Chevron Corp. expects to spend 20% more in 2022 on capital and exploratory efforts than it did this year to support “higher returns and low carbon” efforts, the supermajor said.
Organic capital expenditures (capex) in the coming year are set at $15 billion, at the low end of its $15-17 billion initial budget plan but still sharply ahead of this year’s spend. For new low carbon projects, $800 million has been earmarked; $600 million already has been set aside to advance a renewable fuel joint venture with Bunge North America Inc.
The 2022 budget reflects the San Ramon, CA-based producer’s “commitment to capital discipline,” CEO Mike Wirth said. “We’re sizing our capital program at a level consistent with plans to sustain and grow the company as the global economy continues to recover.”
During 3Q2021, profits jumped to $6.1 billion ($3.19/share) from a year-ago loss of $207 million (minus 12 cents). Earnings were the highest since the first quarter of 2013.
With profits up, Chevron is boosting its share buyback program to $3-5 billion a year from $2-3 billion.
“We’re a better company than we were just a few years ago,” Wirth said. “We’re more capital and cost efficient, guided by a clear and consistent objective to deliver higher returns and lower carbon. And this enables us to return more cash to shareholders.”
$3B For Permian
Most of the capex in the coming year is centered on U.S. upstream and downstream operations.
For the upstream, total spending in 2022 is slated to be around $12.6 billion. U.S. upstream capex is set at $6.4 billion, slightly more than the $6.2 billion for international development.
Around $8 billion of the total upstream capex for 2022 would be allocated to “currently producing assets,” with $3 billion directed to the Permian Basin, Chevron’s No. 1 onshore target. Another $1.5 billion would be spent in “other shale and tight assets” worldwide.
Chevron also has earmarked $3 billion in upstream spend for major capital projects underway, with most — $2 billion — directed to an ongoing expansion of the Tengiz field in Kazakhstan. Another $1.5 billion in upstream capex is allocated to exploration, early stage development projects, midstream activities and carbon reduction opportunities.
Domestic downstream spending is slated to receive $1.7 billion in 2022, with $600 million earmarked for the overseas programs.
For its affiliated companies, Chevron has budgeted $400 million. Overall cash expenditures by the consolidated companies total $11.7 billion.
About $2.3 billion of the planned downstream organic capital spending would be for businesses that refine, market and transport fuels, as well as manufacture and distribute lubricants, additives and petrochemicals.
Also included is the downstream spending is funding to expand the renewable fuels and products businesses. Earlier this year the company launched the Chevron New Energies unit to hold the lower carbon businesses.
U.S.-based peer ExxonMobil issued its capex projections on Wednesday, indicating it would keep annual spending steady for the next six years at $20-25 billion/year. Like Chevron, ExxonMobil’s capex in 2022 is forecast to be about 20% higher than this year.
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