The Naval Petroleum and Oil Shale Reserves (NPOSR) produces crude oil and associated hydrocarbons from the Naval Petroleum Reserves (NPR) numbered 1, 2, and 3, and the Naval Oil Shale Reserves (NOSR) numbered 1, 2, and 3 in a manner to achieve the greatest value and benefits to the US taxpayer. NPOSR consists of the Naval Petroleum Reserve in California (NPRC or Elk Hills), which is responsible for operations of NPR-1 and NPR-2; the Naval Petroleum Oil Shale Reserve in Colorado, Utah, and Wyoming (NPOSR-CUW), which is responsible for operations of NPR-3, NOSR-1, 2, and 3 and the Rocky Mountain Oilfield Testing Center (RMOTC); and NPOSR Headquarters in Washington, DC, which is responsible for overall program direction. Each participant shares in the unit costs and production of hydrocarbons in proportion to the weighted acre-feet of commercially productive oil and gas formations (zones) underlying the respective surface lands as of 1942. The participating shares of NPR-1 as of September 30, 1996 for the US Government and Chevron USA, Inc., are listed. This report presents the results of the independent certified public accountants̀ audit of the Department of Energys̀ (Department) Naval Petroleum and Oil Shale Reserves (NPOSR) financial statements as of September 30, 1996.