Chevron Corp, one of the world’s leading oil companies, announced on Friday that its annual oil and gas production is expected to remain at the lower end of the company’s forecast due to unforeseen interruptions in operations in Canada and Thailand.
In the previous year, Chevron produced 3 million barrels of oil and gas equivalent per day (boepd) globally, with projections for production to either remain steady or increase by 3% annually through 2027.
However, unexpected events such as wildfires in Canada leading to temporary evacuations and an incident with a platform in Thailand that required repairs earlier this year have impacted the company’s production. The latter incident has resulted in a reduction of about 10,000 boepd of net production “for the foreseeable future,” according to CEO Michael Wirth.
Wirth acknowledged these unexpected challenges during an earnings call to discuss results published on Sunday, stating, “Those two things are the ones that are pushing us down.”
For the current quarter, Chevron anticipates that upstream turnarounds and downtime will decrease production by approximately 110,000 boepd. This news led to a 1% drop in the company’s shares in afternoon trading.
Despite these setbacks, Chevron remains focused on its investments in the Permian basin, the largest U.S. oilfield, and its 50% interest in Tengizchevroil (TCO) in Kazakhstan to drive production and revenue growth in the coming years.
However, the company is facing geopolitical tensions from Russia and has also experienced setbacks with well completions in the Permian. This has led analysts to question executives on the risks associated with asset concentration.
CEO Wirth responded to these concerns, stating, “This idea that we are a two-asset company, the Permian and TCO, I don’t think really stands up to careful inspection,” emphasizing the company’s diverse portfolio of assets from the Middle East to Argentina.
Chevron expects TCO’s expanded operations, which are 98% complete, to deliver more than 1 million boepd in 2025, and to pump about 1.1 million boepd from the Permian by mid-decade. The company’s Permian production increased by 5% from the first quarter to a record of 772,000 boepd, aligning with its full-year guidance.
Wirth concluded by stating, “We’ve got a diverse portfolio, but we don’t need to be diversified just for the sake of it. We want to have assets that have scale and are material and long-lived.”