Most improved profit: Chevron Australia

Chevron’s materials offloading facility at the Gorgon gas project in Western Australia. Photo: Chevron

Chevron Corp, the massive New York Stock Exchange-listed $US223 billion market capitalised oil and gas company, is known as the most efficient at what it does in the world.

In fact, by whatever metrics you measure efficiency in gas and oil exploration and production – in terms of return on capital employed (ROCE) or margin per barrel – Chevron is at the top of the list, the chairman of specialist independent North American consulting firm PFC Energy, Robin West, says.

Chevron has the best ROCE compared with its global peers, which is the best measurement of upstream net income reflecting the company’s exploration and production capabilities.

It should be no surprise then that Chevron Australia is the top corporation on the most improved profit list (behind only the Reserve Bank of Australia), with profit climbing $1.1 billion to $2.1 billion. Not only is the Australian company infused with the global parent’s culture but Chevron Australia is in fact spearheading the global company’s future growth plans.

“Australia is very important to Chevron,” West says. “In fact, once the Gorgon and Wheatstone developments are in full swing, Chevron will have more capital employed in Australia than it does in all of North America.”

Gorgon and Wheatstone are the two latest exploration “mega-projects” Chevron has begun to explore in Western Australia.

The company describes Gorgon as the centrepiece of its growth story, which it is expected in bring into production in 2014. Gorgon has the potential to produce 450,000 barrels of oil-equivalent a day, according to Chevron’s analyst briefing notes.

Activity is also ramping up at Wheatstone, the second LNG project in Australia, where the company says it will spend $US29 billion.

While Chevron’s mega-projects are yet to enter production, the company says it already has a long string of successful exploration wells in Australia where its largest portfolio of exploration acreage is in the Carnarvon Basin in Western Australia. Chevron says it has had 13 successes out of 14 wells drilled since 2009. These have added a total of 7 trillion cubic feet of resources, more than 1 billion barrels of oil equivalent, the company says.

The key to efficiency in exploration is the ability to create investment opportunities on a large scale, West says. “That’s something Chevron does well,” he says.

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