UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Commission File Number 1-368-2

Chevron Corporation

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (925) 842-1000

NONE

(Former name or former address, if changed since last report.)

      Indicate by check mark whether 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ          No o

      Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes o          No þ

      Indicate the number of shares of each of the issuer’s classes of common stock, as of the latest practicable date:

INDEX

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

      This quarterly report on Form 10-Q of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “schedules,” “estimates” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

      Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are unknown or unexpected problems in the resumption of operations affected by Hurricanes Katrina and Rita and other severe weather in the Gulf of Mexico; crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and competitive conditions affecting supply and demand for aromatics, olefins and additives products; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the ability to successfully integrate the operations of Chevron and Unocal Corporation; inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; potential disruption or interruption of the company’s net production or manufacturing facilities due to war, accidents, political events, civil unrest or severe weather; potential liability for remedial actions under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental regulations and litigation (including, particularly, regulations and litigation dealing with gasoline composition and characteristics); potential liability resulting from pending or future litigation; the company’s acquisition or disposition of assets; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” in the company’s Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

PART I.

FINANCIAL INFORMATION

CHEVRON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

See accompanying notes to consolidated financial statements.

CHEVRON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

See accompanying notes to consolidated financial statements.

CHEVRON CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

See accompanying notes to consolidated financial statements.

CHEVRON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      The accompanying consolidated financial statements of Chevron Corporation and its subsidiaries (the company) have not been audited by independent accountants. In the opinion of the company’s management, the interim data include all adjustments necessary for a fair statement of the results for the interim periods. These adjustments were of a normal recurring nature, except for the items described in Notes 2 and 3.

      The interim financial statements reflect the company’s acquisition of Unocal Corporation (Unocal) on August 10, 2005. For reporting purposes in these interim financial statements, the former Unocal results have been included from August 1, 2005. Refer to Note 2 for a discussion of the Unocal transaction.

      Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the company’s 2004 Annual Report on Form 10-K.

      The results for the three- and nine-month periods ended September 30, 2005, are not necessarily indicative of future financial results.

      On August 10, 2005, the company acquired 100 percent of the outstanding common shares of Unocal Corporation (Unocal), an independent oil and gas exploration and production company. Unocal’s principal upstream operations are in North America and Asia, including the Caspian region. Also located in Asia are Unocal’s geothermal energy and electrical power businesses. Other activities include ownership interests in proprietary and common carrier pipelines, natural gas storage facilities and mining operations.

      The aggregate purchase price of Unocal was $17.3 billion, which included $7.5 billion cash, approximately 169 million shares of Chevron common stock valued at $9.6 billion, and $0.2 billion for approximately 5 million stock options and merger-related fees. The value of the common shares was based on the average market price for a 5-day period beginning two days before the terms of the acquisition were finalized and announced on July 19, 2005. The issued shares represented 7.5 percent of the number of shares outstanding immediately after the August 10 close. The value of the stock options at the acquisition date was determined using the Black-Scholes option-pricing model.

      A third-party appraisal firm has been engaged to assist the company in the process of determining the fair values of Unocal’s tangible and intangible assets. Initial estimates of those fair values are included in this interim report; however, the complete valuation process is expected to take several months before being finalized. The company expects that adjustments to the initial allocation of the purchase price will be required as it completes its assessment of the fair value of all Unocal assets and liabilities. Once completed, the associated deferred tax liabilities will also be finalized. No significant intangible assets are included in the preliminary allocation of the purchase price in the table below. No in-process research and development assets were acquired. Among the liabilities not yet finalized is the estimated cost of severance and relocation of Unocal employees and the restructuring and reorganization of redundant activities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The acquisition is accounted for under the rules of Financial Accounting Standards Board (FASB) Statement No. 141,“Business Combinations.” The following table summarizes the preliminary allocation of the purchase price to Unocal’s assets and liabilities:

      The $3.6 billion of goodwill is assigned to the upstream segment. None of the goodwill is deductible for tax purposes. The goodwill represents benefits of the acquisition that are additional to the fair values of the other net assets acquired. The primary reasons for the acquisition and the principal factors that contributed to a Unocal purchase price that resulted in the recognition of goodwill were as follows:

      Goodwill recorded in the acquisition is not subject to amortization but will be tested periodically for impairment as required by FASB Statement No. 142,“Goodwill and Other Intangible Assets.”

