Today's earnings show has a horrifying Reserves story on slide 22. A healthy growing oil company adds more to reserves than they deplete through production. Adding the same amount we produced would be a 100% reserve replacement ratio, which is treading water. The goal is well over 100%. We didn't add 100% in 2024. In fact, we didn't add a single barrel. We produced 1.2 BBOE and the same amount and a bit more disappeared off the books so our reserves shrank from 11.1 BBOE to 9.8 BBOE. At this rate, we will be completely out of business in less than a decade.
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Prior to the current Exploration "leadership", Chevron was actually a decent and competent, but not overly successful, exploration company. LS' promotion was a real head-scratcher to those of us in the trenches. It was like a cruise ship running out of fuel in the middle of the ocean. Still big, but now not moving at all. The steady stream of 'kids' and high-pots being put into positions of authority didn't help at all.
Yes, this is alarming but realize Chevron has been around 10 BBOE reserves for at least the last 30 years. As others have mentioned, Chevron is either inept at exploration and/or has given up on discovering its own barrels, and will search out another acquisition if reserves drop a bit more. There aren't any more Hess out there (that is, conventional reserves operated by someone competent), so expect a steady stream of Permian basin buyouts every two years or so.
OP, this is just the tip of the iceberg - there will be more of this in the future. There are no MCPs in the pipeline, and there hasn't been a significant new lease position anywhere in the world in the last decade. Mexico, Brazil, Suriname all busts. Johnny-come-lately never works in international exploration.
Coming out of Downstream, MW is a firm believer that exploration is too risky and too expensive, which is why the first thing he did when he took over was to slash the exploration budget and suffocate the only successful exploration BU at the time, DWEP. MW was completely enamored with the siren's call of cheap wells and eternal reserves in the Permian, both notions now starting to rust.
MW couldn't find oil in Walmart.
Chevron has completely given up on organic exploration (that is, our leases, our wells) and now is wholly dependent the next few years on Hess working out. We haven't had any "winning" leadership in Exploration in a decade, just a steady stream of diversity placements and cronies. Goodness, we don't even have anyone with a track record of finding oil. Really sad.
If I understand correctly as more Guyana projects get sanctioned the reserves will rise accordingly. Acquiring Hess gives a clear line of sight to few years of rising reserves.
Umm, HESS end 2023 proven reserves were 1.4 BBOE or a bit over one year production. If we had merged this year our RRR would be like 125% which is just Meets Expectation.
Who cares about reserves? The Hess acquisition will set us up for the next decade (and the best part is that we don’t even need people to operate it :-))
MW
Maybe we should give Microsoft and Schlumberger some more money? Will that help?
Exploration is hard, but our Exploration leadership makes it look really hard.
If there were accountability it would be time to let someone else have a go at leading the ship, ideally someone that has a track record of finding reserves and is able to cut through the bullsh-t that Chevron has at every level of leadership. Give them a singular mission, find reserves, and reward them only based on this outcome.
Exploration leadership is continuing their string of major dusters with recent dry holes in Egypt and Namibia. Meanwhile our competitors continue with exploration success. Being the laughingstock of the industry is not fun. I doubt there will be layoff accountability in exploration leadership. Instead, all of the people who warned against these horrendous investments will be quickly shown the door. The only hope is to buy reserves.