Chevron Hopes Gushers in Kazakhstan Give Production a Boost

+6.18%
Upside
158
Market
167
Trefis
CVX: Chevron logo
CVX
Chevron

Chevron (NYSE:CVX), the second largest vertically integrated oil major has been expanding its operational foothold in the oil rich state of Kazakhstan over the past few years. The nation’s vast unexplored resources of oil and gas have become a attractive destination for companies such as Chevron, Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) seeking new frontiers for oil and gas exploration. Chevron has taken the early lead in establishing operations in the former Soviet republic with two major upstream projects as well as a manufacturing facility. The future expansion of operations in Kazakhstan is expected to add greatly to Chevron’s overall production output.

We have a $104 price estimate for Chevron which is a 6% premium over its current market price.

Click here for our full analysis of Chevron

Relevant Articles
  1. Down 18% Since 2023, How Will CVX Stock Trend Post Q4 Results?
  2. Down 13% This Year Will Chevron Stock Rebound After Its Q3?
  3. What To Expect From Chevron’s Stock Post Q2?
  4. Chevron Stock Down 13% Over Six Months, What’s Next?
  5. Chevron’s Q4 Earnings: What Are We Watching?
  6. What’s Next For Chevron’s Stock?

Significant production potential

Chevron is the largest private oil producer in Kazakhstan with major stakes in the Tengiz and Karachaganak fields that had a daily production of 831,000 barrels of crude and 1.7 billion cubic feet of natural gas (Bcf) in 2010. [1] Chevron’s total worldwide production in the first half of 2011 stood at 2.73 million barrels of oil equivalents per day (MMBOED) and the company plans to expand output to 3.3 MMBOED by the year 2017. [2] Some of this expansion is expected to come from output expansion by Tengizchevroil (TCO), in which Chevron holds a 50% stake. The company is ramping up its sour gas injection (SGI)  and second generation plant (SGP) facilities to improve production and recovery levels. TCO is also looking to expand significantly using the SGI and SGP technologies and plans to increase output by 250,000 to 300,000 barrels per day. The Tengiz field is the world’s deepest super giant oil field in operation today. TCO is also developing the Korolev fields which are located close to Tengiz.

Chevron also holds a 20% non-operating interest in in the Karachaganak field, which is counted among the world’s largest oil and gas reserves. [1] The fields produce 220,000 barrels of oil and 840 Mcf of gas daily. Chevron produced approximately 23% of its global production in 1H 2011 in Europe, Eurasia and the Middle East and its proved reserves in the region indicate that the relative importance of the region in terms of production will increase in the future. [2]

Downstream and marketing activities

Chevron owns a 15% stake in the 1,505 KM long CPC crude oil pipeline that extends from the Tengiz to the Black Sea port in Russia and transports nearly 750,000 barrels of crude oil per day. [1] Chevron and its partners are looking to invest an additional $5.4 billion to expand the throughput of the pipeline to 1.4 million bbl/day over the coming years to accommodate increased production and TCO’s output.

Chevron also owns and operates a polyethylene plant in Atyrau, Kazakhstan which has an annual production capacity of 15,000 tons of polyethylene pipes. [1] The company is also looking to build another plant in Atyrau to produce iron valves.

Click here for our full analysis of Chevron.

Notes:
  1. Kazakhstan Fact Sheet, Chevron [] [] [] []
  2. Barclays Capital CEO Energy/Power Conference Presentation, Chevron [] []