Latest news with #BruceNiemeyer
Yahoo
7 days ago
- Business
- Yahoo
Why Chevron Is Scaling Back Its Permian Footprint
Chevron is approaching a production plateau in the Permian Basin—America's top oil field—and expects this shift to generate billions in free cash flow, according to Bloomberg. The company is cutting back on drill rigs and frack crews as it nears its long-term target of 1 million barrels of oil equivalent per day, which it expects to sustain through 2040. 'We're going from growth to cash generation,' said Bruce Niemeyer, president of Chevron's shale business. 'We're already in the earliest phases of that. We're making adjustments to rigs and the frack spreads which will reduce the amount of capital we're spending on an annual basis.' Chevron has reduced its rigs from 13 to 9 and frack crews from four to three this year. These cutbacks are expected to boost free cash flow from the Permian by $2 billion over this year and next, reaching $5 billion annually by 2027, assuming Brent crude averages $60 a barrel. 'A million barrels is the right plateau for us to carry out into the next decade,' Niemeyer said. 'It's the natural next phase. You want to create something at scale that ultimately supports our dividend objectives.' Bloomberg writes that unlike conventional oil production, shale wells decline quickly and require constant reinvestment. But Chevron believes it's cracked the code: after 65% production growth over five years, the company now operates at a scale and efficiency that allows it to maintain output with lower capital spending. 'Chevron shifting from growth to flat-lining is coming at the right time because the market doesn't need them to meaningfully grow,' said Neil Mehta, an analyst at Goldman Sachs. 'Now that they've gotten to scale, the right thing to do is to shift this business into a free cashflow orientation.' Chevron's position is strengthened by a rare asset: mineral rights inherited from a 19th-century railroad bankruptcy. Originally acquired by Texaco in the 1960s, these rights—now part of Chevron—mean the company produces about 15% of its Permian oil with zero capital costs. 'It's a meaningful competitive advantage for them as an organization,' said Mehta. 'Chevron has that embedded in its portfolio and doesn't necessarily always get full cost recognition for it.' While other oil majors exited the Permian during downturns, Chevron stayed. That decision paid off when shale boomed. 'The decision to stay in the Permian was very deliberate,' Niemeyer said. 'We tend to enter basins and stay for a very long period of time, and that isn't true of everybody.' By More Top Reads From this article on
Yahoo
7 days ago
- Business
- Yahoo
Why Chevron Is Scaling Back Its Permian Footprint
Chevron is approaching a production plateau in the Permian Basin—America's top oil field—and expects this shift to generate billions in free cash flow, according to Bloomberg. The company is cutting back on drill rigs and frack crews as it nears its long-term target of 1 million barrels of oil equivalent per day, which it expects to sustain through 2040. 'We're going from growth to cash generation,' said Bruce Niemeyer, president of Chevron's shale business. 'We're already in the earliest phases of that. We're making adjustments to rigs and the frack spreads which will reduce the amount of capital we're spending on an annual basis.' Chevron has reduced its rigs from 13 to 9 and frack crews from four to three this year. These cutbacks are expected to boost free cash flow from the Permian by $2 billion over this year and next, reaching $5 billion annually by 2027, assuming Brent crude averages $60 a barrel. 'A million barrels is the right plateau for us to carry out into the next decade,' Niemeyer said. 'It's the natural next phase. You want to create something at scale that ultimately supports our dividend objectives.' Bloomberg writes that unlike conventional oil production, shale wells decline quickly and require constant reinvestment. But Chevron believes it's cracked the code: after 65% production growth over five years, the company now operates at a scale and efficiency that allows it to maintain output with lower capital spending. 'Chevron shifting from growth to flat-lining is coming at the right time because the market doesn't need them to meaningfully grow,' said Neil Mehta, an analyst at Goldman Sachs. 'Now that they've gotten to scale, the right thing to do is to shift this business into a free cashflow orientation.' Chevron's position is strengthened by a rare asset: mineral rights inherited from a 19th-century railroad bankruptcy. Originally acquired by Texaco in the 1960s, these rights—now part of Chevron—mean the company produces about 15% of its Permian oil with zero capital costs. 'It's a meaningful competitive advantage for them as an organization,' said Mehta. 'Chevron has that embedded in its portfolio and doesn't necessarily always get full cost recognition for it.' While other oil majors exited the Permian during downturns, Chevron stayed. That decision paid off when shale boomed. 'The decision to stay in the Permian was very deliberate,' Niemeyer said. 'We tend to enter basins and stay for a very long period of time, and that isn't true of everybody.' By More Top Reads From this article on
Bloomberg
17-07-2025
- Business
- Bloomberg
Chevron Nears Oil Output Plateau in Permian, Adding Billions in Cash Flow
Chevron Corp. is on the cusp of reaching a production plateau in the largest US oil field, allowing it to reap billions of dollars of additional cash flow in the next few years. The company is cutting drill rigs and frack crews in the Permian Basin of Texas and New Mexico as it approaches its long-term target of producing 1 million barrels of oil equivalent a day in the region, Bruce Niemeyer, president of the company's shale business, said in an interview Wednesday. New wells will mostly offset natural declines, meaning production will stay around this level through 2040, enabling Chevron to reap $5 billion in annual free cash flow by 2027, he said.
Reuters
21-04-2025
- Business
- Reuters
Chevron announces first oil at Ballymore project in US Gulf
HOUSTON, April 21 (Reuters) - Chevron (CVX.N), opens new tab has started oil and gas production from a project in the U.S. Gulf of Mexico, the oil major said on Monday, bringing the company a step closer toward its goal of growing production from the ocean basin by 50% this year. The $1.6 billion project called Ballymore, located about 160 miles southeast of New Orleans, is composed of three wells that is expected to produce up to 75,000 barrels of oil equivalent per day (boepd). Chevron aims to grow oil and gas production from the Gulf to 300,000 boepd in 2026, and at the same time, it is working to cut up to $3 billion in costs across the business. Instead of building a new production platform for Ballymore, the wells will transport oil and gas back to an existing platform, which the company said will allow it to increase production at less expense. "Ballymore is interesting in that it's a tie-back to an existing facility, which has allowed us to bring production to market more quickly," said Bruce Niemeyer, president of Americas exploration and production, in an interview. The project is also Chevron's first in a geological formation of the Gulf called Norphlet, where the oil and gas industry has historically had fewer discoveries than in other parts of the ocean basin, he added. Advancements in technology are key to expanding resource exploration, such as the use of ocean bottom nodes, which allow geophysicists to collect better data underneath the ocean floor, Niemeyer said. Chevron is the operator of Ballymore with a 60% interest, while co-owner TotalEnergies has 40%. Ballymore holds an estimated 150 million barrels of oil equivalent in potentially recoverable resources. The company owns 370 leases in the Gulf of Mexico and expects to participate in a lease sale this year by U.S. President Donald Trump's administration, Niemeyer said. The Ballymore start-up comes after Chevron announced first oil in August at Anchor, a Gulf of Mexico project that is a technological breakthrough with the ability to operate in deepwater pressures of up to 20,000 pounds per square inch.
