Chevron Sets 2021 Budget, Reduces Guidance

US major Chevron announced December 3 an organic capital and exploratory spending budget for 2021 of $14bn, in line with its 2020 expenditures. It said it would hold spending in the $14-$16bn/yr range through the 2022-2025 period, which is about 26% lower than earlier expectations.

Spending will be prioritised on investments that hold long-term growth potential and deliver higher returns and lower carbon. More than $300mn will be spent next year on investments that advance the energy transition.

“Chevron remains committed to capital discipline with a 2021 capital budget and longer-term capital outlook that are well below our prior guidance,” CEO Michael Wirth said. “With our major restructuring behind us and Noble Energy integration on track, we’re prepared to execute this program with discipline.”

Chevron said its 2022-2025 spending guidance was “significantly lower” than its previous guidance for the timeframe of $19-$22bn/yr. Over this period, it said, capital for a major expansion in Kazakhstan will be decreased, but several of its “advantaged” assets – the US Permian, other unconventional basins and the Gulf of Mexico – would see increased investments.

Total upstream spending for 2021 is estimated at $11.5bn, with $6.5bn of that allocated to currently producing assets, including $2bn for unconventional development in the Permian basin. Another $3.5bn of the upstream budget will go to major capital projects already underway, with 75% of that total allocated to future growth and wellhead pressure management in Kazakhstan’s Tengiz field.

Chevron’s initial capital budget for 2020 was set at $20bn, but was reduced to $16bn in March and again to $14bn in May in response to impacts stemming from the Covid-19 pandemic. Through the first nine months this year, the company spent $10.3bn, down from $15bn in the comparable 2019 period.