Chevron back on track to push Permian production toward million barrel a day target

U.S. supermajor Chevron Corporation achieved record Permian Basin production of 772,000 boe/d in the second quarter of 2023, up 11 per cent compared to the same quarter of 2022 and up five per cent from its previous record quarterly production of 738,000 boe/d in the final quarter of 2022.

The company addressed ongoing issues with well interference in the Delaware Basin area of the Permian in the quarter, helping to get production back on track towards its goal of surpassing one million boe/d of production by 2025.

“We expect Permian production in the next quarter to be flat before growing again in the fourth quarter, on track with full-year guidance,” said chief executive officer Mike Wirth.

Chevron’s full-year guidance is for 745,000 boe/d, an over five per cent increase from last year’s production of 707,000 boe/d.

At its investor day earlier this year, Chevron said it expects its Permian assets to produce one million boe/d by 2025 and plateau at 1.2 million boe/d later this decade, accounting for around one-third of its total production.

Despite the healthy production levels, Chevron reported a 48 per cent fall in net earnings from the year-ago quarter, primarily due to lower oil and gas prices. Net cash flow from operating activities fell to US$6.3 billion from $13.8 billion in the year-ago quarter.

Meeting guidance

The record production from the Permian offset lower production in other parts of Chevron’s portfolio, helping keep the firm on track to meet its full-year guidance.

Evacuations because of wildfires in Canada and an accident at the Benchamas oilfield in the Gulf of Thailand that suspended operations negatively impacted production.

“Those two things are the ones that are pushing us down, both unexpected,” said Wirth.

Chevron expects upstream turnarounds and downtime to reduce production by about 110,000 boe/d across its global portfolio in the third quarter.

It plans to increase its production in the United States with the recent acquisition of PDC Energy, Inc., which closed in August.

The company expects the PDC acquisition to grow production in the Denver-Julesburg basin to 400,000 boe/d from 140,000 boe/d.

Chevron reported annual production of three million boe/d worldwide last year. It forecasts production to be flat or to increase by three per cent annually from those levels annually through 2027.

For more on Evaluate Energy’s company performance data, click here.