Chevron reduces capital expenditures in the Permian Basin

6 December 2024

Chevron Corporation announced it will reduce the capital expenditure allocated for its operations in the Permian shale oil basin in 2025.

Chevron will reduce its Permian Basin capital expenditures to between $4.5 billion and $5 billion in 2025, a drop of as much as 10%. Globally, the company (including affiliates) expects to spend about $17 billion next year, compared to $19 billion this year, in the first budget cut since 2021.

“Production growth is reduced in favor of free cash flow,” Chevron said in a statement. The decision is the most definitive sign yet that President-elect Donald Trump faces an uphill battle to ramp up American energy output, noted Bloomberg.

Chevron still plans to increase oil output from the Permian next year, but growth will significantly decelerate from the 15% annual increase since 2021. Analysts surveyed by Bloomberg saw the USA adding 251,000 barrels of daily output from the end of this year through 2025, which would be the slowest pace since the Covid pandemic-driven drop in 2020.

The remainder of Chevron’s US budget will be split between operations in the Denver-Julesburg (DJ) shale basin and the Gulf of Mexico. In Kazakhstan, Chevron plans to spend less than $1 billion on the Tengiz oil field, where the expansion project is expected to achieve first oil in the first half of 2025.

Chevron also said it will book charges of between $1 and $1.5 billion in the fourth quarter, most of it attributable to restructuring costs related to plans for achieving structural cost cuts of $2 to $3 billion by 2026.

Source: Chevron