      The following unaudited pro forma summary presents the results of operations as if the acquisition of Unocal had occurred at the beginning of each period:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The pro forma income statements use estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may differ significantly from this pro forma financial information. The pro forma information does not reflect any synergistic savings that might be achieved from combining the operations and is not intended to reflect the actual results that would have occurred had the companies actually been combined during the periods presented.

      Net income for the third quarter 2005 was $3.6 billion, compared with $3.2 billion in the 2004 third quarter. As indicated in Note 1, earnings in the 2005 period included results for two months from the former Unocal operations. Included in the third quarter 2004 were special-item gains of $486 million related to the sale of upstream properties considered nonstrategic to the company’s asset portfolio.

      Net income for the first nine months of 2005 was $10.0 billion, compared with $9.9 billion in the year-ago period, which included net special-item gains of $1.0 billion. Besides the third quarter special items in 2004, the nine-month results also included a special-item gain of $585 million related to the sale of nonstrategic upstream assets in western Canada.

      Foreign currency effects reduced earnings by $52 million and $29 million in the third quarters of 2005 and 2004, respectively. For the nine months of 2005 and 2004, foreign currency effects reduced earnings by $19 million and $27 million, respectively.

      At September 30, 2005, and December 31, 2004, the company classified $96 million and $162 million, respectively, of net properties, plant and equipment as “Assets held for sale” on the Consolidated Balance Sheet. Assets in this category at the end of both periods consisted of service stations outside of the United States. The assets classified as held for sale at the end of the third quarter 2005 are expected to be disposed of within one year.

      Summarized income statement information relating to discontinued operations, all of which were for the company’s upstream business, is as follows:

      Not all assets sold or to be disposed of are classified as discontinued operations, mainly because the cash flows from the assets were not, or will not, be eliminated from the ongoing operations of the company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The “Net (increase) decrease in operating working capital” was composed of the following operating changes:

      In accordance with the cash-flows classification requirements of FAS 123R, “Share-Based Payment,” the “Net increase in operating working capital” includes a reduction of $15 million for excess income tax benefits associated with stock options exercised during the third quarter 2005, which is offset by an equal amount in ‘Net purchases of treasury shares.’ Refer to Note 11 starting on page 17 for additional information related to the company’s adoption of FAS 123R, “Share-Based Payment.”

      “Net Cash Provided by Operating Activities” included the following cash payments for interest on debt and for income taxes:

      The “Net sales (purchases) of marketable securities” consisted of the following gross amounts:

      The “Net purchases of treasury shares” in 2005 included share repurchases of $2.2 billion related to the company’s common stock repurchase program, which began in the second quarter 2004. These purchases were partially offset by the issuance of shares for the exercise of stock options.

      The “Acquisition of Unocal Corporation” represents the cash portion of the Unocal purchase price, net of $1.6 billion of Unocal cash received. The aggregate purchase price of Unocal was $17.3 billion. Refer to Note 2 starting on page 7 for additional discussion of the Unocal acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The major components of “Capital expenditures” and the reconciliation of this amount to the capital and exploratory expenditures, including equity affiliates, presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are presented in the following table:

      Although each of the company’s subsidiaries is responsible for its own affairs, Chevron Corporation manages its investments in these subsidiaries and their affiliates. For this purpose, the investments are grouped as follows: upstream — exploration and production; downstream — refining, marketing and transportation; chemicals; and all other. The first three of these groupings represent the company’s “reportable segments” and “operating segments” as defined in FAS 131, “Disclosures about Segments of an Enterprise and Related Information.”

