-in capital in excess of par value 655 654
Retained earnings 7,463 7,312
Currency translation adjustment 18 (24)
Unrealized net gain on investments 58 --
------- -------
11,055 10,762
Less--Common stock held in treasury, at cost--15,273,372 shares in 1993
and 15,545,777 shares in 1992 776 789
------- -------
Total stockholders' equity 10,279 9,973
------- -------
Total $26,626 $25,992
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 35.
<TABLE>
Statement of Consolidated
Stockholders' Equity
<CAPTION>
Shares in thousands; amounts in millions of dollars
--------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
--------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Preferred stock--par value $1;
Shares authorized--30,000,000
Series C Variable Rate Cumulative Preferred Stock--stated value
of $50 per share
Beginning and end of year 5,334 $ 267 5,334 $ 267 5,334 $ 267
------- ------- ------- ------- ------- -------
Series E Variable Rate Cumulative Preferred Stock--stated value
of $100,000 per share
Beginning and end of year 4 381 4 381 4 381
------- ------- ------- ------- ------- -------
Market Auction Preferred Shares (Series G, H, I and J)--liquidation
preference of $250,000 per share
Beginning of year 1 300 -- --
Issuance -- -- 1 300
------- ------- ------- -------
End of year 1 300 1 300
------- ------- ------- -------
Series B ESOP Convertible Preferred Stock--liquidation value
of $600 per share
Beginning of year 823 494 828 497 831 499
Retirements (11) (7) (5) (3) (3) (2)
------- ------- ------- ------- ------- -------
End of year 812 487 823 494 828 497
------- ------- ------- ------- ------- -------
Series F ESOP Convertible Preferred Stock--liquidation value
of $737.50 per share
Beginning of year 67 49 68 50 68 50
Retirements (1) -- (1) (1) -- --
------- ------- ------- ------- ------- -------
End of year 66 49 67 49 68 50
------- ------- ------- ------- ------- -------
Unearned employee compensation (related to ESOP preferred stock and
restricted stock awards)
Beginning of year (385) (435) (479)
Establishment (10) -- --
Amortization and other 58 50 44
------- ------- -------
End of year (337) (385) (435)
------- ------- -------
Common stock--par value $6.25;
Shares authorized--350,000,000
Issued 274,293 1,714 274,293 1,714 274,293 1,714
------- ------- ------- ------- ------- -------
Common stock held in treasury, at cost
Beginning of year 15,545 (789) 15,799 (799) 16,132 (813)
Debenture conversions -- -- (12) 1 (17) 1
Other--mainly employee compensation plans (272) 13 (242) 9 (316) 13
------- ------- ------- ------- ------- -------
End of year 15,273 (776) 15,545 (789) 15,799 (799)
------- ------- ------- ------- ------- -------
Paid-in capital in excess of par value
Beginning of year 654 658 656
Issuance of preferred stock and treasury
stock transactions relating to investor
services plan and employee compensation
plans 1 (4) 2
------- ------- -------
End of year 655 654 658
------- ------- -------
Retained earnings--End of year* 7,463 7,312 7,514
------- ------- -------
Currency translation adjustment
Beginning of year (24) (19) (40)
Change during year 42 (5) 21
------- ------- -------
End of year 18 (24) (19)
------- ------- -------
Unrealized net gain on investments--End of year 58 -- --
------- ------- -------
Stockholders' equity--End of year $10,279 $9,973 $9,828
======= ======= =======
<FN>
*For changes during the years, refer to accompanying Statement of Consolidated Retained Earnings.
See accompanying notes to consolidated financial statements.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 36.
<TABLE>
Statement of Consolidated Cash Flows
<CAPTION>
Millions of dollars
--------------------------
For the years ended December 31 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
Operating Activities Net income $1,068 $ 712 $1,294
Reconciliation to net cash provided by (used in) operating activities
Loss on disposal of discontinued operations 223 -- --
Cumulative effect of accounting changes -- 300 --
Depreciation, depletion and amortization 1,631 1,627 1,560
Deferred income taxes (283) 67 35
Exploratory expenses 352 349 436
Minority interest in net income 17 18 16
Dividends from affiliates, less than equity in income (227) (149) (288)
Changes in operating working capital
Accounts and notes receivable (275) 650 786
Inventories 26 45 (125)
Accounts payable and accrued liabilities (215) (529) (1,061)
Other--mainly estimated income and other taxes (108) (184) 156
Other--net 153 (231) 157
------ ------ ------
Net cash provided by operating activities 2,362 2,675 2,966
Investing Activities Capital and exploratory expenditures (2,326) (2,533) (2,795)
Proceeds from sales of assets 373 176 221
Purchases of investment instruments (1,342) (1,457) (860)
Sales of investment instruments 1,258 1,303 982
Other--net (7) (2) 70
------ ------ ------
Net cash used in investing activities (2,044) (2,513) (2,382)
Financing Activities Borrowings having original terms in excess of three months
Proceeds 821 1,707 1,883
Repayments (796) (1,529) (1,022)
Net increase (decrease) in other borrowings 296 (49) (319)
Issuance of preferred stock -- 300 --
Issuance of preferred stock by subsidiaries 425 -- --
Dividends paid to the company's stockholders
Common (828) (828) (827)
Preferred (101) (99) (103)
Dividends paid to minority shareholders (84) (8) (21)
Other--net (11) -- --
------ ------ ------
Net cash used in financing activities (278) (506) (409)
Effect of Exchange Rate Changes on Cash and Cash Equivalents (13) (38) (25)
------ ------ ------
Increase (Decrease) in Cash and Cash Equivalents 27 (382) 150
Cash and Cash Equivalents at Beginning of Year 461 843 693
------ ------ ------
Cash and Cash Equivalents at End of Year $ 488 $ 461 $ 843
====== ====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 37.
Notes to Consolidated Financial Statements
Note 1.
Description
of Significant
Accounting
Policies
Principles of Consolidation
The consolidated financial statements consist of the accounts of
Texaco Inc. and subsidiary companies owned directly or indi-
rectly more than 50 percent. Intercompany accounts and trans-
actions are eliminated.
The U.S. Dollar is the functional currency of all the com-
pany's operations and of a substantial portion of the operations
of its affiliates accounted for on the equity method.
Cash Equivalents
Highly liquid investments with a maturity of three months
or less when purchased are generally considered to be
cash equivalents.
Inventories
Virtually all inventories of crude oil, petroleum products and
petrochemicals are stated at cost, determined on the last-in, first-
out (LIFO) method. Other merchandise inventories are stated
at cost, determined on the first-in, first-out (FIFO) method.
Materials and supplies are stated at average cost. Inventories are
valued at the lower of cost or market.
Investments and Advances
The equity method of accounting is used for investments in cer-
tain affiliates owned 50 percent or less, including corporate joint
ventures and partnerships. Under this method, equity in the pre-
tax income or losses of partnerships and in the net income or
losses of corporate joint-venture companies is reflected currently
in Texaco's revenues, rather than when realized through divi-
dends or distributions. Investments in the entities accounted for
on this method generally reflect Texaco's equity in their under-
lying net assets.
The company's interest in the net income of affiliates
accounted for at cost is reflected in net income when realized
through dividends.
Properties, Plant and Equipment and
Depreciation, Depletion and Amortization
Texaco follows the "successful efforts" method of accounting for
its oil and gas exploration and producing operations.
Lease acquisition costs related to properties held for oil, gas
and mineral production are capitalized when incurred. Unproved
properties with acquisition costs which are individually signifi-
cant are assessed on a property-by-property basis, and a loss is
recognized, by provision of a valuation allowance, when the
assessment indicates an impairment in value. Unproved proper-
ties with acquisition costs which are not individually significant
are generally aggregated and the portion of such costs estimated
to be nonproductive, based on historical experience, is amortized
on an average holding period basis.
Exploratory costs, excluding the costs of exploratory wells,
are charged to expense as incurred. Costs of drilling exploratory
wells, including stratigraphic test wells, are capitalized pending
determination whether the wells have found proved reserves
which justify commercial development. If such reserves are not
found, the drilling costs are charged to exploratory expenses.
Intangible drilling costs applicable to productive wells and to
development dry holes, as well as tangible equipment costs
related to the development of oil and gas reserves, are capitalized.
The costs of productive leaseholds and other capitalized
costs related to producing activities, including tangible and intan-
gible costs, are amortized principally by field on the unit-of-
production basis by applying the ratio of produced oil and gas
to estimated recoverable proved oil and gas reserves. Estimated
future restoration and abandonment costs are taken into account
in determining amortization and depreciation rates.
Depreciation of properties, plant and equipment related to
facilities other than producing properties is provided generally on
the group plan, using the straight-line method, with depreciation
rates based upon estimated useful life applied to the cost of each
class of property. Marine vessels are depreciated based on esti-
mated useful lives using the straight-line method.
Capitalized nonmineral leases are amortized over the esti-
mated useful life of the asset or the lease term, as appropriate,
using the straight-line method.
Periodic maintenance and repairs applicable to marine
vessels and manufacturing facilities are accounted for on the
accrual basis. Normal maintenance and repairs of all other prop-
erties, plant and equipment are charged to expense as incurred.
Renewals, betterments and major repairs that materially extend
the useful life of properties are capitalized and the assets
replaced, if any, are retired.
When capital assets representing complete units of property
are disposed of, the difference between the disposal proceeds and
net book value is credited or charged to income. When miscella-
neous business properties are disposed of, the difference between
asset cost and salvage value is charged or credited to accumulated
depreciation.
Environmental Expenditures
Environmentally related remediation costs are recorded as lia-
bilities and expensed when remediation of a property is probable
and the related costs can be reasonably estimated. If recoveries of
environmental costs from third parties are reasonably assured, a
receivable is recorded. Other environmental expenditures, that
are principally maintenance or preventive in nature, are recorded
when expended and are expensed or capitalized as appropriate.
Minority Interest in Subsidiary Companies
Minority interest in the Consolidated Balance Sheet reflects
minority owners' share of stockholders' equity in subsidiaries.
Texaco Inc. 1993 Annual Report to Stockholders page 38.
Deferred Income Taxes
For all periods presented, deferred income taxes are determined
utilizing a liability approach. This approach gives consideration
to the future tax consequences associated with differences
between financial accounting and tax bases of assets and liabili-
ties. These differences relate to items such as depreciable and
depletable properties, exploratory and intangible drilling costs,
nonproductive leases, merchandise inventories and certain liabili-
ties. This approach gives immediate effect to changes in income
tax laws upon enactment. The income statement effect is derived
from changes in deferred income taxes on the balance sheet.
Provision is not made for possible income taxes payable
upon distribution of accumulated earnings of foreign subsidiary
companies and affiliated corporate joint-venture companies
when such earnings are deemed to be permanently reinvested.
The company adopted Statement of Financial Accounting
Standards 109 as of January 1, 1992. For additional information,
refer to Note 2, Changes in Accounting Principles.
Net Income per Common Share
Primary net income per common share is based on net income
less preferred stock dividend requirements divided by the aver-
age number of common shares outstanding and common equiva-
lents. Fully diluted net income per common share assumes full
conversion of all convertible securities into common stock at the
later of the beginning of the year or date of issuance (unless
antidilutive).
Accounting for Contingencies
Certain conditions may exist as of the date financial statements
are issued, which may result in a loss to the company, but which
will only be resolved when one or more future events occur or
fail to occur. Such contingent liabilities are assessed by the com-
pany's management and legal counsel. The assessment of loss
contingencies necessarily involves an exercise of judgment and
is a matter of opinion. In assessing loss contingencies related
to legal proceedings that are pending against the company or
unasserted claims that may result in such proceedings, the com-
pany's legal counsel evaluates the perceived merits of any legal
proceedings or unasserted claims as well as the perceived merits
of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is proba-
ble that a material loss has been incurred and the amount of the
liability can be estimated, then the estimated liability would be
accrued in the company's financial statements. If the assessment
indicates that a potentially material loss contingency is not prob-
able, but is reasonably possible, or is probable but cannot be
estimated, then the nature of the contingent liability, together
with an estimate of the range of possible loss if determinable
and material, would be disclosed.
Loss contingencies considered remote are generally not
disclosed unless they involve guarantees, in which case the
nature of the guarantee would be disclosed. However, in some
instances in which disclosure is not otherwise required, the com-
pany may disclose contingent liabilities of an unusual nature
which, in the judgment of management and its legal counsel,
may be of interest to shareholders or others.
Note 2. Changes in
Accounting Principles
In 1993, the company adopted the following Statements of
Financial Accounting Standards (SFAS).
Employers' Accounting for Postemployment Benefits--SFAS 112
requires companies to accrue the cost of postemployment bene-
fits either during the years that the employee renders the neces-
sary service or at the date of the event giving rise to the benefit,
depending upon whether certain conditions are met. Adoption
of the Standard as of January 1, 1993 did not impact 1993 net
income since the company had been accounting for substantially
all of these costs in accordance with the new Standard.
Accounting for Certain Investments in Debt and Equity Securities--
SFAS 115 requires that investments in equity securities that have
readily determinable fair values and all investments in debt
securities be classified into three categories based on manage-
ment's intent. Such investments are to be reported at fair value
except for investments intended to be held to maturity which
are to be reported at amortized cost. Previously, all such invest-
ments were accounted for at amortized cost.
The cumulative effect on the consolidated financial state-
ments of adopting SFAS 115 as of December 31, 1993 was not
material. Adoption of this Standard resulted in an increase in
stockholders' equity of $58 million, after related income taxes,
representing unrealized net gains applicable to securities catego-
rized as available-for-sale under the new Standard. SFAS 115 pro-
hibits restatement of previous financial statements.
During the fourth quarter of 1992, the company and its sig-
nificant affiliates adopted the following Statements, retroactive to
January 1, 1992.
Employers' Accounting for Postretirement Benefits Other Than
Pensions--SFAS 106 requires accrual of the cost of postretirement
benefits over the estimated service lives of employees. For
Texaco, these benefits principally relate to life insurance and
health-care coverage. Previously, such costs were accounted for
on a pay-as-you-go basis. The adoption of SFAS 106 resulted
in a cumulative after-tax charge of $536 million, or $2.07 per
common share, and an after-tax charge for the year 1992 of
$27 million, or $.10 per common share.
Texaco Inc. 1993 Annual Report to Stockholders page 39.
Note to Consolidated Financial Statements
continued
Accounting for Income Taxes--SFAS 109 maintains the liability
concept of income tax accounting in SFAS 96, but allows
for the assumption of future taxable income in the recognition
of deferred tax assets. Additionally, under SFAS 109 deferred
taxes are not recorded on the differences between the historic
and current translation rates for accounts translated for finan-
cial reporting at historic rates. SFAS 96 required the recording
of deferred taxes on such differences. The adoption of SFAS 109
resulted in a cumulative benefit of $236 million, or $.91 per
common share, and a benefit for the year 1992 of $177 million,
or $.68 per common share.
Note 3. Discontinued
Operations
In the third quarter of 1993, Texaco made the determination that
substantially all of its worldwide chemical operations would
be sold and therefore has accounted for these operations
as discontinued operations. Memorandums of understanding
were entered into with Huntsman Financial Corporation
("Huntsman"), an affiliate of the Jon M. Huntsman Group of
Companies, for the sale of these discontinued operations. Except
for the additives portion of the chemical business, the sale to
Huntsman is expected to be completed in the first quarter of
1994, subject to completing a definitive agreement and obtaining
any required governmental approvals. The sale of the additives
business is expected to take place by September 30, 1994. Texaco
has agreed to cooperate with Huntsman, at their request, to sell
the additives business to a third party. The combined purchase
price of the chemical businesses is $1,045 million, consisting of
cash and notes of approximately $200 to $250 million. Huntsman
will assume current liabilities and ongoing contractual obliga-
tions, while Texaco will retain the remaining obligations appli-
cable to events occurring prior to the date of closing.
The results for chemical operations to be sold have been
classified as discontinued operations for all periods presented
in the Statement of Consolidated Income. The assets and lia-
bilities of discontinued operations have been reclassified in the
December 31, 1993 Consolidated Balance Sheet from their histor-
ical classifications to separately reflect them as net assets of dis-
continued operations. The Consolidated Balance Sheet for the
prior period has not been restated. Discontinued operations have
not been segregated in the Statement of Consolidated Cash Flows
for 1993 and prior years. Therefore, amounts for certain captions
will not agree with the restated Statement of Consolidated
Income.
Related party transactions between the discontinued opera-
tions and Texaco's significant affiliates included both sale and
purchase transactions. Sales to affiliates amounted to $67 million,
$81 million and $86 million for 1993, 1992 and 1991, respectively.
For the years 1993, 1992 and 1991, purchases from affiliates
amounted to $118 million, $102 million and $103 million, respec-
tively. Receivables from and payables to these affiliates at the end
of each of these periods were immaterial.
