U.S. energy giant Chevron Corp. (CVX) declared the commencement of first oil and natural gas production from the Jack/St. Malo project located in deepwater U.S. Gulf of Mexico (GoM). Following the announcement, Chevron shares gained over 2% on the NYSE.
This follows the company’s Nov 17 announcement of first oil from its Tubular Bells Project, also located in the GoM. (Read More: Chevron Produces First Oil from GoM Tubular Bells Project)
The Jack and St. Malo fields – among the largest in the region – are located at a water depth of roughly 7,000 feet in the Walker Ridge area, south of New Orleans, LA. The fields have the potential to reach production levels of 94,000 barrels of crude oil (bbl) and 21 million cubic feet of natural gas (Mmcfe) per day in due course.
The fields have an estimated production life of over 30 years and are likely to yield over 500 million oil-equivalent barrels with the available technology. The company also stated that the promising yield from the fields is owing to the proper execution of its technological advancements. With successive development phases, the recoverable amount from the fields may increase substantially.
The Jack and St. Malo fields, discovered respectively in 2004 and 2003, are the key components of Chevron’s upstream project portfolio. The Jack/St. Malo project was sanctioned in 2010 and was developed by using a semi-submersible floating production that has a capacity of 170,000 bbls of oil and 42 Mmcfe of natural gas per day. Oil from the facility would be transported through the Jack/St. Malo Oil Export Pipeline to the Green Canyon 19 Platform and onto refineries.
Chevron added that with the production from this project, it has moved a few steps ahead in achieving its target of 3.1 million barrels per day output by 2017.
Chevron has a 50% working interest in the Jack field. Statoil ASA (STO) has a 25% stake in the field whereas the remaining is held by Maersk Oil. In the St. Malo field, Chevron has a working interest of 51%. Of the remaining stake, Petrobras (PBR) owns 25%, Statoil owns 21.5%, ExxonMobil Corp. (XOM) owns 1.25% and Eni SpA (E) owns 1.25%.
Also, Chevron holds a 40.6% stake in the production facility. Of the remaining stake in the facility, Statoil owns 27.9%, Petrobras owns 15%, ExxonMobil owns 10.75%, Maersk Oil owns 5% and Eni owns 0.75%.
Currently, Chevron carries a Zacks Rank #3 (Hold).
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