Having achieved record quarterly production of natural gas and oil in the Permian Basin during the second quarter, Chevron Corp. is keeping its foot on the accelerator into next year, according to CEO Mike Wirth.
He said the Permian continues to lead.
“With strong momentum in our operated portfolio and predictable results from our nonoperated and royalty acreage, we now expect full-year production growth of about 15% and fourth quarter production to average around 940,000 [boe/d],” Wirth told analysts of the Permian during the supermajor’s 2Q2024 earnings call.
By 2025, the company continues to guide that Permian output will reach 1 million boe/d.
Development in the basin “continues to get more efficient,” said Wirth, who highlighted Chevron’s use of triple fracturing or “triple-frack” completions, i.e. completing three wells on a single pad simultaneously.
“We’re one of the first operators to deploy triple-frack, delivering cost reductions of more than 10% and shortening completion times by 25% where applied,” said Wirth.
In the Gulf of Mexico (GOM), meanwhile, Chevron is targeting a 50% increase in production to reach 300,000 boe/d by 2026.
Increased GOM volumes are slated to come from the deepwater, high-pressure Anchor project, where first oil is “imminent,” along with three other projects slated to come online in the short-term.
“We’re one of the largest leaseholders in the deepwater Gulf of Mexico,” said Wirth. “And as we move into these higher pressure regimes, we’re well positioned to continue to have exploration success and development success there.”
Leaving California
Alongside the quarterly earnings report, San Ramon, CA-based Chevron announced Friday it is moving its headquarters to Houston The move will “enable better collaboration and engagement, both internally and externally,” said Wirth.
The company already has about 7,000 employees in the Houston area and roughly 2,000 in San Ramon.
Wirth and Vice Chairman Mark Nelson “will move to Houston before the end of 2024 to co-locate with other senior leaders and enable better collaboration and engagement with executives, employees, and business partners,” the company said.
“There will be minimal immediate relocation impacts to other employees currently based in San Ramon. The company expects all corporate functions to migrate to Houston over the next five years.”
Positions in support of the California operations – including crude oil fields, technical facilities, two refineries and more than 1,800 retail stations – would remain in San Ramon.
Permian Record
Global production averaged 3.29 million boe/d in the second quarter, up 11% year/year. The growth was “driven by the successful integration of PDC Energy Inc. and strong execution in the Permian and Denver-Julesburg (DJ) Basins,” management said.
Chevron acquired PDC, a Denver-based exploration and production firm, in 2023. Chevron also executed agreements in Angola, Brazil, Equatorial Guinea and Namibia to increase its exploration position.
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U.S. production averaged 1.57 million boe/d, including 2.64 Bcf/d of natural gas in 2Q2024, up from 1.22 million boe/d (1.82 Bcf/d) in the same period last year.
The U.S. unit fetched an average realized natural gas price of 76 cents//Mcf, compared with $1.23 a year earlier.
The International Upstream division produced 1.72 million boe/d including 5.38 Bcf/d of natural gas, compared with 1.74 million boe/d (5.48 Bcf/d) in 2Q2023. The average realized international gas price was $6.86 from $7.50.
Capital expenditures totaled $4.0 billion during the second quarter, versus $3.8 billion a year earlier.
As for Chevron’s proposed $53 billion merger with Hess Corp., Wirth said shareholders have approved the transaction. The Federal Trade Commission review process is expected to conclude by the end of September.
Chevron reported net income of $4.43 billion ($2.43/share) for 2Q2024, versus profits of $6.01 billion ($3.20) in 2Q2023. Revenue and other income totaled $51.2 billion, from $48.9 billion.
