Chevron has announced its capital expenditure program for 2017, which will see the company spend US$19.8 billion next year, down 42 percent on 2015 and at least 15 percent lower than outlays for 2016.
On Wednesday, Chevron said capex for 2016 will be US$26.6 billion, a substantial downward revision from an earlier estimate of US$35 billion. Based on this, the 2017 capex sum is 24 percent lower than the figure for 2016.
Like its peers, Chevron is turning increasingly towards smaller projects with faster and higher returns. As chairman and CEO John Watson said, "Over 70 percent of our planned upstream investment program is expected to generate production within two years," going on to add that 2017 will be the fourth year in a row of capex reductions for Chevron.
In an interview with CNBC, Watson said that the capex was planned around the company's top priority, which is to maintain dividend payouts.
Chevron's capex program includes a US$2.5-billion allotment for shale and tight oil and gas, most of which will be utilized in the Permian Basin in Texas and New Mexico. Another US$2 billion will be spent on completing the Gorgon and Wheatstone LNG projects, both large-scale developments off the Australian coast. Total outlays for large-scale projects already in development are estimated at US$7 billion.
Chevron is also joining other Big Oil players in the deepwater sector of the Mexican shelf: earlier this week, a consortium led by the company won a drilling license for an oil and gas block in Mexican waters, as part of the country's efforts to open up its energy industry to foreign investment.
Like its peers, Chevron can now take a breather after OPEC's deal that pushed up prices, although it is uncertain how long this breather will last. According to at least one analyst, the company is well placed to refocus on its production business now that benchmarks are a bit above US$50 a barrel.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More