Chevron CEO Mike Wirth

Chevron reveals new budget for 2021 well below prior guidance

Oil major Chevron on Thursday revealed a 2021 organic capital and exploratory spending program of $14 billion and lowered its longer-term guidance to $14 to $16 billion annually through 2025.

Chevron CEO Mike Wirth; Source: Chevron

Chevron said that this capital outlook will continue to prioritize investments that are expected to grow long-term value and deliver higher returns and lower carbon, including over $300 million in 2021 for investments to 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”, said Chevron Chairman and CEO Michael Wirth.

“With our major restructuring behind us and Noble Energy integration on track, we’re prepared to execute this program with discipline”.

Chevron’s capital guidance of $14 to $16 billion annually from 2022 to 2025 is significantly lower than its previous guidance of $19 to $22 billion, which excluded Noble Energy.

During this time period, as capital is expected to decrease for a major expansion in Kazakhstan, the company expects to increase investments in a number of its advantaged assets, including its position in the Permian, other unconventional basins, and the Gulf of Mexico.

“Chevron is in a different place than others in our industry”, Wirth said.

“We’ve maintained consistent financial priorities starting with our firm commitment to the dividend. We took early and swift action at the beginning of the pandemic to prudently allocate capital, reduce costs and protect our industry-leading balance sheet. And we’ve completed a major acquisition and restructuring that positions our company to deliver higher returns and grow long-term value”, Wirth added.

To remind, Chevron acted quickly following the global spread of the Covid-19 pandemic and moved to reduce its spending plans for 2020 in late March 2020.

Under the 2021 plan, in the upstream business, approximately $6.5 billion is allocated to currently producing assets, including about $2 billion for Permian unconventional development.

Approximately $3.5 billion of the upstream program is planned for major capital projects underway, of which about 75 per cent is associated with the Future Growth Project and Wellhead Pressure Management Project (FGP / WPMP) at the Tengiz field in Kazakhstan.

Chevron also stated that the remaining $1.5 billion is allocated to exploration, early-stage development projects, and midstream activities.

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It is also worth reminding that rival ExxonMobil this week said it would take an impairment charge of $17 billion to $20 billion in the last quarter of the year after removing certain dry gas assets from its development plan and reduce spending plans for the next year.

Furthermore, ExxonMobil expects $16 billion to $19 billion in capital and exploration expenditures in 2021 and $20 billion to $25 billion annually through 2025.