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CNBC: Exxon Mobil and Chevron on Tuesday said they both plan to surge oil and natural gas output from America’s top shale field in the coming years, a strategy that the energy giants say will yield significant returns.
As early as 2024, Exxon believes it can increase output from the Permian Basin to 1 million barrels per day of oil equivalent, a measure that blends crude oil and gas production. That represents an 80 -percent increase, the company said in a news release a day ahead of its meeting with investors.
Meanwhile, Chevron aims to more than double its oil and gas output to 900,000 boepd by the end of 2023. Chevron sees Permian production hitting 600,000 boepd by the end of next year, the company said at its meeting with analysts on Tuesday.
The Permian is the epicenter of the U.S. shale boom, which has made the nation the world’s top producer of oil and natural gas. Drillers in the region underlying western Texas and southeastern New Mexico use advanced techniques like hydraulic fracturing to coax oil and gas from shale rock formations.
Once the domain of independent frackers, the shale drilling process is being industrialized by large international oil companies. The oil majors are stitching together large swaths of land and drilling multiple horizontal wells from a single location, making the expensive method more efficient.
“The big thing that I think has changed is the shale game has become a scale game, and so people that can do things at large scale and bring the capabilities to bear that a company like Chevron has are the ones that really can take this to the next level,†Chevron Chairman and CEO Michael Wirth told CNBC’s “Closing Bellâ€Â on Tuesday.
Chevron’s output from the Permian hit 377,000 boepd last quarter, an 84 percent increase from a year ago. The company says it plans $19 to $22 billion in capital spending per year from 2021 to 2023.
“Our message to our investors was it’s a good time to be Chevron. Our portfolio is stronger than it’s ever been, and you don’t have to look any further than the Permian to see that,†Wirth said. “We’re delivering strong production with low risk and disciplined spending, which leaves plenty of money to be returned to shareholders.â€
Exxon’s Permian production surged 93 percent in the final quarter of 2018 from the year-ago period.
“We’re increasingly confident about our Permian growth strategy due to our unique development plans,†Neil Chapman, senior vice president at Exxon, said in a statement. “We will leverage our large, contiguous acreage position, our improved understanding of the resource and the full range of ExxonMobil’s capabilities in executing major projects.â€
Exxon says its Permian assets can produce healthy returns even during times of low oil prices. If crude futures fall to $35 a barrel, Exxon says returns from its Permian assets will still average 10 percent.
Permian Basin oil production is expected to top 4 million barrels per day this month. That is about a third of total U.S. output, which is sitting at a record just above 12 million bpd, according to preliminary government figures.
Output from the region has been constrained by a lack of pipelines needed to carry crude from oil fields to refineries and export terminals. Analysts expect the industry to bring new infrastructure online and clear the bottlenecks by the end of the year.
Exxon is investing heavily in the Permian and U.S. Gulf Coast, with construction planned or under way at 30 sites to account for growth in oil and gas processing and water handling and to assure there’s enough infrastructure to move fossil fuel around the region.
Earlier this year, Chevron announced it would buy Pasadena Refining System from Brazil’s Petrobras for $350 million. The deal will give Chevron control of a Pasadena, Texas, refinery, its first processing facility in the Houston area and a means of processing its growing Permian output.
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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