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.

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

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.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

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


Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  2. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  3. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  4. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  5. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  6. Professionals

    Tips for Helping Clients Though Market Corrections

    When the stock market sees a steep drop, clients are bound to get anxious. Here are some tips for talking them off the ledge.
  7. Stock Analysis

    The Safest Stocks You Can Invest in Right Now

    These stocks are likely to hold up better than others in a bear market, but there's a twist.
  8. Investing Basics

    5 Reasons to Expect Lower Stock Returns

    Lower stock returns are likely here to stay for some time. Here are five reasons why.
  9. Investing Basics

    What to Cut From Your Portfolio Right Now

    Owning stocks may shortly become too scary for your portfolio. Here's why, and here are some alternatives.
  10. Personal Finance

    Careers: Equity Research Vs. Investment Banking

    Equity research is sometimes viewed as the unglamorous, lower-paid cousin to investment banking. In this article, we compare the two careers.
RELATED TERMS
  1. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  2. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  3. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!