Chevron (NYSE:CVX) is looking to more than triple production from the company's unconventional resource base by 2017. These assets are concentrated mostly in the United States but also include prospective areas in Europe and South America.

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Unconventional Production Growth
Chevron estimates that production from the company's unconventional plays will be just short of 50,000 barrels of oil equivalent (BOE) per day in 2012. The company has a development program planned over the next six years that will increase production from these areas to 175,000 BOE per day in 2017. (For related reading, see What Determines Oil Prices?)

This planned development is one part of the company's overall growth plan that will lead to a 20% increase in oil and gas production by 2012. The company also plans large investments over the next six years in Liquefied Natural Gas (LNG) projects, deepwater and other areas of its portfolio.

Chevron has budgeted $6.2 billion in capital in 2012 for the U.S. upstream segment, with the funds split between the onshore and the deepwater Gulf of Mexico.

Unconventional United States
Chevron has three million acres under lease in the U.S., with exposure to 13 unconventional plays. The majority of the plays produce crude oil and wet gas.

Chevron's largest position is in the Marcellus Shale, where the company made two large acquisitions in 2011, boosting its position there to more than 700,000 net acres. The company also has 600,000 net acres exposed to the Utica Shale and will start drilling there in 2012.

In the Permian Basin, Chevron is focused on the Wolfcamp Shale, where it plans to drill more than 200 wells in 2012. The Wolfcamp Shale has attracted other operators looking for oil and liquids production.

Pioneer Natural Resources (NYSE:PXD) is active in the Wolfcamp Shale and plans to spend $225 million on this play in 2012. The company estimates this play is present on more than 400,000 net acres that it has under lease.

Forest Oil (NYSE:FST) has 51,500 net acres under lease prospective for the Wolfcamp Shale in the Permian Basin. The company estimates that it has 500 locations that can be developed currently at a gross drilling and completion cost between $5.5 million and $7 million. (For related reading, see Oil: A Big Investment With Big Tax Breaks.)

Eastern Europe
Chevron has several prospective unconventional plays in Europe and is currently focusing its efforts in Poland, Romania and Bulgaria. The company has made the most progress in Poland, where it has completed seismic work and is currently drilling a second well.

Chevron has also finished seismic work in Romania and expects to start its exploration program here in late 2012. In Bulgaria, Chevron has a 100% interest in 1.1 million acres.

Shale oil and gas in Europe is still at an early stage of exploration with no guarantee of the replication of the success that operators have achieved in the U.S. Exxon Mobil (NYSE:XOM) also has interests in several concessions in Poland and recently reported the two non-commercial wells here.

South America
In Argentina, Chevron has existing production from the El Trapial Field in the Neuquén Basin, and is planning to conduct exploratory drilling of unconventional formations in 2012. The company plans two exploratory wells here in 2012.

The Bottom Line
Chevron has built up a large unconventional acreage position that is diversified both geographically and by commodity. The company will now execute a long-term plan to develop these assets and fulfill its promise of overall company production growth of 20% by 2017.

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.


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