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.
