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Cash Flows from Operating Activities: Net cash pro- vided by operating activities, including changes in operating assets and liabilities, totaled $1,581 million in 2003, $1,965 million in 2002 and $1,960 million in 2001. Lower cash flows in 2003 were primarily due to reduced explo- ration and production sales volumes. 

Cash Flows from Investing Activities: The following table summarizes the Corporation’s capital expenditures in 2003, 2002 and 2001: 

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Capital expenditures in 2001 included $2,720 million for the Triton acquisition, excluding the assumption of debt. In addition, the Corporation purchased crude oil and natural gas reserves in the Gulf of Mexico and onshore Louisiana for $920 million. The amounts shown for acquisitions in 2002 principally represent final installment payments on prior year acquisitions. 

In 2003, the Corporation took initiatives to reshape its port- folio of producing assets to reduce future costs, increase its reserve to production ratio, and provide capital for invest- ment in new fields and funds to reduce debt. The Corpora- tion sold certain producing properties in the Gulf of Mexico Shelf, the Jabung Field in Indonesia, several small United Kingdom fields and an interest in a shipping joint venture. Proceeds from asset sales totaled $545 million during 2003. In addition, the Corporation completed several asset exchanges. The Corporation swapped mature, high-cost assets in Colombia for an additional 25% interest in long- lived natural gas reserves in Block A-18 in the joint devel- opment area of Malaysia and Thailand, bringing the Corporation’s interest in the area to 50%. The Corporation exchanged its 25% equity investment in Premier Oil plc for a 23% interest in Natuna Sea Block A in Indonesia, plus approximately $10 million in cash. In the fourth quarter of 2003, the Corporation exchanged 14% interests in the Scott and Telford fields in the United Kingdom for an additional 22.5% interest in the Llano Field in the Gulf of Mexico and $17 million in cash. This exchange increased the Corpora- tion’s working interest in the Llano Field to 50% and decreased its interest in the Scott Field to 21% and the Telford Field to 17%. Production from the Corporation’s 50% interest in the Llano Field is scheduled to commence in mid-2004. 

The net production from fields sold or exchanged at the time of disposition was approximately 50,000 barrels of oil equivalent per day. The Corporation believes the overall impact of its program of asset exchanges and sales of prop- erties has not reduced its liquidity in the short-term or over the next five years. 

In 2002, the Corporation sold United States Flag vessels, its energy marketing business in the United Kingdom and sev- eral small oil and gas fields for net proceeds of $412 million. 

Cash Flows from Financing Activities: In the fourth quarter of 2003, the Corporation issued 13,500,000 shares of mandatory convertible preferred stock for net proceeds of $653 million. Cash flows from operations, asset sales and the issuance of preferred stock enabled the Corporation to reduce debt by $1,051 million during 2003. Debt repayment in 2002, net of new borrowings, was $673 million. 

