Chevron Corp. has cut its planned capital and exploratory investment program for 2017 by 15% from this year and 42% from 2015 to $19.8 billion, which includes $4.7 billion of planned affiliate expenditures.
“Our spending for 2017 targets shorter-cycle time, high-return investments, and completing major projects under construction. In fact, over 70% of our planned upstream investment program is expected to generate production within 2 years,” said John Watson, Chevron chairman and chief executive officer.
“This is the fourth consecutive year of spending reductions. Construction is nearing completion on several major capital projects, which are now online or expected to come online in the next few quarters. This combination of lower spending and growth in production revenues supports our overall objective of becoming cash balanced in 2017,” he said.
Of the $20 billion, $17.3 billion will be directed toward the firm’s upstream divisions, with international operations receiving $11.6 billion and US receiving $5.7 billion.
About $8.5 billion of planned upstream capital spending relates to base-producing assets, including about $2.5 billion for shale and tight investments, the majority of which is slated for Permian basin developments in Texas and New Mexico.
Another $7 billion of the planned upstream program is related to major capital projects currently under way, including $2 billion toward the completion of the Gorgon and Wheatstone LNG projects in Australia, and $3 billion of affiliate expenditures associated with the Future Growth Project-Wellhead Pressure Management Project (FGP-WPMP) at Tengiz field in Kazakhstan (OGJ Online, July 5, 2016).
Global exploration funding accounts for $1 billion of the total upstream budget, and the remainder is primarily related to early stage projects supporting potential future development opportunities, the firm says.
Total downstream spending is expected to be $2.2 billion, with US downstream receiving $1.6 billion and international downstream receiving $600 million.