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Chevron Boosts Capital Budget 35% in '06 to $14.9B

December 12, 2005
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Chevron Corp. on Thursday boosted its 2006 capital and exploratory budget by 35%, to $14.9 billion, earmarking $3.3 billion for projects in the U.S. upstream, including the deepwater Gulf of Mexico, liquefied natural gas (LNG) and gas-to-liquids (GTL) facilities. Chevron also will repurchase another $5 billion in shares over the next three years; it has repurchased $5 billion in shares since April 2004.

"The size of our overall program reflects a strong queue of growth projects, many of which are entering their construction phase, and demonstrates our commitment to bring new energy supplies to market," said CEO Dave O'Reilly.

A $4.9 billion total investment in U.S. downstream and upstream projects is $1.1 billion more than the company spent this year. O'Reilly explained the investment program will advance strategies "to build legacy positions in key producing regions and commercialize our significant natural gas resource base. We also have planned investments to expand gasoline production capacity, produce cleaner fuels and develop transportation infrastructure to bring fuels to market."

The increase to upstream spending will focus on three things: projects entering the more capital-intensive construction phase; full-year spending to develop the growth projects of Unocal, which was acquired in August 2005; and increased industry-wide costs for materials and services. Investments to commercialize the company's natural gas resources are estimated at $1 billion, including LNG facilities, GTL facilities and ensuring natural gas regasification and import capability for the U.S. markets.

"Our upstream and gas investment opportunities will help the company deliver more oil and gas resources to world markets. In the past year, we commenced construction of two important U.S. energy projects, Tahiti and Blind Faith, in the Gulf of Mexico," said George Kirkland, executive vice president of Upstream and Gas.

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