      The segments are separately managed for investment purposes under a structure that includes “segment managers” who report to the company’s “chief operating decision maker” (CODM) (terms as defined in FAS 131). The CODM is the company’s Executive Committee, a committee of senior officers that includes the chief executive officer, and which in turn reports to the Board of Directors of Chevron Corporation.

      The operating segments represent components of the company as described in FAS 131 terms that engage in activities (a) from which revenues are earned and expenses are incurred; (b) whose operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the segment and to assess its performance; and (c) for which discrete financial information is available.

      Segment managers for the reportable segments are directly accountable to, and maintain regular contact with, the company’s CODM to discuss the segment’s operating activities and financial performance. The CODM approves annual capital and exploratory budgets at the reportable segment level, as well as reviews capital and exploratory funding for major projects and approves major changes to the annual capital and exploratory budgets. However, business-unit managers within the operating segments are directly responsible for decisions relating to project implementation and all other matters connected with daily operations. Company officers who are members of the Executive Committee also have individual management responsibilities and participate on other committees for purposes other than acting as the CODM.

      “All Other” activities include the company’s interest in Dynegy Inc. (Dynegy), mining operations of coal and other minerals, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities and technology companies.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The company’s primary country of operation is the United States of America, its country of domicile. Other components of the company’s operations are reported as “international” (outside the United States).

      Segment Earnings The company evaluates the performance of its operating segments on an after-tax basis, without considering the effects of debt financing interest expense or investment interest income, both of which are managed by the company on a worldwide basis. Corporate administrative costs and assets are not allocated to the operating segments. However, operating segments are billed for the direct use of corporate services. Nonbillable costs remain at the corporate level in “All Other.” Income from continuing operations by operating segment for the three- and nine-month periods ended September 30, 2005 and 2004, is presented in the following table:

Segment Income

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Segment Assets Segment assets do not include intercompany investments or intercompany receivables. “All Other” assets consist primarily of worldwide cash, cash equivalents and marketable securities, real estate, information systems, the company’s investment in Dynegy, mining operations of coal and other minerals, power generation businesses, technology companies and assets of the corporate administrative functions. Segment assets at September 30, 2005, and December 31, 2004 follow:

Segment Assets

      Segment Sales and Other Operating Revenues Revenues for the upstream segment are derived primarily from the production of crude oil and natural gas, as well as the sale of third-party production of natural gas. Revenues for the downstream segment are derived from the refining and marketing of petroleum products such as gasoline, jet fuel, gas oils, kerosene, lubricants, residual fuel oils and other products derived from crude oil. This segment also generates revenues from the transportation and trading of crude oil and refined products. Revenues for the chemicals segment are derived primarily from the manufacture and sale of additives for lubricants and fuel. “All Other” activities include revenues from mining operations of coal and other minerals, power generation businesses, insurance operations, real estate activities and technology companies.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Operating segment sales and other operating revenues, including internal transfers, for the three- and nine-month periods ended September 30, 2005 and 2004, are presented in the following table. Products are transferred between operating segments at internal product values that approximate market prices.

Sales and Other Operating Revenues

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      In connection with the Unocal acquisition, the company implemented a restructuring and reorganization program as part of the effort to capture the synergies of the combined companies. The program is expected to be substantially completed by the end of 2006 and is aimed at eliminating redundant operations, consolidating offices and facilities and sharing common services and functions.

      As part of the restructuring and reorganization, approximately 550 positions have been preliminarily identified for elimination. Most of the positions are in the United States and relate primarily to corporate and upstream executive and administrative functions.

      An accrual of $106 million was established as part of the purchase accounting for the Unocal acquisition. Payments against the accrual in the third quarter were $3 million. Adjustments to the accrual may occur in future periods as the implementation plans are finalized and estimates are refined.

