Financial Energy Review
Chevron Corporation revealed Thursday that it plans to allocate between $14.5 billion and $15.5 billion for capital expenditures (capex) in 2025, marking a $2 billion year-over-year reduction. In addition, the company outlined an affiliate capital expenditure range of $1.7 billion to $2.0 billion for the same year. These moves are part of Chevron’s ongoing efforts to maintain cost and capital discipline while strategically positioning the company for future growth.
“The 2025 capital budget, along with our announced structural cost reductions, demonstrates our commitment to cost and capital discipline,” said Chevron Chairman and CEO Mike Wirth. “We continue to invest in high-return, lower-carbon projects that position the company to deliver free cash flow growth.”
Focus on Upstream and Lower-Carbon Projects
Chevron’s upstream spending for 2025 is expected to be approximately $13 billion, with a significant portion—around two-thirds—directed toward developing its U.S. portfolio. This includes a planned reduction in Permian Basin spending, which is set to fall between $4.5 billion and $5.0 billion as production growth slows in favor of enhancing free cash flow. Chevron’s remaining U.S. investments will be split between the DJ Basin and the Gulf of Mexico, with deepwater growth projects expected to reach an offshore production of 300 thousand barrels of oil equivalent per day (mboed) by 2026.
In terms of international investments, Chevron plans to allocate approximately $1.0 billion to its Australian projects, including investments in the Gorgon backfill.
Downstream and Carbon-Reduction Investments
For downstream operations, Chevron expects capex to total around $1.2 billion, with two-thirds allocated to the U.S. market. In a notable move, Chevron has earmarked about $1.5 billion within the total upstream and downstream budgets for projects focused on reducing the carbon intensity of operations and advancing the company’s New Energies initiatives. Corporate and other capex is projected to be approximately $0.7 billion.
Affiliate Capex and Tengizchevroil Budget
Chevron’s affiliate capital expenditure plans include a significant portion for Tengizchevroil LLP, which is expected to account for less than half of the affiliate capex. The Future Growth Project at Tengizchevroil is on track to achieve first oil in the first half of 2025. The remainder of the affiliate capex will primarily support Chevron Phillips Chemical Company LLC, with notable projects like the Golden Triangle Polymers and Ras Laffan Petrochemical Projects.
Cost Reductions and Restructuring Charges
As part of its ongoing efforts to reduce costs, Chevron recently announced plans to achieve $2 billion to $3 billion in structural cost reductions by the end of 2026. The company expects to recognize a restructuring charge of $0.7 billion to $0.9 billion after tax in the fourth quarter of 2024, with cash outflows expected over the next two years. Additionally, non-cash charges related to impairments, asset sales, and other obligations could range between $0.4 billion and $0.6 billion in the fourth quarter.
Chevron emphasized that these items will be treated as special items and excluded from adjusted earnings, though the financial impact may differ from the estimates provided.
Chevron, one of the world’s leading integrated energy companies, continues to focus on affordable, reliable, and cleaner energy, with a strong commitment to reducing the carbon intensity of its operations while expanding into lower-carbon businesses such as renewable fuels, carbon capture, hydrogen, and other emerging technologies.
