Chevron’s CEO says the outlook for European natural gas is “less risky,” and markets are calmer
The senior major said Friday that legacy Permian Basin operations have directed Chevron Corp. to record US production in 2022, with natural gas and oil production from the play up 16%.
CEO Mike Wirth led a conference call with the executive team to discuss fourth-quarter and full-year performance.
“We had record profits and cash flow in 2022, with increased investments and US production rising to a company record,” Wirth said. Investments have increased by more than 75% annually, with US production increasing to 1.2 million barrels per day.
“We are also investing in the development of both traditional and new energy supplies to meet the growing demand for affordable, reliable and cleaner energy,” Wirth said.
CEO, whose company you own LNG prospects around the worldincluding two LNG export facilities in Australia, took a few minutes to discuss with market analysts ups and downs.
“We certainly had a very unusual and volatile year in ’22, which has settled here as winter has come,” he said of natural gas. “Primarily, we experienced a much milder winter in the Northern Hemisphere than is normal…
“In Europe, this year’s successful build-up of inventories and reduced industrial demand has resulted in a less risky outlook for European economies than it did several months ago,” Wirth told investors. “I think the market reflects all of that.”
The CEO said that the Chinese economy has also been slow, but it may be changing.
“I think it’s good for the markets to calm down. I mean, high prices have been creating a lot of pressure there and that’s not good. And I hope we see those prices stay in a more moderate range as we go into 2023.”
Chevron’s natural gas is “primarily contracted based on oil index prices”, with “the biggest piece, obviously outside of Australia … We did really well in Australia last year with a record number of shipments. And there were some spot shipments in This mix is out of Australia, from West Africa.”
The Permian is still growing
The Permian boosted GDP, but worldwide, net natural gas and oil production in the fourth quarter of 2022 fell 3% annually to 3.01 million barrels of oil per day. Production averaged 3.00 mb/d for the year, also down 3% from 2021. International production fell 7% in 2022, while US production increased 4% from 2021, mainly due to the Permian .
“After adjusting for lower prices and portfolio changes, primarily the sale of our Eagle Ford assets and contract expiration in Thailand, we expect production to grow, led by the Permian, other shale assets in the limited,” said CFO Pierre Breber. during the conference call. “We remain confident in exceeding our long-term production guidance.”
Wirth explained that the production forecast for 2023 is based on an average oil price of $80 per barrel, with output growth of 0-3%, to between 3.0-3.1 million barrels of oil per day.
“We have some downtime plans,” he said, which shifted to 2023 from 2022. “And then our growth in the Permian will be a little bit lower in ’23.”
Chevron benefited in the Permian River last year due to a backlog of drilled but incomplete wells, or DUCs. When the DUCs turned to sales, “they went into production a little bit earlier in ’22. And then we’re also refining some of our development plans to take into account some of the things that we continue to learn in terms of interactions … about how we’re going to do lateral spacing and do single or multiple development.
Overall, US production in the fourth quarter of 2022 was 1.19 million barrels per day in the fourth quarter of 2022, down slightly from the previous year as the decline in the Gulf of Mexico was partially offset by increases in the Permian period. The net liquids component of domestic production decreased by 4% to 895 thousand barrels per day.
Specifically for global natural gas, net production in the fourth quarter of 2022 was 7.58 bcf/d compared to the previous year’s production of 7.74 bcf/d. US gas production was trending up 4% from a year earlier to 1.79 bcfd. International gas production fell to 5.79 bcfd from 6.01 bcfd in the fourth quarter of 2021.
Global natural gas sales increased slightly to 9.96 bcfd in the fourth quarter of 2022 compared to last year’s sales of 9.34 bcfd. US gas sales have roughly stabilized at 4.22 billion cubic feet per day. International sales rose to 5.73 bcfd from 5.08 bcfd.
Chevron achieved an average US natural gas sales price of $4.94/cf in the fourth quarter of 2022 versus $4.78 in the fourth quarter of 2021. Average sales prices for crude oil and natural gas liquids were $66 per barrel from $63 the previous year.
For international gas, the average selling price was $10.35/cf in the fourth quarter of 2022 from $7.90 a year earlier. Crude oil and natural gas liquids prices averaged $78 a barrel from $74.
Chevron has launched several large projects in the past few months to enhance its traditional production of natural gas and oil, in addition to building up alternative energies accumulated.
To this end, Chevron acquired renewable energy group, becoming the second largest producer of biodiesel in the United States. Chevron also launched a joint venture with Bunge North America Inc. To develop raw materials for renewable fuels.
In addition, a San Ramon, California” product developed Multiple opportunities for carbon capture. They include The Bio Bend Carbon Storage Projectwhich will be off the Gulf Coast, and has secured permits to assess carbon storage off the coast of Australia.
while, Integrated polymer projects in Texas have been approved with Qatar Through a half-owned subsidiary, Chevron Phillips Chemical Co. LLC. Chevron agreed Ballimore Project in the deep waters of the Gulf of Mexico, with a design capacity of 75,000 b/d.
Net profit was $6.4 billion ($3.33/share) for the fourth quarter of 2022, compared to $5.1 billion ($2.63) in the fourth quarter of 2021. Full-year 2022 earnings rose to $35.5 billion ($18.28/share), up From $15.6 billion in 2021 ($8.14).
U.S. exploration and production earned $2.62 billion in the fourth quarter of 2022, compared to $2.97 billion a year earlier. The local refining arm reported profits of $1.18 billion in the fourth quarter, compared to $660 million in the fourth quarter of 2021.
The company also raised its quarterly dividend by 6%, to $1.51 per share. In addition, the Board of Directors approved a new $75 billion share repurchase program.