In the upstream business, approximately US$11 billion is forecasted to sustain and grow currently producing assets, including about US$4 billion for Permian unconventional development and about US$1 billion for other international unconventional development. Approximately $5 billion of the upstream programme is planned for major capital projects underway, of which about 75% is associated with the Future Growth Project and Wellhead Pressure Management Project (FGP / WPMP) at the Tengiz field in Kazakhstan. Global exploration funding is expected to be about US$1 billion.
“We are positioning Chevron to win in any environment by ratably investing in the highest return, lowest risk projects in our portfolio. This will be the third consecutive year with organic capital spending held flat at US$20 billion, continuing our capital discipline through the cycle. Our emphasis on short cycle investments is expected to deliver improved returns on capital and stronger free cash flow over the long-term,” said Chevron Chairman and CEO Michael Wirth.
As a result of Chevron’s disciplined approach to capital allocation and a downward revision in its longer-term commodity price outlook, the company will reduce funding to various gas-related opportunities including Appalachia shale, Kitimat LNG, and other international projects. Chevron is evaluating its strategic alternatives for these assets, including divestment. In addition, the revised oil price outlook resulted in an impairment at Big Foot. Combined, these actions are estimated to result in non-cash, after tax impairment charges of US$10 billion to US$11 billion in its fourth quarter 2019 results, more than half related to the Appalachia shale.
“We believe the best use of our capital is investing in our most advantaged assets,” Wirth continued. “With capital discipline and a conservative outlook comes the responsibility to make the tough choices necessary to deliver higher cash returns to our shareholders over the long-term.”
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/11122019/chevron-announces-capital-and-exploratory-budget-for-2020/
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