Chevron Cuts Permian Capex for 2025

By Irina Slav of OilPrice.com

Chevron has reduced the amount of capital expenditure it will allocate for its operations in the Permian Basin next year, the company said in an update.

The company said it planned to spend between $4.5 billion and $5 billion on production in the Permian, “as production growth is reduced in favor of free cash flow.” Total upstream spending for 2025 is planned at $13 billion, with the company’s total capex budget set in a range of between $14.5 billion to $15.5 billion.

This would be a decline from this year’s capex budget of $15.5 billion to $16.5 billion. When the affiliate capex budget is included, the 2025 budget represents a $2-billion reduction on the 2024 number, Chevron reported.

The company remains focused on its home operations, with the remainder of its U.S. budget to be split between operations in the DJ Basin and the Gulf of Mexico. In the latter area, Chevron said it expected daily production of some 300,000 barrels from its deepwater wells by 2026.

Chevron also said in its update that it will book charges of between $1 billion and $1.5 billion in the fourth quarter, most of it attributable to restructuring costs related to plans for achieving structural cost cuts of $2 billion to $3 billion by 2026.

“We continue to invest in high-return, lower-carbon projects that position the company to deliver free cash flow growth,” chief executive Mike Wirth said, highlighting the priorities of the company.

He also pointed out that “The 2025 capital budget along with our announced structural cost reductions demonstrate our commitment to cost and capital discipline,” hitting the second key point for shareholders in the energy industry.

The update could be seen as the latest piece of evidence that despite President-elect Trump’s plans for a return to a “Drill, baby, drill” mentality in the oil and gas industry, companies are wary of it and remain focused on cash and shareholder returns above production growth.