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Chevron’s Strong Upstream Portfolio Will Likely Grow


Mar. 5 2019, Published 1:19 p.m. ET

Chevron’s upstream production

Chevron (CVX) has a strong upstream portfolio, which is optimized to provide competitive growth. Chevron’s upstream production rose 7% YoY to highs of 2.93 MMboepd (million barrels of oil equivalent per day) in 2018. The production increased due to a rise in the output in the Gorgon, Wheatstone, and Permian regions.

The company’s fourth-quarter production touched record highs of 3.08 MMboepd. BP (BP), ExxonMobil (XOM), and Royal Dutch Shell’s (RDS.A) production was 2.63 MMboepd, 4.01 MMboepd, and 3.79 MMboepd, respectively, in the fourth quarter.

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Permian Basin

Chevron’s resources in the Permian Basin grew 20% compared to 2016 to 11.2 billion barrels of oil equivalent in 2018. The company holds 2.2 million net acres in the Permian Basin—more than 80% has no or low royalty.

The Permian Basin’s contribution to Chevron’s overall production has been rising. In 2018, Chevron’s Permian production rose 71% YoY to 310 Mboepd (thousand barrels of oil equivalent per day). In the region, Chevron expects its production to grow by more than 600 Mboed by 2022.

Gorgon and Wheatstone

Chevron’s mega capital-intensive gas projects Gorgon and Wheatstone, in Australia, have started yielding results. In the fourth quarter, Gorgon’s net production was 223 Mboepd, while Wheatstone’s net production was 171 Mboepd. The production from these projects is expected to ramp up in 2019. Wheatstone’s Train II is expected to drive the company’s production growth.

Expected upstream growth

Overall, Gorgon, Wheatstone, and the Permian have been driving Chevron’s growth. Chevron expects its total volumes to grow 4%–7% in 2019. The company also has other vital upstream positions. The other positions include conventional oil and gas assets in Kazakhstan (like Tengiz and TCO) and deep-water assets in the Gulf of Mexico. Chevron’s reserve replacement ratio was 136% in 2018, which showed its strong long-term growth potential.


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