Chevron is boosting its planned capital expenditures for 2023, revealing a $14 billion budget that is up more than 25 percent from 2022, excluding acquisitions.
The oil giant continues its pace of investing $4 billion in its Permian operations with a little more than $4 billion headed to the region in 2023. The company is forecasting cost inflation averaging the mid-single digits with certain areas higher, such as the Permian, where it assumes low double-digit cost inflation.
Chevron continues to expect its Permian output will surpass 1 million barrels of oil equivalent per day in the next five years. By 2040, Chevron expects its Permian holdings to be producing between 1.2 and 1.5 million barrels of oil equivalent.
In discussing its 2022 capital expenditures, Jay Johnson, executive vice president, upstream, told investors “In the Permian, we’re building a business that’s expected to deliver high returns and significant free cash flow for decades. With capital investment of around $4 billion a year, we expect to grow production beyond one million barrels of oil equivalent per day. We can do this because of our large resource base and efficient factory model.”
Chevron expects the Permian to provide in excess of $4 billion in free cash flow in 2026 and over 30% return on capital employed in that same timeframe.
While the company has earmarked a little over $4 billion for the Permian, it has also earmarked roughly $2 billion for other shale and tight assets. Over 20% of its upstream capital expenditures is for projects in the Gulf of Mexico.
Approximately $2 billion will be spent across all segments in lower carbon capital expenditures, including $500 million to lower the carbon intensity of its traditional operations and about $1 billion to increase renewable fuels production capacity. That’s more than double Chevron’s spending on lower carbon in 2022.