Chevron Corp, the second-largest US oil company, cut expectations for its 2017 production on March 11 by 6 percent, citing lower natural gas prices, rising costs and project delays. The company, like many of its peers, has seen mixed results from spending heavily to lift oil and natural gas production, and shareholders in the sector are pushing for more cost discipline.
Chevron trimmed its production outlook to 3.1 million barrels of oil equivalent per day (boed) by 2017 from 3.3 million boed but stuck to plans to spend $40 billion this year on capital projects, about as much as last year.
"Our growth strategy remains intact, though some things have changed," Chief Executive John Watson said at the company's analyst day in New York.
In January, Chevron said it expects production of 2.6 million boed this year, up 0.5 percent from last year.
Chevron has slowed development of its holdings in the Marcellus shale formation in the eastern United States due in part to low natural gas prices. Rising crude oil prices, paradoxically, have cut cost reimbursement in some contracts and increased costs, Watson said. An increase in the price of oil can entitle Chevron's partners to a higher share of production.
Chevron warned that trend should continue, adopting a price new assumption of around $110 barrel, an increase from its previous forecast of $79 per barrel.
Chevron plans to sell about $10 billion of assets in the next three years, an increase from the $7 billion in asset sales in the previous three years, which will also cut production.
Most of the new asset sales will be uncompetitive assets in the company's oil and natural gas exploration and production business, Watson and other executives said.
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