Written by Sheila Dang
Houston (Reuters) – Chevron’s oil and gas reserves fell to the lowest point in at least a contract, highlighting the importance of the planned acquisition of oil products that stopped due to a battle with Exxon Mobil.
The replacement of the reserve is one of the main measures of investors in energy companies, as it gives a feeling of oil and gas that companies can produce and for how long.
If Chevron closes the HESS acquisition, you will get a stake in the profitable Guyana Oilments run by the Chevron, Exxon competitor.
Exxon and CNOOC, the other minority partner in Joyana Field, challenged Chevron’s attempt with Hess in court, saying they had the first right to reject Hess’s shares in the project.
Chevron reserves, or the amount of oil and gas that could extract them, decreased from 11.1 billion barrels, equivalent to oil in 2023 to 9.8 billion by the end of 2024. The reserves decreased partly due to sales of space.
Paul Cheng, an analyst at ScotiaBank, highlights concerns about the company’s long -term prospects, said the reserve replacement rate raises “red flags.”
Chevron said that the replacement rate during the past ten years was 88 %.
The company’s organic reserve replacement, a measure that measures the amount of new oil and gas that was added to the reserves compared to the amount produced by and excludes acquisitions and sales, is 45 %. 100 % or more means that the company replaces its reserves at the same rate that it is exhausted.
Cheng said the company’s replacement rate has been less than a tie condition over the past three years. ScotiaBank maintains a sector that exceeds the Chevron classification.
Chevron refused to comment. During the fourth -quarter profit call, CEO Mike Worth said that the company focuses on developing high -quality oil and gas assets, including in the Gulf of Mexico.
The acquisition of Hess, a $ 53 billion deal concluded in October 2023, could improve the horizons of Chevron. The company said when the deal announced that it will give the company a 30 % stake in more than 11 billion barrels of equivalent oil for recovered resources discovered in Guyana, as announced by the deal.
“It is expected that the joint company will have the depth of resource stocks in the next decade – far beyond what we can usually see with confidence in our business,” Worth said in October.
Cheng said that Exxon has not yet reached the replacement rate for 2024, but the 1st oil product in the United States also struggled to replace its reserves in 2023 and 2022, which may have contributed to his decision to purchase the resources of natural oil and gas products. Exxon refused to comment.
https://media.zenfs.com/en/reuters-finance.com/0870f35fc243966847042947fe634b87
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