Chevron to boost Permian output by 10pc: Update

Market: Crude oil, Natural gas
28/01/22

Adds more details from analyst call.

Chevron plans to boost production from the prolific Permian basin of west Texas and southeastern New Mexico by about 10pc this year as it doubles spending on the top shale play.

The second-largest US producer has earmarked about $3bn in spending on its Permian operations. It anticipates just over 200 wells being put on production in 2022, which would represent a 50pc increase over last year.

"That is a meaningful step-up in activity," chief executive Mike Wirth said today after Chevron posted fourth quarter earnings.

While the company could accelerate drilling in the Permian as oil price surge to multi-year highs, Wirth said it would not get ahead of itself. "I don't think we're going to be tempted by the price of the day to put that at risk by doing more," he said.

Capital spending this year will likely be at the low end of a $15bn-$17bn range, with modest price pressures expected.

"While we might be seeing a little bit more than that in the Permian, it's very manageable and we think we can offset it with efficiencies," chief financial officer Pierre Breber said.

Overall output for 2022 is expected to be flat to down 3pc, largely due to the expiration of contracts in Indonesia and Thailand. Excluding those factors, production is set to increase by 2-5pc, driven by the Permian and fewer turnarounds in Australia and Kazakhstan.

Output in the fourth quarter dropped 5pc to 3.12mn b/d of oil equivalent (boe/d). Full-year production came in at 3.10mn boe/d, a slight increase from 2020.

Wirth expressed disappointment after a federal court threw out a recent $192mn oil and gas lease sale that President Joe Biden's administration held for tracts in the US Gulf of Mexico, citing a failure to adequately review potential climate effects.

Chevron was the largest bidder in the 17 November lease sale, submitting high bids totaling $47mn on 34 tracts.

"We're reviewing this judicial decision right now," Wirth said. "We hope this is resolved in a manner that allows continued development and investment in the US energy economy."

Chevron earlier reported a fourth-quarter profit of $5.1bn, compared with a loss of $665mn in the year-earlier period as the oil industry was emerging from a pandemic-induced collapse.

The company recorded full-year earnings of $15.6bn, the most since 2014. Free cash flow swelled to a record $21.1bn in 2021.

Earlier this week, its shares hit a record after the company raised the dividend by 6pc to $1.42/share. Chevron is guiding first-quarter share buybacks at the top end of its $3bn-$5bn annual range.

Oil companies' profits have been buoyed by a recovery in crude prices which are trading at their highest levels in seven years. That follows a string of losses as producers were forced to slash costs when the pandemic first struck.

By Stephen Cunningham

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20/12/24

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Washington, 20 December (Argus) — The US House of Representatives voted overwhelmingly today to extend funding for US federal government agencies and avoid a partial government shutdown. The Republican-controlled House, by a 366-34 vote, approved a measure that would maintain funding for the government at current levels until 14 March, deliver $10bn in agricultural aid and provide $100bn in disaster relief. Its passage was in doubt until voting began in the House at 5pm ET, following a chaotic intervention two days earlier by president-elect Donald Trump and his allies, including Tesla chief executive Elon Musk. The Democratic-led Senate is expected to approve the measure, and President Joe Biden has promised to sign it. Trump and Musk on 18 December derailed a spending deal House speaker Mike Johnson (R-Louisiana) had negotiated with Democratic lawmakers in the House and the Senate. Trump lobbied for a more streamlined version that would have suspended the ceiling on federal debt until 30 January 2027. But that version of the bill failed in the House on Thursday, because of opposition from 38 Republicans who bucked the preference of their party leader. Trump and Musk opposed the bipartisan spending package, contending that it would fund Democratic priorities, such as rebuilding the collapsed Francis Scott Key Bridge in Baltimore, Maryland. But doing away with that bill killed many other initiatives that his party members have advanced, including a provision authorizing year-round 15pc ethanol gasoline (E15) sales. Depending on the timing of the Senate action and the presidential signature, funding for US government agencies could lapse briefly beginning on Saturday. Key US agencies tasked with energy sector regulatory oversight and permitting activities have indicated that a brief shutdown would not significantly interfere with their operations. But the episode previews potential legislative disarray when Republicans take full control of Congress on 3 January and Trump returns to the White House on 20 January. Extending government funding beyond 14 March is likely to feature as an element in the Republicans' attempts to extend corporate tax cuts set to expire at the end of 2025, which is a key priority for Trump. The Republicans will have a 53-47 majority in the Senate next month, but their hold on the House will be even narrower than this year, at 219-215 initially. Trump has picked two House Republican members to serve in his administration, so the House Republican majority could briefly drop to 217-215 just as funding for the government would expire in mid-March. Congress will separately have to tackle the issue of raising the debt limit. Conservative advocacy group Economic Policy Innovation Center projects that US borrowing could reach that limit as early as June. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US government agencies set to shut down

20/12/24

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20/12/24

US government agencies set to shut down

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Investment funds cut net long positions on Ice TTF

20/12/24

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20/12/24

Investment funds cut net long positions on Ice TTF

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Viewpoint: More changes for Dated crude benchmark ahead

20/12/24

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20/12/24

Viewpoint: More changes for Dated crude benchmark ahead

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Australia’s Cleanaway, LMS to produce landfill gas

20/12/24

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20/12/24

Australia’s Cleanaway, LMS to produce landfill gas

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