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Chevron Tries to Build Value as It Cuts Costs

Stocks in this article: CVX XOM HES

Almost 90%, or $35.8 billion, of Chevron's 2014 capital expenditure would go towards its exploration and production business. Of this, $27.9 billion would be spent on international operations and $7.9 billion on its domestic business. A part of this will flow towards the four major upstream projects under development that could give a boost to the company's output in the near future.

The two massive projects in Australia, the $50 billion Gorgon project and the $29 billion Wheatstone Project in Australia, could position Chevron as the biggest natural gas supplier and LNG operator in Asia-Pacific. Chevron owns a 47.3% stake in Gorgon and a 64% stake in Wheatstone. The LNG plants at Gorgon and Wheatstone represent a combined capacity of 24.5 million tonnes per annum as well as domestic gas plants. The two projects could come online within the next two years.

The other two projects are located at the Gulf of Mexico: the $7.5 billion Jack/St. Malo and the $4 billion Big Foot deepwater project.

The former represents two fields that are located within 25 miles of each other and are being jointly developed through a single floating production facility. Chevron is the operator in these fields with a 50% interest in the Jack field and a 51% interest in the St. Malo field. The Jack/St. Malo could result in production of up to 94,000 barrels of oil equivalents per day.

Similarly, Big Foot field, where Chevron holds a 60% interest, also looks promising as it holds reserves of more than 100 million barrels of oil equivalents. The facility at Big Foot will have a production capacity of 79,000 barrels of oil per day.

Jack/St. Malo could begin operations in the current year while Big Foot could start in 2015. Besides these major projects, Chevron has a 42.9% non-operating working interest in the Tubular Bells project, which is another deepwater prospect at the Gulf of Mexico. This project, which is operated by Hess Corp  (HES), comes with a price tag of $2.3 billion and production capacity of more than 40,000 barrels per day, could come online in the current year.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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