Chevron Corp. plans to reduce overall capital spending by 26% next year and slice the budget through 2025, but more resources are budgeted for the deepwater Gulf of Mexico and the Lower 48, including the legacy Permian Basin holdings.

Capital expenditures (capex) are set at $14 billion for 2021, and up to $16 billion a year is earmarked for 2022-2025, the energy major said Thursday. 

Pre-pandemic, Chevron was forecasting capex would average $19-22 billion a year through 2024. The lower spending is set even as the Noble Energy Inc. assets are integrated, a deal completed in October.

The spending is designed to “prioritize investments that are expected to grow long-term value and deliver higher returns and lower carbon” with more than $300 million earmarked for investments to advance the energy transition.

“Chevron is in a different place than others in our industry,” CEO Michael Wirth said. “We’ve maintained consistent financial priorities starting with our firm commitment to the dividend. 

“We took early and swift action at the beginning of the pandemic to prudently allocate capital, reduce costs and protect our industry-leading balance sheet. And we’ve completed a major acquisition and restructuring that positions our company to deliver higher returns and grow long-term value.”

The San Ramon, CA-based energy major “remains committed to capital discipline with a 2021 capital budget and longer-term capital outlook that are well below our prior guidance…With our major restructuring behind us and Noble Energy integration on track, we’re prepared to execute this program with discipline.”

Beyond 2021, expect to see more “investments in a number of Chevron’s advantaged assets, including its world class position in the Permian, other unconventional basins and the Gulf of Mexico.”

Roughly $2 billion, or 31%, of 2021 upstream spending ($11.5 billion) is to target the Permian, where Chevron has worked for decades. Another $3.5 billion would be directed to major projects already underway, with about 75% for the Tengiz field in Kazakhstan. The remaining $1.5 billion in upstream capex would be for exploration, early-stage development and midstream activities.

The Noble takeover has added an estimable set of global assets to Chevron’s war chest. In addition to its broad holdings in the Permian and Denver-Julesburg basins, Noble brought aboard an estimable Eastern Mediterranean natural gas-rich portfolio that could complement Chevron’s extensive liquefied natural gas operations in Australia, including Gorgon and Wheatstone. Chevron’s lower capital plans follow a similar move by ExxonMobil, which has reduced annual capex by $5-10 billion a year through 2025. Since the start of the year Chevron also has restructured its operations and plans to reduce its 45,000-person workforce by up to 15%.