Chevron sets 2021 capital and exploratory budget of $14 billion, in line with guidance

Houston — Chevron unveiled its 2021 capital and exploratory budget of $14 billion on Dec. 3, precisely in line with earlier recent guidance and flat with this year's capex.

The company also reduced its longer-term guidance to $14 billion to $16 billion annually through 2025, it said in a statement, down substantially from $19 billion to $22 billion set earlier in the year.

The original longer-term spending plan had excluded expenses associated with Chevron's $5 billion all-stock acquisition of upstream producer Noble Energy which closed in October. As a result, Chevron will spend less in capital this year than it would have otherwise spent even including the sizeable US and global assets the company acquired from Noble.

"This capital outlook will continue to prioritize investments that are expected to grow long-term value and deliver higher returns and lower carbon, including over $300 million in 2021 for investments to advance the energy transition," Chevron said.

"Chevron remains committed to capital discipline with a 2021 capital budget and longer-term capital outlook that are well below our prior guidance," company chairman and CEO Michael Wirth said. "With our major restructuring behind us and Noble Energy integration on track, we're prepared to execute this program with discipline."

Upstream takes lion's share of capex

The company will spend $5 billion on US upstream and $6.5 billion on international upstream. For downstream operations, Chevron has allotted $1.2 billion in the US and $900 million internationally.

Another $400 million is planned for miscellaneous other expenses.

Chevron had begun 2020 with a $20 billion capital budget for the year, but the coronavirus pandemic forced the company – along with most of industry – to slash its expenses and cut back activity from the historically low oil prices from weak oil demand caused by the pandemic.

Earlier in the week, ExxonMobil also released its capital and exploration investments for 2021 of $16 billion to $19 billion, with a projection of $20 billion to $25 billion annually to 2025.

ExxonMobil said its near-term priorities would be investments in Guyana where it has made 18 discoveries, one of which began producing about a year ago, and has two others in various stages of development.

Two other ExxonMobil investment priorities for 2021 are the Permian Basin in West Texas and New Mexico – the US' largest producing basin at around 4 million b/d of oil – and also Brazil.

Baytex sets $250 million capex

In addition, Canada's Baytex Energy on Dec. 2 said it had approved a 2021 capital budget of $225 million-$275 million, or $250 million at midpoint, which aims to generate both free cash flow and average yearly production of 73,000 boe/d to 77,000 boe/d.

Baytex CEO Ed LaFehr said the company is capable of achieving those goals in a US $40/b to US $45/b WTI oil price environment.

"In 2021, we will benefit from our high graded development opportunities as well as our continued drive to improve cost structure and capital efficiencies. Our disciplined approach to capital allocation is focused on our high netback light oil assets in the Viking and Eagle Ford and will allow us to continue to pay down debt," LaFehr said in a statement.