Chevron Aims 25% Vol Growth by 2017

U.S. oil major, Chevron Corporation (CVX - Analyst Report) is all set to deliver 25% production growth by 2017. Chevron targets 3.3 million barrels per day (bpd) of oil-equivalent by the said time, up from an estimated 2.65 million bpd this year.

Management at Chevron said that 98% of its targeted oil and gas output by 2017 is either in design/construction phase, or is already online. Chevron’s Gorgon and Wheatstone liquefied natural gas (LNG) projects are developing well and the company expects to commence production by early 2015. Also, Jack/St. Malo and Big Foot deepwater projects in the U.S. Gulf of Mexico are scheduled to start in 2014.

Earlier this month, Chevron carried out a production test at St. Malo PS003 well. The attempt was successful, with oil flow rate reported to be over 13,000 bpd.

Additionally, Chevron also plans to drill around 440 wells in the Permian basin, located in west Texas and New Mexico. Output from this basin is expected to grow up to 200,000 bpd by 2017. Acreage in the Marcellus shale is expected to produce almost 100,000 bpd by the same time frame.

Chevron also said that the expansion in Kazakhstan, steam-flooded oil production in the Middle East and more LNG from Australia and Canada will boost production. These projects will also help in achieving its estimated target.

The company currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.

Chevron is one of the largest integrated energy companies in the world and has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects.

However, being one of the largest integrated oil and gas companies in the world, Chevron is particularly susceptible to downside risk from continued weakness in the global economy. We are also concerned about the company’s high level of capital spending, which may result in reduced returns going forward.

But there are certain other companies in the oil industry that are expected to perform well in the coming 1 to 3 months. These include Royal Dutch Shell plc (RDS.B - Snapshot Report) with a Zacks Rank #1 (Strong Buy), as well as Total SA (TOT - Analyst Report) and Statoil ASA (STO - Analyst Report) with a Zacks Rank #2 (Buy).