Chevron’s Upstream Segment: Is Production Growth on the Horizon?



Chevron’s upstream production

Chevron (CVX) produced 2.8 MMboepd (million barrels of oil equivalent per day) from its worldwide operations, posting a 10% year-over-year rise in production in 2Q17. CVX expects 4%–9% growth in production volumes in 2017 over 2016.

Of the total output in 2Q17, 2.0 MMboepd (or 75%) was from international operations. Chevron has an Upstream portfolio with a worldwide reach, including huge international projects such as Gorgon and Wheatstone. Liquids account for 1.8 MMbpd (million barrels per day), or 63% of Chevron’s (CVX) total output in 2Q17.

In 2Q17, Chevron’s peer ExxonMobil (XOM) produced 3.4 MMboepd. Royal Dutch Shell (RDS.A) and BP’s (BP) production stood at 3.5 MMboepd and 2.4 MMboepd, respectively, in 2Q17.

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Upstream portfolio: Expecting production growth

CVX’s crude oil and natural gas production is expected to grow, with some of its major projects starting in 2016 and 2017. Chevron predicts three of its main legacy upstream assets to account for one-third of its total hydrocarbon production by 2019. These assets include gas portfolios in Australia such as Gorgon and Wheatstone, conventional oil and gas assets in Kazakhstan like Tengiz, and shale and tight assets in the Permian Basin in the US.

In 2Q17, Chevron had all three trains surpass their nameplate capacity at Gorgon. Also, CVX’s Wheatstone platform became operational. At Tengiz, to increase production from the field, Chevron is progressing with the WPM (wellhead pressure management) project and the FG (future growth) project. The projects are foreseen to begin by 2022.

In the Permian Basin, Chevron (CVX) is anticipated to ramp up to 20 rigs by 2018. The company has started production from the Mafumeira Sul project, which is offshore Angola. Mafumeira Sul is a deepwater project with total potential recoverable oil equivalent resources of ~300 million barrels.

Of the other leading projects in 2016, CVX resumed LNG production from its Angola LNG project. CVX also started production at its Bangka project in Indonesia. Chevron’s Alder project in the North Sea achieved its first production in November 2016.

Reserve base

Chevron has a large proved reserve base of 11.1 billion barrels of oil. Going forward, these reserves are anticipated to render healthy production growth for the company.


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