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Chevron's Gulf Of Mexico Growth Runway

Dec. 04, 2018 1:09 PM ETChevron Corporation (CVX)12 Comments
Callum Turcan profile picture
Callum Turcan


  • Summary of Chevron Corporation's near-term growth catalysts in the Gulf of Mexico.
  • Big Foot finally reaches first-oil.
  • Noteworthy non-operated upside.
  • All about growing Chevron Corporation's crude oil production.

Around 30% of Chevron Corporation’s (NYSE:NYSE:CVX) American upstream production comes from producing properties in the Gulf of Mexico. Last year, the company pumped out 165,000 barrels of crude per day, 13,000 bpd of natural gas liquids, and 122 MMcf/d of natural gas net from the region. That is equal to roughly a tenth of the GoM’s oil production, according to the EIA. While Chevron Corporation has divested some of its legacy GoM assets over the past few years, the company will continue to grow its production base in the region as new upstream oil projects come online. Let’s dig in.

Chevron Corporation In Gulf of Mexico

Source: Chevron Corporation

Big Foot finally good to go

Originally, the Big Foot project was slated to reach first-oil in 2015. Due to many of the project's tendons losing buoyancy back in 2015, which caused them to float down to the bottom of the Gulf, Chevron was forced to scrap its Big Foot timetable. Those tendons would have connected the tension leg platform with the seafloor. Chevron is the operator of the project with a 60% interest in the venture.

It wasn’t until November 2018 that Chevron was able to declare first-oil at the project, which will recover 200 million barrels of oil equivalent over its lifetime (mostly crude oil). With peak production capacity pegged at 75,000 bo/d and 25 MMcf/d of natural gas (note that on a barrel of oil equivalent basis, this peak production stream weighted 95% towards oil), this endeavor is big enough to have a nice uplift on Chevron’s oil production.

Readers should note that conventional upstream projects take between 12 and 24 months to ramp up to their peak production levels. Output plateaus near that rate for a few years, and then moves steadily lower. The production profiles of oil fields can be managed by drilling new producing

This article was written by

Callum Turcan profile picture
Worked as an equity analyst for several years in the USA and have been writing financial articles and analyzing publicly traded companies for more than a decade.

Analyst’s Disclosure: I am/we are long BP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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