Chevron Corporation plans to cut its total capital and exploratory budget for a fourth consecutive year in 2018—to $18.3 billion, compared to the $19.8 billion that it planned for this year, but the supermajor is significantly boosting spending on U.S. shale, especially in the Permian.
Chevron’s capital expenditure for 2017 envisaged a $2.5 billion allotment for shale and tight oil and gas, most of which was to be invested in the Permian Basin in Texas and New Mexico.
For 2018, Chevron’s investment in U.S. shale includes $3.3 billion—just for the Permian—and another $1.0 billion for other shale and tight rock investments, for a total of $4.3 billion.
“We’re fully funding our advantaged Permian Basin position and dedicating approximately three-quarters of our spend to projects that are expected to realize cash flow within two years,” Chairman and CEO John Watson said in Chevron’s press release.
“With production currently exceeding guidance in the Permian, our 2018 plan should deliver both strong production growth and solid free cash flow, at prices comparable to what we’ve seen this year,” Watson said.
Chevron’s total U.S. upstream capital and exploratory expenditures are planned at $6.6 billion, and international upstream investment is seen at $9.2 billion. Chevron will also spend $2.2 billion on its downstream business, of which $1.4 billion earmarked for the U.S. downstream.
Chevron plans around $5.5 billion of its upstream program to go to major capital projects underway, including $3.7 billion for the Future Growth Project at the Tengiz field in Kazakhstan.
The U.S. supermajor expects its global exploration funding next year to be about $1.1 billion. The rest of the upstream spend will go to early stage projects supporting potential future developments.
“Our 2018 budget is down for the fourth consecutive year, reflecting project completions, improved efficiencies, and investment high-grading,” Watson said, summing up Chevron’s capex plans for next year.
By Tsvetana Paraskova for Oilprice.com
