According to the statement, 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.
Chevron Chairman and CEO, Michael Wirth, said: “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.”
Chevron claims that, as a result of its disciplined approach to capital allocation and a downward revision in its longer-term commodity price outlook, it will reduce funding to various gas-related opportunities, including Appalachia shale, Kitimat LNG, and other international projects.
According to the statement, Chevron is evaluating its strategic alternatives for these assets, including divestment. In addition to this, the revised oil price outlook resulted in an impairment at Big Foot. Combined, it is estimated that these actions will result in non-cash, after tax impairment charges of US$10 billion to US$11 billion in its 4Q19 results, more than half related to the Appalachia shale.
Wirth added: “We believe the best use of our capital is investing in our most advantaged assets.
“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.lngindustry.com/liquid-natural-gas/12122019/chevron-announces-capital-and-exploratory-budget-for-2020/