The summarized results of discontinued operations and
related per common share effects are as follows:
<TABLE>
<CAPTION>
For the years ended December 31 (Millions of dollars) 1993 1992 1991
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,114 $1,128 $1,160
====== ====== ======
Loss from operations before
income taxes $ (19) $ (44) $ (2)
Benefit from income taxes 2 18 4
------ ------ ------
Net income (loss) from
operations $ (17) $ (26) $ 2
------ ------ ------
Loss on disposal
before income taxes* $ (223) $ -- $ --
Benefit from income taxes 49 -- --
------ ------ ------
Net loss on disposal $ (174) $ -- $ --
------ ------ ------
Total net income (loss) $ (191) $ (26) $ 2
====== ====== ======
<FN>
*1993 includes losses in phase-out period of $19 million.
Per common share (dollars)
Net income (loss) from
operations $ (.06) $ (.10) $ .01
Loss on disposal (.67) -- --
------ ------ ------
Total net income (loss) $ (.73) $ (.10) $ .01
====== ====== ======
</TABLE>
Summarized balance sheet data for the discontinued operations
as of December 31, 1993 is as follows. The difference between the
net assets below and the purchase price is reflected in current lia-
bilities in the Consolidated Balance Sheet as of that date.
<TABLE>
<CAPTION>
Assets Millions of dollars
--------------------
<S> <C>
Current Assets
Accounts receivable $ 128
Inventories 121
Other 25
------
Total current assets 274
Net Properties, Plant and
Equipment 1,025
Other Noncurrent Assets 9
------
Total $1,308
------
Liabilities
Current Liabilities $ 109
Noncurrent Liabilities 19
------
Total $ 128
------
Net Asset of discontinued operations $1,180
======
</TABLE>
Note 4. Inventories
<TABLE>
<CAPTION>
As of December 31 (Millions of dollars) 1993 1992
- ------------------------------------------------------------------
<S> <C> <C>
Crude oil $ 304 $ 290
Petroleum products 726 707
Petrochemicals -- 128
Other merchandise 52 55
Materials and supplies 216 281
------ ------
Total $1,298 $1,461
====== ======
</TABLE>
The excess of estimated current cost over the book value of
inventories carried on the LIFO basis of accounting was approxi-
mately $137 million and $259 million at December 31, 1993
and 1992, respectively. Petrochemical and related materials and
supplies inventories at December 31, 1993 have been included as
part of net assets of discontinued operations.
Texaco Inc. 1993 Annual Report to Stockholders page 40.
Note 5. Investments
and Advances
Investments in affiliates, including corporate joint ventures and
partnerships, owned 50% or less are accounted for on the equity
method. Texaco's total investments and advances are summarized
as follows:
<TABLE>
<CAPTION>
As of December 31 (Millions of dollars) 1993 1992
- ------------------------------------------------------------------
<S> <C> <C>
Affiliates accounted for on the equity method
Caltex group of companies
Exploration and production $ 500 $ 450
Manufacturing, marketing
and distribution 1,647 1,460
------ ------
Total Caltex group of companies 2,147 1,910
Star Enterprise 863 813
Other affiliates 731 745
------ ------
3,741 3,468
Miscellaneous investments, long-term
receivables, etc., less reserve 1,243 1,065
------ ------
Total $4,984 $4,533
====== ======
</TABLE>
Texaco's equity in the net income of affiliates accounted for on
the equity method, adjusted to reflect income taxes for partner-
ships whose income is directly taxable to Texaco, is as follows:
<TABLE>
<CAPTION>
For the years ended December 31
(Millions of dollars) 1993 1992 1991
- ------------------------------------------------------------------
<S> <C> <C> <C>
Equity in net income
Caltex group of companies
Exploration and production $134 $154 $166
Manufacturing, marketing
and distribution 227 180 255
---- ---- ----
Total Caltex group of companies 361 334 421
Star Enterprise 61 7 85
Cumulative effect of accounting
changes--Caltex and Star -- (11) --
Other affiliates 108 125 102
---- ---- ----
Total $530 $455 $608
==== ==== ====
Dividends received from
these companies $366 $351 $389
==== ==== ====
</TABLE>
The undistributed earnings of these affiliates accounted for on
the equity method included in Texaco's retained earnings were
$2,585 million, $2,363 million and $2,239 million as of
December 31, 1993, 1992 and 1991, respectively.
Caltex Group
Texaco has investments in the Caltex group of companies, owned
50% by Texaco and 50% by Chevron Corporation. The Caltex
group consists of Caltex Petroleum Corporation and subsidiaries,
P.T. Caltex Pacific Indonesia and American Overseas Petroleum
Limited and subsidiaries. This group of companies is engaged in
the exploration for and production, transportation, refining and
marketing of crude oil and products in Africa, Asia, the Middle
East, Australia and New Zealand.
Star Enterprise
Star Enterprise (Star) is a joint-venture partnership owned 50%
by Texaco and 50% by the Saudi Arabian Oil Company. The
partnership refines, distributes and markets Texaco-branded
petroleum products in 26 East and Gulf Coast states and the
District of Columbia.
The table below provides summarized financial information on
a 100 percent basis for the Caltex group, Star and all other affil-
iates accounted for on the equity method, as well as Texaco's
share. The net income of all partnerships, including Star, is
net of estimated income taxes. The actual income tax liability
is reflected in the accounts of the respective partners and not
shown in the table below.
Star's assets at the respective balance sheet dates include
the remaining portion of the assets which were originally trans-
ferred from Texaco to Star at the fair market value on the date of
formation. Texaco's investment and equity in the income of Star,
as reported in the consolidated financial statements, reflect the
remaining unamortized historical carrying cost of the assets
transferred to Star at formation. Additionally, Texaco's invest-
ment includes adjustments necessary to reflect contractual
arrangements on the formation of this partnership, principally
involving contributed inventories.
<TABLE>
<CAPTION>
Caltex group Star Enterprise Other equity affiliates Texaco's share
----------------------- --------------------- ------------------------ ----------------------
Millions of dollars 1993 1992 1991 1993 1992 1991 1993 1992 1991 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the years ended December 31:
Gross revenues $15,648 $17,527 $15,921 $6,252 $6,825 $7,165 $3,233 $2,891 $2,387 $12,150 $13,229 $12,377
Income before income taxes and
cumulative effect of accounting
changes $ 1,178 $ 1,178 $ 1,526 $ 194 $ 29 $ 265 $ 633 $ 634 $ 563 $ 852 $ 781 $ 1,059
Net income (loss)* $ 720 $ 720 $ 839 $ 126 $ (53) $ 175 $ 406 $ 416 $ 346 $ 530 $ 455 $ 608
======= ======= ======= ====== ====== ====== ====== ====== ====== ======= ======= =======
As of December 31:
Current assets $ 2,123 $ 2,378 $ 2,494 $1,015 $1,081 $1,089 $ 635 $ 675 $ 572 $ 1,637 $ 1,826 $ 1,829
Noncurrent assets 6,266 5,485 4,869 3,188 3,097 2,813 3,481 3,464 3,433 5,888 5,463 4,989
Current liabilities (2,411) (2,453) (2,398) (647) (717) (665) (755) (774) (784) (1,835) (1,862) (1,850)
Noncurrent liabilities
and deferred credits (1,537) (1,453) (1,354) (1,161)(1,170) (762) (1,928) (1,979)(1,915) (1,876) (1,890) (1,576)
Minority interest in
subsidiary companies (146) (138) (126) -- -- -- -- -- -- (73) (69) (63)
------- ------- ------- ------ ------ ------ ------ ------ ------ ------- ------- -------
Net assets (or partners' equity) $ 4,295 $ 3,819 $ 3,485 $2,395 $2,291 $2,475 $1,433 $1,386 $1,306 $ 3,741 $ 3,468 $ 3,329
======= ======= ======= ====== ====== ====== ====== ====== ====== ======= ======= =======
<FN>
*Net income (loss) for 1992 includes the cumulative effect of accounting changes. For the Caltex group, this represents an
after-tax charge of $26 million for SFAS 106 and a benefit of $77 million for SFAS 109.
For Star Enterprise, adoption of SFAS 106 resulted in an after-tax charge of $72 million.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 41.
Notes to Consolidated Financial Statements
continued
Note 6. Properties,
Plant and Equipment
<TABLE>
<CAPTION>
As of December 31 (Millions of dollars) 1993 1992
- -----------------------------------------------------------------------------------------------------
Gross Net Gross Net
----------------- -----------------
<S> <C> <C> <C> <C>
Exploration and production $24,759 $ 8,829 $24,840 $ 9,033
Manufacturing 2,932 1,891 2,538 1,620
Marketing 3,123 2,250 2,946 2,134
Marine 379 125 414 150
Pipe lines 915 397 990 457
Petrochemical -- -- 1,885 1,137
Other 1,041 679 1,040 695
------- ------- ------- -------
Total $33,149 $14,171 $34,653 $15,226
------- ------- ------- -------
Capital lease amounts included above $ 578 $ 122 $ 597 $ 144
======= ======= ======= =======
</TABLE>
Accumulated depreciation, depletion and amortization totaled
$18,978 million and $19,427 million at December 31, 1993 and 1992,
respectively. Net property, plant and equipment for discontinued
operations at December 31, 1993 has been reflected in net assets
of discontinued operations in the Consolidated Balance Sheet.
Note 7. Notes Payable,
Commercial Paper
and Current Portion
of Long-Term Debt
<TABLE>
<CAPTION>
As of December 31 (Millions of dollars) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial paper $1,195 $1,090 $1,136
Notes payable to banks and others
with originating terms of one
year or less 76 392 56
Current portion of long-term debt
and capital lease obligations
Indebtedness 376 453 77
Capital lease obligations 47 45 62
------ ------ ------
1,694 1,980 1,331
Less short-term obligations
intended to be refinanced
(see Note 9) 1,025 1,840 --
------ ------ ------
Total $ 669 $ 140 $1,331
====== ====== ======
</TABLE>
The following table reflects data on commercial paper and notes
payable to banks. The averages were determined by using the
average of the amounts outstanding as of each day for commer-
cial paper and each month-end for notes payable to banks.
<TABLE>
<CAPTION>
Millions of dollars 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average interest rate at
December 31 3.4% 3.7% 5.1%
Maximum outstanding at
any month-end $2,066 $2,538 $2,212
Average amount outstanding for
the year $1,793 $1,719 $1,752
Weighted average interest rate for
the year 3.3% 3.7% 5.9%
====== ====== ======
</TABLE>
Note 8. Accounts
Payable and Accrued
Liabilities
<TABLE>
<CAPTION>
As of December 31 (Millions of dollars) 1993 1992
- ------------------------------------------------------------------
<S> <C> <C>
Trade $1,887 $2,038
Other 1,437 1,139
------ ------
Total $3,324 $3,177
====== ======
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 42.
Note 9. Long-Term
Debt and Capital
Lease Obligations
<TABLE>
<CAPTION>
As of December 31 (Millions of dollars) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Long-Term Debt
6 7/8% Guaranteed notes, due 1999 $ 200 $ 200
6 7/8% Guaranteed debentures, due 2023 195 --
7 1/2% Guaranteed debentures, due 2043 198 --
7 3/4% Guaranteed debentures, due 2033 198 --
7 7/8% Guaranteed notes, due 1995 150 150
8% Guaranteed debentures, due 2032 147 147
8 1/4% Guaranteed debentures, due 2006 149 149
8 3/8% Guaranteed debentures, due 2022 198 198
8 1/2% Guaranteed notes, due 2003 199 199
8 5/8% Guaranteed debentures, due 2010 150 150
8 5/8% Guaranteed debentures, due 2031 199 199
8 5/8% Guaranteed debentures, due 2032 199 199
8.65% Guaranteed notes, due 1998 200 200
8 7/8% Guaranteed debentures, due 2021 150 150
9% Guaranteed notes, due 1994 250 250
9% Guaranteed notes, due 1996 400 400
9% Guaranteed notes, due 1997 200 200
9% Guaranteed notes, due 1999 200 200
9 3/4% Guaranteed debentures, due 2020 250 250
Medium-term notes, maturing from 1994 to 2043 (7.8%) 692 635
Pollution Control Revenue Bonds, due 2012--variable rate (2.6%) 166 166
Other long-term debt:
Texaco Inc.--Guarantee of ESOP Series B and F loans--fixed and variable rates (3.8%) 329 385
U.S. dollars (6.4%) 254 337
Other currencies (9.9%) 51 59
------ ------
Total 5,324 4,823
Capital Lease Obligations (See Note 10) 231 276
------ ------
5,555 5,099
Less current portion of long-term debt and capital lease obligations 423 498
------ ------
5,132 4,601
Short-term obligations intended to be refinanced 1,025 1,840
------ ------
Total long-term debt and capital lease obligations $6,157 $6,441
====== ======
</TABLE>
The percentages reflected for variable rate debt are the interest
rates at December 31, 1993. The percentages reflected for the
categories "Medium-term notes" and "Other long-term debt" are
the weighted average interest rates at year-end 1993. Where
applicable, principal amounts reflected in the preceding sched-
ule include unamortized premium or discount.
During 1993, the company completed public long-term
debt offerings totaling $732 million, which included $132 million
under Texaco's medium-term note program. Also, the company
redeemed prior to maturity $71 million of 5 3/4% debentures due
in 1997. In 1992, the company redeemed prior to maturity some
$960 million of high-cost debt.
At December 31, 1993, Texaco was party to revolving credit
facilities with commitments of $2.35 billion with syndicates of
major U.S. and international banks, available as support of the
issuance of the company's commercial paper, as well as for work-
ing capital and for other general corporate purposes. Texaco had
no amounts outstanding under these facilities at year-end 1993.
Texaco pays a commitment fee on the unused portion of the
$350 million facility and a facility fee on the $2 billion facility.
The banks reserve the right to terminate the credit facilities
upon the occurrence of certain specific events, including change
in control.
At December 31, 1993, Texaco's long-term debt included
$1,025 million of debt scheduled to mature during 1994, which
the company has both the intent and the ability to refinance
on a long-term basis, through the use of its $2 billion revolving
credit facility.
Contractual annual maturities of long-term debt, including
sinking fund payments and other redemption requirements, for
the five years subsequent to December 31, 1993 are as follows
(in millions): 1994--$376; 1995--$414; 1996--$426; 1997--$345;
and 1998--$289. The preceding maturities are before considera-
tion of short-term obligations intended to be refinanced and
also exclude capital lease obligations.
Texaco Inc. 1993 Annual Report to Stockholders page 43.
Notes to Consolidated Financial Statements
continued
Note 10. Lease
Commitments and
Rental Expense
The company has leasing arrangements involving service sta-
tions, tanker charters and other facilities. Amounts due under
capital leases are reflected in the company's balance sheet as
obligations, while Texaco's interest in the related assets is prin-
cipally reflected as properties, plant and equipment. The remain-
ing lease commitments are operating leases, and payments on
such leases are recorded as rental expense.
As of December 31, 1993, Texaco Inc. and its subsidiary
companies (excluding discontinued operations) had estimated
minimum commitments for payment of rentals (net of non-
cancelable sublease rentals) under leases which, at inception,
had a noncancelable term of more than one year, as follows:
<TABLE>
<CAPTION>
Operating Capital
Millions of dollars leases leases
- ------------------------------------------------------------------
<S> <C> <C>
1994 $157 $ 80
1995 94 65
1996 78 48
1997 72 30
1998 61 29
After 1998 476 126
---- ----
Total lease commitments $938 378
====
Less amounts representing
Executory costs 48
Interest 149
Add noncancelable sublease
rentals netted in capital lease
commitments above 50
----
Present value of total capital
lease obligations $231
====
</TABLE>
Rental expense (excluding discontinued operations) relative to
operating leases, including contingent rentals based on factors
such as gallons sold, is provided in the table below. Such
payments do not include rentals on leases covering oil and
gas mineral rights.
<TABLE>
<CAPTION>
Millions of dollars 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental expense
Minimum lease rentals $238 $252 $249
Contingent rentals 20 24 19
---- ---- ----
Total 258 276 268
Less rental income on
properties subleased
to others 36 36 32
---- ---- ----
Net rental expense $222 $240 $236
==== ==== ====
</TABLE>
In 1992, Texaco as lessee entered into a five year agreement for
the leasing of a chemical manufacturing plant to be constructed in
Port Neches, Texas. The lease provides for a substantial residual
value guarantee by the lessee at the termination of the lease.
Both the lease payment amount and the residual value guarantee
amount for this operating lease are dependent upon the final con-
struction costs of the plant and related facilities and accordingly
are not included in the preceding table of minimum rental
commitments. The accumulated construction in progress was
$359 million at December 31, 1993. Construction is expected to
be completed in late 1994. Huntsman, in the memorandum of
understanding with Texaco, will have an option for two years to
purchase 50% or 100% of Texaco's rights under this lease.
