U.S.-based oil major Chevron has announced a 2018 capital and exploratory spending program of $18.3 billion, which is down for the fourth consecutive year.
This amount includes $5.5 billion for the company’s share of expenditures by affiliated companies, Chevron said on Wednesday.
“Our 2018 budget is down for the fourth consecutive year, reflecting project completions, improved efficiencies, and investment high-grading,” said Chevron Chairman and CEO John Watson, who will retire from the company on February 1, 2018, after 37 years of service, including eight years as chairman and CEO.
About a year ago, Chevron reduced its capex for 2017 to $19.8 billion, a reduction of 42 percent from 2015 outlays.
Watson continued, “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.”
“With production currently exceeding guidance in the Permian, our 2018 plan should deliver both strong production growth and solid free cash flow, at prices comparable to what we’ve seen this year.”
In the upstream business, approximately $8.7 billion is forecasted to sustain currently producing assets, including $3.3 billion for the Permian and $1 billion for other shale and tight rock investments. Approximately $5.5 billion of the upstream program is planned for major capital projects underway, including $3.7 billion associated with the Future Growth Project at the Tengiz field in Kazakhstan.
Global exploration funding is expected to be about $1.1 billion. Remaining upstream spend 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.