Upstream. George Kirkland Vice Chairman and Executive Vice President

Transcription

1 Upstream George Kirkland Vice Chairman and Executive Vice President

2 A Strong Worldwide Portfolio 770 MBOED 710 MBOED North America Europe, Eurasia and Middle East 2010 Net Production Capacity By Region 2.9 MMBOED 2010 Proved Reserves By Region 700 MBOED Africa & Latin America 720 MBOED Asia-Pacific Areas of Operation 10.5 BBOE 2011 Chevron Corporation 2

3 A Leader in Drilling Safety Unique Approach Internal well control training Internal subsea BOP team Only operator-owned cement lab in North America Increased Emphasis Complex well categorization Management of change process Oversight of non-operated wells 2011 Chevron Corporation 3

4 Upstream Themes Performance Strategy Growth 2011 Chevron Corporation 4

5 Net Production Grew 2 % Exceeding Guidance Net Production: 2,763 Thousand Barrels of Oil-Equivalent Per Day 2,704 Price Base Business & External Constraints Major Capital Projects 2,763 (38) (73) Actual 2010 $ $ 79/bbl 2011 Chevron Corporation 5

6 Reserve Replacement 2010 Reserve Replacement Ratio: 24 % Billion Barrels of Oil-Equivalent Production Price Net Additions (1.00) (0.14) Actual 2010 Actual Based on SEC proved reserves 2011 Chevron Corporation 6

7 More Reserve Additions Ahead From Sanctioned Projects Expected recovery of 30 sanctioned greenfield MCPs: 5.6 billion BOE Cumulative MCP Resources and Proved Reserves (MMBOE) 6,000 ~40 % currently booked as proved reserves Conversion of resources to proved reserves through: Development progress Performance data Enhanced recovery 5,000 4,000 3,000 2,000 1, Cumulative Expected Recovery Cumulative Proved Reserve Additions 2011 Chevron Corporation 7

8 Major Capital Projects 2010 Startups and Ramp-ups AOSP Expansion Perdido EGP 3A 3 Key Project Startups 6 Key Project Ramp-ups Tahiti Frade Mafumeira Norte Tombua- Landana SGI/SGP North Belut 2011 Chevron Corporation 8

9 Growth from Major Capital Projects Startups and Ramp-ups AOSP Expansion Brodgar- Callanish Netherlands AB Tengiz SGI/SGP ACG Phase III Major Capital Project Net Production MBOED 1000 Piceance Stage 2 Tahiti Blind Faith Ongoing MCP Perdido Moving to Base Business EGP-3A Frade Agbami Tombua- Landana Moho-Bilondo Mafumeria Norte PZ Large- Scale Pilot North Duri A-12 North Belut Bibiyana Arthit NWS Train Chevron Corporation 9

10 Improvements in Base Business Performance Increased Efficiency Reliability Capacity Production Efficiency* 96% 94% Improved Base Business Decline outlook 4 % Previously 5-6 % 92% 90% * Ratio of actual total operated production to assessed production capacity (%) 2011 Chevron Corporation 10

11 Competitive Upstream Cost Structure Upstream Costs $ per BOE Chevron is consistently among the lowest in cost structure 2010 increase due to higher oil prices and higher DD&A Controllable production expenses remained flat in 2010 Anticipate similar increase in competitor range 3 Ranking Relative to Competitors 1 being the best Competitor Range (XOM, BP, COP, RDS, HES, MRO, MUR, OXY, TOT) Sourced: from publicly disclosed company data. Includes production costs, exploration expense, depreciation, 2011 Chevron Corporation depletion and amortization (DD&A) and other expenses. For COP includes other revenues and excludes equity affiliate impairments. Starting in 2009, includes equity affiliates and bitumen mining and upgrader costs.

12 Superior Cash Margins Oil and Gas Cash Margins $ Per BOE $ $ $ Chevron Corporation Competitive cash margins calculated based on public information handled on a consistent basis. Cash margins include consolidated companies and affiliates but excludes working capital effects and are based on adjusting oil & gas earnings with DD&A and any gains or losses in asset sales. 12

13 Superior Financial Performance 25 1 $ Adjusted Earnings Per BOE % 2010 Adjusted ROCE Ranking Relative to Competitors 1 being the best Competitor Range (XOM, BP, COP, RDS) Competitor analysis based on Chevron estimates and public information handled on a consistent basis Chevron Corporation Excludes special items. Reconciliation to non-gaap earnings measure for Chevron can be found in the 13 Appendix of this presentation. Chevron s information is conformed to 2010 segment presentation.

