Lower maintenance activity in T&T resulted in increased production of crude oil year-on-year (y-o-y) in the third quarter (Q3) of 2014, Chevron said during a conference call with investors October 31.Chevron's worldwide net oil and gas production fell y-o-y though, from 2.585 million barrels of oil equivalent per day (boed) in Q3 2013 to 2.568 million boed in Q3 2014.Out of those figures, Chevron's Investor Relations General Manager Jeff Gustavson said, "Unconventional production increased in the Permian, in the Vaca Muerta, in Argentina by 40,000 boed. Lower turnaround activity mainly in T&T, Kazakhstan and the Gulf of Mexico increased production by 19,000 boed. Production entitlement effects decreased production by 28,000 boed."
Chevron does not have production of its own in T&T but produces from the Dolphin and Dolphin Deep natural gas fields operated by its 50-50 partner, the Britain's BG Group's local unit (BG T&T), offshore in the East Coast Marine Area. Chevron country manager Ravi Bajaj, up to press time, had not responded to the Guardian's e-mail query, but Chevron's fact sheet on T&T, updated in May, said production of "first natural gas is expected in 2015" from Starfish, another gas field held in 50-50 partnership with BG T&T.
Chevron also holds the single largest stake in the Loran-Manatee field, which straddles the T&T-Venezuela maritime border. With the BG Group, Chevron also has a 50 per cent interest in a liquefied natural gas (LNG) marketing and transportation company, Trinlng Ltd, which ships and sells LNG to markets worldwide. Chevron also sells lubricants under the Chevron and Texaco brands through T&T distributors.
Even before oil started to fall
During the conference call, Chevron's Gustavson also addressed what Morgan Stanley analyst Evan Calio would call a "modest silver lining on the low oil price." The decrease in crude oil prices between Q3 2013 and Q3 2014 "resulted in a small increase in net production volumes primarily as a function of our production sharing contracts in Indonesia. This increase was more than offset, however, by negative production entitlement effects in Kazakhstan as well as lower cost recovery volumes due to changes in absolute spending levels," said Gustavson.
Chevron vice president and chief financial officer (CFO) Pat Yarrington said Chevron is "keenly focused on managing operating cost. This, too, is not a new area of effort for us since oil prices have been drifting south for the past few years while costs have continued to rise."Yarrington said Chevron costs are "already highly competitive with our larger peers as well as a much broader set of exploration and production (E&P) companies. Well before the recent price decline, several of our international and domestic business units, as well as our corporate departments already had notable cost reduction efforts underway."
Yarrington said Chevron will be careful about managing its ongoing asset divestment and portfolio rationalisation efforts. He said the valuations for some assets targeted for sale are "not likely to be affected by near-term circumstances, but the valuations for other prospective sale assets may be. In all cases, we will only sell if we can capture good value."By the end of 2014, Yarrington said Chevron should be well on its way to its US$10 billion asset divestment target. He said: "We still have confidence in achieving it between now and the end of 2016. We have a great deal of experience and managing through prior price cycles in both our upstream and downstream businesses, and we feel confident in our ability to allocate capital appropriately and to sustain a competitive cost structure even in a lower commodity price world."