Note 11. Preferred
Stock and Rights
Series B ESOP Convertible Preferred Stock
An amendment to Texaco Inc.'s Employees Thrift Plan created
an Employee Stock Ownership Plan (ESOP) feature. In 1988, the
ESOP purchased 833,333 1/3 shares of Series B ESOP Convertible
Preferred Stock (Series B) from the company for $600 per share,
or an aggregate purchase price of $500 million. Texaco Inc.
guaranteed a $500 million variable-rate loan made to the ESOP
which was used to acquire the shares of Series B. Subsequently,
in 1991, Texaco Inc. refinanced approximately $103 million of
the outstanding balance through a Grantor Trust structure at
a fixed interest rate of 6.19%.
Dividends on each share of Series B are cumulative and
are payable semiannually at the rate of $57 per annum.
Cash dividends on Series B totaled $47 million for 1993, 1992
and 1991.
Participants may partially convert their Series B into com-
mon stock beginning at age 55, and may elect full conversion
upon retirement or separation from service with the company.
The conversion ratio and number of votes per share of Series B
are subject to adjustment under certain conditions. At present,
the Series B entitles a participant to 12.9 votes per share, voting
together with the holders of common stock, and is currently con-
vertible into 12.868 shares of common stock. As an alternative
to conversion, a participant can elect to receive $600 per share
of Series B, payable in cash or common stock. If the participant
elects to receive common stock, the company provides shares of
common stock to the plan trustee, who then transmits the shares
to the participant. Should the participant elect to receive cash, it
is the intent of the company to provide the plan trustee with
shares of common stock, so that the trustee can sell such shares
in the open market and have sufficient cash to transmit to the
participant. The shares of Series B may be redeemed by
Texaco Inc. at $628.50 per share through December 19, 1994,
and at prices declining to $600 per share on or after December
20, 1998. Also, Texaco Inc. may be required to redeem the
shares of Series B under certain circumstances.
Series C Variable Rate Cumulative Preferred Stock
In 1989, the company distributed to its stockholders as a special
dividend one share of Series C Variable Rate Cumulative
Preferred Stock (Series C) for each 50 shares of common stock
owned.
The Series C has a stated value of $50 per share, is non-
callable for five years (except under certain circumstances)
and is non-voting. Dividend rates are reset and paid quarterly,
based upon the highest prevailing yields of three U.S. Treasury
maturities (3-month, 10-year and 30-year), less 0.375 percent.
Dividends would be reset in the event of either a credit-rating
Texaco Inc. 1993 Annual Report to Stockholders page 44.
downgrade to below investment grade in the Series C or a
change in the U.S. Federal income tax dividends-received deduc-
tion percentage for corporate investors. During 1993, 1992 and
1991, cash dividends on Series C totaled $17 million ($3.26 per
share), $20 million ($3.69 per share) and $21 million ($3.94
per share), respectively.
Holders have an option to put the Series C to the company
between August 1, and September 22, 1994, at a price of $50 per
share, payable on September 30, 1994. The company may call
the Series C for redemption at a price of $50 per share plus
accrued and unpaid dividends in the event of an increase in the
dividend rate as the result of either a credit-rating downgrade to
below investment grade or a decrease in the dividends-received
deduction. The company may also call the stock unconditionally
anytime on or after September 30, 1994, at a price of $50 per
share plus accrued and unpaid dividends. A call by the company
or a put by the shareholders may be funded at the company's
option in either cash or an equivalent amount of common stock.
Series D Junior Participating Preferred Stock and Rights
In 1989, the company declared a dividend distribution of one
Right for each outstanding share of common stock. Under cer-
tain circumstances, each Right may be exercised to purchase
from the company a unit consisting of 1/100th of a share (Unit)
of Series D Junior Participating Preferred Stock (Series D), par
value $1.00 per share, at a purchase price of $150 per Unit (the
Purchase Price), subject to adjustment.
The Rights may only be exercised after a person has
acquired, or obtained the right to acquire, beneficial ownership
of 20% or more of the company's common stock other than
pursuant to a Qualifying Offer, or has commenced a tender offer
that would result in that person owning 20% or more of the com-
mon stock.
A Qualifying Offer is an all-cash, fully financed tender
offer for all outstanding shares of common stock which remains
open for 45 days, which results in the acquiror owning a
majority of the company's voting stock, and in which the
acquiror agrees to purchase for cash all remaining shares of
common stock.
The Rights expire on April 3, 1999, or sooner, upon the
acquisition of the company pursuant to a Qualifying Offer, and
may be redeemed by the company at a price of $.01 per Right at
any time prior to 10 days after the Rights become exercisable.
In the event that a person becomes the beneficial owner of
20% or more of the common stock other than pursuant to a
Qualifying Offer, each Right will thereafter entitle the holder to
receive, upon exercise of the Right, in lieu of the Series D, a
number of shares of common stock, property, cash or other
securities having a formula value equal to two times the exercise
price of the Right.
In the event that the company is acquired in a transaction
in which the company is not the surviving corporation, or in the
event 50% or more of the company's assets or earning power
is sold or transferred, each holder of a Right thereafter has the
right to receive, upon exercise, common stock of the acquiring
company having a value equal to two times the exercise price of
the Right.
Until a Right is exercised, the holder thereof, as such, has
no rights as a stockholder of the company, including the rights to
vote or to receive dividends.
As of December 31, 1993, there were 3,000,000 shares
designated as Series D with a liquidation value of $100 per share.
In general, the terms of the Series D have been designed so that
each Unit of Series D should be substantially the economic
equivalent of one share of common stock. The Series D will,
if issued, be junior to any other series of Preferred Stock which
may be authorized and issued, unless the terms of such other
series provide otherwise. Each share of the Series D which may
be issued will entitle the holder to receive a quarterly dividend
equal to the greater of (i) $5.00 per share or (ii) 100 times the
quarterly dividend declared per share of common stock, subject
to adjustment. In the event of liquidation of the company, the
holders of the Series D will be entitled to receive a preferred
liquidation payment of $100 per share plus accrued and unpaid
dividends to the date of payment, but in no event less than an
amount equal to 100 times the payment made per share of com-
mon stock, if greater. The Series D will be redeemable as a
whole, or in part, at any time, or from time to time, at the option
of the company at a redemption price per share equal to 100
times the then market price of a share of common stock, plus
accrued and unpaid dividends through the redemption date. Each
share of the Series D will have 100 votes, voting together with
the common stock. In the event of any merger, consolidation or
other transaction in which the shares of common stock are
exchanged, each share of the Series D will entitle the holder
thereof to receive 100 times the amount received per share of
common stock.
If dividends on the Series D are in arrears in an aggregate
amount equal to six quarterly dividends, the number of directors
of the company will be increased by two, and the holders of
the Series D outstanding at the time of such dividend arrearage,
voting separately as a class with any other series of preferred
stock likewise qualified to vote, will be entitled at the next
annual meeting to elect two directors. The Series D will also
have a separate class vote on certain matters which would
adversely affect the rights and preferences of the Series D.
The Purchase Price payable and the number of Units of
Series D or other securities or property issuable upon exercise
of the Rights are subject to adjustment from time to time in
certain events to prevent dilution.
Series E Variable Rate Cumulative Preferred Stock
In 1989, the company issued 3,814 shares of Series E Variable
Rate Cumulative Preferred Stock (Series E) in connection with
a merger transaction.
The Series E has a stated value of $100,000 per share, is
non-callable for five years (except under certain circumstances)
and is non-voting. Dividend rates are reset and paid quarterly,
based upon the highest prevailing yields of three U.S. Treasury
maturities (3-month, 10-year and 30-year), less 0.375 percent.
Texaco Inc. 1993 Annual Report to Stockholders page 45.
Notes to Consolidated Financial Statements
continued
Dividends would be reset in the event of either a credit-rating
downgrade to below investment grade in Series E or a change
in the U.S. Federal income tax dividends-received deduction
percentage for corporate investors. During 1993, 1992 and 1991,
cash dividends on Series E totaled $25 million ($6,513 per share),
$28 million ($7,375 per share) and $30 million ($7,875 per
share), respectively.
Holders can convert the shares of Series E at a price of
$100,000 per share into shares of common stock on December
31, 1994 and December 31, 1999. The company may call the
Series E for redemption at a price of $100,000 per share plus
accrued and unpaid dividends in the event the holders elect to
convert or in the event of an increase in the dividend rate as the
result of either a credit-rating downgrade to below investment
grade or a decrease in the dividends-received deduction. The
company may also call the stock unconditionally anytime on or
after December 31, 1994, at a price of $100,000 per share plus
accrued and unpaid dividends. A call by the company may be
funded at the company's option in either cash or an equivalent
amount of common stock. However, under certain circum-
stances, the call must be funded with an equivalent amount of
common stock.
Series F ESOP Convertible Preferred Stock
An amendment to Texaco Inc.'s Employees Savings Plan created
an Employee Stock Ownership Plan (ESOP) feature. In 1990,
the ESOP purchased 67,796.61 shares of Series F ESOP Convert-
ible Preferred Stock (Series F) from the company for $737.50
per share, or an aggregate purchase price of $50 million.
Texaco Inc. guaranteed a $50 million variable-rate loan made to
the ESOP which was used to acquire the shares of Series F.
Dividends on each share of Series F are cumulative and
are payable semiannually at the rate of $64.53 per annum. Cash
dividends on Series F totaled $4 million for both 1993 and 1992
and $5 million for 1991.
Participants may partially convert their Series F into com-
mon stock beginning at age 55, and may elect full conversion
upon retirement or separation from service with the company.
The conversion ratio and number of votes per share of Series F
are subject to adjustment under certain conditions. At present,
the Series F entitles a participant to 10 votes per share, voting
together with the holders of common stock, and is convertible
into 10 shares of common stock. As an alternative to conversion,
a participant can elect to receive $737.50 per share of Series F,
in cash or common stock. If the participant elects to receive
common stock, the company provides shares of common stock
to the plan trustee, who then transmits the shares to the partici-
pant. Should the participant elect to receive cash, it is the intent
of the company to provide the plan trustee with shares of com-
mon stock, so that the trustee can sell such shares in the open
market and have sufficient cash to transmit to the participant.
The shares of Series F may be redeemed by Texaco Inc. at
$776.22 per share through February 12, 1995, and at prices
declining to $737.50 per share on or after February 13, 2000.
Also, Texaco Inc. may be required to redeem the shares of
Series F under certain circumstances.
Market Auction Preferred Shares
On December 23, 1992, the company issued 1,200 shares of
cumulative variable rate preferred stock, called Market Auction
Preferred Shares (MAPS) in a private placement, for an aggregate
purchase price of $300 million. The MAPS are grouped into four
series (Series G, H, I and J) of $75 million each.
The initial dividend rate for each series was 3.25% per
annum, and the initial dividend periods ranged from seven to ten
weeks. The subsequent dividend rates for each series during
1993 were determined by Dutch auctions conducted at seven-
week intervals. During 1993, the annual dividend rate for the
MAPS ranged between 2.40% and 3.25% and cash dividends on
the MAPS totaled $8 million (Series G, H, I and J of $6,281,
$6,396, $6,549 and $6,762 per share, respectively). The MAPS
contain the flexibility for the length of the dividend periods to be
changed at each auction. Alternatively, the dividend rate and the
dividend period can be negotiated with potential investors.
The company may redeem the MAPS, in whole or in part, at
any time at a liquidation preference of $250,000 per share, plus
premium, if any, and accrued and unpaid dividends thereon.
The MAPS are non-voting, except under certain limited
circumstances.
Note 12. Foreign
Currency
Currency translations from continuing operations resulted in
pre-tax gains of $35 million in 1993, $182 million in 1992 and $27
million in 1991. After applicable income taxes, gains were $49
million in 1993, $230 million in 1992 and $48 million in 1991.
These amounts include Texaco's equity in such gains and losses
of affiliates accounted for on the equity method.
Not included in the above 1991 amount were currency
translation effects included in the Statement of Consolidated
Income as deferred income taxes, amounting to a gain of
$93 million. The comparable amounts for 1993 and 1992 are
included in currency translation as a result of the adoption of
SFAS 109, "Accounting for Income Taxes."
The currency gains in 1993 and 1991 were primarily related
to operations in developing countries which experienced high
inflation and currency devaluations throughout the year. The cur-
rency gains in 1992 related mostly to operations in the U.K.
reflecting the weakness of the Pound Sterling as well as opera-
tions in certain developing countries reflecting strong inflationary
factors and currency devaluations.
Currency translation adjustments reflected in the separate
stockholders' equity account result from translation items per-
taining to certain affiliates of Caltex.
Texaco Inc. 1993 Annual Report to Stockholders page 46.
Note 13. Taxes
<TABLE>
<CAPTION>
1993 1992 1991
----------------------------- --------------------------- ---------------------------
United United United
Millions of dollars States Foreign Total States Foreign Total States Foreign Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Direct taxes
Provision (benefit) for income taxes
Current
U.S. Federal and foreign $ 5 $ 143 $ 148 $ 111 $ 103 $ 214 $ 93 $ (57) $ 36
U.S. state and local 14 -- 14 36 -- 36 -- -- --
Deferred
Tax law changes 17 (169) (152) -- -- -- -- -- --
Other (141) 44 (97) (82) 143 61 (46) 140 94
------ ------ ------ ------ ------ ------ ------ ------ ------
Total provision (benefit) for
income taxes (105) 18 (87) 65 246 311 47 83 130
Taxes other than income taxes
Oil and gas production 122 17 139 131 2 133 141 3 144
Sales and use 5 59 64 6 10 16 17 31 48
Property 124 16 140 112 21 133 120 18 138
Payroll 87 29 116 81 39 120 78 36 114
Other 75 15 90 59 69 128 73 34 107
------ ------ ------ ------ ------ ------ ------ ------ ------
Total taxes other than income
taxes 413 136 549 389 141 530 429 122 551
Import duties and other governmental
levies 42 3,735 3,777 39 3,743 3,782 45 3,335 3,380
------ ------ ------ ------ ------ ------ ------ ------ ------
Total direct taxes 350 3,889 4,239 493 4,130 4,623 521 3,540 4,061
Taxes collected from consumers for
governmental agencies 1,068 2,060 3,128 986 2,125 3,111 954 1,996 2,950
------ ------ ------ ------ ------ ------ ------ ------ ------
Total $1,418 $5,949 $7,367 $1,479 $6,255 $7,734 $1,475 $5,536 $7,011
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
All tax expense data excludes discontinued operations. Effective
January 1, 1992, the company adopted SFAS 109, "Accounting for
Income Taxes." All 1992 tax expense data exclude the cumulative
effect of accounting changes for SFAS 106 and SFAS 109.
The provision (benefit) for deferred income taxes includes
the following amounts:
<TABLE>
<CAPTION>
Millions of dollars 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Type of temporary difference
Depreciation $ 99 $95 $156
Intangible drilling costs (76) 16 46
Depletion (95) (37) (65)
Environmental reserves (15) 23 42
Tax-related reserves 113 8 (49)
DOE payments -- 66 22
Tax credit carryforwards 13 (25) (55)
Employee benefit plans (32) (58) (6)
Investment in stock of subsidiary (145) -- --
Casualty/property reserves 69 (1) (1)
Tax loss carryforwards (38) 9 --
Deferred revenue (53) -- --
Other (89) (35) 4
----- ----- -----
Total $(249) $61 $ 94
===== ===== =====
</TABLE>
The deferred income tax assets and liabilities included in the
Consolidated Balance Sheet as of December 31, 1993 and 1992
amounted to $264 million and $195 million, respectively, as net
current assets and $1,162 million and $1,370 million, respectively,
as net noncurrent liabilities. The table that follows shows
deferred income tax assets and liabilities by category. Deferred
income taxes are not recorded on differences between financial
reporting and tax bases of investments in stock of subsidiary
companies, unless realization of the effect is probable in the fore-
seeable future. Certain potential deferred tax asset amounts for
which possibility of realization is deemed extremely remote
have been eliminated and are therefore excluded from the
following table.
