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Where Will Chevron (CVX) Spend the Bulk of Its 2023 Capex?
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Chevron Corporation (CVX - Free Report) recently offered a glimpse of its 2023 capital spending plans.
CVX has pegged its organic capital and exploratory budget at $14 billion, up 25% from its 2022 guidance. Adding the $3 billion projected expenditures relating to equity affiliates, the total comes at the high end of its estimation of $15-$17 billion.
Chevron’s next year's total budget is higher than the company’s 2021 spending of $11.7 billion, though it’s down 19% from the 2019 pre-pandemic expenditure of $21 billion.
The second-biggest U.S. oil and gas group's boost in capital spending reflects Chevron's plans to optimize its outlay while relying heavily on shale drilling. Investors should know that during the nine months ended Sep 30, 2022, CVX incurred a capital expenditure of $11.1 billion.
According to Chevron's Chairman and CEO Michael K. Wirth, the company is following a capital deployment strategy that is aligned with its plans to improve returns and lower carbon footprint. He stated that CVX has kept its capital budget within prior guidance despite the effects of cost inflation.
Analyzing Chevron's 2023 Capital Budget
Of the American multinational's total 2023 capital expenditure, 82% is planned to be incurred in its upstream operations that produce oil and gas. In particular, Chevron is concentrating on its investment in U.S. shale production next year. For 2023, the company intends to spend $6 billion on shale, with the lion's share (or some $4 billion) going to the lucrative Permian Basin of Texas and New Mexico alone. The remaining $2 billion has been set aside for other shale investments worldwide.
Overall, the oil giant plans to shell out $8 billion for its domestic upstream operations. An additional $3.5 billion will target international upstream projects. Further, Chevron has allocated over 20% of its expected exploration and production spend for developments in the Gulf of Mexico.
Some 50% of its affiliate spend for 2023 has been dedicated to the Tengiz field in Kazakhstan – the only large capital project the company is committed to following the completion of Australian LNG projects (Gorgon and Wheatstone).
As far as the downstream business (which refines crude oil into fuels like gasoline and diesel oil) is concerned, Chevron expects to spend approximately $1.9 billion in 2023 as organic capital spending.
Meanwhile, CVX has earmarked approximately $2 billion (across all segments) to carry forward its lower carbon initiatives.
Zacks Rank & Key Picks
Chevron currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at operators like Nine Energy Service (NINE - Free Report) , Patterson-UTI Energy (PTEN - Free Report) and Halliburton (HAL - Free Report) , each carrying a Zacks Rank #1 (Strong Buy), currently.
Nine Energy Service: Nine Energy Service is valued at some $292.7 million. The Zacks Consensus Estimate for NINE’s 2022 earnings has been revised 1,325% upward over the past 60 days.
Nine Energy Service, headquartered in Houston, TX, delivered a 137.5% beat in Q3. NINE shares have surged 622.6% in a year.
Patterson-UTI Energy: PTEN beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 169.2%, on average.
Patterson-UTI is valued at around $3.4 billion. PTEN has seen its shares gain 85.7% in a year.
Halliburton: Halliburton is valued at some $31.8 billion. The Zacks Consensus Estimate for HAL’s 2022 earnings has been revised 4% upward over the past 60 days.
Halliburton, headquartered in Houston, TX, has a trailing four-quarter earnings surprise of roughly 5.5%, on average. HAL shares have gained 48.4% in a year.
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Where Will Chevron (CVX) Spend the Bulk of Its 2023 Capex?
Chevron Corporation (CVX - Free Report) recently offered a glimpse of its 2023 capital spending plans.
CVX has pegged its organic capital and exploratory budget at $14 billion, up 25% from its 2022 guidance. Adding the $3 billion projected expenditures relating to equity affiliates, the total comes at the high end of its estimation of $15-$17 billion.
Chevron’s next year's total budget is higher than the company’s 2021 spending of $11.7 billion, though it’s down 19% from the 2019 pre-pandemic expenditure of $21 billion.
The second-biggest U.S. oil and gas group's boost in capital spending reflects Chevron's plans to optimize its outlay while relying heavily on shale drilling. Investors should know that during the nine months ended Sep 30, 2022, CVX incurred a capital expenditure of $11.1 billion.
According to Chevron's Chairman and CEO Michael K. Wirth, the company is following a capital deployment strategy that is aligned with its plans to improve returns and lower carbon footprint. He stated that CVX has kept its capital budget within prior guidance despite the effects of cost inflation.
Analyzing Chevron's 2023 Capital Budget
Of the American multinational's total 2023 capital expenditure, 82% is planned to be incurred in its upstream operations that produce oil and gas. In particular, Chevron is concentrating on its investment in U.S. shale production next year. For 2023, the company intends to spend $6 billion on shale, with the lion's share (or some $4 billion) going to the lucrative Permian Basin of Texas and New Mexico alone. The remaining $2 billion has been set aside for other shale investments worldwide.
Overall, the oil giant plans to shell out $8 billion for its domestic upstream operations. An additional $3.5 billion will target international upstream projects. Further, Chevron has allocated over 20% of its expected exploration and production spend for developments in the Gulf of Mexico.
Some 50% of its affiliate spend for 2023 has been dedicated to the Tengiz field in Kazakhstan – the only large capital project the company is committed to following the completion of Australian LNG projects (Gorgon and Wheatstone).
As far as the downstream business (which refines crude oil into fuels like gasoline and diesel oil) is concerned, Chevron expects to spend approximately $1.9 billion in 2023 as organic capital spending.
Meanwhile, CVX has earmarked approximately $2 billion (across all segments) to carry forward its lower carbon initiatives.
Zacks Rank & Key Picks
Chevron currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at operators like Nine Energy Service (NINE - Free Report) , Patterson-UTI Energy (PTEN - Free Report) and Halliburton (HAL - Free Report) , each carrying a Zacks Rank #1 (Strong Buy), currently.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Nine Energy Service: Nine Energy Service is valued at some $292.7 million. The Zacks Consensus Estimate for NINE’s 2022 earnings has been revised 1,325% upward over the past 60 days.
Nine Energy Service, headquartered in Houston, TX, delivered a 137.5% beat in Q3. NINE shares have surged 622.6% in a year.
Patterson-UTI Energy: PTEN beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 169.2%, on average.
Patterson-UTI is valued at around $3.4 billion. PTEN has seen its shares gain 85.7% in a year.
Halliburton: Halliburton is valued at some $31.8 billion. The Zacks Consensus Estimate for HAL’s 2022 earnings has been revised 4% upward over the past 60 days.
Halliburton, headquartered in Houston, TX, has a trailing four-quarter earnings surprise of roughly 5.5%, on average. HAL shares have gained 48.4% in a year.