technology to improve access to deepwater assets and elevate deepwater drilling safety and environmental standards that is on track for initial deployment on the 

Big Foot project in 2012. In the Partitioned Zone, between Kuwait and Saudi Arabia, we progressed a pilot project to enhance production of heavy oil through industry-leading steamflood technology, building on our success in Indonesia and the San Joaquin Valley in California. We continue to pursue a variety of next-generation technologies with partners that include businesses, universities and national laboratories. 

Over the past decade, we’ve gone from trailing the industry in safety to becoming one of its leaders as a result of our broader commitment to operational excellence — the safety of our people, the reliability of our operations and environmental stewardship. To achieve our goal of zero incidents, we have deployed systems and processes that helped drive down injury rates to industry- leading levels. We take pride in what we’ve achieved, but we expect continual improvement in how we manage risk. Even with this emphasis, we are not incident-free. We rigorously investigate all incidents to strengthen our ability to recognize and reduce risk and achieve what we strive for — doing things the right way every time. I am committed to meeting our world-class standards in safety and operational excellence, and I know that the men and women of Chevron join me in that commitment. 

Meeting the world’s long-term demand for energy requires significant invest- ments. We move into 2012 with a $32.7 billion capital and exploratory budget. This reflects our confidence in an unparalleled project queue and is supported by our strong financial position and operational performance. 

Also important to our future are the investments we make in the communities where we operate. Our business generates immense value by creating jobs and supporting local business development. We also make strategic social investments focused on building stronger communities through partnerships in the areas of health, education and economic development. One of our larger social investments in 2011 was a $20 million commitment to eliminate mother-to-child transmission of HIV in Angola, Nigeria and South Africa. All told, we deployed nearly 

$1 billion in worldwide community investments over the past six years. I encourage you to read more about these investments in our companion publication, the 2011 Corporate Responsibility Report. 

Affordable energy underpins economies and generates progress and prosperity. The people of Chevron remain focused on finding and producing affordable energy safely, reliably and efficiently. This is a responsibility that our company takes seriously. We are committed to growing our business, contributing to global economic expansion, building stronger communities and creating enduring value for our stockholders. 

Thank you for investing in Chevron. 

Business Environment and Outlook

Chevron is a global energy company with substantial business activities in the following countries: Angola, Argentina, Australia, Azerbaijan, Bangladesh, Brazil, Cambodia, Canada, Chad, China, Colombia,