Chevron Corp.'s capital and exploration (C&E) activity this year will be "essentially on par" with spending in 2006 as the company continues to develop an array of global natural gas projects that should begin to ramp up in 2008, the CFO said Friday.
During a conference call with investors on Friday, CFO Steve Crowe said worldwide C&E expenses in the first quarter were up 26% from 1Q2006, but they were down 21% from 4Q2006.
"Certainly, our C&E pattern is influenced by our large projects, which we tend to monitor very, very closely," Crowe said. "The C&E tends to be back loaded through the end of the year, which is right in line with our historical pattern. We tend to spend the most in the first quarter."
Chevron's worldwide exploration successes last year prepared it to begin development on several fronts going forward. In 2007, Chevron plans to invest around $19.6 billion in the upstream, which is about 18% more than 2006 spending levels. About 75% is planned for oil and gas exploration and production projects worldwide. Another 20% will be devoted to global refining, marketing and transportation.
Capital spending in 1Q2007 totaled $4.1 billion, up from $3 billion for the same period of 2006. However, the increased spending did nothing to boost U.S. upstream production. U.S. natural gas output was 1.723 Bcf/d, which was nearly flat compared with the 1.782 Bcf/d reported in both 1Q2006 and 4Q2006. Total U.S. production was 746,000 boe/d, compared with 750,000 boe/d in 1Q2006 and 763,000 boe/d in 4Q2006.
George L. Kirkland, executive vice president of upstream and gas, said that with the company's "140 Tcf of natural gas resources, it is clear that natural gas will play an increasingly important role in our future production." He spoke Wednesday at the company's annual shareholder meeting. Chevron is "pursuing growth opportunities" in both liquefied natural gas and gas-to-liquids to commercialize its gas resources, and it has about 30 major gas projects under way, many of which are legacy developments.
"Our projects are targeted to supply an ever-growing and more interconnected world market," Kirkland said.
Last year in the Gulf of Mexico, Chevron concluded development drilling activities for its $3.5 billion Tahiti project.
"With much of the construction for the massive deepwater platform well under way, we expect first production from this project in 2008," Kirkland said. "We also are fabricating key facilities for the Perdido deepwater project in the Gulf of Mexico, which should begin producing near 2010."
Lower oil and natural gas prices buffeted Chevron's earnings in the first three months of 2007, but the company still managed to chart an 18% rise in profit on the sale of some overseas assets.
The San Ramon, CA-based oil major posted net income of $47.2 billion ($2.18/share), compared with $4 billion ($1.80) in 1Q2006. Results included a $700 million gain (32 cents/share) on the sale of its interest in the Netherlands manufacturing and refining business. However, revenue dropped 13% to $48.2 billion from $54.62 billion.
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