Chevron targets Permian, Western Australia, Kazakhstan for 2017 capital expenditures

Chevron Corporation (ticker: CVX) released its fourth quarter results today, showing significantly lower earnings than expected. Net earnings were $415 million, or $0.22 per share, bringing total 2016 results in as a loss of $497 million, or $0.228 per share.

Chevron reported fourth quarter average production of 2.67 MMBOEPD, making average production for 2016 2.59 MMBOEPD. Year-end total proved reserves were 11.1 billion BOE, giving a reserve replacement ratio of 95%, the company reported.

CapEx for 2017 just shy of $20 billion

Planned 2017 CAPEX is $19.8 billion, a decrease of $2.6 billion from 2016 levels. In its 2018-2020 guidance, the company predicts similar future expenditures, representing a significant decrease from historic levels.

Current planned investments represent a conservative outlook for the global integrated producer, with a focus on completing projects in progress and short-cycle high return investments, the company said.

Chevron’s planned 2017 investment targets include:

  • $2 billion planned for the Gorgon and Wheatstone LNG projects,
  • $3 billion for Tengiz field in Kazakhstan,
  • $2.5 billion to develop its shale assets in the Permian basin,
  • $6 billion for other base-producing assets.

Permian Basin development continues for Chevron, mirroring other majors stepping up Permian activity

Chevron’s Permian basin operations are developing ahead of expectations, the company reported, with 10 rigs currently operating and plans to add a new one every eight weeks, Chevron said. With two million acres in the Permian, Chevron holds the largest acreage position in the basin.

With the short cycle of unconventional investments, the Permian basin is becoming one of Chevron’s primary base-producing assets.

In a related Permian development also announced in January, global oil giant ExxonMobil (ticker: XOM) said  it will more than double its Permian Basin resources to 6 billion BOE through the acquisition of companies owned by the Bass family of Fort Worth, Texas, with approximately 3.4 billion BOE of that resource located in the Delaware basin. Exxon’s unconventional liquids portfolio is managed by its subsidiary, XTO Energy.

Chevron Looks to Expand Permian Activity in 2017

Source: Chevron

Western Australia LNG projects coming online

Chevron’s Gorgon and Wheatstone projects are massive LNG operations in Western Australia. Multiple offshore reservoirs will be developed and processed in two large onshore plants. The Gorgon and Jansz-Io Fields, with a combined 35 Tcf of reserves, will be processed at the Gorgon facility. Gorgon, on Barrow Island, is partially online, with Trains 1 and 2 currently operating at 220 MBOED and Train 3 expected to come online in mid-2017. When all three trains are operational the plant will process 330 MBOED. Gorgon will process produced natural gas for international shipping and domestic consumption.

Chevron Looks to Expand Permian Activity in 2017

Source: Chevron

Similar to Gorgon, the Wheatstone project is an LNG plant that will process natural gas produced from offshore reservoirs. With two LNG trains planned, total capacity will be 196 MBOED. This facility will primarily process gas from the Wheatstone and Iago Fields, which contain an estimated 9 Tcf of gas reserves. Train 1 first LNG is expected mid-2017, with Train 2 coming online 6-8 months later.

Chevron Looks to Expand Permian Activity in 2017

Source: Chevron

 

Chevron plans expansion of Kazakhstan operations

Chevron owns a 50% stake in the massive Tengiz field in Kazakhstan, where a new project called the Future Growth and Wellhead Pressure Management Project (FGP/WPMP) was recently announced. This sour gas injection project is projected to increase crude production by 260,000 BPD. First oil production is planned for 2022, Chevron said.

Chevron’s earnings release is available here.

 


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