<TABLE>
<CAPTION>
(Liability) Asset
--------------------
As of December 31 (Millions of dollars) 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C>
Depreciation $(1,006) $(1,060)
Depletion (764) (857)
Intangible drilling costs (624) (728)
Other deferred tax liabilities (178) (194)
------- -------
Total (2,572) (2,839)
Employee benefit plans 496 458
Tax loss carryforwards 626 476
Tax-related reserves 157 289
Tax credit carryforwards 271 271
Environmental reserves 246 231
Other deferred tax assets 580 536
------- -------
Total 2,376 2,261
Total before valuation allowance (196) (578)
Valuation allowance (702) (597)
------- -------
Total--net $ (898) $(1,175)
======= =======
</TABLE>
The following schedule reconciles the differences between
the U.S. Federal income tax rate and the effective income tax rate:
<TABLE>
<CAPTION>
1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Federal income tax rate
assumed to be applicable 35.0% 34.0% 34.0%
Net earnings and dividends
attributable to affiliated
corporations accounted for
on the equity method (11.6) (9.5) (10.7)
Aggregate earnings and losses from
international operations before
tax law changes 3.5 1.5 (2.7)
Tax law changes (13.0) -- --
Sales of stock of subsidiary (17.9) (2.2) (1.3)
Energy credits (2.5) (1.6) (1.1)
Canadian income tax refund -- -- (8.5)
Other (.9) .8 (.5)
----- ----- -----
Effective income tax rate (7.4)% 23.0% 9.2%
===== ===== =====
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 47.
Notes to Consolidated Financial Statements
continued
The decrease in the 1993 effective income tax rate as com-
pared to 1992 is mainly due to the net tax benefits realizable
through the sales of interests in a subsidiary as well as net
deferred tax benefits arising from tax law changes in the U.K.
and U.S. The change between 1992 and 1991 is mainly due to
1992 tax costs related to certain foreign producing operations and
a Canadian tax refund received in 1991.
For companies operating in the United States, pre-tax earn-
ings from continuing operations before cumulative effect of
accounting changes aggregated $397 million in 1993, $382 million
in 1992, and $90 million in 1991. For companies with operations
located outside the United States, pre-tax earnings on that basis
aggregated $775 million in 1993, $967 million in 1992, and $1,332
million in 1991.
Income taxes paid, net of refunds, as well as certain
amounts deposited with the Internal Revenue Service amounted
to $326 million, $283 million and $102 million in 1993, 1992 and
1991, respectively.
The undistributed earnings of subsidiary companies and of
affiliated corporate joint-venture companies accounted for on
the equity method, for which deferred U.S. income taxes have
not been provided at December 31, 1993 amounted to $1,293
million and $2,038 million, respectively. The corresponding
amounts at December 31, 1992 were $1,214 million and $1,847
million, respectively. Recording of deferred income taxes on
these undistributed earnings is not required relative to foreign
companies and pre-1992 earnings of domestic companies when
the earnings have been permanently reinvested. These amounts
would be subject to possible U.S. taxation only if remitted as divi-
dends. The determination of the hypothetical amount of unrecog-
nized deferred U.S. taxes on undistributed earnings of foreign
entities is not practicable. For domestic entities, such unrecorded
deferred income taxes were not material.
For the years 1993 and 1992 there was no utilization of loss
carryforwards for U.S. Federal income taxes. For the year 1991
such utilization of loss carryforwards resulted in U.S. Federal
income tax benefits of $8 million. For the years 1993, 1992 and
1991, the utilization of loss carryforwards resulted in income tax
benefits of $20 million, $85 million and $15 million in foreign
income taxes, respectively.
At December 31, 1993, Texaco had worldwide tax basis
loss carryforwards of approximately $1,568 million, including
$824 million which do not have an expiration date. The remain-
der expire at various dates through 2008.
Foreign tax credit carryforwards available for U.S. Federal
income tax purposes amounted to approximately $522 million
at December 31, 1993, expiring at various dates through 1998.
Alternative minimum tax and other tax credit carryforwards
available for U.S. Federal income tax purposes were $271 million
at December 31, 1993, of which $253 million have no expiration
date. The remaining credits expire at various dates through 2008.
The credits that are not utilized by the expiration dates may be
taken as deductions for U.S. Federal income tax purposes.
Note 14. Employee
Benefit Plans
Texaco Inc. and certain of its non-U.S. subsidiaries sponsor vari-
ous benefit plans for active employees and retirees.The costs
of the savings, health care and life insurance plans relative to
employees' active service are shared by the company and its
employees, with Texaco's costs for these plans charged to
expense as incurred. In addition, reserves for employee benefit
plans are provided principally for the unfunded costs of various
pension plans, retiree health and life insurance benefits, incen-
tive compensation plans and for separation benefits payable to
employees.
As of January 1, 1993, Texaco adopted SFAS 112, "Employers'
Accounting for Postemployment Benefits." Adoption of SFAS 112
did not impact 1993 net income since the company had been
accounting for substantially all of these costs in accordance with
the new Standard.
The discussion of employee benefit plans that follows is for
total plan activity, including benefits and amounts applicable to
employees of the discontinued operations. Amounts relative to the
discontinued operations are not material for any of the years
discussed.
Employee Stock Ownership Plans
Texaco recorded $20 million, $17 million and $19 million in
ESOP expense during 1993, 1992 and 1991, respectively.
Company contributions to the Employees Thrift Plan of
Texaco Inc. and the Employees Savings Plan of Texaco Inc.
(the Plans) amounted to $20 million, $17 million and $22 million
in 1993, 1992 and 1991, respectively. These Plans are designed
to provide participants with a benefit of approximately 6% of
base pay.
In 1993, 1992 and 1991, the company paid $51 million, $51
million and $52 million, respectively, in dividends on Series B
and Series F stock. The dividends are applied by the trustee to
fund interest payments which amounted to $14 million, $18 mil-
lion and $26 million for 1993, 1992 and 1991, respectively, as well
as to reduce principal on the ESOP loans. Dividends on the shares
of Series B and Series F used to service debt of the Plans are tax
deductible to the company.
Texaco Inc. 1993 Annual Report to Stockholders page 48.
Reflected in Texaco's long-term debt are the Plans' ESOP
loans which are guaranteed by Texaco Inc. Commensurate with
each repayment on the ESOP loans and as a result of the alloca-
tion of the Series B and Series F stock by the trustee of the Plans
to the individual participating employees, there is a reduction in
the remaining ESOP-related unearned employee compensation
included as a component of stockholders' equity.
Pension Plans
The company sponsors pension plans that cover substantially all
employees. Generally, these plans provide defined pension bene-
fits based on final average pay. However, the level of benefits
and terms of vesting vary among plans. Amounts charged to
pension expense, as well as amounts funded, are generally based
on actuarial studies. Pension plan assets are administered by
trustees and are principally invested in equity and fixed income
securities and deposits with insurance companies.
The total worldwide expense for all employee pension
plans of Texaco, including pension supplementations and the
smaller non-U.S. plans, was $111 million in 1993, $105 million in
1992 and $113 million in 1991.
The following data are provided for U.S. plans and princi-
pal non-U.S. plans.
<TABLE>
Components of Pension Expense United States Plans Non-U.S. Plans
<CAPTION> ------------------------------------ ------------------------------
Millions of dollars 1993 1992 1991 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Benefits earned during the year $ 67 $ 68 $ 64 $ 14 $15 $12
Actual investment return on plan assets, (gain) loss (158) (115) (185) (155) (98) (81)
Interest cost on projected benefit obligations 125 134 131 61 56 46
Amortization of net deferred amounts 39 -- 88 112 39 32
---- ---- ---- ---- ---- ----
Total $ 73 $ 87 $ 98 $ 32 $12 $ 9
==== ==== ==== ==== ==== ====
<FN>
The assumed long-term return on plan assets for U.S. plans was 9% for 1993, 1992 and 1991; for non-U.S. plans the weighted
average rate was 8.6% for 1993, 8.5% for 1992 and 8.7% for 1991.
</TABLE>
<TABLE>
Funded Status of Pension Plans
<CAPTION>
United States Plans
-------------------------------------------------------------------------------
1993 1992
---------------------------------- ------------------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
As of December 31 (Millions of dollars) Benefits Exceed Assets Benefits Exceed Assets
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Present value of the estimated pension
benefits to be paid in the future
Vested benefits $(1,302) $(47) $(1,169) $(47)
Nonvested benefits (100) (3) (110) (3)
------- ---- ------- ----
Accumulated benefit obligations (1,402) (50) (1,279) (50)
Effect of projected future salary
increases (467) (16) (441) (15)
------- ---- ------- ----
Total projected benefit obligations (1,869) (66) (1,720) (65)
------- ---- ------- ----
Amount of assets available for benefits
Funded assets of the plans, at fair value 1,513 -- 1,429 --
Net pension liability (asset) recorded on
Texaco's Consolidated Balance Sheet 128 50 184 34
------- ---- ------- ----
Total assets 1,641 50 1,613 34
------- ---- ------- ----
Assets in excess of (less than)
projected benefit obligations(1) $ (228) $(16) $ (107) $(31)
======= ==== ======= ====
<FN>
(1)Consisting of:
Net transition asset (liability) not yet
recognized $ 75 $(17) $ 91 $(20)
Unrecognized cost of retroactive benefits
granted by a plan amendment (54) (8) (46) (9)
Effect of changes in assumptions and
differences between actual and
estimated experience (249) 9 (152) (2)
------- ---- ------- ----
Total $ (228) $(16) $ (107) $(31)
======= ==== ======= ====
<CAPTION>
Non-U.S. Plans
-------------------------------------------------------------------------------
1993 1992
---------------------------------- ------------------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
As of December 31 (Millions of dollars) Benefits Exceed Assets Benefits Exceed Assets
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Present value of the estimated pension
benefits to be paid in the future
Vested benefits $(344) $(199) $(238) $(177)
Nonvested benefits (19) (19) (16) (6)
----- ----- ----- ----
Accumulated benefit obligations (363) (218) (254) (183)
Effect of projected future salary
increases (54) (29) (56) (50)
----- ----- ----- ----
Total projected benefit obligations (417) (247) (310) (233)
----- ----- ----- ----
Amount of assets available for benefits
Funded assets of the plans, at fair value 696 -- 611 --
Net pension liability (asset) recorded on
Texaco's Consolidated Balance Sheet (237) 218 (202) 183
----- ---- ----- ----
Total assets 459 218 409 183
----- ----- ----- ----
Assets in excess of (less than)
projected benefit obligations(1) $ 42 $ (29) $ 99 $(50)
===== ===== ===== ====
<FN>
(1)Consisting of:
Net transition asset (liability) not yet
recognized $ 92 $ (23) $ 110 $(23)
Unrecognized cost of retroactive benefits
granted by a plan amendment (32) (7) (14) (17)
Effect of changes in assumptions and
differences between actual and
estimated experience (18) 1 3 (10)
----- ----- ----- ----
Total $ 42 $ (29) $ 99 $(50)
===== ===== ===== ====
</TABLE>
<TABLE>
Weighted Average Rate Assumptions Used in Estimating Pension Benefit Obligations
<CAPTION>
United States Plans Non-U.S. Plans
---------------------------- ------------------
1993 1992 1993 1992
- ----------------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C>
Discount rate 7.0% 7.8% 10.6% 12.8%
Rate of increase in compensation levels 4.8% 5.0% 7.0% 11.2%
==== ==== ===== =====
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 49.
Notes to Consolidated Financial Statements
continued
Other Postretirement Benefits
Texaco sponsors postretirement plans primarily in the U.S. that
provide health care and life insurance for retirees and eligible
dependents. The company's U.S. health insurance obligation is
its fixed dollar contribution. The plans are unfunded, and the
costs are shared by the company and its employees and retirees.
Effective January 1, 1992, the company adopted SFAS 106,
"Employers' Accounting for Postretirement Benefits Other
Than Pensions" using the immediate recognition method for the
cumulative effect. This Standard requires companies to accrue
for the cost of such benefits over the service lives of employees.
For Texaco, this Standard primarily applies to the cost of life
insurance and health insurance in the U.S. The company's
previous practice was to expense these costs on a pay-as-you-
go basis.
The determination of the company's obligation is based on
the terms of the life and health insurance plans, along with
applicable actuarial assumptions. The company continues to
fund these benefit costs on a pay-as-you-go basis, with retirees
paying the excess over the company's fixed dollar contribution
for health insurance. For employees who retire from Texaco
between age 55 and 65, most will be eligible to receive health
care benefits, similar to those available to active employees, as
well as life insurance benefits. The company's cost to provide
these postretirement benefits for health insurance is currently
equal to the company's cost for an active employee. After attain-
ing age 65, the retirees' health care coverage is coordinated with
available Medicare benefits.
The trend rates used for the purpose of estimating those
costs reflect the expected increase in general U.S. health care
inflation as measured by the health-care cost component of the
U.S. Consumer Price Index. For retirees between age 55 and 65,
the assumed rate of increase in the fixed dollar contribution for
health-care benefits was 6.7% in 1993. The rate of increase in the
fixed dollar contribution is expected to rise to 8.5% in 1996 and
then decrease to an ultimate rate of 4.5% in the year 2002, at
which time the company expects general U.S. health care infla-
tion to increase at a rate approximating general inflation. The
fixed dollar contribution for retirees 65 and older is assumed to
increase by 4.5% per year. The fixed dollar contributions derived
from these assumptions do not necessarily represent an obligation
of the company.
Assuming a 1% increase in the annual rate of increase in
the fixed dollar contribution for health insurance, the accumu-
lated postretirement benefit obligation and annual expense
would increase by approximately $58 million and $8 million,
respectively.
Certain of the company's non-U.S. subsidiaries have post-
retirement benefit plans. However, most retirees outside the
U.S. are covered by government sponsored and administered
programs, the cost of which is not significant to the company.
The total worldwide expense for all postretirement plans of
Texaco, including the smaller non-U.S. plans was $76 million
in 1993, $78 million in 1992 and $43 million in 1991. The amount
for 1991 was accounted for under the pay-as-you-go method.
The following tables provide information on the status of
the principal postretirement plans:
<TABLE>
Components of Other Postretirement Benefit Expense
<CAPTION>
1993 1992
------------------------------------ ------------------------------
Health Life Health Life
Millions of dollars Care Insurance Total Care Insurance Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Benefits earned during the year $ 13 $ 4 $ 17 $ 12 $ 5 $ 17
Interest cost on accumulated postretirement benefit obligations 40 19 59 41 20 61
---- ---- ---- ---- ---- ----
Total $ 53 $ 23 $ 76 $ 53 $ 25 $ 78
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
Funded Status of Other Postretirement Plans
<CAPTION>
1993 1992
------------------------------------ ------------------------------
Health Life Health Life
Millions of dollars Care Insurance Total Care Insurance Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Accumulated unfunded postretirement benefit obligations
Retirees $250 $208 $458 $279 $193 $472
Fully eligible active participants 57 26 83 68 30 98
Other active plan participants 172 51 223 169 54 223
---- ---- ---- ---- ---- ----
Total accumulated unfunded postretirement benefit
obligations 479 285 764 516 277 793
Unrecognized net gain (loss) 35 7 42 (24) 3 (21)
---- ---- ---- ---- ---- ----
Net other postretirement benefit liability recorded on Texaco's
Consolidated Balance Sheet $514 $292 $806 $492 $280 $772
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
Weighted Average Rate Assumptions Used in Estimating Other Postretirement Benefit Obligations
<CAPTION>
1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Discount rate 7.7% 8.3%
Rate of increase in compensation levels 4.8% 5.0%
=== ===
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 50.
Note 15. Stock
Incentive Plan
Under the company's stock incentive plan (the Plan) approved
by stockholders, among the awards that may be granted to exec-
utives and certain key employees are stock options, with or
without stock appreciation rights, and restricted stock. The total
number of shares available each year for issuance under the Plan
through December 31, 2002 is eight-tenths of one percent (0.8%)
of the aggregate number of shares of common stock issued and
outstanding on December 31 of the previous year, adjusted for
certain plan activity. Shares not issued in the current year are
available for future grant. The option price per share cannot be
less than the fair market value of a share of common stock on
the date granted unless adjusted as provided in the Plan. At
December 31, 1993, there were available for awards during 1994,
1,824,282 shares, of which 1,243,873 shares were available to all
participants and 580,409 shares were available to those partici-
pants who are not officers or directors. At December 31, 1992,
1,578,445 shares were available for future grant.
Stock options granted under the Plan extend for 10 years
from the date of grant and become 50% exercisable on the first
anniversary. These options are fully exercisable on the second
anniversary, except for the January 1990 awards, which became
fully exercisable on the fourth anniversary of the award.
The Plan permits the company to grant restored options to
a participant in the Plan who has previously been granted stock
options. This feature enables a participant, who exercises an
option by exchanging previously acquired common stock or who
has shares withheld by the company to satisfy tax withholding
obligations, to receive new options, exercisable at the then mar-
ket value, for the same number of shares as were exchanged or
withheld. Under existing regulations, restored options are fully
exercisable six months after the date of grant.
