Chee to spend more on Permian Basin as investors demand more
An additional $2 billion will be allocated to capital spending next year, largely focused on the Permian Basin, as it seeks to balance demands for higher investor returns with calls from US President Joe Biden to invest more profits in energy production.
The US oil giant plans to spend $17 billion in the year 2023, at the top end of its $15 billion to $17 billion medium-term range, the San Ramon, California-based company said in a statement. That is a 13% increase from the previous year's target.
The Permian will receive $4 billion, nearly a quarter of the global total. Chevron is hoping to speed up US shale production, which offers a low risk and quick financial returns compared to the multi-year megaprojects that dominate much of the last decade. Spending in the basin assumes low double-digit cost inflation, while global costs are likely to increase in the mid-single digit percentages, Chevron said. Low carbon will receive $2 billion.
Chief Executive Officer Mike Wirth said in the statement that we are focusing on capital discipline while investing to grow both traditional and new energy supplies. Our capex budgets are in line with prior guidance despite inflation. Biden spent much of the year lambasting major oil explorers for investing little of the windfall profits he reaped in the wake of Russia's invasion of Ukraine as surging pump prices squeezed consumers. Chevron's spending next year will be well above the 2020 and 2021 pandemic years, but still less than half of the $30 billion annual average of the 2012 -- 2019 period.
Chief Executive Officer Mike Wirth said that Chevron's spending is more efficient than in the past, meaning the company produces more oil per dollar invested. It comes with a focus on investor returns. Chevron is currently spending $6.5 billion a quarter on dividends and share buybacks, or $26 billion a year, well in excess of capital spending.
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