We continue to develop an unparalleled project queue. Our 2012 capital program covers a number of multi-year projects currently in the construction phase, including two world-class Australian LNG projects and multiple deepwater developments. We believe these investments will yield significant production growth and reward our shareholders for years to come. By 2017, we expect our net crude oil and natural gas production to grow about 20 percent to 3.3 million barrels per day. This growth profile, along with our current financial strength, supports our priority of continuously growing our dividends.

Our 2012 capital program includes spending of nearly $9 billion in the United States, with major new investments in the deepwater Gulf of Mexico, the Marcellus Shale in Pennsylvania and our refinery at Pascagoula, Mississippi.

—Chairman and CEO John Watson

Approximately 87% of the 2012 spending program is budgeted for upstream crude oil and natural gas exploration and production projects. Another 11% is associated with the company’s downstream businesses that manufacture, transport and sell gasoline, diesel fuel and other refined products, fuel and lubricant additives, and petrochemicals.

Upstream. Spending of $28.5 billion is planned for exploration and production activities, including major natural gas-related projects. Major capital investments include developments in Australia, the deepwater Gulf of Mexico, Nigeria, Angola and China. Planned capital spending is also directed toward improving crude oil and natural gas recovery and reducing natural field declines of existing producing assets throughout the world.

In Australia, the Gorgon LNG project is entering its third year of construction, with first production scheduled for 2014. The project is approximately one-third complete and has awarded contracts worth more than $25 billion. The Wheatstone LNG project was sanctioned in September 2011 and is entering its first year of construction. First production is expected in 2016. The project has already awarded $6 billion in contracts. Once online, these two LNG projects are expected to add approximately 350,000 barrels net oil-equivalent production per day. Production from these LNG plants is expected to be sustained at these same levels for many years.

In the Gulf of Mexico, projects under development include Jack/St. Malo, Big Foot, Tahiti-2 and Tubular Bells. Both the Jack/St. Malo and Big Foot projects are approximately 20 percent complete. First production for both projects is expected in 2014.

Upstream spending for major capital projects in other regions includes:

• Nigeria: development of the Usan and Agbami deepwater fields, and construction of the Escravos gas-to-liquids facility
• Angola: Angola LNG and development of Mafumeira Sul
• China: development of the Chuandongbei natural gas project
• Brazil: development of the Papa-Terra deepwater field
• Canada: Hebron offshore development
• United Kingdom: development of the offshore Clair Ridge project
• Kazakhstan/Russia: Caspian Pipeline expansion

Global exploration funding is expected to be $3 billion in 2012. This planned spending includes initial appraisal of new acreage captured over the past two years, including Liberia, China and various international shale gas plays. The program also supports continued exploration and appraisal activity in Chevron's focus areas of Western Australia, the Gulf of Mexico and western Africa.

About 30% of the Upstream capital program is targeted to support currently-producing assets and mitigate natural field decline. This includes further development of recently-acquired acreage in the Marcellus trend in the northeast U.S., the Wolfcamp play in West Texas and the Pattaini Basin offshore Thailand.

Downstream. Capital spending of $3.6 billion in 2012 is budgeted for downstream operations. Investments include refinery projects geared toward improving returns by increasing energy efficiency and feedstock flexibility, and producing cleaner fuels. Investments also are targeted toward producing base oils at Pascagoula, Mississippi, and expanding Oronite additives production in Singapore.

Additional investments are expected to be funded by Chevron affiliates. These include the continued upgrading of the Yeosu refining complex in South Korea associated with the company’s 50 percent-owned GS Caltex affiliate, and additional chemicals projects in the United States and Saudi Arabia associated with the company’s 50 percent-owned Chevron Phillips Chemical Company LLC.

Expenditures of approximately $600 million in 2012 are budgeted for technology, power generation and other corporate activities.