Option activity during 1993 and 1992 is summarized in the
following table:
<TABLE>
<CAPTION>
Price Range
Stock Options 1993 1992 Per Share
- --------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding January 1 2,651,746 1,997,467 $46.78--66.19
Granted 776,375 704,800 57.94--63.69
Canceled -- (2,200) 61.44
Exercised (831,869) (599,180) 46.78--64.38
Restored 772,697 550,859 57.44--69.25
Outstanding
December 31 3,368,949 2,651,746 46.78--69.25
Exercisable
December 31 1,394,718 1,167,301 46.78--66.19
========= ========= =============
</TABLE>
Note 16. Other
Financial Information
Environmental Reserves
Texaco Inc. and subsidiary companies have financial reserves
relating to environmental remediation programs which the
company believes are sufficient for known requirements. At
December 31, 1993, reserves for future environmental remedia-
tion costs amounted to $782 million and reserves relative to the
future cost of restoring and abandoning existing oil and gas prop-
erties were $803 million. Texaco's significant affiliates also have
recorded reserves for environmental remediation and restoration
and abandonment costs.
Texaco makes every effort to remain in full compliance with
existing governmental regulations. It is likely that changes in
governmental regulations and/or Texaco's re-evaluation of its pro-
grams will result in additional future costs. However, it is not
believed that such future costs will be material to the company's
financial position nor to its operating results over any reasonable
period of time. It is assumed that any mandated future costs
would be recoverable in the marketplace, since all companies
within the industry would be facing similar requirements.
Interest Paid and Interest Expense Capitalized
Interest paid, net of amounts capitalized, amounted to $439
million in 1993, $481 million in 1992 and $564 million in 1991.
Interest expense capitalized as part of properties, plant and
equipment was $49 million in 1993, $88 million in 1992 and
$66 million in 1991.
Sale of Receivables
At December 31, 1993 the company had a third-party accounts
receivable agreement under which it has the right to sell approxi-
mately $400 million of accounts receivable on a continuing basis
subject to limited recourse. Receivables sold under such facilities
totaled approximately $1.1 billion during 1993 and approximately
$1.4 billion during 1992. At December 31, 1993, no receivables
sold remained uncollected. At December 31, 1992, $400 million
of receivables sold remained uncollected.
Preferred Stock of Subsidiary Companies
On October 8, 1993, MVP Production Inc., a producing subsidiary,
issued variable rate cumulative preferred stock in a private place-
ment for an aggregate purchase price of $75 million. The shares
have voting rights in the subsidiary and are redeemable on
September 30, 2003.
On November 3, 1993, Texaco Capital LLC, a finance sub-
sidiary, issued 14 million shares of Cumulative Guaranteed
Monthly Income Preferred Shares (MIPS), Series A, in a public
offering, for an aggregate purchase price of $350 million.
The dividend rate for the MIPS is 6 7/8% per annum. The
payment of dividends and payments on liquidation or redemp-
tion with respect to the MIPS are guaranteed by Texaco Inc.
Dividends on the MIPS are paid monthly commencing November
30, 1993. During 1993, cash dividends on the MIPS totaled $4 mil-
lion ($.27 per share).
The MIPS are redeemable, at the option of Texaco Capital
LLC (with Texaco Inc.'s consent) in whole or in part from time to
time, at $25 per share on or after October 31, 1998, plus, in each
case, accrued and unpaid dividends to the date fixed for redemp-
tion. In addition, under certain circumstances, Texaco Capital
LLC (with Texaco Inc.'s consent) can redeem the MIPS at any
time, in whole or in part, at $25 per share plus accrued unpaid
dividends.
The MIPS are non-voting, except under certain limited
circumstances.
Texaco Inc. 1993 Annual Report to Stockholders page 51.
Notes to Consolidated Financial Statements
continued
Note 17. Financial
Instruments and
Commitments
In the normal course of its business, the company utilizes various
types of financial instruments. These instruments include
recorded assets and liabilities, and also items which principally
involve off-balance sheet risk. The company has adopted SFAS 115,
"Accounting for Certain Investments in Debt and Equity
Securities", as of December 31, 1993. The required disclosures for
investments in debt securities and in equity securities with readily
determinable fair values are included below:
Financial Assets and Liabilities
Cash and cash equivalents--Fair value approximates cost as
reflected in the Consolidated Balance Sheet at December 31, 1993
and 1992 because of the short-term maturities of these instru-
ments. Cash equivalents are classified as held-to-maturity. The
amortized cost of cash equivalents was as follows:
<TABLE>
<CAPTION>
As of December 31, 1993 (Millions of dollars)
- ----------------------------------------------------------------------------
<S> <C>
Time deposits and certificates of deposit $108
Commercial paper and other 140
----
$248
</TABLE>
Short-term and long-term investments--Fair value is primarily
based on quoted market prices and valuation statements obtained
from major financial institutions. Information concerning invest-
ments held at December 31, 1993 in short-term and long-term
debt securities and in publicly-traded equity securities is shown in
the tables that follow. These investments are classified as
available-for-sale.
<TABLE>
<CAPTION>
Amortized Estimated
As of December 31, 1993 (Millions of dollars) Cost Fair Value
- ----------------------------------------------------------------------------
<S> <C> <C>
U.S. government securities $213 $212
Foreign government securities 250 250
Corporate and other debt securities 174 176
Equity securities 22 109
---- ----
$659 $747
</TABLE>
For the above items at year-end 1993, there were gross unrealized
gains of $91 million, primarily related to equity securities, and
gross unrealized losses of $3 million.
Debt securities in the preceding table had the following
scheduled maturities:
<TABLE>
<CAPTION>
Amortized Estimated
As of December 31, 1993 (Millions of dollars) Cost Fair Value
- ----------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 47 $ 48
Due after one year through five years 300 297
Due after five years 290 293
---- ----
$637 $638
</TABLE>
The estimated fair value of other long-term investments not
included above, for which it is practicable to estimate fair value,
approximated the December 31, 1993 carrying value of $97
million.
At December 31, 1992, the estimated fair value of short-term
and long-term investments, for which it is practicable to estimate
fair value, was $720 million compared with a carrying value of
$664 million.
Notes payable and commercial paper--Fair value approximates car-
rying amounts as reflected in the Consolidated Balance Sheet at
December 31, 1993 and 1992 because of the short-term maturities
of these instruments.
Long-term debt, including debt due within one year--Fair value is
primarily based on quoted market prices, as well as borrowing
rates currently available to the company for bank loans with simi-
lar terms and maturities. The fair value of long-term debt, includ-
ing debt due within one year, at December 31, 1993 and 1992 was
$5.9 billion and $5.1 billion, respectively, compared with carrying
values of $5.3 billion and $4.8 billion.
Other Financial Instruments
In the normal course of its business, the company enters into
financial instrument transactions with off-balance sheet risk in
order to hedge its exposure to market risk regarding petroleum
prices, currency translations and interest rates.
Petroleum Futures, Forwards and Derivative Products--Contracts to
hedge petroleum prices which are required to be settled in cash
were immaterial at December 31, 1993 and 1992.
Forward Exchange Contracts--At December 31, 1993 and 1992, the
company had outstanding $216 million and $321 million, respec-
tively, of forward exchange contracts to purchase and sell foreign
currency. The exposure to credit risk is minimal since the counter-
parties are major financial institutions. The company does not
anticipate nonperformance by any of the multiple counterparties.
The market risk exposure is essentially limited to risk related to
currency rate movements. Outstanding forward exchange con-
tracts are marked to market on a monthly basis using the month-
end spot rate. The gains or losses arising from these contracts are
applied to offset exchange gains or losses on related hedged assets,
liabilities or future commitments. Unrealized gains or losses at
December 31, 1993 and 1992 were not material.
Interest Rate Swaps--The company has outstanding interest rate
swaps of various maturities with multiple major financial institu-
tions to help manage the interest rate exposure associated with the
company's debt portfolio. At December 31, 1993 and 1992, the
aggregate notional principal amounts were $1,532 million and $840
million, respectively. Notional amounts do not represent cash flow
and are not subject to credit risk. Credit and market risk exposures
are limited to the net interest differentials. The interest differentials
are reflected in interest expense as a hedge of interest on outstand-
ing debt. The fair value of the swaps is the estimated amount that
would be received or paid to terminate the agreements at year end,
taking into account current interest rates and the current credit-
worthiness of the swap counterparties. At year-end 1993, the fair
value of outstanding swaps was immaterial. The fair value at
December 31, 1992 would have been a payable of $49 million. This
amount did not reflect unamortized realized gains of approxi-
mately $22 million on terminated interest rate swaps which are
being amortized over the life of the associated outstanding debt.
Financial Guarantees
The company has guaranteed the payment of certain debt and
other obligations of third parties and affiliates. These guarantees
totaled $154 million and $153 million at December 31, 1993 and
1992, respectively.
Exposure to credit risk in the event of non-payment by the
obligors is represented by the contractual amount of these instru-
ments. No loss is anticipated under these guarantees.
Texaco Inc. 1993 Annual Report to Stockholders page 52.
Throughput Agreements
Texaco Inc. and certain of its subsidiary companies have entered
into certain long-term agreements wherein they have committed
either to ship through affiliated pipeline companies and an offshore
oil port, or to refine at an affiliated refining company a sufficient
volume of crude oil or petroleum products to enable these affili-
ated companies to meet a specified portion of their individual debt
obligations, or, in lieu thereof, to advance sufficient funds to enable
these affiliated companies to meet these obligations. Additionally,
Texaco has entered into long-term purchase commitments with
third parties for take or pay gas transportation. The company's
maximum exposure to loss was $765 million and $348 million at
December 31, 1993 and 1992, respectively.
However, based on Texaco's right of counterclaim against third
parties in the event of nonperformance, Texaco's net exposure was
approximately $590 million and $313 million at December 31, 1993
and 1992, respectively.
No losses are anticipated as a result of the above obligations.
Other Commitments
At December 31, 1993, $425 million of preferred stock of sub-
sidiaries was owned by minority holders. Such amount is reflected
in minority interest in subsidiary companies in the Consolidated
Balance Sheet. At present, Texaco is required to redeem $75
million in 2003 and $350 million in 2043. The company has the
ability to extend the required redemption date for the $350 million
beyond 2043. Such preferred stock requires annual dividend pay-
ments of approximately $27 million.
Note 18. Contingent
Liabilities
Internal Revenue Service Claims
During 1989, Texaco commenced an action in the United States
Tax Court (Tax Court), to challenge certain claimed increases in
the company's 1979-1982 Federal income tax liability. The com-
pany's action contested, among other items, an Internal Revenue
Service (IRS) claim that during the 1979-1981 years, Texaco
should be taxed as if it had resold Saudi crude oil at prices higher
than those mandated by the Saudi Arab Government (Aramco
Advantage issue).
On December 22, 1993, the Tax Court issued an opinion
upholding the company's position on the Aramco Advantage
issue. The Tax Court held that the IRS was barred from taxing the
company on income never received, and which could only have
been received by violating Saudi law. Finding that the Saudi Arab
Government's mandate represented the sovereign law of that
country, the Tax Court determined that the company was required
to comply with the Saudi Arab Government's mandate and did in
fact observe it.
The IRS has not indicated whether it will appeal the deci-
sion, and need not do so until the two remaining issues in the
case, involving the taxation of crude processed at Caltex' Bahrain
refinery and sales of crude oil in the Far East, have been tried
and decided by the Tax Court or otherwise resolved.
In March 1988, prior to the commencent of the Tax Court
action, the company, as a condition of its emergence from
Chapter 11 proceedings, agreed to make certain cash deposits
with the IRS in contemplation of potential tax claims (Deposit
Fund). From time to time, the company has applied Deposit Fund
amounts to final liabilities agreed upon by the company and the
IRS for income tax and windfall profit tax years of Texaco and
Getty not involved in the Tax Court litigation. A portion of the
Deposit Fund also will be applied to issues settled without trial in
the 1979-1982 litigation years. After satisfaction of all liabilities
associated with presently settled issues, it is anticipated that
approximately $700 million will remain in the Deposit Fund
and continue to accrue interest.
If the company ultimately prevails on the two remaining
issues in the Tax Court and the Aramco Advantage issue, the
amount remaining in the Deposit Fund will be refunded to the
company, with interest. The company believes that even if the
remaining two issues in the Tax Court are resolved in whole
or part adversely to the company, a substantial portion of
the amount remaining in the Deposit Fund will be available
for refund, assuming continued success on the Aramco
Advantage issue.
In the company's opinion, while it is impossible to ascer-
tain the ultimate legal and financial liability with respect to the
above-mentioned and other contingent liabilities and commit-
ments, including lawsuits, claims, guarantees, taxes and regula-
tions, the aggregate amount of such liability in excess of financial
reserves, together with deposits and prepayments made against
disputed tax claims, is not anticipated to be materially important
in relation to the consolidated financial position or results of
operations of Texaco Inc. and its subsidiaries.
Note 19.
Settlement of
Louisiana Royalties
Issues
On February 22, 1994, the U.S. District Court for the Middle
District of Louisiana approved a global settlement of the suit
which had been initiated in 1987, in which the State of Louisiana
had sought payment of alleged underpaid royalties on State gas
leases, interest, cancellation of the leases, double royalties and
attorneys' fees. The settlement, for which sufficient financial
reserves had been established, provides for payments by Texaco
totaling $250 million, $150 million of which will be paid on
February 28, 1994, and two $50 million payments to be made
over the next two years. Texaco also agreed to cause $152 million
to be spent over the next five years on activity and investment
affecting state-owned oil and gas properties in which Texaco has
interests. Texaco and the State exchanged comprehensive releases
of all pending and related claims.
Texaco Inc. 1993 Annual Report to Stockholders page 53.
Notes to Consolidated Financial Statements
continued
Note 20.
Financial Data by
Geographic Area
Texaco Inc. and its subsidiary companies, together with affiliates,
represent a vertically integrated enterprise principally engaged in the
worldwide exploration for and production, transportation, refining
and marketing of crude oil, natural gas and petroleum products, as
well as nonpetroleum operations such as insurance and alternate
energy activities. Intergeographic sales and services shown are based
on prices which are generally representative of market prices or
arm's-length negotiated prices.
Operating profit represents total sales and services as shown
on the Statement of Consolidated Income less operating costs and
expenses, net of income taxes. Corporate/nonoperating includes
interest income and expense, dividends, general corporate expenses
and other nonoperating items, net of income taxes. Equity in income
or losses of partnership joint-venture companies is reflected net of
taxes, since this income is directly taxable to Texaco.
Identifiable assets are those from continuing operations
which can be directly identified or associated with operations
which have been geographically segregated. Net assets of discon-
tinued operations (see Note 3) for the year 1993 and identifiable
assets of discontinued operations for the years 1992 and 1991
are reflected in corporate/nonoperating to conform to the
presentation of net income (loss) from discontinued operations.
Investments in affiliates pertain to those affiliates which are
accounted for on the equity method. Investments in affiliates
relating to discontinued operations are reflected in corporate/
nonoperating. Corporate assets include cash and cash invest-
ments, as well as receivables, properties, plant and equipment
and other assets which are corporate in nature.
