Chevron Corp. spud its first well during the third quarter in Alberta's promising Duvernay Formation, CFO Pat Yarrington said Friday.

The San Ramon, CA-based oil major acquired more than 200,000 acres in the Canadian unconventional oil and gas play in February, joining a bevy of big and small producers that today include Royal Dutch Shell plc and Encana Corp.

CFO Pat Yarrington, who spoke with analysts and investors during a conference call Friday to discuss quarterly earnings, said there wasn't much drilling activity between July and September. The company instead focused on other activities across its global portfolio.

However, exploration progressed in two of Chevron's unconventional plays.

"We spud our first well in Duvernay" during the quarter and spudding a well in Poland is "imminent," she said. More development is expected over the course of the coming months, she explained.

Chevron, which now has a big footprint in North America's unconventional plays after buying Atlas Energy Inc. earlier this year, has kept news about its separate Duvernay purchase quiet, as many of the big producers do. Athabasca Oil Sands is the largest net acreage holder in Duvernay with 475,000 acres, according to information compiled by NGI's Shale Daily (see Shale Daily, Aug. 29). Encana Corp. is second with 365,000 net acres and Talisman Energy Corp. is third with 360,000 net acres.

Even though profits nearly doubled from the year-ago period, the lack of production was evident in Chevron's 3Q2011 earnings report. Chevron topped Wall Street expectations in the latest quarter, reporting that profits nearly doubled from a year earlier to $7.8 billion ($3.92/share) from $3.8 billion ($1.87). A consensus forecast by analysts had expected earnings to average $3.48/share in the latest period.

Sales and other operating revenues jumped to $61 billion in 3Q2011, up from $48 billion in the year-ago period.

However, worldwide net oil-equivalent production fell in 3Q2011 to 2.60 million boe/d from 2.74 million boe/d in 3Q2010.

Chevron blamed the fall-off in production to normal field declines and tropical storm and maintenance-related downtime. Partially offsetting the decrease was production from the acquisition of Atlas in 1Q2011, as well as increases in output from the Perdido project in the GOM.

"Production increases from project ramp-ups in Canada, the United States and Brazil and new volumes stemming from the acquisition of Atlas Energy Inc. were more than offset by maintenance-related downtime, normal field declines and an approximate 39,000 b/d negative effect of higher prices on volumes produced under cost-recovery and variable-royalty contract provisions," the San Ramon, CA-based oil major stated.

U.S. upstream capital expenditures totaled $2.06 billion in the latest quarter, nearly triple the $736 million spent in the year-ago period. U.S. downstream spending was $362 million in 3Q2011 versus $313 million a year ago. However, the spending didn't translate into domestic production gains or sales.

Gas production in the United States in 3Q2011 was flat year/year at 1.26 Bcf/d from 1.25 Bcf/d. Net U.S. liquids output fell to 453,000 b/d from 482,000 b/d, while oil equivalent production was 662,000 boe/d, down from 692,000 boe/d. Gas sales in the United States totaled 5,812 MMcf/d, versus 6,091 MMcf/d in 3Q2010. Meanwhile, sales of U.S. gas liquids were slightly higher during the period at 160,000 b/d, up from 157,000 b/d in the year-ago period.

Chevron's average sales price was $97/bbl in 3Q2011, up from $69 a year ago. The average sales price of natural gas was $4.14/Mcf, compared with $4.06 in the year-ago quarter.