Chevron Corp. has earmarked $14 billion for organic capital investments and $3 billion for its affiliates in 2023, with most of the fundings budgeted for the Gulf of Mexico and the Permian Basin.
Nearly $2 billion of the capital expenditures (capex) also would be set aside for lower carbon projects, the San Ramon, CA-based major said. The spending is more than 25% higher than the initial spending forecast for 2022.
“We’re maintaining capital discipline while investing to grow both traditional and new energy supplies,” said CEO Mike Wirth. “Our 2023 capex budgets are consistent with our long-term plans to safely deliver higher returns and lower carbon.”
The budget assumes that cost inflation “will average in the mid-single digits with certain areas higher, such as the Permian Basin, that assumes low double-digit cost inflation.”
The spending plans, Wirth said, “remain in line with prior guidance despite inflation. We’re winning back investors with capital efficient growth, a strong balance sheet and more cash returned to shareholders.”
Of the total spending planned, $8 billion is earmarked for the U.S. Upstream, with international upstream set at $3.5 billion. Domestic Downstream operations would receive $1.5 billion, with the international business spend at $300 million. The budget for affiliates is $2.9 billion.
“Upstream capex includes more than $4 billion for Permian Basin development and roughly $2 billion for other shale and tight assets,” management said. During 3Q2022, Permian output was up about 10% year/year, averaging 708,000 boe/d.
Chevron also develops shale and tight oil and gas in the Denver-Julesburg Basin, the Duvernay formation in Canada, the Haynesville Shale and the Vaca Muerta in Argentina.
More than 20% of the total upstream capex “is for projects in the Gulf of Mexico,” where Chevron is one of the leading operators.
“Lower carbon capex across all segments totals around $2 billion, including $5 million to lower the carbon intensity of Chevron’s traditional operations and about $1 billion to increase renewable fuels production capacity.”
Almost one-half of the affiliate capex is for a Tengizchevroil project in Kazakhstan. Another one-third is for Chevron Phillips Chemical Co., including the Gulf Coast II petrochemical project. In November Chevron Phillips and QatarEnergy sanctioned an $8.5 billion integrated polymers facility east of Houston.
