Chevron to reduce overall 2025 capex, including in Permian basin
Chevron Corp. expects to spend two-thirds of its $13-billion 2025 upstream spending budget to develop its US portfolio, reducing its year-over-year spending in the Permian basin.
The company’s organic capital expenditure budget for consolidated subsidiaries is $14.5-15.5 billion, while affiliate capex currently stands at an expected $1.7-2.0 billion for 2025, the company said in a release Dec. 5.
Overall, the company’s 2025 capex and affiliate capex budgets are $2 billion lower than last year.
In the US, Chevron has earmarked $4.5-5 billion to the Permian basin, a reduction from its 2024 budget. The company said production growth is being reduced in favor of free cash flow. In October, the company said it was targeting Permian basin production of 1 million boe/d by 2025 (OGJ Online, Oct. 16, 2024). Permian basin production guidance for 2025 has not yet been provided.
The remaining US investment will be divided between its Denver-Julesburg (DJ) basin assets and the Gulf of Mexico, where deepwater growth projects continue to ramp and are expected to deliver offshore production of 300,000 boe/d in 2026, the operator said. In August, Chevron began oil and gas production from its operated Anchor development in the Green Canyon area in deepwater US Gulf of Mexico (OGJ Online, Aug. 12, 2024). The development lies water depths of about 5,000 ft and uses subsea high-pressure technology rated to 20,000 psi, with reservoir depths reaching 34,000 ft from the water surface.
Internationally, Chevron has earmarked about $1.0 billion to Australia to include Gorgon backfill investments.
Some $1.2 billion will be spent on downstream operations, with two-thirds of the budget focused on US assets.
Within total upstream and downstream budgets, the company said, about $1.5 billion will be dedicated to lowering the carbon intensity of its operations and growing its New Energies businesses.
Corporate and other capex is expected to be around $0.7 billion.
Tengizchevroil LLP’s budget is less than half of the affiliate capex as the Future Growth Project is projected to achieve first oil in first-half 2025, the company said. The remaining affiliate spend primarily supports Chevron Phillips Chemical Co. LLC, which includes the Golden Triangle Polymers and Ras Laffan Petrochemical Projects.
Fourth-quarter 2024 update
Related to Chevron’s plans to reduce structural costs by $2-3 billion by end-2026, the operator expects to record a restructuring charge of $700-900 million after-tax in this year’s fourth quarter, with associated cash outflows over the next 2 years.
Non-cash, after-tax charges related to impairments, asset sales, and other obligations are expected to come in at $400-600 million in the quarter. Chevron plans to treat these as special items and exclude them from adjusted earnings.
Mikaila Adams | Managing Editor - News
Mikaila Adams has 20 years of experience as an editor, most of which has been centered on the oil and gas industry. She enjoyed 12 years focused on the business/finance side of the industry as an editor for Oil & Gas Journal's sister publication, Oil & Gas Financial Journal (OGFJ). After OGFJ ceased publication in 2017, she joined Oil & Gas Journal and was named Managing Editor - News in 2019. She holds a degree from Texas Tech University.