During the next five years, ChevronTexaco will spend $6- to $8 billion in its upstream business alone-$2 billion of this in North America, a region that remains a critical part of the company's global portfolio, which now includes 11 billion barrels of oil equivalent of proved reserves, according to Ray Wilcox, president of North America upstream. The new supermajor has enormous, world-class projects coming onstream soon in Indonesia at Natuna, from Tengiz Field in the Caspian region, and offshore Angola and Nigeria,Wilcox told Independent Petroleum Association of America members in Houston. In the U.S. and Canada, the company has a gas strategy that includes liquefied natural gas (LNG), gas-to-liquids technology and power. In North America, ChevronTexaco is the No. 1 producer in California's San Joaquin Valley and on the Gulf of Mexico Shelf, and the No. 2 producer in the Permian Basin in West Texas. It also is the second-largest holder of leases in the Gulf of Mexico in more than 1,300 feet of water. "We are the No. 1 leaseholder of producing properties on the Shelf, so there is a lot of infrastructure we can leverage there for developing other blocks. And we are exporting our heavy-oil expertise in the Athabasca sands in Alberta and California to our heavy-oil holdings in Venezuela and Indonesia." In the deepwater Gulf of Mexico, ChevronTexaco recently announced discovery of the Tahiti Field, which is estimated to hold 400- to 500 million barrels of oil equivalent (BOE). Two appraisal wells are being drilled this year and another prospect nearby, Tonga, will be spud in 2003. Integration of the company is exceeding expectations, he added. The original goal of cost synergies of $1.2 billion was surpassed early-$2.2 billion in costs were cut by June 30, less than a year before the merger of Chevron and Texaco was closed. "It was not just a matter of reduction in the number of people who overlapped. There were hundreds of millions of dollars of costs we cut by using best practices from each legacy company, and introducing new IT systems and processes," he said. "Today the company's assets are about two-thirds Chevron and one-third Texaco on a global basis. These legacies are great, but looking forward is what everybody wants to do. We spent a great deal of time not talking about business, but about how to create a new culture that was not Chevron, not Texaco, but ChevronTexaco. We didn't want to preclude anyone's ideas." Hinting at divestitures to come, Wilcox said the pooling-of-interest tax restrictions associated with the merger expire in the fall of 2003, and the company is looking at how to build on its strengths "or get those assets off the balance sheet. We will be optimizing the portfolio." ChevronTexaco executives at an IPAA program in Denver said the company will put assets on the market as soon as this coming summer and close any ready sales just after October 9, which is the second anniversary of the merger and the expiration of pooling-of-interest restrictions. -Leslie Haines
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