As it continues to restore its Gulf of Mexico (GOM) infrastructure damaged in last year’s hurricanes, Chevron Corp. said it now expects 3Q2006 U.S. natural gas liquids (NGL) and gas production volumes to increase 1.4% sequentially over 2Q2006.
In an interim quarterly report covering the first two months of 3Q2006, Chevron reported its combined NGL and gas output reached 779 million boe/d (net). That compares with full 2Q2006 net production of 768 million boe/d, and 3Q2005’s 735 million boe/d. Domestic gas production for July and August was 1,879 MMcf/d (net), which also is higher than the full results for 2Q2006 or 3Q2005. In 2Q2006, Chevron’s U.S. gas output was 1,832 MMcf/d, and in 3Q2005, output was 1,676 MMcf/d.
Pre-Hurricane Katrina, Chevron’s GOM oil and gas production was about 300,000 boe/d (see NGI, Jan. 30). Earlier this year, Chevron said it expected GOM production to average about 200,000 boe/d, with a slightly higher rate occurring in the last six months.
In the first two months of 3Q2006, Chevron’s U.S. gas realizations increased 16 cents/Mcf, averaging $6.05/Mcf, which was higher than a composite of bidweek price changes for Henry Hub, Rocky Mountain and the California border, “due to a mix of production in the various regions and spot sales.” Chevron’s 2Q2006 gas prices averaged $5.89/Mcf; in 3Q2005, gas prices averaged $7.34/Mcf.
Chevron also reported international oil and gas production is expected to rise about 1.1% sequentially from 2Q2006. However, a tax dispute with the Republic of Chad may affect international results, and “the magnitude of the potential impact is not known at this time,” the report said.
Overall, 3Q2006 taxes are expected to increase by $40 million from a year ago, and the producer also will be impacted by a $100 million charge for increases to its environmental reserves account, which is set aside to pay for potential remediation work. Net after-tax charges for corporate and other activities are expected to range between $160-$200 million.
Chevron is scheduled to release its quarterly results on Oct. 27.
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