Chevron Permian output drops less than expected in Q1; Guyana output exceeds 600,000 b/d

Chevron's Permian Basin production in the first quarter dropped less sequentially than the 2%-4% than had been predicted three months ago, but still expects to continue on a growth trajectory in the second half 2024, its top executive said April 26.

The 859,000 boe/d that Chevron produced in Q1 was barely down 1% from Q4 2023's volumes – a decrease which should persist into Q2 2024 due to the company's intention to build up its inventory of drilled but uncompleted wells during the first half of this year.

Even so, Chevron's Q1 production was "stronger than we had anticipated," company CEO Mike Wirth said in webcast remarks during its Q1 earnings conference call.

As a result, "we now think [Permian production] will be less than 2% down" in H2 2024, and exit the year at higher levels around 900,000 boe/d, he said.

"We had a strong performance in our operated wells, building off momentum" from Q4 2023, Wirth said. "We saw a lot of improvements that resulted in slightly less decline to our base production, and saw significantly shorter frac to POP [placed on production] cycle times that resulted in a few more wells" producing in the quarter.

Wirth said Chevron also saw a "good contribution" from its Permian royalty acreage, which delivers the highest-return barrels in the company because there is essentially no investment required for them as other operators are developing it.

Chevron expects to hit the landmark 1 million b/d of equivalent oil production in the Permian during 2025, while ExxonMobil – also a major Permian Basin producer – expects it will do likewise in 2027, both companies have said.

Guyana producing above 600,000 b/d

Meanwhile, Payara, ExxonMobil's third Guyana producing field which came online in November 2023 and was producing at full nameplate capacity of 220,000 b/d in January, now appears to have boosted total Guyana production a little higher still, the company's Q1 earnings report suggested April 26.

Three Guyana fields that were producing 600,000 boe/d earlier in Q1 are now producing "more than" that, according to the report.

Moreover, "I continue to see opportunities to debottleneck Guyana's oil developments as they come online," ExxonMobil CEO Darren Woods said during the company's Q1 earnings conference call April 26.

Besides the three producing FPSOs, three others are under construction at Guyana's offshore Stabroek Block, in which Hess Corp and CNOOC are also partners.

Pending field developments include Yellowtail, which is slated to come online in 2025; Uaru, which is pegged for 2026 startup; and Whiptail, which was greenlighted earlier in April 2024 and should flow first oil in 2027. All three FPSOs will have 250,000 b/d of production capacity each.

Besides Payara, two other Stabroek fields are producing oil: Liza Phase 1, which began production respectively in December 2019, and Liza Phase 2 which started up in February 2022.

Debottlenecking over the last few years has lifted Liza 1 production to about 140,000 b/d from its nameplate 120,000 b/d, and also raised Liza 2 to about 240,000-245,000 b/d currently from its nameplate of 220,000 b/d.

First Guyana gas-to-power deliveries by year-end

Woods also said Guyana's first gas-to-power project, where offshore gas would be brought to shore to power electricity, is projected to begin delivering gas "sometime at the end of 2024."

Guyana's government will receive the gas and is responsible for installing the power station that will utilize it, he said.

In other Chevron news, CEO Wirth said the company's deepwater Anchor field in the US Gulf of Mexico is on track to deliver first oil around mid-year.

"The floating production unit is being commissioned as we speak," he said. "We're commissioning some of the subsea infrastructure, including flowlines. The first well completion is in progress, the second well has been drilled and the third well is being drilled right now."

Anchor, sited in 5,000 feet of water roughly 140 miles off the coast of Louisiana, is being designed to produce a maximum 75,000 b/d of oil and 28,000 Mcf/d of natural gas per day.

Anchor was the oil and gas industry's first extremely high-pressure field with 20,000 pounds of pressure per square inch – higher than a typical US Gulf deepwater field of maximum 15,000 psi – to be greenlighted. Anchor was discovered in late 2014 but wasn't producible then as the production technology wasn't fully developed.

Not affected by Venezuela sanctions

Also, Wirth said Chevron isn't affected by the reimposed sanctions on Venezuela for that country's failure to to commit to move toward free, fair elections.

"We're not putting new capital into Venezuela right now," he said. "All the spending [we do] is self-funded from cash flow from operations. We've been lifting oil and bringing it to the US, which has been helpful for the US refining system – not just ours but others as well."

He said in the past year, Venezuela's production has increased in the joint ventures in which Chevron participates from about 120,000 b/d to about 180,000 b/d.

And, Wirth said his company's pending acquisition with Hess Corp, scheduled to close in H1 2024, is "advancing."

Many observers thought ExxonMobil's move earlier this year to exercise its preemptive right of first refusal on the deal, in which Chevron would also acquire Hess' 30% of Guyana's coveted Stabroek Block, would delay the transaction's closure.

Wirth has argued all along that the preemptive right "doesn't apply to this transaction."

"We are confident this will be affirmed in arbitration," he added. "We expect a proxy for Hess shareholders to be mailed in April with a special shareholder vote in late May."

ExxonMobil's production in Q1 2024 totaled 3.8 million boe/d, including 2.5 million b/d of liquids, flat with both Q4 2023 and Q1 2023. Natural gas production in Q1 averaged 7.4 Bcf/d, down from around 8 Bcf/d in Q1 2023.

Chevron's global production averaged 3.35 million boe/d in Q1 2024, down from 3.39 million boe/d in Q4 2023 and 2.98 million boe/d in Q1 2023. Liquids output averaged 1.97 million b/d in Q1 2024 while gas totaled 8.3 Bcf/d.