After a year marked by oil and gas production setbacks, Chevron Corp. on Friday delivered a better-than-expected 10.7% annual gain from the Permian Basin, its top shale-producing region.
The company delivered a record 867,000 barrels per day (bpd) in the fourth quarter and, after a first-half dip in output, aims to pump about 900,000 bpd by year-end and reach 1 million bpd by 2025.
Chevron increased its productivity in the west Texas and New Mexico shale field by drilling faster and longer horizontal wells with the same drilling rig fleet, said Chief Executive Officer Michael Wirth on a call with analysts.
Results benefited from improved well-completions, and fewer frac hits, midstream problems and scheduled delays. Inflation in the top U.S. shale field also moderated, with room for further improvements, Wirth said.
Shale production will slip 2% to 4% in the first half of this year on January weather disruptions and as the company concentrates on rebuilding its inventory of untapped wells.
Chevron started the year running 12 drilling rigs and three hydraulic fracturing crews. It plans to add a fourth frac crew near mid-year, Wirth said.
“I don’t think we’ve seen the end of the performance improvement cycle,” Wirth said. Additional productivity gains are possible this year from sharing operating practices with employees of PDC Energy, a company Chevron acquired last year.
Analysts had lowered their earnings and share price estimates in December after setbacks in the Permian and elsewhere. However, the higher shale productivity helped Chevron recover lost ground and end 2023 within its production forecast.
“The quarterly ups and downs on some of these things can create some questions,” Wirth said, but the company “ended the year right on our guidance.
“We’re well positioned not just for 2024, but into 2025 and 2026,” he added.
The productivity gain led Bernstein & Co oil analyst Robert Brackett to question if Chevron’s 2024 production estimates are too conservative.
Source: Reuters (Reporting by Sabrina Valle; Editing by Leslie Adler)