Drilling & Completions | Top Story

Chevron Changes Strategy On Permian; Slows Growth, Rig & Frac Activity

Share Print Bookmark    |    Friday,July 31,2020

Chevron Corp. announced its 2Q results.  Here is a quick read through regarding the Permian.  

As you might remember, Chevron inked a deal to acquire Noble Energy.  At the time we said the deal didn't make sense as it didn't fit into the Chevron's vision of the future, which was massive growth the Permian assset.

Current operations (as of 7/31/2020)

• Rigs : 5 Rigs Running
• Frac Crews : 1 Frac Crew
• Capex $1.7 billion down from initial guidance of $4 billion (feb 2020)

Chevron has some 2.2 million net acres in the Basin and last year provided a guidance to growth Permian Production to 1 million barrels of oil equivalent (1MMboe/d).    Since March the company has been busy cutting its drilling & completion programs, see the drilling activity chart below.   Chevron also put it's Appalachia asset up for sale.   As you can see from Chevron's production chart below, the company intends to slow activity through 2022 in the Permian Basin.  This reduction in production is as a result of a drastic reduction in capital investment in the basin.  

As the company reduce its spending in the Basin, not only is drilling activity affected by also the number of wells completed/frac'd.  Which is the best indicator of future production.   As a july the company was operating 5 rigs and 1 frac crew.

“The near-term production profile for the Permian has changed, but our long-term view of the assets’ attractiveness has not,” Johnson said

Chevron Permian Capital Spending

Chevron Drilling Activity (rig count) by Basin

Click here for rig count by other operators

Chevron Permian (Horizontal) Production