Chevron Corp. has not shut in any natural gas wells within its U.S. onshore portfolio, but it is “working to minimize dry gas as much as we possibly can,” CFO Pat Yarrington said Friday.

She discussed the oil major’s North American operations and 1Q2012 earnings performance during a conference call with financial analysts.

The Marcellus Shale is the only onshore region where gas production may increase this year because Chevron has an obligated drilling requirement, or carry, that came when it purchased Atlas Energy Inc. in late 2010 (see Daily GPI, Nov. 10, 2010). At the time of the takeover Atlas had a joint venture in a portion of the play with India’s Reliance Industries Ltd., which Chevron assumed under the original agreement terms (see Daily GPI, April 23, 2010; April 12, 2010).

Besides the gas drilling requirement in the Marcellus, “we are definitely focused on liquids-rich plays,” Yarrington said.

Although she couldn’t provide drilling rig statistics for Chevron’s North American operations, Yarrington said “everything we’ve got is cash break-even or better” in the onshore.

Some delineation work is ongoing in the Utica Shale, where the oil major plans to begin drilling later this year. In addition, an estimated 200 wells are planned for the Wolfcamp play in Texas, another liquids-rich play, the CFO said. A third well is also under way in the Duvernay Shale in Canada, and “we are encouraged from that standpoint.”

U.S. gas production dropped 10% in 1Q2012 from the year-ago period, which Yarrington explained was mostly because of the sale last summer of the company’s Cook Inlet, AK, assets to Hilcorp Energy Co. (see Daily GPI, July 21, 2011). Net production at the time was estimated at 85 MMcf/d and 3,900 b/d of oil, or 4,410 boe/d.

Asked if Chevron might consider buying any distressed North American gas assets, Yarrington hedged. “I don’t think we ever take anything off the table but I would emphasize a value approach here. If a combination of opportunities were there where we could see value down the line, that might be something we would take a look at. It would have to compete in our portfolio…We have a very strong portfolio and it would have to [hit a high bar] for any sort of addition to it.”

Chevron reported net earnings of $6.5 billion ($3.27/share) in 1Q2012, down from $6.2 billion ($3.09) in the year-ago quarter. Sales and other operating revenues were nearly flat at $59 billion, versus $58 billion a year earlier. U.S. upstream earnings totaled $1.53 billion, up $80 million from year-ago profits of $1.45 billion.

Worldwide net production was 2.63 million boe/d in the latest quarter, down from 2.76 million boe/d a year ago. Production increases from project ramp-ups in the Gulf of Mexico and overseas “were more than offset by normal field declines, maintenance-related downtime and dispositions.”

Chevron’s average sales price for U.S. natural gas fell to $2.48/Mcf in 1Q2012, versus $4.04 in 1Q2011. The company’s average sales price for crude oil and natural gas liquids was $102/bbl, up from $89 a year earlier.

Total net production in the United States in 1Q2012 was down 6%, or 43,000 b/d, year/year to 651,000 boe/d, mostly on normal field declines, and the loss of volumes from Cook Inlet.

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