<TABLE>
<CAPTION>
Other Other
United Western Eastern Corporate/
Millions of dollars States Hemisphere Europe Hemisphere Nonoperating* Consolidated
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C> <C>
Year 1993 Sales and services
Outside $17,417 $4,245 $ 8,416 $3,167 $ -- $33,245
Intergeographic 289 241 725 43 (1,298) --
------- ------ ------- ------ -------- -------
Total sales and services $17,706 $4,486 $ 9,141 $3,210 $ (1,298) $33,245
------- ------ ------- ------ -------- -------
Net income (loss)
Operating profit $ 562 $ 107 $ 245 $ 24 $ -- $ 938
Equity in income of affiliates 146 8 8 368 -- 530
Corporate/nonoperating -- -- -- -- (209) (209)
------- ------ ------- ------ -------- -------
Net income (loss) before discontinued
operations 708 115 253 392 (209) 1,259
Discontinued operations -- -- -- -- (191) (191)
------- ------ ------- ------ -------- -------
Total net income (loss) $ 708 $ 115 $ 253 $ 392 $ (400) $ 1,068
------- ------ ------- ------ -------- -------
Identifiable assets $12,603 $1,435 $ 4,556 $1,107 $ -- $19,701
Net assets of discontinued operations -- -- -- -- 1,180 1,180
Investments in affiliates 1,171 29 388 2,153 -- 3,741
Corporate assets -- -- -- -- 2,004 2,004
------- ------ ------- ------ -------- -------
Total assets $13,774 $1,464 $ 4,944 $3,260 $ 3,184 $26,626
======= ====== ======= ====== ======== =======
Year 1992 Sales and services
Outside $18,651 $4,023 $ 9,295 $3,718 $ -- $35,687
Intergeographic 223 233 695 152 (1,303) --
------- ------ ------- ------ -------- -------
Total sales and services $18,874 $4,256 $ 9,990 $3,870 $ (1,303) $35,687
------- ------ ------- ------ -------- -------
Net income (loss)
Operating profit (loss) $ 714 $ (39) $ 300 $ 66 $ -- $ 1,041
Equity in income of affiliates 95 8 22 341 -- 466
Corporate/nonoperating -- -- -- -- (469) (469)
------- ------ ------- ------ -------- -------
Net income (loss) before discontinued
operations and cumulative effect of
accounting changes 809 (31) 322 407 (469) 1,038
Discontinued operations -- -- -- -- (26) (26)
Cumulative effect of accounting changes -- -- -- -- (300) (300)
------- ------ ------- ------ -------- -------
Total net income (loss) $ 809 $ (31) $ 322 $ 407 $ (795) $ 712
------- ------ ------- ------ -------- -------
Identifiable assets $12,596 $1,452 $ 4,093 $1,147 $ -- $19,288
Identifiable assets of discontinued
operations -- -- -- -- 1,409 1,409
Investments in affiliates 1,128 29 387 1,921 3 3,468
Corporate assets -- -- -- -- 1,827 1,827
------- ------ ------- ------ -------- -------
Total assets $13,724 $1,481 $ 4,480 $3,068 $ 3,239 $25,992
======= ====== ======= ====== ======== =======
Year 1991 Sales and services
Outside $19,698 $3,868 $ 9,429 $3,117 $ -- $36,112
Intergeographic 501 65 770 127 (1,463) --
------- ------ ------- ------ -------- -------
Total sales and services $20,199 $3,933 $10,199 $3,244 $ (1,463) $36,112
------- ------ ------- ------ -------- -------
Net income (loss)
Operating profit $ 614 $ 173 $ 343 $ 71 $ -- $ 1,201
Equity in income of affiliates 158 5 17 428 -- 608
Corporate/nonoperating -- -- -- -- (517) (517)
------- ------ ------- ------ -------- -------
Net income (loss) before discontinued
operations 772 178 360 499 (517) 1,292
Discontinued operations -- -- -- -- 2 2
------- ------ ------- ------ -------- -------
Total net income (loss) $ 772 $ 178 $ 360 $ 499 $ (515) $ 1,294
------- ------ ------- ------ -------- -------
Identifiable assets $13,062 $1,533 $ 3,966 $1,050 $ -- $19,611
Identifiable assets of discontinued
operations -- -- -- -- 1,326 1,326
Investments in affiliates 1,183 29 366 1,748 3 3,329
Corporate assets -- -- -- -- 1,916 1,916
------- ------ ------- ------ -------- -------
Total assets $14,245 $1,562 $ 4,332 $2,798 $ 3,245 $26,182
======= ====== ======= ====== ======== =======
<FN>
*Includes intergeographic sales and services eliminations.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 54.
Report of Management
The consolidated financial statements are the responsibility of the
management of Texaco Inc. They were prepared in accordance with
generally accepted accounting principles and are, in part, based on
certain estimates and judgments, as required. Other information con-
tained in this Annual Report is presented on a basis consistent with
the financial statements.
To meet these responsibilities, it is Texaco's long-established cor-
porate policy to maintain a control conscious environment and an
effective internal control system throughout its worldwide operations.
Included in this system are Corporate Conduct Guidelines which require
that all employees maintain the highest level of ethical standards. The
internal control system provides reasonable assurance that assets are
safeguarded and that financial records are accurately and objectively
maintained, thus serving as a reliable basis for the preparation of
financial statements. This system is augmented by written policies
and procedures and an organizational structure that provides for an
appropriate division of responsibility. Management personnel are
required to formally certify each year that an effective internal
control system is maintained. The internal controls are complemented
by Texaco's internal auditors who conduct regular and extensive in-
ternal audits throughout the company. In addition, the independent
public accounting firm of Arthur Andersen & Co. is engaged to provide
an objective, independent audit of the company's financial state-
ments. Their accompanying report is based on an audit conducted in
accordance with generally accepted auditing standards, which included
obtaining a sufficient understanding of the company's internal con-
trols to plan their audit and determine the nature, timing and extent
of audit tests to be performed. The appointment of the independent
auditors is presented to the stockholders for approval at each Annual
Meeting of the Stockholders.
The Board of Directors of Texaco Inc. maintains an Audit Committee
which has been in place since 1939. This Committee, currently com-
prised of five non-employee Directors, met two times in 1993.
Depending on the nature of the matters under review, the independent
auditors, as well as certain officers and employees of the company,
may attend all or part of a meeting. The Committee reviews and
evaluates the company's accounting policies and reporting practices,
internal auditing, internal controls, security procedures and other
matters deemed appropriate. The Audit Committee also reviews the
performance of Arthur Andersen & Co. in their audit of Texaco's
financial statements and evaluates their independence and pro-
fessional competence, as well as the scope of their audit. Both the
internal and independent auditors have unrestricted access to the
Audit Committee to discuss the results of their audits and the
quality of the company's financial reporting and internal control
system.
(Alfred C. DeCrane Jr.)
Alfred C. DeCrane, Jr.
Chairman of the Board and Chief Executive Officer
(Allen J. Krowe)
Allen J. Krowe
Vice Chairman and Chief Financial Officer
(Patrick J. Lynch)
Patrick J. Lynch
Vice President and Comptroller
February 24, 1994
Report of Independent Public Accountants
ARTHUR ANDERSEN & CO.
To the Stockholders, Texaco Inc.:
We have audited the accompanying consolidated balance sheet of Texaco
Inc. (a Delaware corporation) and subsidiary companies as of December
31, 1993 and 1992, and the related statements of consolidated income,
retained earnings, stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1993. These finan-
cial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial state-
ments based on our audits.
We conducted our audits in accordance with generally accepted audit-
ing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reason-
able basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Texaco
Inc. and subsidiary companies as of December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the Consolidated Financial Statements,
effective January 1, 1992, the company changed its methods of
accounting for income taxes and postretirement benefits other than
pensions.
February 24, 1994
New York, N.Y.
(Arthur Andersen & Co.)
Texaco Inc. 1993 Annual Report to Stockholders page 55.
Supplemental Oil and Gas Information
The following information for Texaco Inc. and consolidated
subsidiaries, as well as Texaco's equity in P.T. Caltex Pacific
Indonesia (CPI), a 50%-owned affiliate operating in Other
Eastern Hemisphere areas, is presented in accordance
with Statement of Financial Accounting Standards No. 69,
"Disclosures about Oil and Gas Producing Activities" (SFAS 69).
Estimated Proved Reserves
Volumes reported for proved liquid and gas reserves are based
upon reasonable estimates. These estimates are consistent with
current knowledge of the characteristics and production history of
the reserves. Although they are based upon sound geological and
engineering principles, by their very nature, such estimates are
subject to upward and downward revision as additional informa-
tion about producing fields and technology becomes available.
Reported volumes include only such reserves as can reasonably
be classified as proved. Net reserves represent the volumes esti-
mated to be available after deduction of the royalty interests of
others from gross reserves. In addition to reported reserves,
Texaco has a large inventory of potential reserves that will add
to the company's proved reserve base as future investments are
made in exploration and development programs.
CPI's estimated liquids reserves include volumes projected to
be recovered as reimbursement for a portion of costs incurred.
Accordingly, these volumes will fluctuate annually with the price
of crude oil. CPI's natural gas production is all consumed in
operations.
Annually, Texaco Inc. provides information concerning oil
and gas reserves to the U.S. Department of Energy and to certain
governmental bodies. Such information is compatible with the
information presented in this Annual Report.
During 1993, reserve increases, including equity and exclud-
ing purchases and sales, replaced 112% of worldwide combined
oil and gas production. New fields, new sands, new plants, exten-
sions, and improved recovery accounted for 67% of these reserve
increases. During the three-year period 1991-1993, Texaco's reserve
additions were 101% of worldwide production. During the five-
year period 1989-1993, reserve additions were 106% of worldwide
production.
In the United States during 1993, extensions, discoveries, and
other additions of liquids and natural gas mainly reflect volumes
added from the Ewing Bank Block 873 offshore Louisiana and
from drilling in Texas, Utah, Wyoming and offshore Louisiana.
New and planned CO2 and waterflood projects in Louisiana,
New Mexico, and Texas also added reserves. Significant gas
reserve volumes were added from the drilling at the Carthage
and Brookeland fields in Texas where the productive limits
were extended by exploiting 3D Seismic technology to enhance
Texaco's resource base. Upward reserve revisions resulted mainly
from improved performance at various fields in California,
Louisiana, New Mexico and Texas. Liquids and natural gas
reserves sales of minerals-in-place were principally comprised
of numerous smaller economically marginal properties which
did not fit into Texaco's business.
Outside the United States during 1993, significant gas
reserves were added in the offshore Trinidad Dolphin Field in
the Other Western Hemisphere area. European liquid reserve
increases reflect additional volumes at the Captain Field offshore
in the United Kingdom sector of the North Sea. Other liquid
reserve increases resulted from upward revisions arising from
future additional development at the Tyra Field and improved
recovery from utilizing horizontal drilling techniques at the Dan
Field--both offshore in the Danish sector of the North Sea. Gas
reserve additions mainly reflect volumes added from the Orwell
Field offshore in the United Kingdom sector of the North Sea.
Upward revisions to gas reserves reflect the agreement reached
on a new gas sales contract through 2012 covering the Dan, Tyra,
and Gorm Fields in the Danish sector of the North Sea. Affiliate
liquid reserves in Indonesia increased due to improved recovery
from steam flooding at the Duri Field and improved performance
at the Minas Field which resulted in upward revisions.
During 1994, Texaco expects that net production of natural
gas will approximate 2,180 million cubic feet per day. This
estimate is based upon past performance and on the assumption
that such gas quantities can be produced under operating and
economic conditions existing at December 31, 1993. Possible
future changes in prices or world economic conditions were not
factored into this estimate. These expected production volumes,
together with normal related supply arrangements, are sufficient
to meet anticipated delivery requirements under contractual
arrangements. Texaco's proved natural gas reserves in the United
States that are covered by long-term sales contracts were approxi-
mately 42% in 1993, 37% in 1992 and 33% in 1991.
Texaco Inc. 1993 Annual Report to Stockholders page 56.
<TABLE>
Estimated Net Proved Developed and Undeveloped Reserves
of Crude Oil
<CAPTION>
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------------ --------------- -------
Other Other Affiliate
United Western Eastern -Other Eastern
Millions of barrels States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1990 1,399 129 219 380 2,127 395 2,522
Increase (decrease) attributable to:
Extensions, discoveries and other additions 22 3 26 11 62 2 64
Improved recovery 53 -- 1 -- 54 8 62
Revisions of previous estimates 26 1 21 25 73 36 109
Purchases of minerals-in-place -- 1 -- -- 1 -- 1
Sales of minerals-in-place (6) -- -- -- (6) -- (6)
Production (135) (34) (28) (20) (217) (44) (261)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1991* 1,359 100 239 396 2,094 397 2,491
Increase (decrease) attributable to:
Extensions, discoveries and other additions 14 2 4 11 31 40 71
Improved recovery 32 -- 19 -- 51 35 86
Revisions of previous estimates 37 (2) 19 17 71 4 75
Purchases of minerals-in-place -- 1 -- -- 1 -- 1
Sales of minerals-in-place (10) -- -- -- (10) -- (10)
Production (127) (16) (25) (30) (198) (44) (242)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1992* 1,305 85 256 394 2,040 432 2,472
Increase (decrease) attributable to:
Extensions, discoveries and other additions 36 1 50 8 95 1 96
Improved recovery 37 -- 9 -- 46 52 98
Revisions of previous estimates 37 (2) 3 14 52 18 70
Purchases of minerals-in-place 1 -- -- -- 1 -- 1
Sales of minerals-in-place (15) (3) (5) -- (23) -- (23)
Production (123) (7) (28) (36) (194) (47) (241)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1993* 1,278 74 285 380 2,017 456 2,473
===== ===== ===== ===== ===== ===== =====
<FN>
*Includes net proved developed reserves
As of December 31, 1991 1,111 86 113 359 1,669 281 1,950
As of December 31, 1992 1,047 73 115 350 1,585 319 1,904
As of December 31, 1993 991 67 123 347 1,528 354 1,882
===== ===== ===== ===== ===== ===== =====
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 57.
Supplemental Oil and Gas Information
continued
<TABLE>
Estimated Net Proved Developed and Undeveloped Reserves
of Natural Gas Liquids
<CAPTION>
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------------ --------------- -------
Other Other Affiliate
United Western Eastern -Other Eastern
Millions of barrels States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1990 201 -- 23 -- 224 7 231
Increase (decrease) attributable to:
Extensions, discoveries and other additions 4 -- 3 -- 7 -- 7
Revisions of previous estimates 14 -- 2 -- 16 (1) 15
Purchases of minerals-in-place -- 1 -- -- 1 -- 1
Production (31) -- (2) -- (33) (1) (34)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1991* 188 1 26 -- 215 5 220
Increase (decrease) attributable to:
Extensions, discoveries and other additions 4 -- -- -- 4 1 5
Improved recovery 1 -- -- -- 1 -- 1
Revisions of previous estimates 34 1 1 -- 36 -- 36
Sales of minerals-in-place (1) -- -- -- (1) -- (1)
Production (31) -- (2) -- (33) -- (33)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1992* 195 2 25 -- 222 6 228
Increase (decrease) attributable to:
Extensions, discoveries and other additions 5 -- -- -- 5 -- 5
Revisions of previous estimates 15 (1) 3 -- 17 (1) 16
Sales of minerals-in-place (3) -- -- -- (3) -- (3)
Production (32) -- (2) -- (34) -- (34)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1993* 180 1 26 -- 207 5 212
===== ===== ===== ===== ===== ===== =====
<FN>
*Includes net proved developed reserves
As of December 31, 1991 184 1 9 -- 194 4 198
As of December 31, 1992 189 1 8 -- 198 5 203
As of December 31, 1993 174 1 7 -- 182 5 187
===== ===== ===== ===== ===== ===== =====
Grand total reserves
of crude oil and
natural gas liquids
As of December 31, 1991 1,547 101 265 396 2,309 402 2,711
As of December 31, 1992 1,500 87 281 394 2,262 438 2,700
As of December 31, 1993 1,458 75 311 380 2,224 461 2,685
===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
Estimated Net Proved Developed and Undeveloped Reserves
of Natural Gas
<CAPTION>
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------------ --------------- -------
Other Other Affiliate
United Western Eastern -Other Eastern
Billions of cubic feet States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1990 4,849 588 477 84 5,998 140 6,138
Increase (decrease) attributable to:
Extensions, discoveries and other additions 491 9 228 2 730 15 745
Improved recovery 7 -- -- -- 7 -- 7
Revisions of previous estimates 160 54 26 -- 240 10 250
Purchases of minerals-in-place 1 83 -- -- 84 -- 84
Sales of minerals-in-place (89) -- (37) -- (126) -- (126)
Production (722) (51) (30) (2) (805) (16) (821)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1991** 4,697 683 664 84 6,128 149 6,277
Increase (decrease) attributable to:
Extensions, discoveries and other additions 230 14 2 4 250 20 270
Improved recovery 29 -- 5 -- 34 7 41
Revisions of previous estimates 332 5 3 (3) 337 (1) 336
Purchases of minerals-in-place 1 23 -- -- 24 -- 24
Sales of minerals-in-place (91) (15) -- -- (106) -- (106)
Production (672) (55) (26) (2) (755) (17) (772)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1992** 4,526 655 648 83 5,912 158 6,070
Increase (decrease) attributable to:
Extensions, discoveries and other additions 344 128 110 1 583 -- 583
Improved recovery 26 6 4 -- 36 -- 36
Revisions of previous estimates 257 -- 149 (37) 369 -- 369
Purchases of minerals-in-place 2 4 -- 1 7 -- 7
Sales of minerals-in-place (174) (14) -- (1) (189) -- (189)
Production (652) (57) (36) (3) (748) (18) (766)
----- ----- ----- ----- ----- ----- -----
As of December 31, 1993** 4,329 722 875 44 5,970 140 6,110
===== ===== ===== ===== ===== ===== =====
<FN>
**Includes net proved developed reserves
As of December 31, 1991 4,325 497 234 73 5,129 134 5,263
As of December 31, 1992 4,064 589 216 74 4,943 150 5,093
As of December 31, 1993 3,971 575 362 41 4,949 128 5,077
===== ===== ===== ===== ===== ===== =====
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 58.
<TABLE>
Capitalized Costs
Capitalized costs represent cumulative expenditures for proved and
unproved properties and support equipment and facilities used in
oil and gas exploration and producing operations together with
related accumulated depreciation, depletion and amortization (in-
cluding provisions for restoration and abandonment costs, net
of such costs expended to date).