14 Upstream Themes Performance Strategy Growth 2011 Chevron Corporation 14

15 Upstream Continues to Execute the Right Strategies Grow profitably in core areas and build new legacy positions through: Operational excellence Maximizing value of base business Selection and execution of major capital projects Superior exploration performance Commercializing large gas resources Capturing new core positions 2011 Chevron Corporation 15

16 14 Million Acres in Portfolio Additions Canada Beaufort Canada Atlas Poland Romania Million Acres (Chevron Net) China DW Black Sea Liberia GOM Shelf Ultra-Deep DW GOM China DW Beaufort GOM Shelf DW GOM Liberia Turkey Black Sea Romania Atlas Poland Conventional Plays Unconventional Plays Canada Chevron Corporation 16

17 Portfolio Additions Deepwater Liberia 70 % interest in three blocks in emerging Cretaceous trend Blocks cover ~2.4 million acres (gross) Acquire seismic and drill initial exploration well in 2011 China 59 % 100 % interest in three blocks in Pearl River Mouth Basin Blocks cover ~5.2 million acres (gross) Acquire seismic and drill initial exploration well in Chevron Corporation 17

18 Portfolio Additions Shale Gas Poland 100 % interest in four concessions totaling ~1.1 million acres Complete seismic program in 2011 Drilling to start 2011 Romania 100 % interest in four licenses Blocks cover ~2.1 million acres Canada 100 % interest in ~200,000 acres Exploration program to start Chevron Corporation 18

19 Portfolio Additions Atlas Energy Integration on track Currently operating 9 rigs Expect to drill 70 Marcellus wells in 2011 Average 2011 production of 115 MMCFD Drilling carry reduces C&E Positioned for ramp-up of multi-year development program 2011 Chevron Corporation 19

20 Upstream Capital Investments 2011 Capital & Exploratory: $ 22.6 $ Billions Exploration Major Capital Projects Base 2011 Chevron Corporation Note: 2009 information is conformed to 2010 and 2011 segment presentations. 20

21 Capital Investments Are Delivering Results Cumulative Investment (Billion $) Cumulative Investment per BOE Produced ($/boe) Competitor Range: (XOM, BP, COP, RDS) Chevron s cumulative investment low relative to peers Chevron s cumulative investment per boe at peer average Investments are delivering results: Strong organic production growth Superior cash and earnings margins 2011 Chevron Corporation Sourced: from publicly disclosed company data. Includes 21 cash and affiliate C&E, other uses of cash and acquisitions.

22 Upstream Themes Performance Strategy Growth 2011 Chevron Corporation 22

23 Consistent Exploration Success BBOE Resource Adds (9 Year Total) % Success Rate (9 Year Average) Cumulative Resources Added From Exploration BBOE Key Discoveries 2010 Key Discoveries Chevron Corporation 23

24 51 % 38 % Superior Exploration Performance Resource* Replacement Percent Replacement 89 % Average Underlying Finding Costs* $/BOE $ 2.90 $ 2.93 $ % 68 % $ 1.83 $ % Higher resource replacement than competitor group average 32 % Lower finding costs than competitor group average *Wood Mackenzie 2011 Chevron Corporation 24

25 Growing a Leading Resource* Portfolio Resource Growth: 15 % Billion Barrels of Oil-Equivalent Production Sales Additions Distribution Africa Europe, Eurasia and Middle East 30 Asia-Pacific Actual 2010 Actual Americas * Resource defined as un-risked proved, probable and possible reserves plus potential recoverable resources contingent on commerciality. Includes oil volumes associated with oil sands mining Chevron Corporation 25

26 Key 2011 Exploration Activities United Kingdom Canada Deepwater Gulf of Mexico Marcellus GOM Shelf Deep Gas Liberia Angola Poland Nigeria Partitioned Zone DW China Gulf of Thailand Focus Areas Brazil Northwest Australia Exploration Wells Appraisal Wells 2011 Chevron Corporation 26

27 Continued Growth from Major Capital Projects Startups between 2011 and Project Startups > $ 250MM net Chevron Share 9 Project Startups > $ 1B net Chevron Share AOSP Exp 1 Downstream Projects > $ 1B Chevron share Tahiti 2 Papa-Terra Agbami 2 Usan Angola LNG EGTL Chuandongbei Stage 1/2/3 Platong II 2011 Chevron Corporation 27

