After years of cutting frontier exploration spending and focusing on nearby drilling, Chevron is once again setting out to find oil and gas resources in remote, untapped regions.
The second-largest U.S. oil giant now has abundant cash flow. The Iran conflict triggered historic turmoil in energy markets, sending oil prices soaring and driving a sharp jump in company profits.
The executive leading this exploration effort, Kevin McLachlan, is a veteran Canadian oil and gas exploration expert with a degree in geophysics who enjoys cycling in the French mountains. Chevron poached him from TotalEnergies, a French energy company long known for operating in remote areas where many American firms hesitate to venture.
McLachlan says the satisfaction from cycling and oil and gas exploration is much the same: both involve finding new paths and wanting to see what lies around the next corner.
He joined Chevron last year to drive exploration in untapped areas across Africa, South America, and the eastern Mediterranean. "Exploration is a hard business," he said, "but nothing compares to the moment of making a discovery."
Chevron's first-half profit exceeded $14 billion, already surpassing its full-year 2025 earnings; the market expects the company to deliver another standout quarterly report on Friday. FactSet data shows Wall Street analysts expect third-quarter profit to nearly triple year over year.
The current external environment favors oil and gas exploration and further investment. The Iran conflict fully exposed the fragility of energy supply chains: roughly 20% of global oil and gas supply effectively passes through the Strait of Hormuz, and any disruption there creates a choke point.
After 2022, investor pressure on companies to move away from fossil fuels was widespread; under the Trump administration, such pressure has largely faded.
Chevron management says earlier predictions that global oil demand would soon peak have been pushed back by many years. Major oil companies have seized the moment. Exxon Mobil, Shell, TotalEnergies, and other leading firms are rushing to Suriname, Brazil, Namibia, and elsewhere to find new oil and gas deposits.
For years, the industry's newly added reserves have failed to keep pace with production depletion. Chevron's reserve replacement ratio in 2024 was -4%, meaning its proved reserves fell by more than its oil and gas production. That year the company's crude output hit a record high, but it also sold Canadian assets.
When Exxon Mobil made major oil and gas discoveries in Guyana in the 2010s, Chevron chose to scale back frontier exploration and focus on mature producing areas such as the Permian Basin in West Texas and New Mexico. A large part of Chevron's $53 billion acquisition of Hess was driven by the goal of securing Hess's 30% stake in the Exxon-led Guyana project.
The deal helped Chevron fill a gap, and last year its reserve replacement ratio rose to 158%. But investors want the giant to rely on its own exploration to make new discoveries and steadily replenish reserves.
Chevron CEO Mike Wirth admitted last year that he was not satisfied with the company's exploration results in recent years. Industry observers widely believe that integrating Hess's exploration team and bringing in McLachlan signals Chevron's determination to reverse its exploration slump.
During his time at TotalEnergies, McLachlan led major oil and gas discoveries in Namibia, Suriname, Cyprus, South Africa, and other locations. Wirth said on an analyst call: "We had pulled back and narrowed our scope considerably. Exploration must once again play an important role."
Chevron is now disclosing more resource replenishment plans: among other steps, the company is ramping up deepwater oil and gas exploration again, scouting new blocks for drilling, and using new technology to extract more crude from formations.
McLachlan says half of the company's exploration capital is now invested in frontier basins (basins that remain undeveloped), compared with only about 20% a few years ago. The company aims to drill up to 20 exploration wells a year, about half of them targeting new blocks that could grow into major development projects.
The company is also using greatly improved seismic imaging technology and artificial intelligence tools to comb through a century of geological data and pinpoint potential oil and gas-rich areas. Chevron Chief Technology and Engineering Officer Ryder Booth said: "This tool can deliver data to geologists and exploration staff in seconds."
This year, Chevron is drilling a second exploration well in Namibia's promising PEL90 block; it is also drilling in Egypt, reassessing areas near its own assets around Israel, signing agreements to position itself for exploration in Greece, Malta, and Syria, and investing in seismic surveys to look for oil and gas in Uruguay and Brazil.
Booth believes that since the start of this century, the vast majority of newly added oil and gas resources have only been developed through technological breakthroughs. One of Chevron's key research and development priorities is specialty chemicals to enhance recovery rates in mature oilfields such as the Permian Basin.
Before the Hess acquisition, investors had been worried that Chevron's oil and gas portfolio would lack staying power after 2030. The deal, which was held up for nearly two years by Exxon's objections before finally closing, can be described as a transformative transaction.
Still, Chevron is not expanding blindly. Jack Spiering, president in charge of corporate business development, said that even as the company looks for potential acquisition targets and maintains partnerships with governments in Iraq, Argentina, Venezuela, and other countries, it remains disciplined about spending.
"We take a long-term view," Spiering said. "We want to keep the business non-politicized and make sure we are doing what is best for shareholders."
Chevron is looking forward to a breakthrough in exploration, but McLachlan cautions that a successful exploration cycle often takes years. It is very common for companies to walk away when many projects are just one step from a major discovery.
"When you drill a dry hole, everyone feels bad," he said. "It is useful to review and challenge yourself in a timely way: should we keep investing? Or cut our losses? That is probably the hardest question in the exploration industry, and not everyone can make the right call."
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