<CAPTION>
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------------ --------------- -------
Other Other Affiliate
United Western Eastern -Other Eastern
Millions of dollars States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1993
Proved properties $18,442 $ 549 $3,232 $1,094 $23,317 $ 694 $24,011
Unproved properties 434 23 258 80 795 356 1,151
Support equipment and facilities 373 48 114 90 625 439 1,064
------- ----- ------ ------ ------- ------- -------
Gross capitalized costs 19,249 620 3,604 1,264 24,737 1,489 26,226
Accumulated depreciation,
depletion and amortization (12,837) (394) (2,018) (643) (15,892) (629) (16,521)
------- ----- ------ ------ ------- ------- -------
Net capitalized costs $ 6,412 $ 226 $1,586 $ 621 $ 8,845 $ 860 $ 9,705
======= ===== ====== ====== ======= ======= =======
As of December 31, 1992
Proved properties $18,779 $ 528 $3,059 $ 967 $23,333 $ 622 $23,955
Unproved properties 510 31 246 79 866 330 1,196
Support equipment and facilities 399 72 112 76 659 414 1,073
------- ----- ------ ------ ------- ------- -------
Gross capitalized costs 19,688 631 3,417 1,122 24,858 1,366 26,224
Accumulated depreciation,
depletion and amortization (12,836) (378) (2,012) (645) (15,871) (567) (16,438)
------- ----- ------ ------ ------- ------- -------
Net capitalized costs $ 6,852 $ 253 $1,405 $ 477 $ 8,987 $ 799 $ 9,786
======= ===== ====== ====== ======= ======= =======
</TABLE>
Costs Incurred
Costs incurred represent amounts capitalized or charged against
income as expended. Property acquisition costs include costs to
purchase or lease proved and unproved properties. Exploration costs
include the costs of geological and geophysical work, carrying and
retaining undeveloped properties and drilling and equipping ex-
ploratory wells. Development costs include expenditures to drill
and equip development wells; to provide improved recovery systems;
to construct facilities for extraction, treating, gathering and
storing liquids and natural gas; and to maintain producing fac-
ilities for existing developed reserves. Exploration and development
costs include applicable depreciation of support equipment and fac-
ilities used in those activities, rather than the expenditures to
acquire such assets.
<TABLE>
<CAPTION>
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------------ --------------- -------
Other Other Affiliate
United Western Eastern -Other Eastern
Millions of dollars States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended December 31, 1993
Proved property acquisition $ 15 $ 2 $ -- $ 3 $ 20 $ -- $ 20
Unproved property acquisition 15 1 -- 8 24 -- 24
Exploration 157 9 141 111 418 10 428
Development 690 29 299 119 1,137 137 1,274
------ ---- ---- ---- ------ ---- ------
Total $ 877 $ 41 $440 $241 $1,599 $147 $1,746
====== ==== ==== ==== ====== ==== ======
For the year ended December 31, 1992
Proved property acquisition $ 9 $ 3 $ -- $ -- $ 12 $ -- $ 12
Unproved property acquisition 11 -- -- 7 18 -- 18
Exploration 162 55 85 114 416 9 425
Development 639 39 485 87 1,250 171 1,421
------ ---- ---- ---- ------ ---- ------
Total $ 821 $ 97 $570 $208 $1,696 $180 $1,876
====== ==== ==== ==== ====== ==== ======
For the year ended December 31, 1991
Proved property acquisition $ 11 $ 39 $ -- $ -- $ 50 $ -- $ 50
Unproved property acquisition 20 6 -- -- 26 -- 26
Exploration 193 69 213 123 598 11 609
Development 782 54 397 66 1,299 164 1,463
------ ---- ---- ---- ------ ---- ------
Total $1,006 $168 $610 $189 $1,973 $175 $2,148
====== ==== ==== ==== ====== ==== ======
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 59.
Supplemental Oil and Gas Information
continued
Results of Operations--Oil and Gas Exploration and Producing Activities
The results below solely relate to Texaco's exploration for and net
production of liquids and natural gas. They exclude operating earnings
related to the sale of purchased oil and gas, equity earnings of cer-
tain affiliates, liquids and gas trading activity, general overhead,
and miscellaneous operating income. Related estimated income tax ex-
pense was computed by applying the statutory income tax rates, including
state and local income taxes, to the pre-tax results of operations and
reflects applicable credits and allowances.
<TABLE>
<CAPTION>
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------------ --------------- -------
Other Other Affiliate
United Western Eastern -Other Eastern
Millions of dollars States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended December 31, 1993
Gross revenues from:
Sales and transfers to affiliates
and to divisions and subsidiaries
within Texaco $2,945 $ -- $ 184 $ 457 $3,586 $ 486 $4,072
Sales to unaffiliated entities 464 130 350 98 1,042 23 1,065
Production costs (1,203) (50) (252) (205) (1,710) (146) (1,856)
Exploration expenses (102) (13) (76) (92) (283) (9) (292)
Depreciation, depletion and amortization (967) (28) (164) (93) (1,252) (64) (1,316)
Other expenses (213) (11) -- (21) (245) (4) (249)
------ ----- ------ ------ ------ ----- ------
Results before estimated income taxes 924 28 42 144 1,138 286 1,424
Estimated income taxes (303) (23) (6) (115) (447) (152) (599)
------ ----- ------ ------ ------ ----- ------
Net results $ 621 $ 5 $ 36 $ 29 $ 691 $ 134 $ 825
====== ===== ====== ====== ====== ===== ======
For the year ended December 31, 1992
Gross revenues from:
Sales and transfers to affiliates
and to divisions and subsidiaries
within Texaco $3,136 $ 55 $ 151 $ 495 $3,837 $ 536 $4,373
Sales to unaffiliated entities 440 167 389 12 1,008 19 1,027
Production costs (1,281) (87) (261) (173) (1,802) (138) (1,940)
Exploration expenses (107) (55) (73) (102) (337) (8) (345)
Depreciation, depletion and amortization (975) (41) (104) (72) (1,192) (53) (1,245)
Other expenses (244) (26) -- (22) (292) (20) (312)
------ ----- ------ ------ ------ ----- ------
Results before estimated income taxes 969 13 102 138 1,222 336 1,558
Estimated income taxes (321) (26) 2 (125) (470) (182) (652)
------ ----- ------ ------ ------ ----- ------
Net results $ 648 $ (13) $ 104 $ 13 $ 752 $ 154 $ 906
====== ===== ====== ====== ====== ===== ======
For the year ended December 31, 1991
Gross revenues from:
Sales and transfers to affiliates
and to divisions and subsidiaries
within Texaco $3,315 $ 187 $ 164 $ 373 $4,039 $ 563 $4,602
Sales to unaffiliated entities 460 209 455 37 1,161 20 1,181
Production costs (1,405) (115) (290) (80) (1,890) (129) (2,019)
Exploration expenses (115) (61) (142) (108) (426) (10) (436)
Depreciation, depletion and amortization (979) (50) (107) (51) (1,187) (55) (1,242)
Other expenses (209) (12) (3) (97) (321) (11) (332)
------ ----- ------ ------ ------ ----- ------
Results before estimated income taxes 1,067 158 77 74 1,376 378 1,754
Estimated income taxes (350) (154) 15 (67) (556) (212) (768)
------ ----- ------ ------ ------ ----- ------
Net results $ 717 $ 4 $ 92 $ 7 $ 820 $ 166 $ 986
====== ===== ====== ====== ====== ===== ======
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 60.
Average Sales Prices and Production Costs--Per Unit
Average sales prices per unit are based upon the gross revenues
reported in the Results of Operations--Oil and Gas Exploration and
Producing Activities table. Average production costs per com-
posite barrel includes related depreciation, depletion and
amortization. It also includes cash lifting costs, excluding
payments for royalties and income taxes. However, users of this
information are cautioned that such income taxes and royalties
substantially add to the total cost of producing operations and
substantially reduce the profitability and cash flow from such
operations.
<TABLE>
<CAPTION>
Average sales prices
----------------------------------------------------------------------------
1993 1992 1991
------------------------- ------------------------ -----------------------
Crude oil Natural Crude oil Natural Crude oil Natural
and natural gas per and natural gas per and natural gas per Average production costs
gas liquids thousand gas liquids thousand gas liquids thousand (per composite barrel)
per barrel cubic feet per barrel cubic feet per barrel cubic feet 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $13.61 $2.07 $15.50 $1.73 $16.19 $1.54 $4.60 $4.77 $4.93
Other Western Hemisphere 11.11 .89 11.21 .78 10.33 .99 3.06 3.69 2.84
Europe 16.06 2.33 18.69 2.36 19.48 2.19 10.11 8.56 8.27
Other Eastern Hemisphere 15.18 2.58 17.83 2.89 18.90 2.78 5.49 6.17 3.69
Affiliate--Other Eastern
Hemisphere 13.45 -- 14.21 -- 15.38 -- 3.21 3.19 3.11
====== ===== ====== ===== ====== ===== ===== ===== =====
</TABLE>
Standardized Measure of Discounted Future Net Cash Flows
The following table shows estimated future net cash flows from
future production of net developed and undeveloped reserves of
crude oil, natural gas liquids and natural gas; therefore, re-
serves exclude the royalty interests of others. As prescribed by
SFAS 69, such future net cash flows were estimated using year-end
prices, costs, and tax rates, and, a 10% annual discount factor.
Future production costs are based upon current year costs used
uniformly throughout the life of the reserves. Future development
costs include restoration and abandonment costs, net of residual
salvage value. Estimated future income taxes were computed by applying
the statutory income tax rates, including state and local taxes,
to the future pre-tax net cash flows less appropriate tax de-
ductions, giving effect to tax credits. Effective tax rates were
used for certain foreign areas.
Texaco is presenting this information in accordance with the
requirements of SFAS 69 and has exercised all due care in develop-
ing the data. It is necessary to caution investors and other users
of the information to avoid its simplistic use. While the intent of
this disclosure is to provide a common benchmark to help financial
statement users project future cash flows and compare companies,
users should note the following: data in this table excludes the
effect of future changes in prices, costs, and tax rates which past
experience indicates will occur. Such future changes could signifi-
cantly impact the disclosed discounted net cash flows. The data also
excludes the estimated net cash flows from reserves that are yet to
be proved. Extensive judgement is used to estimate the timing of
production and future costs over the remaining life of the reserves
utilized in developing this disclosure. Values can be distorted by
the use of year-end prices that may reflect seasonal factors or un-
predictable distortions from wars and other significant world events.
For all the preceding reasons, this disclosure is not necessarily indica-
tive of Texaco's perception of the future cash flows to be derived from
underground reserves.
Texaco Inc. 1993 Annual Report to Stockholders page 61.
Supplemental Oil and Gas Information
continued
Standardized Measure of Discounted Future Net Cash Flows
<TABLE>
<CAPTION>
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------------ --------------- -------
Other Other Affiliate
United Western Eastern -Other Eastern
Millions of dollars States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1993
Future cash inflows from sale of oil and gas $24,897 $1,373 $5,444 $4,044 $35,758 $4,113 $39,871
Future production costs (10,678) (774) (3,023) (1,879) (16,354) (1,573) (17,927)
Future development costs (2,831) (166) (1,060) (418) (4,475) (636) (5,111)
Future income tax expense (3,060) (156) (487) (1,228) (4,931) (1,009) (5,940)
------- ------ ------ ------ ------- ------ -------
Net future cash flows before discount 8,328 277 874 519 9,998 895 10,893
10% discount for timing of future cash flows (3,231) (113) (305) (168) (3,817) (349) (4,166)
------- ------ ------ ------ ------- ------ -------
Standardized measure: discounted future
net cash flows $ 5,097 $ 164 $ 569 $ 351 $ 6,181 $ 546 $ 6,727
======= ====== ====== ====== ======= ====== =======
As of December 31, 1992
Future cash inflows from sale of oil and gas $31,609 $1,669 $5,917 $5,485 $44,680 $5,154 $49,834
Future production costs (11,487) (827) (2,541) (1,615) (16,470) (1,780) (18,250)
Future development costs (3,128) (120) (959) (400) (4,607) (631) (5,238)
Future income tax expense (5,173) (303) (966) (2,476) (8,918) (1,399) (10,317)
------- ------ ------ ------- ------- ------ -------
Net future cash flows before discount 11,821 419 1,451 994 14,685 1,344 16,029
10% discount for timing of future cash flows (4,741) (176) (517) (357) (5,791) (522) (6,313)
------- ------ ------ ------ ------- ------ -------
Standardized measure: discounted future
net cash flows $ 7,080 $ 243 $ 934 $ 637 $ 8,894 $ 822 $ 9,716
======= ====== ====== ====== ======= ====== =======
As of December 31, 1991
Future cash inflows from sale of oil and gas $29,908 $1,820 $6,351 $5,579 $43,658 $4,752 $48,410
Future production costs (12,157) (814) (2,258) (1,935) (17,164) (1,423) (18,587)
Future development costs (3,837) (147) (1,312) (390) (5,686) (502) (6,188)
Future income tax expense (4,075) (481) (1,152) (2,334) (8,042) (1,583) (9,625)
------- ------ ------ ------ ------- ------ -------
Net future cash flows before discount 9,839 378 1,629 920 12,766 1,244 14,010
10% discount for timing of future cash flows (3,817) (164) (655) (345) (4,981) (423) (5,404)
------- ------ ------ ------ ------- ------ -------
Standardized measure: discounted future
net cash flows $ 6,022 $ 214 $ 974 $ 575 $ 7,785 $ 821 $ 8,606
======= ====== ====== ====== ======= ====== =======
</TABLE>
<TABLE>
Changes in the Standardized Measure of
Discounted Future Net Cash Flows
<CAPTION>
Texaco Inc. and Consolidated Total Including Equity in
Subsidiaries--Worldwide Affiliate--Other Eastern Hemisphere
----------------------------------------------------------------------------------
Millions of dollars 1993 1992 1991 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Standardized measure--Beginning of year $8,894 $7,785 $12,968 $9,716 $8,606 $14,544
Sales of minerals-in-place (211) (115) (138) (211) (115) (138)
------ ------ ------- ------ ------ -------
8,683 7,670 12,830 9,505 8,491 14,406
Changes in ongoing oil and gas
operations:
Sales and transfers of produced
oil and gas, net of estimated
future production costs (2,918) (3,043) (3,310) (3,281) (3,460) (3,764)
Net changes in prices, production
and development costs (5,512) 1,182 (11,537) (6,001) 788 (13,301)
Extensions, discoveries and
improved recovery, less related
costs 955 541 830 963 763 777
Development costs incurred during
the period 1,137 1,250 1,299 1,274 1,421 1,463
Timing of production and other
changes (488) (551) 83 (564) (488) (45)
Revisions of previous quantity
estimates 725 1,129 865 787 1,111 1,025
Purchases of minerals-in-place 6 12 12 6 12 12
Accretion of discount 1,398 1,234 2,203 1,566 1,420 2,561
Net change in future income taxes 2,195 (530) 4,510 2,472 (342) 5,472
------ ------ ------- ------ ------ ------
Standardized measure--End of year $6,181 $8,894 $ 7,785 $6,727 $9,716 $8,606
====== ====== ======= ====== ====== ======
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 62.
Selected Financial Data
<TABLE>
Selected Quarterly Financial Data*
<CAPTION>
1993 1992**
------------------------------------- ----------------------------------
First Second Third Fourth First Second Third Fourth
Millions of dollars Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
--------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues Sales and services $8,061 $8,591 $8,276 $8,317 $8,085 $8,943 $9,483 $9,176
Equity in income of affiliates,
income from dividends, interest,
asset sales and other 172 182 214 258 193 144 221 285
------ ------ ------ ------ ------ ------ ------ ------
8,233 8,773 8,490 8,575 8,278 9,087 9,704 9,461
------ ------ ------ ------ ------ ------ ------ ------
Deductions Purchases and other costs 5,957 6,380 6,167 6,163 6,003 6,844 7,228 6,886
Operating expenses 708 754 835 789 714 726 776 856
Selling, general and administrative
expenses 402 418 524 439 416 402 440 534
Maintenance and repairs 98 96 102 122 109 105 110 122
Exploratory expenses 55 60 161 76 78 84 89 98
Depreciation, depletion and
amortization 375 386 401 406 387 389 366 394
Interest expense, taxes other than
income taxes and minority interest 253 257 270 245 256 264 243 262
------ ------ ------ ------ ------ ------ ------ ------
7,848 8,351 8,460 8,240 7,963 8,814 9,252 9,152
------ ------ ------ ------ ------ ------ ------ ------
Income from continuing operations
before income taxes and cumulative
effect of accounting changes 385 422 30 335 315 273 452 309
Provision for (benefit from) income
taxes 104 110 (287) (14) 92 124 127 (32)
------ ------ ------ ------ ------ ------ ------ ------
Net income from continuing operations,
before cumulative effect of
accounting changes 281 312 317 349 223 149 325 341
Discontinued operations
Net income (loss) from operations (3) (3) (11) -- 9 2 (9) (28)
Net loss on disposal -- -- (164) (10) -- -- -- --
Cumulative effect of accounting
changes -- -- -- -- (300) -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Net Income (Loss) $ 278 $ 309 $ 142 $ 339 $ (68) $ 151 $ 316 $ 313
====== ====== ====== ====== ====== ====== ====== ======
Per common share (dollars)
Net income (loss) before cumulative
effect of accounting changes
Continuing operations $ .98 $ 1.11 $ 1.13 $ 1.25 $ .77 $ .48 $ 1.16 $ 1.22
Discontinued operations (.01) (.01) (.68) (.04) .03 .01 (.04) (.11)
Cumulative effect of accounting
changes -- -- -- -- (1.16) -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss) $ .97 $ 1.10 $ .45 $ 1.21 $ (.36) $ .49 $ 1.12 $ 1.11
====== ====== ====== ====== ====== ====== ====== ======
<FN>
*Results for 1992 and the first and second quarters of 1993 have been reclassified to separately identify
discontinued operations.