      At September 30, 2005, the company also maintained an accrual related to a reorganization and restructuring of its downstream businesses in late 2003 and certain other businesses and corporate departments since that time. Activity for this accrual is summarized in the following table:

      Substantially all of the balance for this accrual at September 30, 2005, related to employee severance costs that were part of a presumed ongoing benefit arrangement under applicable accounting rules in FAS 146, “Accounting for Costs Associated with Exit or Disposal Activities,” paragraph 8, footnote 7. Therefore, the company accounts for severance costs in accordance with FAS 88, “Employers’ Accounting for Settlements and Curtailments of Defined Pension Plans and for Termination Benefits.” The amount was categorized as a current accrued liability on the Consolidated Balance Sheet and the associated adjustments during the period were categorized as “Operating expenses” or “Selling, general and administrative expenses” on the Consolidated Statement of Income.

      Chevron U.S.A. Inc. (CUSA) is a major subsidiary of Chevron Corporation. CUSA and its subsidiaries manage and operate most of Chevron’s U.S. businesses. Assets include those related to the exploration and production of crude oil, natural gas and natural gas liquids and those associated with refining, marketing, supply and distribution of products derived from petroleum, other than natural gas liquids, excluding most of the regulated pipeline operations of Chevron. CUSA also holds Chevron’s investments in the Chevron Phillips Chemical Company LLC (CPChem) joint venture and Dynegy, which are accounted for using the equity method.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Chevron Transport Corporation Limited (CTC), incorporated in Bermuda, is an indirect, wholly owned subsidiary of Chevron Corporation. CTC is the principal operator of Chevron’s international tanker fleet and is engaged in the marine transportation of crude oil and refined petroleum products. Most of CTC’s shipping revenue is derived by providing transportation services to other Chevron companies. Chevron Corporation has guaranteed this subsidiary’s obligations in connection with certain debt securities issued by a third party. Summarized financial information for CTC and its consolidated subsidiaries is presented as follows:

      There were no restrictions on CTC’s ability to pay dividends or make loans or advances at September 30, 2005.

      Taxes on income from continuing operations for the third quarter and first nine months of 2005 were $3.1 billion and $8.1 billion, respectively, compared with $1.9 billion and $5.7 billion for the comparable periods in 2004. The associated effective tax rates for the 2005 and 2004 third quarters were 46 percent and 39 percent, respectively. For the year-to-date periods, the effective tax rates were 45 percent and 37 percent, respectively.

      The effective tax rate for the third quarter 2005 was higher than the corresponding 2004 period due to an increase in international earnings in countries with higher tax rates, combined with the absence in 2005 of a capital loss tax benefit recorded in the year-ago period. Rates were higher in the 2005 year-to-date period due to the absence of a benefit from changes in the income tax laws for certain international operations and an increase in earnings in countries with higher tax rates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Effective July 1, 2005, the company adopted the provisions of Financial Accounting Standards Board (FASB) Statement No. 123R, “Share-Based Payment,” (FAS 123R) for its share-based compensation plans. The company previously accounted for these plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” (APB 25) and related interpretations and disclosure requirements established by FAS 123, “Accounting for Stock-Based Compensation.”

      Under APB 25, no expense was recorded in the income statement for the company’s stock options. The pro forma effects on income for stock options were instead disclosed in a footnote to the financial statements. Expense was recorded in the income statement for stock-appreciation rights, restricted stock units and performance units. Under FAS 123R, all share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense in the income statement over an employee’s requisite service period.

      The company adopted FAS 123R using the modified prospective method. Under this transition method, compensation cost recognized in the third quarter 2005 includes the cost for all share-based payments granted prior to, but not yet vested, as of July 1, 2005. This cost was based on the grant-date fair value estimated in accordance with the original provisions of FAS 123. The cost for all share-based awards granted subsequent to July 1, 2005, represented the grant-date fair value that was estimated in accordance with the provisions of FAS 123R. Results for prior periods have not been restated.

