Chevron is struggling to exchange oil, gas reserves in Hess’s trade limbo
By Sheila Dan
HOUSTON (Reuters) – Chevron’s oil and gas reserves have fallen to their lowest point in at least a decade, and planned oil producer Hess is stagnating due to a court battle with Exxon Mobil It emphasizes the importance of acquisition.
Reserve exchanges are one of the key metrics for investors in energy companies. This is because it gives a sense of how much oil and gas a company can produce and how long it can earn over and over.
If Chevron closes Hess’ acquisition, it will win a stake in the lucrative Guyana oil field run by Chevron’s rival Exxon.
Guyana Field’s other minority partners, Exxon and CNOOC, challenged Chevron’s bid for Hess, saying they had the first right to reject Hess’ fairness in the project.
Chevron reserves, or potentially extractable oil and gas, had fallen to 11.1 billion barrels of oil and 9.8 billion in 2023 by the end of 2023.
The low replacement rate of the spare causes a “red flag,” Scottiabank analyst Paul Chen stresses concerns about the company’s long-term outlook.
Chevron said the reserve exchange rate for the past decade was 88%.
The company’s organic reserve exchange ratio measures how much new oil and gas added to the protected area compared to the amount produced, and the metrics that exclude acquisitions and sales are It was 45%. A ratio of 100% or more means that the company is replacing reserves at the same rate as it drains them.
Cheng said the company’s exchange rate has fallen below the break-even requirement over the past three years. Scotiabank maintains an outperform rating for Chevron’s sector.
Chevron declined to comment. In a fourth-quarter revenue call, CEO Mike Worth said the company is focusing on developing high-quality oil and gas assets, including the Gulf of Mexico.
The acquisition of Hess, a $53 billion deal in October 2023, could improve Chevron’s outlook. The company would grant 30% stake in more than 11 billion barrels of oil, the equivalent of recoverable resources discovered in Guyana, the company said when it announced the deal.
“The total company is expected to have a deep resource inventory over the next decade, which is far more than we can confidently see in our business,” Wirth said. He said in October.
Exxon has not yet reported an alternative ratio for 2024, but no. One US oil producer had a hard time replacing reserves in 2023 and 2022. Exxon declined to comment.