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Chevron boosts Gulf of Mexico oil recovery

Published 09/03/2024, 08:37 AM
CVX
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HOUSTON - Chevron Corporation (NYSE: NYSE:CVX) has commenced water injection operations at its Jack/St. Malo and Tahiti facilities in the deepwater U.S. Gulf of Mexico, a move aimed at increasing oil and natural gas recovery. The company's efforts are part of a strategy to expand its production to 300,000 net barrels of oil equivalent per day by 2026.

The water injection process at the St. Malo field represents Chevron's first waterflood project within the deepwater Wilcox trend. The project, which was completed under budget, includes new water injection facilities, two production wells, and two injection wells. This development is expected to contribute an additional 175 million barrels of oil equivalent to the St. Malo field's gross ultimate recovery.

Since their inception in 2014, the Jack and St. Malo fields have collectively produced nearly 400 million gross barrels of oil equivalent. Located approximately 280 miles south of New Orleans in around 7,000 feet of water, these fields are a testament to Chevron's deepwater production capabilities.

The Tahiti facility, situated about 190 miles south of New Orleans in approximately 4,100 feet of water, has also seen the implementation of water injection into its first deepwater Gulf producer-to-injector conversion wells. The facility has recently surpassed 500 million gross barrels of oil-equivalent cumulative production since it began operations in 2009.

Chevron, through its subsidiary Union Oil Company of California, holds a 51 percent working interest in the St. Malo field and operates it. Other stakeholders include MP Gulf of Mexico, LLC with a 25 percent interest, Equinor Gulf of Mexico LLC at 21.5 percent, Exxon Mobil Corporation (NYSE:XOM) at 1.25 percent, and Eni Petroleum US LLC also at 1.25 percent.

At the Tahiti facility, Chevron U.S.A Inc. is the operator with a 58 percent working interest. Co-owners include Equinor Gulf of Mexico LLC with a 25 percent stake and TotalEnergies (EPA:TTEF) E&P USA, Inc. holding 17 percent.

This announcement is based on a press release statement and contains forward-looking statements regarding Chevron's operations and strategies. These statements are subject to risks and uncertainties and actual outcomes may differ from those projected.

In other recent news, the oil and gas industry in the United States saw a significant uptick in merger and acquisition (M&A) activity last year, as reported by Ernst & Young. This surge was primarily fueled by higher cash flows, which stemmed from profits in previous years. In a related development, an arbitration panel is set to examine the undisclosed value of Hess Corporation (NYSE:HES)'s oil assets in Guyana as part of a dispute between energy giants Exxon Mobil and Chevron.

In the environmental sector, a U.S. District Judge mandated stronger marine protection from oil and gas drilling in the Gulf of Mexico, requiring a revision of the National Marine Fisheries Services' biological opinion. This ruling was welcomed by environmental organizations and has potential implications for oil and gas operations in the region.

In the political landscape, California Governor Gavin Newsom proposed a measure to combat volatile gasoline prices, requiring oil refiners in the state to maintain a minimum reserve of gasoline. The proposal has faced criticism from the oil industry. Meanwhile, Vice President Kamala Harris maintained a strategically ambiguous stance on energy policy in the race for the 2024 U.S. presidency, leaving industry executives uncertain about her position.

These are recent developments that have potential implications for investors and stakeholders in the oil and gas industry.

InvestingPro Insights

Chevron Corporation's (NYSE: CVX) commitment to enhancing oil and natural gas recovery in the Gulf of Mexico is underpinned by its strong financial metrics and strategic positioning in the industry. According to recent data from InvestingPro, Chevron has a robust market capitalization of approximately $270.59 billion, showcasing its significant presence in the sector. The company's Price to Earnings (P/E) ratio stands at 14.48, indicating how much investors are willing to pay for each dollar of earnings, which is an important metric for assessing valuation.

From an operational standpoint, Chevron's gross profit margin over the last twelve months as of Q2 2024 is a healthy 39.29%, reflecting the company's ability to maintain profitability despite varying market conditions. Additionally, the company's dividend yield as of the same period is 4.41%, which is particularly attractive to income-focused investors. Notably, Chevron has raised its dividend for 36 consecutive years, demonstrating its commitment to returning value to shareholders.

InvestingPro Tips highlight Chevron as a prominent player in the Oil, Gas & Consumable Fuels industry, with cash flows that can sufficiently cover interest payments. This financial stability is critical for the company's long-term investment in projects like Jack/St. Malo and Tahiti facilities. Moreover, analysts predict the company will remain profitable this year, which is reassuring news for stakeholders monitoring the success of Chevron's deepwater operations.

For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available on the platform. These insights provide a deeper dive into Chevron's financial health and strategic initiatives, which can be found at: InvestingPro Chevron page.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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