      For the third quarter 2005, compensation expense charged against income for the first time for stock options was $39 million ($25 million after tax). Compensation expense otherwise charged against income for stock appreciation rights, performance units and restricted stock units was $33 million ($22 million after tax) and $55 million ($36 million after tax) for the 2005 and 2004 third quarters, respectively, and $49 million ($32 million after tax) and $75 million ($48 million after tax) for the 2005 and 2004 nine-month periods, respectively. There were no significant capitalized stock-based compensation costs at September 30, 2005.

      The following table illustrates the effect on net income and earnings per share as if the company had applied the fair-value recognition provisions of FAS 123 to stock options, stock appreciation rights, performance units and restricted stock units for periods prior to adoption of FAS 123R, and the actual effect on net income and earnings per share for periods after adoption of FAS 123R.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Cash received from option exercises under all share-based payment arrangements for the nine months ended September 30, 2005, was $276 million. Cash paid to settle performance units and stock appreciation rights for the nine months ended September 30, 2005, was $107 million, which included $73 million for Unocal awards paid under change-in-control plan provisions.

      Prior to the adoption of FAS 123R, the company presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Consolidated Statement of Cash Flows. FAS 123R requires the cash flow resulting from the tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. The actual tax benefits realized for the tax deductions from option exercises for the nine months ended September 30, 2005, and 2004 were $58 million and $49 million, respectively.

      A cumulative effect of change in accounting principle to recognize the impact of measuring share-based awards classified as liabilities at fair value instead of intrinsic value resulted in an insignificant charge against income in the third quarter 2005. A contra-equity balance of $6 million in “Deferred compensation and benefit plan trust” on the Consolidated Balance Sheet was reclassified to “Capital in excess of par value” as of July 1, 2005.

      Chevron Long-Term Incentive Plan (LTIP) Awards under the LTIP may take the form of, but are not limited to, stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and non-stock grants. For a 10-year period after April 2004, no more than 160 million shares may be issued under the Plan, and no more than 64 million of those shares may be in a form other than a stock option, stock appreciation right or award requiring full payment for shares by the award recipient.

      Stock options and stock appreciation rights granted under the LTIP extend for 10 years from grant date. Effective with options granted in June 2002, one-third of the award vest on each of the first, second and third anniversaries of the date of grant. Prior to this change, options granted by Chevron vested one year after the date of grant. Performance units granted under the LTIP extend for 3 years from grant date and are settled in cash at the end of the period. Settlement amounts are based on achievement of performance targets relative to major competitors over the period and payments are indexed to the company’s stock price.

      Texaco Stock Incentive Plan (Texaco SIP) On the closing of the acquisition of Texaco in October 2001, outstanding options granted under the Texaco SIP were converted to Chevron options. These options retained a provision for restored options, which enables a participant who exercises a stock option to receive new options equal to the number of shares exchanged or who has shares withheld to satisfy tax withholding obligations to receive new options equal to the number of shares exchanged or withheld. The restored options are fully exercisable six months after the date of grant, and the exercise price is the market value of the common stock on the day the restored option is granted. Apart from the restored options, no further awards may be granted under the former Texaco plans.

      Unocal Share-Based Plans (Unocal Plans) On the closing of the acquisition of Unocal in August 2005, outstanding options granted under various Unocal Plans were exchanged for fully vested Chevron options at a conversion ratio of 1.07 Chevron shares for each Unocal share. These options retained the same provisions as the original Unocal Plans. Options issued prior to 2004 generally may be exercised for up to 3 years after termination of employment (depending upon the terms of the individual award agreements), or the original expiration date, whichever is earlier. Options issued since the beginning of 2004 remain exercisable until the end of the normal option term if termination of employment occurs prior to August 10, 2007. Other awards issued under the Unocal Plans, including restricted stock, stock units, restricted stock units and performance shares became

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

vested at the acquisition date, and shares or cash were issued to recipients in accordance with change-in-control provisions of the plans.

      The fair market values of stock options and stock appreciation rights granted in 2005 and 2004 were measured on the date of grant using the Black-Scholes option-pricing model, with the following weighted-average assumptions: