NOVEMBER 26, 2001 

                 THE CORPORATION 

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                 The Other Instant Powerhouse in Energy
                 Trading 


                 It's not easy being No. 4. Despite a $35 billion merger
                 completed in October, ChevronTexaco Corp. (CVX )
                 is still not one of the oil superpowers. Nor, at more
                 than $90 billion a year in revenues, is it a scrappy little
                 guy. So Chairman David J. O'Reilly has been
                 searching for a strategy beyond just drilling for more
                 oil and gas.

                 Now, he may have something: a big stake in the No. 1
                 energy-trading company. Chevron Corp. has owned
                 26% of Dynegy Inc. (DYN ) since 1996, and with
                 Dynegy's planned acquisition of Enron Corp. (ENE ),
                 the top energy trader, ChevronTexaco is making the
                 oil industry's most aggressive push yet into this
                 fast-growing business. It plans to eventually pump
                 $2.5 billion into the combined Dynegy and Enron to
                 maintain its 26% stake, and it might raise that share.
                 So, while ChevronTexaco's much bigger rivals run small in-house trading
                 operations, energy trading may soon account for more than 10% of
                 ChevronTexaco's earnings. "Chevron is now positioned to be a leader in the
                 business," says analyst Arjun Murti at Goldman, Sachs & Co.

                 The deal would certainly dovetail with ChevronTexaco's strategy of becoming a
                 more integrated energy company, with a hand in everything from pumping oil at
                 the wellhead to trading natural-gas futures. By acquiring Texaco, Chevron
                 picked up, for instance, a big refining-and-marketing business --which should
                 balance out the bad times in oil and gas production, says Eugene Nowak, an
                 analyst at ABN Amro. "When crude-oil prices are down, they'll have margin
                 improvements on refining and marketing," he says. O'Reilly and other
                 ChevronTexaco executives declined to comment.

                 Until now, Dynegy wasn't a big deal for Chevron. Chevron purchased the stake
                 for $700 million when Dynegy was still called NGC Corp., and it filled three of
                 the 14 board seats--positions it will keep. Since then, Chevron has sold nearly all
                 its domestic natural-gas production to Dynegy. The stake has been a good
                 investment: it is now worth $3 billion, ChevronTexaco says.

                 Sitting on $2.9 billion in cash as of the end of the second quarter, ChevronTexaco
                 can well afford the Dynegy deal, analysts say. And they expect O'Reilly to use
                 some of that to make more buys; the most likely target is a natural-gas company.
                 Maybe it's not so bad being No. 4.