- Disciplined capital allocation prioritizes high return,
lower risk investments
- Third consecutive year of flat capital spending
- Capital allocation decisions and lower price outlook
expected to result in non-cash after tax charges in fourth quarter
2019
Chevron Corporation today announced a 2020 organic capital and
exploratory spending program of $20 billion. The 2020 budget
supports a robust portfolio of upstream and downstream investments,
highlighted by Chevron’s world-class Permian Basin position, the
company’s major capital project at TCO in Kazakhstan, and an
advantaged queue of deepwater opportunities in the Gulf of
Mexico.
“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 $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 $10 billion to $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.”
Details of the 2020 Capital and Exploratory Spending Program
include:
Chevron 2020 Planned Capital &
Exploratory Expenditures
$
Billions
U.S. Upstream
7.6
International Upstream
9.1
Total Upstream
16.8
U.S. Downstream
1.6
International Downstream
1.2
Total Downstream
2.8
Other
0.4
TOTAL (Including Chevron’s Share of
Expenditures by Affiliated Companies)
20.0
Expenditures by Affiliated Companies
(6.2)
Cash Expenditures by Chevron
Consolidated Companies
13.8
Upstream
In the upstream business, approximately $11 billion is
forecasted to sustain and grow currently producing assets,
including about $4 billion for Permian unconventional development
and about $1 billion for other international unconventional
development. Approximately $5 billion of the upstream program is
planned for major capital projects underway, of which about 75
percent 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 $1
billion.
Downstream
Approximately $2.8 billion of planned capital spending is
associated with the company’s downstream businesses that refine,
market, and transport fuels, and manufacture and distribute
lubricants, additives and petrochemicals.
Chevron Corporation is one of the world's leading integrated
energy companies. Through its subsidiaries that conduct business
worldwide, the company is involved in virtually every facet of the
energy industry. Chevron explores for, produces and transports
crude oil and natural gas; refines, markets and distributes
transportation fuels and lubricants; manufactures and sells
petrochemicals and additives; generates power; and develops and
deploys technologies that enhance business value in every aspect of
the company's operations. Chevron is based in San Ramon, Calif.
More information about Chevron is available at www.chevron.com.
As used in this news release, the term “Chevron” and such terms
as “the company,” “the corporation,” “our,” “we,” “us” and “its”
may refer to Chevron Corporation, one or more of its consolidated
subsidiaries, or to all of them taken as a whole. All of these
terms are used for convenience only and are not intended as a
precise description of any of the separate companies, each of which
manages its own affairs.
CAUTIONARY STATEMENTS RELEVANT TO
FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR”
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This news release contains forward-looking statements relating
to Chevron’s operations that are based on management’s current
expectations, estimates and projections about the petroleum,
chemicals and other energy-related industries. Words or phrases
such as “anticipates,” “expects,” “intends,” “plans,” “targets,”
“forecasts,” “projects,” “believes,” “seeks,” “schedules,”
“estimates,” “positions,” “pursues,” “assumes,” “may,” “could,”
“should,” “will,” “budgets,” “outlook,” “trends,” ”guidance,”
“focus,” “on schedule,” “on track,” "is slated,” “goals,”
“objectives,” “strategies,” “opportunities,” “poised” and similar
expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
other factors, many of which are beyond the company’s control and
are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements. The reader should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this news release. Unless legally required, Chevron
undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Among the important factors that could cause actual results to
differ materially from those in the forward-looking statements are:
changing crude oil and natural gas prices; changing refining,
marketing and chemicals margins; the company's ability to realize
anticipated cost savings and expenditure reductions; actions of
competitors or regulators; timing of exploration expenses; timing
of crude oil liftings; the competitiveness of alternate-energy
sources or product substitutes; technological developments; the
results of operations and financial condition of the company's
suppliers, vendors, partners and equity affiliates, particularly
during extended periods of low prices for crude oil and natural
gas; the inability or failure of the company’s joint-venture
partners to fund their share of operations and development
activities; the potential failure to achieve expected net
production from existing and future crude oil and natural gas
development projects; potential delays in the development,
construction or start-up of planned projects; the potential
disruption or interruption of the company’s operations due to war,
accidents, political events, civil unrest, severe weather, cyber
threats and terrorist acts, crude oil production quotas or other
actions that might be imposed by the Organization of Petroleum
Exporting Countries and other producing countries, or other natural
or human causes beyond the company’s control; changing economic,
regulatory and political environments in the various countries in
which the company operates; general domestic and international
economic and political conditions; the potential liability for
remedial actions or assessments under existing or future
environmental regulations and litigation; significant operational,
investment or product changes required by existing or future
environmental statutes and regulations, including international
agreements and national or regional legislation and regulatory
measures to limit or reduce greenhouse gas emissions; the potential
liability resulting from pending or future litigation; the
company’s future acquisitions or dispositions of assets or shares
or the delay or failure of such transactions to close based on
required closing conditions; the potential for gains and losses
from asset dispositions or impairments; government-mandated sales,
divestitures, recapitalizations, industry-specific taxes, tariffs,
sanctions, changes in fiscal terms or restrictions on scope of
company operations; foreign currency movements compared with the
U.S. dollar; material reductions in corporate liquidity and access
to debt markets; the effects of changed accounting rules under
generally accepted accounting principles promulgated by
rule-setting bodies; the company's ability to identify and mitigate
the risks and hazards inherent in operating in the global energy
industry; and the factors set forth under the heading “Risk
Factors” on pages 18 through 21 of the company’s 2018 Annual Report
on Form 10-K and in subsequent filings with the U.S. Securities and
Exchange Commission. Other unpredictable or unknown factors not
discussed in this news release could also have material adverse
effects on forward-looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191210005310/en/
Sean Comey, Chevron, SeanComey@chevron.com, 925-842-5509
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