28 Advancing the Inventory Projects Reaching FID between 2011 and Project FIDs > $ 1B net Chevron Share Hebron Clair Phase 2 TCO Future Growth Knotty Head Mad Dog II PZ Area 1 Vietnam Gas Gendalo-Gehem Lucapa Mafumeira Sul Greater Vanza/Longui Wheatstone T1-2 Gorgon T Chevron Corporation 28

29 Future Growth from Near-Term Startups Agbami 2 Usan Angola LNG Papa Terra Startup in 2011 Startup in 2012 Startup 2012 Startup in 2013 $ 1.9B investment Drill and complete 10 wells Extend 250 MBOPD plateau production for up to 6 years $ 8.4B investment Peak capacity ~180 MBOD $ 9.0B investment Greenfield 1 x 5.2 MMTPA LNG plant Peak production 175 MBOED Subsea development in Campos Basin Peak capacity ~140 MBOED 2011 Chevron Corporation 29

30 Future Growth from Deepwater GOM Tahiti-2 FID September 2010 Startup in 2011 Total cost $ 2.3B Waterflood for pressure maintenance Jack/St. Malo FID October 2010 Startup in 2014 Total cost $ 7.5B Hub development Production capacity 177 MBOED Big Foot FID December 2010 Startup in 2014 Total cost $ 4.1B Tension Leg Platform Peak production 79 MBOED 2011 Chevron Corporation 30

31 Enabling Technology in Deepwater Exploration Subsalt Imaging Differentiated prospect portfolio Drilling & Completions Dual gradient drilling Single-trip multi-zone frac pack Production Technology Seafloor boosting Intelligent wells and i-field Single Gradient Drilling Dual Gradient Drilling Conventional Drilling Riser Subsea Rotating Device Integrated Drilling Riser Mud Lift Pump Salt 2011 Chevron Corporation 31

32 Heavy Oil Technology Leader Reservoir Management Surveillance Reservoir simulation Heat management Integrated Operations Increased well reliability Improved cost structure Global Deployment Dedicated Heavy Oil Center of Excellence International training and development 2011 Chevron Corporation 32

33 Future Growth in the Partitioned Zone Wafra Large-Scale Pilot First steam injection in 2009 Reservoir accepted steam at design rates Production increase >600 % over initial baseline Evaluating full-scale application 500+ MBOPD potential 6+ billion barrels potential recovery Pilot First Steam FEED FID Area 1 Start-up 2011 Chevron Corporation 33

34 Future Growth in the Caspian CPC Expansion Reached FID in 2010 Project cost $ 5.4B Increases capacity to 1.4 MMBOD Replaces rail shipments Enables Tengiz FGP Tengiz FGP FEED expected in 2011 Scale comparable to SGI/SGP Potential to increase production by MBOD 2011 Chevron Corporation 34

35 Natural Gas To Drive Long-Term Growth Over 150 TCF of Natural Gas Resources * 30 Projects > $ 250MM Net Chevron Share 15 TCF Europe, Eurasia & Middle East LNG Conventional Unconventional GTL 35 TCF Americas 25 TCF Africa 80 TCF Asia-Pacific All projects shown are greater than $ 1B net Chevron share Chevron Corporation * Resource defined as un-risked proved, probable and possible reserves 35 plus potential recoverable resources contingent on commerciality.

36 Asia-Pacific Growth Jim Blackwell Executive Vice President of Technology and Services

37 Chevron Asia-Pacific Exploration & Production Largest IOC in the region Production capacity: 720 MBOED Proved reserves: 2.6 BBOE Total resource* base: 17.7 BBOE China Largest producer in Thailand, Indonesia, and Bangladesh Largest resource position in Australia Indonesia Pioneered geothermal development in Indonesia and the Philippines Australia * Resource is defined as un-risked proved, probable and possible reserves plus potential recoverable resources contingent on commerciality. Areas of Operation 2011 Chevron Corporation 37

38 Well-Positioned for Growing Asia-Pacific Demand Natural Gas Demand Percentage increase vs levels 200% 150% Asia 100% 50% Worldwide 0% Chevron Corporation Source: DOE EIA International Energy Outlook, May

39 Growth from Asia-Pacific Pipeline Gas Platong II Startup in 2011 $ 3.1B investment 440 MMCFD production capacity 70 % working interest Vietnam Block B FID in 2011 $ 4.3B investment 520 MMCFD production capacity 43 % working interest Chuandongbei Startup in 2012 $ 4.7B investment 560 MMCFD production capacity 49 % working interest 2011 Chevron Corporation 39

