Chevron's ( CVX ) oil & natural gas liquids production volume has sustained its levels over the last few years, excluding a dip in 2008. In fact, production increased slightly in 2010, amounting to about 1.62 million barrels of oil per day. We expect that Chevron will be able to sustain this production level. Below, we take a look at the factors that will help the company do so. Chevron competes with other oil & gas companies like Exxon Mobil (NYSE:XOM), ConocoPhillips ( COP ), BP ( BP ) and Anadarko ( APC ).
Our price estimate for Chevron's stock currently stands at $104 , roughly in line with market price.
Chevron's Focus on Upstream Business
Chevron is refocusing its resources on the upstream business, especially in the Asian markets. While natural gas remains the primary focus, it will also support crude oil production. Between 2010 and 2012, Chevron plans to begin 25 new upstream projects.
Gulf of Mexico Moratorium Lifted, and Chevron Plans to Explore
The federal judge has over-ruled the U.S. President's six-month moratorium on offshore oil drilling. Ever since the Deepwater Horizon situation, the U.S. administration has halted approval of new permits for offshore drilling as well as suspended drilling on 33 exploratory offshore wells. Chevron has already submitted one deep-water drilling permit, and has an active exploration and development drilling program planned for 2011. The announced expansion of capital expenditures for 2011 is partly to be directed towards exploration and production in the Gulf of Mexico.
Growth in Deep Water Exploration and Production
Modern technology has made it easy for companies like Chevron to access previously unreachable areas. Petroleum can often be found in subsalt reserves, which are thousands of meters below layers of sand and rocks. The discovery of the Tupi field in Brazil in 2007 is considered to be the largest in the Americas since 1970.
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