Chevron Corporation CVX recently announced its capital and exploratory spending program for 2021. The budget for capital projects is reserved at $14 billion, lower than the company’s projected investment for 2020.
With an aim to maintain a disciplined capital approach for 2021, management lowered its long-term (2022-2025) capital budget view to $14-$16 billion from its previous guided range of $19-22 billion, which excluded Noble Energy.
Chevron’s upstream spending in 2021 is expected to decline 31.5% from 2020 level while downstream expenditure will likely decrease 25% next year.
Per the chairman and CEO Michael K. Wirth, the company aims to deepen its focus on wisely deploying capital, reining in costs and preserving liquidity to solidify its industry-leading balance sheet.
Upstream: Chevron allocated 83% of its total budget to upstream operations. The company has plans to invest $5 billion in the upstream projects located in the United States and $6.5 billion in the international upstream programs. It will use $6.5 billion to develop and grow its present producing assets, of which $2 billion will be reserved for the Permian Basin.
Moreover, for the major capital projects underway, the company plans to allot $3.5 billion, of which 75% will likely be spent on Kazakhstan’s Future Growth Project and Wellhead Pressure Management Project, located in the Tengiz field. Chevron also plans to fund $1.5 billion for its global exploration.
Downstream: Capital spending on the downstream segment is expected to be $2.1 billion in 2021, lower than 2020’s budget of $2.8 billion. Of this, 57.14% will be used for the projects in the United States and the rest will be allocated to international downstream activities. The company’s downstream businesses include refining, marketing and transporting fuels. It also manufactures and distributes additives, lubricants and petrochemicals.
Other: The company is expected to spend approximately $400 million on other activities in 2020, which is same as the 2019 budget value.
Zacks Rank & Key Picks
Chevron currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the energy space are CNOOC Limited CEO, Noble Corporation NE and Antero Midstream Corporation AM, each presently holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CNOOC Limited (CEO): Free Stock Analysis Report
Chevron Corporation (CVX): Free Stock Analysis Report
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Noble Corporation (NE): Free Stock Analysis Report
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