Upcoming Projects to Support the Company’s Production Volume

Friday 27 July 2012, Amsterdam

Chevron is among the big six players in the oil and gas sector and has a strong asset base globally. The company has recently been managing its legacy and upcoming projects to boost its upstream portfolio. However, its production declined at an annual rate of about 3.3% during 2011 compared to the previous year due to a decline in production from legacy assets and the impact of external factors such as the production halt in the GoM due to the Deepwater Horizon oil spill. However, Chevron is now aggressively involved in developing upcoming projects to enhance its overall production. In line with this, the company has some major upcoming projects including Usan, Angola LNG, Caesar/Tonga, Jack/ St. Malo, Big Foot, Mad Dog II, Papa Terra, Chuandongbei, Gorgon LNG Train 1–3 Expansion and Wheatstone LNG Trains 1-2.

Chevron is developing the Usan project in Nigeria, which is likely to be one of the major contributors to the company’s production in future. The company owns a 30% working interest in the Usan project. Chevron expects production to commence in 2012, and reach maximum production of 180 Mboe/d in 2014. Apart from this project, the company also has a presence in Angola with one major upcoming project. The company holds interest in the Angola LNG Plant along with Sonangol (22.8% WI), Eni, Total and BP, each with a 13.6% WI. The Angola LNG project is expected to commence production in 2012. The plant is designed to process around 175 Mboe/d net of production during 2014.

In GoM, Chevron has been involved in developing various projects including Caesar/Tonga, Jack/ St. Malo, Big Foot and Mad Dog II. The company holds a 20.3% working interest in Caesar/Tonga. The company’s development plans for this project includes the drilling of four wells and a subsea tieback to a third-party production facility. The production from this project is expected to commence by mid-2012. Chevron expects the Caesar/Tonga project to reach peak production of about 46,000 boe/d. The company is also developing its GoM assets with another major asset Jack/ St. Malo. It holds 50% and 51% interests in the Jack and St. Malo fields respectively. This project is expected to commence production in 2014 and reach a maximum production of around 177 Mboe/d during 2015. The total production cost involved in the initiation of the development activities of this project was around $7.5 bn. Apart from these two projects, the company is also developing the Big Foot project in the GoM. Chevron operates and owns a 60% working interest in this project. The company expects production to commence in 2014 and expects production to reach a maximum level of 79 Mboe/d by 2016. Chevron also has a 15.6% working interest in Mad Dog II. Mad Dog II is a major developing project in the GoM that is expected to start production in 2013. The company expects this project to produce a maximum output of 130 Mboe/d by 2015.

In addition to the major projects above, the company is also developing the Papa-Terra project, which is located in Brazil. Chevron holds a 37.5% interest in the Papa Terra project. The company expects to incur a cost of around $5.2 billion. The Papa-Terra project is expected to commence production in 2013, with a peak production of around 140,000bbl/d.

Apart from the construction and expansion of its crude oil projects the company is also focusing on the development of its natural gas portfolio. Chevron operates and holds a 49% working interest in Chuandongbei PSC, which is located in the onshore Sichuan Basin. The Chuandongbei project includes two sour-gas processing plants with a design capacity of 740 MMcf/d. The company expects the production from this project to start in 2013 and reach a peak of 558 MMcf/d by 2015. The company also has interest in two other major LNG projects located in Australia, Gorgon LNG Train 1–3 Expansion and Wheatstone LNG Trains 1-2. Chevron operates and owns a 47.3% working interest in the Gorgon LNG project. The company will get engaged in developing this project by building three-train for 15 MMt LNG facility. The company expects production to commence in 2014 with maximum production to reach 450 Mboe/d in 2016. Chevron also has a 90% working interest in Wheatstone LNG Trains 1-2. Chevron expects this project to start production in 2016 with maximum production to reach 260 Mboe/d in 2018.

Chevron has efficiently balanced its crude oil and natural gas mix through a range of legacy and upcoming assets. With the increase in crude oil prices matching the increase in natural gas prices, Chevron’s focus towards the development of crude oil projects will boost the company’s production output and cash flows. Chevron’s upcoming projects have reached their peak at fairly regular intervals, which has fueled its cash flows. The company has designed and developed these upcoming projects so that they will come online during 2013–2014. Therefore, the development of these projects during 2012–2016 will provide stable cash flows for the same period. GlobalData expects the company’s production to grow at a CAGR of 3.7% during 2012–2016. It also has several development and exploration projects lined up to support its production beyond 2014. The projects are geographically diversified and span all resource types, suggesting a balanced and strong portfolio.