By Starr Spencer | S&P Global | Chevron, one of the biggest producers in the US’ Permian Basin and with high visibility into a wide swath of the play’s operations through joint ventures, has not seen its partners cut back activity due to lower oil prices and market turmoil over recent tariff concerns, the company’s top executive said May 2.
“At this point, we don’t really see any actions that have been taken to pull back by our partners” in Permian fields where Chevron is a partner, company CEO Mike Wirth said during a first-quarter earnings conference call.
Three-quarters of Chevron’s production comes from acreage where it is teamed with companies Wirth characterized as “larger mega cap” players.
Moreover, he said, wells in those partnered leases that are due to be placed in production in 2025 have already been spud.
Wirth said Chevron has interests in as much as one of every four acres in the Permian.
“That exposure allows us to see exactly what’s going on with other operators,” he said. “What we see is [that companies are] pretty well staying the course.”
The market has faced uncertainty and expectations that some operators may reduce activity and spending due to current oil prices in the high $50s/b to low $60s/b due to an oversupplied global market, concerns over higher US tariffs imposed by the Trump Administration on imports that will take effect in July, and higher volumes of oil being placed on the market by members of OPEC+, a coalition of OPEC and other oil producers.
But Wirth said Chevron is prepared for the turbulence. With low-decline assets, big LNG gas projects in Australia and West Africa, the expansion of its Kazakstan TCO project and efficient US shale output, the company can sidestep many of the conditions that have caused big headaches during past periods of low oil prices in 2008, 2015-2016 and 2020, he said. The company’s net debt to capital is 14%, and it has a double A credit rating.
Can cut capex if needed
“If we need to bring [capital expenditures] down further we can certainly do so,” Wirth said. “In 2020 during COVID we started the year at a $20 billion capital budget, and finished at I think $12 billion.”
In the first quarter, Chevron’s Permian production fell 3% to 960,000 b/d of equivalent oil — even though the company was headed toward 1 million boe/d in the Permian in the fourth quarter of 2024 at 992,000 boe/d. But the milestone 1 million boe/d of production, which should stabilize at that level for years, should be attained soon, Chevron’s Chief Financial Officer Eimear Bonner said.
“We expect growth toward a sustained one million barrels of oil equivalent per day to resume in the Permian in the second quarter with higher frac activity,” — that is, well completions, Bonner said.
Wirth added about 80% of Chevron’s 2024 development program was in the Delaware Basin — the western Permian, where the company saw performance improvements in both the Second Bone Spring formation in New Mexico and the Wolfcamp A and C benches in Texas. In 2025, 85% of the development program will be in the Delaware Basin, as opposed to the Midland Basin which is the eastern Permian.
“Right now we’re seeing an oil cut of 43% to 45%, and we think that will continue through the rest of the decade,” Wirth said, addressing concerns about growing natural gas/oil ratios throughout much of the industry.
He also said he expects more New Mexico wells, which tend to be bigger and produce more oil but also more gas, to be placed on production this year than in 2024.
Meanwhile, the company’s operated Ballymore deepwater field in the Gulf of Mexico came online in late April with “some of the most prolific wells we’ve seen in the [Gulf] and frankly well beyond that,” he said.
Third Ballymore well debuts in 2025
The field is now ramping up, and the expectation is 25,000 b/d from each of three wells, for a total 75,000 b/d at peak. Two of the wells are online currently, and the third will flow oil later in 2025.
Also, Chevron’s Anchor project, an historic high-pressure field that came online in August, now has two wells flowing oil and “performing very well.” Two additional wells will debut in 2025 — one at midyear, the other in the second half of the year, Wirth said. Production from both Anchor and Ballymore is “strong,” he added.
In 2025, Chevron will focus on infill and staged developments in the US Gulf, he said. The company has a portfolio of large oil projects in that arena and has filled its output hubs with new finds as production from the original discovery tails out.
Breakevens in the US Gulf have come down “a lot” in recent years, Wirth said. He noted that a decade ago, oil prices needed to be “well north of what we’re seeing today” around $60/b to get even a “modest” return. Development costs were also on the rise 10 years ago in the $20s/boe and headed to the $30s/boe.
“But now we’re down to the teens, and pushing the low teens on development costs,” because facility designs and construction standardization have made breakevens more competitive, he said. “If you look at our [US Gulf] exploration portfolio, 80% of it is within tieback range of existing production hubs.”
He said tiebacks are a way to develop hydrocarbon accumulations that might not support construction of a new hub but are “highly economic as a brownfield” project.
Total company production in the first quarter was 3.353 million boe/d, about flat sequentially and year over year.
Chevron reported earnings of $3.5 billion, or $2/share, for the first quarter of 2025, up 8% sequentially but down 36% year on year from the $5.5 billion, or $2.97/share, earned in the same 2024 period.
In the first quarter of 2025, a net loss of $175 million related to legal reserves and a tax charge due to changes in the energy profits levy in the UK were included, which were partially offset by the fair value measurement for shares of Hess Corporation, a company Chevron intends to acquire and the acquisition of which is pending.