40 LNG Underpins Growth and Long-Term Cash Flow Production Net MBOED Asia-Pacific LNG Evaluate Design Construct Producing Gendalo-Gehem East Kalimantan Angola LNG NWS Gorgon 1-3 Gorgon 4 Wheatstone 1-2 Wheatstone 3 Browse Production includes LNG, domestic gas, associated liquids and feedstock associated with LNG projects Chevron Corporation 40

41 Gorgon Overview Scope 3 train 15 MMTPA LNG facility Domestic gas plant Reservoir CO 2 injection and storage Maximum daily production: 2.6 BCFD of natural gas 20 MBD condensate Estimated US$37 Billion Chevron-operated, 47.3 % equity interest Key Milestones First LNG expected in Chevron Corporation 41

42 Gorgon Update Progress Cost and schedule on track > $ 25 billion in contracts awarded Construction village in service Dredging nearing completion Commenced Train 1 module fabrication Drilling rig completed 90 % equity LNG under long-term agreement 2011 Chevron Corporation 42

43 Wheatstone Update Scope Four offshore fields and processing platform 2 train 8.9 MMTPA LNG facility and domestic gas plant First LNG in 2016 Peak production 260 MBOED Progress Raw Gas Pipeline Domestic Gas Pipeline On target for 2H 2011 FID Native title agreement completed 80 % equity LNG under long-term agreement 2011 Chevron Corporation 43

44 Pricing of LNG in Asia-Pacific 60 % of global LNG delivered to Asian markets Asian LNG prices more than twice Henry Hub in 2010 $/MMBTU Japan Average LNG (1) Long-term contracts for Gorgon and Wheatstone indexed to oil Recent industry contracts near parity with Japanese Crude Cocktail (JCC) 0 Henry Hub (2) $/MMBTU Oil Parity Average of recent industry long-term contracts (3) JCC Oil Price ($/bbl) 2011 Chevron Corporation (1) Japanese Customs (2) Platt s Gas Daily (3) WoodMackenzie 44

45 LNG Generates Long-Term Revenue Gorgon and Wheatstone combined production exceeds 420 MBOED Provides decades of plateau production Delivers sustained cash flow for several decades Net Production MBOED Wheatstone Trains 1-2 Gorgon Train 4 Gorgon Trains Chevron Corporation 45

46 Exploration Success Underpins Future LNG Expansions Consistent exploration success Additional resources support future expansions at Gorgon and Wheatstone Additional opportunities for third-party gas Resource* Adds Carnarvon Basin, Australia excluding NWS TCF (100% basis) Gorgon 4 Gorgon 1-3 & Wheatstone 1-2 LNG 100% capacity assuming 25 years Chevron Corporation * Resource is defined as un-risked proved, probable and possible reserves 46 plus potential recoverable resources contingent on commerciality.

47 Becoming A Top-Tier LNG Producer 2020 Estimated Liquefaction Capacity Billion Cubic Feet Per Day Sonatrach ExxonMobil Petronas Indonesia NNPC Total Woodside Iran BG Inpex BP ConocoPhillips Chevron Shell Qatar Chevron s LNG Evolution Top 20 Top 15 Top Chevron Corporation Source: Wood Mackenzie LNG Tool, November

48 Upstream George Kirkland Vice Chairman and Executive Vice President

49 Actual Guidance Actual Delivered Growth and Performance in 2010 World-class safety Leading exploration results Delivered superior projects 2 % organic production growth #1 earnings margins #1 cash flow margins Top-tier ROCE Net Production Thousands Barrels of Oil-Equivalent Per Day 3,500 3,000 2,500 2,000 2,704 2,730 Price Growth 2,763 1,500 $62 March $62 $ Chevron Corporation 49

50 Actual Guidance Actual Guidance Sustaining Growth in production outlook 2,790 MBOED Delivering 1 % production growth Net Production Thousands Barrels of Oil-Equivalent Per Day 3,500 Sustaining safety and base business performance 3,000 2,704 2,730 2,763 2,790 Focusing on project execution 2,500 Base Growth Advancing new opportunities 2,000 Integrating Atlas 1,500 $62 March $62 $79 March $ Chevron Corporation 50

51 Actual Guidance Actual Guidance Guidance Positioned for Long-Term Growth On track to: Deliver organic opportunities... That grow production to 3,300 MBOED... With leading financial performance Net Production Thousands Barrels of Oil-Equivalent Per Day 3,500 3,000 2,500 2,704 2,730 2,763 2,790 3,300 2,000 1,500 $62 March $62 $79 March $79 $ Chevron Corporation 51