Chevron Corp. revealed its much-anticipated 2024 capital-expenditure (capex) budget, outlining its plans to allocate approximately $16 billion towards increasing production in U.S. shale projects. This budget marks a significant increase from the previous year’s $14 billion capex budget, which already represented a substantial 25% jump from 2022.
The oil giant intends to direct about two-thirds of this year’s budget towards U.S. projects, with a particular emphasis on developing Chevron’s U.S. shale portfolio, requiring an investment of around $6.5 billion. Additionally, Chevron has plans for projects in the Gulf of Mexico.
Maintaining a disciplined approach to capital allocation, Chevron’s Chief Executive, Mike Wirth, emphasized the company’s commitment to both traditional and new energies. According to Wirth, these investments will serve as a solid foundation for sustainable free cash flow growth, enabling the company to fulfill its objective of returning more cash to shareholders.
Chevron’s initial plan was to keep its capex budget between $14 billion and $16 billion up until 2027. However, the impending acquisition of Hess Corp., valued at a substantial $53 billion, necessitated a strategic shift. Expected to be finalized in the first half of 2024, subject to regulatory approvals, this deal will subsequently lead Chevron to adjust its yearly capex budget to a range of $19 billion to $22 billion.
Following the announcement, Chevron experienced a slight increase in share prices during after-hours trading, offsetting the earlier decline of 0.2% in regular trading hours.
