Chevron sees Permian output up 10pc in 2024: Update

Market: Crude oil, Natural gas
02/02/24

Adds details from call.

Chevron aims to boost output from the Permian basin by 10pc this year as the second-biggest US major remains on track to reach 1mn b/d of oil equivalent (boe/d) from the top shale play in 2025.

The company's production from the basin set a quarterly record of 867,000 boe/d in the final three months of 2023.

Chevron plans to continue to build its backlog of drilled but uncompleted wells in the basin. Its Permian output will fall slightly as a result in the first half before recovering to around 900,000 b/d at the end of the year.

The company started the year with 12 rigs and three hydraulic fracturing (fracking) crews in the Permian.

"We'll add a fourth frack crew around the middle of the year, but at the same time we're becoming more efficient," Wirth said, adding that inflation has moderated in the region.

Chevron has earmarked spending in the Permian of around $5bn this year, up from $4bn in 2023.

"We're at the capital level that I think is going to be required to get us" to the 1mn boe/d goal, said Wirth.

Chevron's global output increased to more than 3.1mn boe/d last year, led by a 14pc gain from the US.

US net production rose 34pc in the fourth quarter from the prior year, mainly as a result of the acquisition of PDC Energy, which added 266,000 boe/d, as well as the Permian.

The company increased the quarterly dividend by 8pc to $1.63/share.

"In 2023, we returned more cash to shareholders and produced more oil and natural gas than any year in the company's history," said Wirth.

Last year, Chevron agreed to buy independent producer Hess for $53bn in stock to gain a foothold in booming South American oil producing nation Guyana. It is currently responding to a request from the US Federal Trade Commission (FTC) for more information on the deal. Closing is expected around the middle of the year, according to Wirth.

Profit of $2.3bn in the fourth quarter was down from $6.4bn in the year-earlier period. Results included $1.8bn of US upstream impairment charges, as well as $1.9bn of decommissioning obligations in the Gulf of Mexico.

By Stephen Cunningham

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