* Sees big Australian projects leading growth
* Gets bigger cost savings in downstream business
* Brazilian regulator see possible license renewal there
* Shares close up 1.1 percent
By Matt Daily and Braden Reddall
March 13 Chevron Corp aims to grow
output by a fifth by 2017, driven by big Australian projects
moving gas to energy-hungry Asian markets, while it also tries
to squeeze another $150 million in cost savings out of its
Closer to home, in the Marcellus shale, the second-largest
U.S. oil company said reservoir outcomes were exceeding
expectations, although it was investing there at a "measured
pace" in light of depressed North American natural gas prices.
After getting $850 million of savings from a multi-year
restructuring of its refining and chemicals division, compared
with $700 million originally planned, Chevron said it was now
looking for a total of $1 billion in savings.
"We've been able to meet and exceed those targets within two
years," Mike Wirth, head of Chevron's refining and chemicals
operations, told Reuters.
"We're looking for ways to squeeze a little more yield out
of every barrel through the flexibility of our operations."
Chevron has been reducing the number of countries served by
its marketing operations. It sold its UK refinery last year as
well as a New Jersey terminal last month.
George Kirkland, executive vice president for upstream and
gas, saw ample demand for its coming flood of Australian
liquefied natural gas (LNG) since it will be sold in Asia, which
does not have the same glut as North America.
"LNG is a replacement energy for coal or oil or nuclear and
it really doesn't have any direct gas-on-gas competition, apart
from other LNG," Kirkland said at a meeting with analysts in New
York. "All these markets are different."
A new Angolan LNG project with peak capacity for 175,000
barrels of oil equivalent per day (bpd) should start shipping
next quarter and, while contracts with Angola's government are
not finalized, Chevron expects the gas to go to Europe and Asia.
New onshore gas sources, opened up through new drilling
techniques and hydraulic fracturing, have been found in other
countries. Chevron started an initial well this quarter in
China, where it is exploring 940,000 acres with Sinopec
, and in Poland, where it just started up a second
shale gas well.
Larger rival Exxon Mobil Corp had cast some doubt on
Polish shale gas prospects after its first two wells there did
not find commercial quantities.
In Rio De Janeiro, the Brazilian energy regulator said on
Tuesday that Chevron's drilling rights there will remain
suspended but those rights could be restored within months if
the company gave it additional information about a November leak
from its offshore drilling project.
That leak, which has been put at 2,400 to 3,000 barrels,
prompted prosecutors to lodge a 20 billion real ($11.2 billion)
lawsuit against Chevron and threaten staff there with criminal
Brazil has attracted intense interest from energy companies
who are eager to explore for what some believe could be some of
the world's biggest untapped oil fields.
Hours before that statement, Chevron Chief Executive John
Watson told reporters the company had been very forthcoming with
information about the accident to Brazilian authorities.
"We regret the incident, but there wasn't damage, and we
expect to be treated as Petrobras or other companies
would be treated in a similar circumstance," Watson told
reporters after the presentation to analysts.
The Brazilian energy regulator said its investigation showed
a different conclusion about the cause of the accident than
Chevron provided, and it was seeking to clear up the different
views before reinstating Chevron.
Overall, Chevron stuck with its production target of 3.3
million barrels per day by 2017, assuming oil prices of $79 per
barrel, up from its anticipated output of 2.68 million bpd this
The start of its investment-heavy projects would allow the
company to reduce cash on its balance sheet, Chevron said, as
analysts sought clues on potential dividend increases.
Chevron also said it planned to hold onto its West Coast
refineries at a time when others are pulling out, including
rival BP Plc, which has put its Southern California
refinery up for sale.
Chevron shares closed 1.1 percent higher at $111.19, their
highest so far this year.