Deliveries from Chevron Corp.’s two operated Australian LNG export facilities, both through spot sales and contracts, helped propel third quarter profits, and executives are considering ways to expand exports from the Atlantic Basin and the Eastern Mediterranean.


During the quarterly conference call on Friday, CEO Mike Wirth said the international upstream results benefited from “record” liquefied natural gas cargoes, primarily those from the Gorgon and Wheatstone projects in Australia.

“We’re very happy to see that it was a time when the world needed the energy,” Wirth said of the sales. A lot of the supply was under long-term contract, “but that included cargoes in the spot market, which we know were at high prices.”

Natural gas production increased year/year to 7.92 Bcf/d net from 7.66 Bcf/d. U.S. gas output was flat at 1.71 Bcf/d. Worldwide gas sales jumped to 12.45 Bcf/d from 9.53 Bcf/d, with U.S. natural gas sales up year/year at 4.46 Bcf/d from 4.08 Bcf/d.

For its global gas, Chevron’s realized average price was $10.36 from $6.28 in 3Q2021. The average price for U.S. natural gas of $7.05, compared with $3.25 a year earlier. 

The final three months of the year are likely to result in “fewer LNG cargoes from Australia,” CFO Pierre Breber said. However, there are some projects on the drawing board that could expand Chevron’s LNG portfolio.

‘Advancing Projects’ Beyond Pacific

On the Gulf Coast, Chevron is working on some plans “that will give us offtake that we can move into global markets,” Wirth said. Some of the gas would be supplied by the prolific Permian Basin 

“And then we’re advancing projects in the Eastern Mediterranean” from assets acquired through Chevron’s takeover of Noble Energy Inc. Producing the gassy assets in the deepwaters of the Eastern Med, as it is known, “would potentially allow an expansion of the Leviathan gas field to provide LNG supply that can go into global markets,” Wirth said.
The San Ramon, CA-based company also is looking at “other things” to export gas, which include the “big process” underway in Qatar to expand the North Field.

“We certainly…deeply involved in evaluating that opportunity,” the CEO said. “I like everything that we look at.”
However, “LNG has to compete against the other investment opportunities in our portfolio. We’re going to stay very disciplined on capital. And we won’t invest in everything that we could. We’re going to invest in the best things that we can, and I expect that will include some LNG projects over time.”

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Inflation? Not A Permian Problem

Asked about how inflation has impacted operations, particularly in the Permian, Wirth said, “we like to tell people ‘we plan our work and work our plan’…Frankly, if you go back to the pre-Covid trajectory, we’ve pretty much stayed right on, even with the interruption of Covid. 

“In terms of contracting for rigs, completion crews, pipe, sands, you name it, we tend to have a longer term visibility into that.”
Chevron secured oilfield services “earlier, and that can result in both quality and availability of people, equipment, etc. So we don’t see any meaningful constraints on our ability to execute our program.” There is “some cost inflation, and the Permian is probably the strongest that we see around the world…in the low double digits, year on year. 

“In other parts of our portfolio, the cost pressures are probably a little bit less as the constraints aren’t quite as pressing…Yeah, it’s very real, and you know, we’ve seen this movie before in the Permian. We’ve seen it up in the oilsands a decade earlier…In a cyclical business, this is part of it.”

Permian output was up about 10% year/year in 3Q2022 to average 708,000 boe/d on average. 

“The thing that some people may miss is, during the pandemic, drilled but uncompleted, DUC, well inventories really grow and rightfully so,” Wirth said. There was no need to complete wells and bring them online when there was declining demand.

“We kept some drilling going so that the inventory grew. As we went back to work, the first thing we did was send completion crews out to inspect to bring the DUCs online…Through the back half of last year and certainly the first part of this year,” the DUCs were supplanting new drilling, “which may have misled a little bit in terms of the rate of growth because this was this kind of surge capacity.”
Today, Chevron is “back to factory drilling,” Wirth said. “Now our DUC inventory is in line with what our plan would suggest it would be. And so we’re seeing production level out at a growth rate that is more the kind of underlying rate that you should see…”

Net income rose to $11.2 billion ($5.81/share) in 3Q2022 from $6.1 billion ($3.19) in the year-ago period. Revenue jumped to more than $66.6 billion in the latest quarter from year-ago revenue of $44.7 billion.

Upstream earnings increased year/year to $9.3 billion from $5.1 billion. U.S. upstream profits rose to $3.4 billion from $1.9 billion. International upstream operations earned $5.91 billion, versus $3.17 billion.