Chevron cuts output forecast, sees low replacement

NEW YORK (Reuters) - Chevron Corp (CVX.N) cut on Friday its 2008 production forecast and said its 2007 reserve replacement rate would be low, as high oil prices took a bite out of expected production from international projects.

The company said on a conference call with analysts that it expects production in 2008 to rise about 1.2 percent to 2.65 million barrels of oil equivalent per day, assuming an average oil price of $70 a barrel.

Chevron, the second-largest U.S. oil company, had previously forecast production of around 2.8 million barrels of oil equivalent a day, but at a lower average oil price. Still, Chief Financial Officer Steve Crowe said that 95,000 to 100,000 barrels per day of the cut was due to major project delays.

It also said its 2007 reserve replacement rate would be in the range of 10 percent to 15 percent. Reserve replacement rate calculates what percentage of the oil produced over the year the company replaced through exploration or acquisitions.

Crowe said the reserve replacement rate was hurt by the high year-end oil prices used to calculate the figure, sales of projects and timing of various large projects.

"Although we made a great deal of progress on our major development projects, the timing and circumstances were such that we were unable to book large reserves additions for these projects or for contract extensions in 2007," Crowe said.

"Given the number of major projects in development, we anticipate a meaningful impact on reserve additions in the years ahead."

High oil prices can hurt reserve replacement rates and production numbers because the production sharing agreements for some international projects give higher shares of output to host countries when crude prices rise.

(Reporting by Michael Erman, editing by Dave Zimmerman and Tim Dobbyn)