Chevron plans to spend $3.3 billion in Permian next year

By Patrick C. Miller | December 11, 2017

Chevron will invest $3.3 billion in the Permian Basin next year under its $18.3 billion capital and exploratory spending budget for 2018.

The budget includes another $1 billion for other shale and tight rock investments and $5.5 billion for Chevron’s share of expenditures by affiliated companies.  

“Our 2018 budget is down for the fourth consecutive year, reflecting project completions, improved efficiencies, and investment high-grading,” said John Watson, Chevron chairman and CEO. “We’re fully funding our advantaged Permian Basin position and dedicating approximately three-quarters of our spend to projects that are expected to realize cash flow within two years.”

Watson said that with Chevron’s current production in the Permian exceeding guidance, he expects the company’s 2018 plan to deliver both strong production growth and solid free cash flow at oil prices comparable to 2017.

In the upstream business, approximately $8.7 billion is forecasted to sustain currently producing assets. Approximately $5.5 billion of the upstream program is planned for major capital projects underway, including $3.7 billion associated with a future growth project at the Tengiz field in Kazakhstan.

Global exploration funding is expected to be about $1.1 billion. Remaining upstream expenditures will be for early-stage projects supporting potential future developments.

Approximately $2.2 billion of planned capital spending is associated with the company’s downstream businesses that refine, market and transport fuels, as well as manufacture and distribute lubricants, additives and petrochemicals.

Other details of Chevron’s 2018 capital and exploratory spending program include $6.6 billion for U.S. upstream, $9.2 billion for international upstream, $1.4 billion for U.S. downstream and $800 million for international downstream.