Chevron Sharply Reduces Annual Capex Guidance Amid Pandemic

Researched by Industrial Info Resources (Sugar Land, Texas)--Chevron Corporation (NYSE:CVX) (San Ramon, California) is cutting its annual capital guidance by 26-27% through 2025 as the global Oil & Gas Production giant contends with the impact of the COVID-19 pandemic. Chevron announced on Thursday a 2021 organic capital and exploratory spending program of $14 billion and lowered its longer-term guidance to $14 billion to $16 billion annually through 2025, from its previous guidance of $19 billion to $22 billion, which excluded its Noble Energy acquisition.

Industrial Info is tracking nearly $51 billion worth of active capital Chevron projects across the globe.

Click on the image at right for a graph showing Chevron project activity by world region.

Next year's capital program of $14 billion compares with 2020's guidance of $15 billion. For more information, see November 13, 2020, article - Chevron Guts Capital Spending as it Faces Low-Price, Low-Demand Reality.

"Chevron remains committed to capital discipline with a 2021 capital budget and longer-term capital outlook that are well below our prior guidance," said Chief Executive Officer Michael Wirth in a press release. "With our major restructuring behind us and Noble Energy integration on track, we're prepared to execute this program with discipline."

The company said that as capital spending is expected to wind down for its major expansion in Kazakhstan, it expects to increase investments in a number of other advantaged assets, including its position in the Permian Basin, other unconventional basins and the Gulf of Mexico.

Next year's planned expenditures include $11.5 billion for U.S. and international upstream operations, the company said.

About $6.5 billion is allocated to currently producing assets, including about $2 billion for Permian unconventional development, the company said. About $3.5 billion is planned for major capital upstream projects underway, of which about 75% is earmarked for the Future Growth Project and Wellhead Pressure Management Project (FGP/WPMP) at Kazakhstan's Tengiz field in Kazakhstan. For more information on Tengiz see Industrial Info's project reports.

The remaining $1.5 billion is allocated to exploration, early stage development projects, and midstream activities.

Chevron was not alone this week in announcing capital projections. Exxon Mobil Corporation (ExxonMobil) (NYSE:XOM) (Irving, Texas) announced on Monday it expects to spend $16 billion to $19 billion on capital and exploration in 2021 -- its lowest level in 15 years -- and $20 billion to $25 billion annually through 2025. ExxonMobil said it would write down the value of natural gas properties by $17 billion to $20 billion, its biggest ever impairment, laying bare the size of the miscalculation that the company made in 2010, when it paid $30 billion for U.S. shale producer XTO Energy as natural gas prices went into a decade-long decline.

In April, ExxonMobil announced it had cut 2020 capital spending by 30% to about $23 billion amid low energy commodity prices and demand weakness due to the pandemic. For more information, see April 8, 2020, article - ExxonMobil Lops $10 Billion Off Planned 2020 Capex, Targets Permian Basin.

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