Chevron focuses on near term with 15% budget cut

SAN RAMON, California -- Chevron has announced a $19.8-billion capital and exploratory investment program for 2017. The budget, which includes $4.7 billion of planned affiliate expenditures, represents a reduction of 42% from 2015 outlays and is expected to be at least 15% lower than projected 2016 capital investments.

The company has allocated $17.3 billion for its Upstream business, $5.7 billion of which is slated for the U.S.

Approximately $8.5 billion of the company's planned upstream spending relates to base-producing assets, including about $2.5 billion for shale and tight investments, the majority of which is slated for Permian basin developments in Texas and New Mexico.

Another $7 billion of the planned upstream program is related to major capital projects currently underway, including approximately $2 billion toward the completion of the Gorgon and Wheatstone LNG projects in Australia and $3 billion of affiliate expenditures associated with the Future Growth Project-Wellhead Pressure Management Project (FGP-WPMP) at Tengiz field in Kazakhstan.

Global exploration funding accounts for approximately $1 billion of the total upstream budget, and the remainder is primarily related to early stage projects supporting potential, future development opportunities.

"Our spending for 2017 targets shorter-cycle time, high-return investments and completing major projects under construction. In fact, over 70% of our planned upstream investment program is expected to generate production within two years," said Chairman and CEO John Watson. "This is the fourth consecutive year of spending reductions. Construction is nearing completion on several major capital projects, which are now online or expected to come online in the next few quarters. This combination of lower spending and growth in production revenues supports our overall objective of becoming cash balanced in 2017."