08 December 2016, Houston — For a fourth consecutive year, Chevron Corp. will reduce spending in its capital budget, which is expected to make its 2017 capital investment plan less than that for 2016 by about 15 percent.
Chairman and CEO John Watson said the $19.8-billion plan – representing a 42-percent drop from 2015 – targets shorter cycle time, high-return investments and completing major projects already underway.
“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,” Watson said in a statement released after U.S. markets closed Wednesday.
A quarter of the spending – $4.7 billion – is earmarked for planned affiliate expenses, the company said in a statement released after U.S. markets closed Wednesday.
The decline in spending was expected. In March, Chevron pledged to slash its capital budget by as much as 36 percent in 2017 and 2018, in a bid to preserve its historic dividend during the downturn.
Of the total $17.3 billion upstream spend for 2017, about $5.7 billion is dedicated to U.S. spending; an additional $11.6 billion will target international upstream projects. Roughly $8.5 billion of planned capital spending relates to base-producing assets, including about $2.5 billion for shale and tight investments – mostly slated for development in the Permian Basin.
Another $7 billion of the planned upstream program is earmarked for major capital projects currently underway, including approximately $2 billion toward completing the Gorgon and Wheatstone LNG projects in Australia.
Global exploration funding accounts for approximately $1 billion of the total upstream budget, and the remainder is primarily related to early stage projects supporting potential, future development opportunities, according to the statement. Another $2.2 billion is allocated to downstream projects.
*Deon Daugherty at [email protected]