Supermajor Chevron Corp. produced a record 2.96 million boe/d net in 3Q2018, 9% higher than a year ago, as the Wheatstone natural gas export project in Australia ramped up and Permian Basin volumes continued to climb.
Global production growth from 2.72 million boe/d in 3Q2017 “represents our highest quarter ever,” CEO Michael Wirth said Friday in announcing the quarterly results.
Global net liquids output for the San Ramon, CA-based operator actually declined 5% from a year ago to 1.13 million boe/d, but natural gas volumes increased by 18% to 5.95 Bcf/d.
In the United States alone, net liquids production increased by 25% year/year to 654,00 boe/d, while natural gas output rose by 14% to 1.06 Bcf/d net. Total domestic production improved to 831,000 boe/d net, a 150,000 boe/d gain year/year.
Permian production was over-the-top, according to CFO Pat Yarrington, who led a conference call Friday morning.
“Permian shale and tight production in the second quarter was 338,000 boe/d, representing an increase of 150,000 boe/d,” she said. “Let me say it again: this is up 80% relative to the same quarter last year.
“As many of you will realize, that’s the equivalent of adding a mid-sized Permian pure-play exploration and production company in a matter of months.”
In Chevron’s operated Permian acreage, where it holds 100% working interest, 20 rigs on average were working during 3Q2018. Another 21 nonoperated rigs also were working company acreage, which equated to another seven net rigs for Chevron.
Shale and tight oil and gas production from the Permian, combined with substantial Gulf of Mexico output, were partially offset by asset sales that were producing 19,000 boe/d.
“Excluding the impact of 2018 asset sales…our year-to-date production growth through the third quarter was 6% higher than the daily average production for full-year 2017,” Yarrington said. By the end of the year, “we expect to be at the top of our original guidance range of approximately 7% growth, excluding the impact of asset sales. And this is even without normalizing for the impact of current prices on production sharing contracts.”
Liquefied natural gas (LNG) projects in Australia, Wheatstone and Gorgon, also are becoming major contributors, she said. Combined the two plants averaged 379,000 boe/d in 3Q2018, a 35% sequential increase.
“We are finalizing the commissioning of the Wheatstone domestic gas plant and expect first sales in first quarter 2019,” said the CFO. “For this gas, production and sales activity will be dependent on local demand. With all five Australian LNG trains running reliably, we’re focusing on finding opportunities to incrementally add production and enhance reliability.”
Net profits doubled from a year ago to $4 billion ($2.11/share) from $2 billion ($1.03). Operating revenues increased to $42 billion from $34 billion.
“Our strong financial results reflect higher production and crude oil prices, coupled with a continued focus on efficiency and productivity,” Wirth said. “Quarterly cash flow from operations of $9.6 billion was the highest it has been in nearly five years,” allowing Chevron “to pay the dividend, fund our capital program, strengthen the balance sheet and repurchase $750 million of the company’s common stock.”
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