**Results for 1992 reflect the impact of the 1992 adoption of SFAS 106 and SFAS 109 which resulted in a
cumulative after-tax charge of $536 million, or $2.07 per common share, and benefit of $236 million, or
$.91 per common share, respectively, as of January 1, 1992. The combined effects of SFAS 106 and SFAS 109
on results for the first three quarters of 1992 were as follows--increase (decrease): first quarter $32
million or $.12 per share; second quarter, $(94) million, or $(.36) per share; third quarter, $47 million,
or $.18 per share. The SFAS 109 portions of these amounts for the first, second and third quarters of 1992
were $39 million, or $.15 per share; $(87) million, or $(.34) per share; and $53 million, or $.21 per share,
respectively.
See accompanying notes to consolidated financial statements.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 63.
Selected Financial Data
continued
<TABLE>
Five-Year Comparison of Selected Financial Data*
<CAPTION>
Millions of dollars 1993 1992 1991 1990 1989
---------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C>
For the year: Revenues from continuing operations $34,071 $36,530 $37,162 $40,508 $34,209
Net income (loss) before cumulative effect of
accounting changes
Continuing operations $ 1,259 $ 1,038 $ 1,292 $ 1,405 $ 2,106
Discontinued operations (191) (26) 2 45 307
Cumulative effect of accounting changes -- (300) -- -- --
------- ------- ------- ------- -------
Net income $ 1,068 $ 712 $ 1,294 $ 1,450 $ 2,413
------- ------- ------- ------- -------
Per common share (dollars)
Primary net income (loss) before cumulative
effect of accounting changes
Continuing operations $ 4.47 $ 3.63 $ 4.60 $ 5.01 $ 7.93
Discontinued operations (.73) (.10) .01 .17 1.19
Cumulative effect of accounting changes -- (1.16) -- -- --
------- ------- ------- ------- -------
Primary net income $ 3.74 $ 2.37 $ 4.61 $ 5.18 $ 9.12
------- ------- ------- ------- -------
Fully diluted net income (loss) before
cumulative effect of accounting changes
Continuing operations $ 4.43 $ 3.62 $ 4.54 $ 4.92 $ 7.65
Discontinued operations (.71) (.10) .01 .16 1.09
Cumulative effect of accounting changes -- (1.16) -- -- --
------- ------- ------- ------- -------
Fully diluted net income $ 3.72 $ 2.36 $ 4.55 $ 5.08 $ 8.74
------- ------- ------- ------- -------
Dividends $ 3.20 $ 3.20 $ 3.20 $ 3.05 $ 10.00
Total cash dividends paid on common stock $ 828 $ 828 $ 827 $ 793 $ 2,635
At end of year: Total assets $26,626 $25,992 $26,182 $25,975 $25,636
Debt and capital lease obligations
Short-term $ 669 $ 140 $ 1,331 $ 1,516 $ 1,311
Long-term 6,157 6,441 5,173 4,485 4,714
------- ------- ------- ------- -------
Total debt and capital lease obligations $ 6,826 $ 6,581 $ 6,504 $ 6,001 $ 6,025
======= ======= ======= ======= =======
<FN>
*Results have been reclassified to separately identify discontinued operations as appropriate.
See accompanying notes to consolidated financial statements.
</TABLE>
Texaco Inc. 1993 Annual Report to Stockholders page 64.
Investor Information
Stockholder Information
Texaco Inc.'s Form 10-K Report to the Securities and
Exchange Commission for 1993 and a Financial and
Operational Supplement to Texaco's 1993 Annual
Report are available to stockholders and others who
request them.
To obtain copies, please write to Mr. Carl B. Davidson,
Vice President and Secretary, Texaco Inc., 2000
Westchester Avenue, White Plains, New York 10650.
In recognition of Texaco's long-standing commit-
ment to corporate citizenship, the Texaco Foundation was
founded in December 1979 for the purpose of making
charitable contributions in the United States to selected
tax-exempt organizations, particularly in the fields of
higher education, arts and culture, civic and public inter-
est, social betterment, health and the environment. Upon
written request to our White Plains office, the Texaco
Foundation will send a copy of its Annual Report.
Those wishing to receive a report on Texaco's equal
opportunity activities may also do so by writing to Mr.
John D. Ambler, Vice President, Human Resources, at
our White Plains office, requesting a copy of Texaco:
Equal Opportunity--Taking Affirmative Action at Work and
in the Community.
Investor Services Plan
The company's Investor Services Plan provides individu-
als with a variety of innovative and quality stockholder
services--all designed to make investing in Texaco com-
mon stock easy. Enrollment in the Plan is open to anyone
and, even if you are not already a stockholder, your initial
investment can be made directly through the company.
The Plan contains many interesting features such as divi-
dend reinvestment, optional cash investments and custo-
dial service for stock certificates, and is a great way to
start an investment program for family members and
friends.
For a complete informational package, including a
Plan prospectus, call 1-800-283-9785.
Annual Meeting
Texaco Inc.'s Annual Stockholders Meeting will be held
at the Hyatt Regency Tech Center in Denver, Colorado,
on Tuesday, May 10, 1994.
A formal notice of the meeting, together with a
proxy statement and proxy form, will be mailed to
stockholders.
Market Information
The New York Stock Exchange is the principal exchange
on which Texaco Inc. common stock is traded. There
were 201,435 stockholders of record as of February 24,
1994. The high and low sales prices of Texaco Inc.
common stock as quoted on the composite tape of the
New York Stock Exchange during 1993 and 1992 were
as follows:
<TABLE>
<CAPTION>
1993 1992
-------------- --------------
High Low High Low
- -----------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $64.63 $57.63 $63.63 $56.13
Second Quarter 65.75 61.75 66.88 56.50
Third Quarter 68.50 60.63 65.88 61.75
Fourth Quarter 69.50 62.00 64.25 57.75
====== ====== ====== ======
</TABLE>
Common Stock Dividends
Texaco Inc. paid quarterly cash dividends of 80 cents per
share to its common stockholders in 1993 and 1992, for a
total of $3.20 per share for each year.
Stock Transfer Offices
Texaco Inc.
Investor Relations and Shareholder
Services Department
2000 Westchester Avenue
White Plains, New York 10650
Mellon Securities Transfer Services
120 Broadway--33rd Floor
New York, NY 10271
Montreal Trust Company
151 Front Street West--8th Floor
Toronto, Ontario, Canada M5J 2N1
Texaco Inc. 1993 Annual Report to Stockholders page 65.
EXHIBIT 21
--------------------------
Subsidiaries of Registrant
1993
Parents of Registrant
None
Registrant
Texaco Inc.
The operations of the Registrant and its subsidiaries are generally grouped by
divisions. The divisions are comprised of various subsidiaries and affiliates.
The significant subsidiaries included in the consolidated financial statements
of the Registrant, grouped by the division primarily responsible for each, are
as follows:
Organized
under
Texaco U.S.A. the laws of
- ------------- -----------------
Four Star Oil and Gas Company Delaware
Texaco Cogeneration Company Delaware
Texaco Pipeline Inc. Delaware
Texaco Exploration and Production Inc. Delaware
Texaco Refining and Marketing Inc. Delaware
Texaco Refining and Marketing (East) Inc. Delaware
Texaco Trading and Transportation Inc. Delaware
Texaco Europe
- -------------
Texaco A/S Denmark
Texaco Britain Limited England
Texaco Denmark Inc. Delaware
Texaco Investments (Netherlands), Inc. Delaware
Texaco Limited England
Texaco North Sea U.K. Company Delaware
Texaco Latin America/West Africa
- --------------------------------
Texaco Brasil S.A. Produtos de Petroleo Brazil
Texaco Overseas (Nigeria) Petroleum Company Nigeria
Texaco Overseas Petroleum Company Delaware
Texaco Panama Inc. Panama
Texas Petroleum Company New Jersey
Other significant subsidiaries of the Registrant not within
- -----------------------------------------------------------
the above divisions
- -------------------
Heddington Insurance Ltd. Bermuda
Saudi Arabian Texaco Inc. Delaware
Texaco International Trader Inc. Delaware
Texaco Overseas Holdings Inc. Delaware
TRMI Holdings Inc. Delaware
Texaco Chemical Company, a wholly owned subsidiary of Texaco Inc., is not
listed, as Texaco expects to sell Texaco Chemical Company and substantially
all of its worldwide chemical operations in April 1994.
Names of certain subsidiary companies are omitted because, considered in the
aggregate as a single subsidiary company, they do not constitute a significant
subsidiary company.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated February 24, 1994 included or incorporated by
reference in Texaco Inc.'s Form 10-K for the year ended December 31, 1993,
into the following previously filed Registration Statements:
1. Form S-3 File Number 2-37010
2. Form S-3 File Number 33-31148
3. Form S-8 File Number 2-67125
4. Form S-8 File Number 2-76755
5. Form S-8 File Number 2-90255
6. Form S-8 File Number 33-34043
7. Form S-3 File Number 33-40309
8. Form S-8 File Number 33-45952
9. Form S-8 File Number 33-45953
10. Form S-3 File Number 33-63996
11. Form S-3 File Number 33-50553 and 33-50553-01
ARTHUR ANDERSEN & CO.
New York, N.Y.
March 28, 1994.
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 21st day of January, 1994.
ALFRED C. DE CRANE, JR. (SEAL)
-----------------------
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full
power and authority to act in any and all capacities for and in the name,
place and stead of the undersigned in connection with the filing of:
(i) any and all registration statements and all amendments and post-
effective amendments thereto (collectively, "Registration Statements")
under the Securities Act of 1933, as amended, with the Securities and
Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states
and other jurisdictions, with respect to the securities of the Company of
whatever class, including without limitation thereon the Company's Common
Stock, par value $6.25 per share, and preferred stock, par value $1.00 per
share, however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be
designated from time to time for such purposes), pursuant to Section 16(a)
of the Exchange Act.
Without limiting the generality of the foregoing grant of
authority, such attorneys-in-fact and agents, or either of them, are
hereby granted full power and authority, on behalf of and in the name,
place and stead of the undersigned, to execute and deliver all such
Registration Statements, registrations, qualifications, or notifications,
the Company's Form 10-K, any and all amendments thereto, statements of
changes, and any and all other documents in connection with the foregoing,
and take such other and further action as such attorneys-in-fact and
agents, or either of them, deem necessary or appropriate. The powers and
authorities granted herein to such attorneys-in-fact and agents, and
either of them, also include the full right, power and authority to effect
necessary or appropriate substitutions or revocations. The undersigned
hereby ratifies, confirms, and adopts, as his own act and deed, all action
lawfully taken pursuant to the powers and authorities herein granted by
such attorneys-in fact and agents, or either of them, or by their
respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 17th day of January, 1994.
ALLEN J. KROWE (SEAL)
--------------
Vice Chairman and Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full
power and authority to act in any and all capacities for and in the name,
place and stead of the undersigned in connection with the filing of:
(i) any and all registration statements and all amendments and post-
effective amendments thereto (collectively, "Registration Statements")
under the Securities Act of 1933, as amended, with the Securities and
Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states
and other jurisdictions, with respect to the securities of the Company of
whatever class, including without limitation thereon the Company's Common
Stock, par value $6.25 per share, and preferred stock, par value $1.00 per
share, however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be
designated from time to time for such purposes), pursuant to Section 16(a)
of the Exchange Act.
Without limiting the generality of the foregoing grant of
authority, such attorneys-in-fact and agents, or either of them, are
hereby granted full power and authority, on behalf of and in the name,
place and stead of the undersigned, to execute and deliver all such
Registration Statements, registrations, qualifications, or notifications,
the Company's Form 10-K, any and all amendments thereto, statements of
changes, and any and all other documents in connection with the foregoing,
and take such other and further action as such attorneys-in-fact and
agents, or either of them, deem necessary or appropriate. The powers and
authorities granted herein to such attorneys-in-fact and agents, and
either of them, also include the full right, power and authority to effect
necessary or appropriate substitutions or revocations. The undersigned
hereby ratifies, confirms, and adopts, as his own act and deed, all action
lawfully taken pursuant to the powers and authorities herein granted by
such attorneys-in fact and agents, or either of them, or by their
respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 1st day of March, 1994.
ROBERT C. OELKERS (SEAL)
-----------------
Comptroller
(Principal Accounting Officer)
EXHIBIT 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 14th day of January, 1994.
ROBERT A. BECK (SEAL)
--------------
EXHIBIT 24.5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 27th day of January, 1994.
JOHN BRADEMAS (SEAL)
-------------
EXHIBIT 24.6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 21st day of January, 1994.
WILLARD C. BUTCHER (SEAL)
------------------
EXHIBIT 24.7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 20th day of January, 1994.
EDMUND M. CARPENTER (SEAL)
-------------------
EXHIBIT 24.8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 14th day of January, 1994.
WILLIAM J. CROWE, JR. (SEAL)
--------------------
EXHIBIT 24.9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 24th day of January, 1994.
FRANKLYN G. JENIFER (SEAL)
-------------------
EXHIBIT 24.10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 26th day of January, 1994.
JAMES W. KINNEAR (SEAL)
----------------
EXHIBIT 24.11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 27th day of January, 1994.
THOMAS S. MURPHY (SEAL)
----------------
EXHIBIT 24.12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 13th day of January, 1994.
CHARLES H. PRICE, II (SEAL)
--------------------
EXHIBIT 24.13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set her name and
seal as of the 14th day of January, 1994.
ROBIN B. SMITH (SEAL)
--------------
EXHIBIT 24.14
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 31st day of January, 1994.
WILLIAM C. STEERE, JR. (SEAL)
---------------------
EXHIBIT 24.15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 2nd day of February, 1994.
THOMAS A. VANDERSLICE (SEAL)
---------------------
EXHIBIT 24.16
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of TEXACO INC., a Delaware corporation (the "Company"), hereby makes,
designates, constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH,
and either of them (with full power to act without the other), as the
undersigned's true and lawful attorneys-in-fact and agents, with full power
and authority to act in any and all capacities for and in the name, place
and stead of the undersigned in connection with the filing of: (i) any and
all registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission, and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and other
jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock,
par value $6.25 per share, and preferred stock, par value $1.00 per share,
however offered, sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person or
entity, that may be required to effect: (a) any such filing, (b) any
primary or secondary offering, sale, distribution, exchange, or conversion
of the Company's securities, (c) any acquisition, merger, reorganization
or consolidation involving the issuance of the Company's securities,
(d) any stock option, restricted stock grant, incentive, investment,
thrift, profit sharing, or other employee benefit plan relating to the
Company's securities, or (e) any dividend reinvestment or stock purchase
plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended
December 31, 1993, on Form 10-K, and any and all amendments thereto on
Form 8 or otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial Ownership
of Securities on Form 4 or Form 5 (or such other forms as may be designated
from time to time for such purposes), pursuant to Section 16(a) of the
Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted
full power and authority, on behalf of and in the name, place and stead of
the undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K,
any and all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such other and
further action as such attorneys-in-fact and agents, or either of them,
deem necessary or appropriate. The powers and authorities granted herein
to such attorneys-in-fact and agents, and either of them, also include the
full right, power and authority to effect necessary or appropriate
substitutions or revocations. The undersigned hereby ratifies, confirms,
and adopts, as his own act and deed, all action lawfully taken pursuant
to the powers and authorities herein granted by such attorneys-in fact and
agents, or either of them, or by their respective substitutes. This Power
of Attorney expires by its terms and shall be of no further force and
effect on March 31, 1995.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and
seal as of the 3rd day of February, 1994.
WILLIAM WRIGLEY (SEAL)
---------------
