Chevron's Permian Pivot | Russell T. Rudy Energy LLC
“Rigzone” reports that Chevron, like fellow super majors ExxonMobil and Shell, is shifting focus to the Permian Basin of West Texas and Southeast New Mexico. On the surface this could be interpreted as merely following the trend to the Permian shales. However, this is not a change of direction, but rather a change of emphasis.
Largely as a result of acquisitions of predecessor companies, Chevron has an enviable position in the Permian. The company controls 2 million acres with an estimated 9 billion barrels of reserves valued at approximately $43 billion.
Previously Chevron, like most mega-majors oil companies, invested heavily in capital intensive, long lead time projects in remote areas or deep water. However, with oil prices less than half what they were a couple of years ago, Chevron and its peers are opting for shale plays which require less capital and yield revenue quickly. This is especially true in mature production provinces such as the Permian.
Still, Chevron’s largest project is Tengiz in Kazakhstan, which will not start generating revenue until after 2020. However, this year the operator is increasing its spending in the Permian by 67% to $2.5 billion, making it the company’s second largest investment. Chevron plans to add 9 more rigs between now and year-end, bringing its total to 20. In return, the company expects to increase production by more than 8 fold to 700,000 barrels of oil per day within a decade.
To read the article in its entirety, please go to http://www.rigzone.com/news/oil_gas/a/149103/Chevron_Pivots_To_Permian_Shale_As_MegaProject_Era_Fades/?all=HG2 .
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