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Chevron's 2025 Capex Focus: Where Will the Company Spend?
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Chevron Corporation (CVX - Free Report) recently announced its 2025 capital expenditure (Capex) plan, representing a reduction of about $2 billion from the previous year.
CVX’s 2025 Capex plan outlines $14.5-$15.5 billion of capital spending for consolidated subsidiaries and $1.7-$2.0 billion for affiliates. The new budget positions the company to deliver free cash flow growth by investing in high-return and lower-carbon projects reflecting its commitment toward cost and capital discipline.
CVX’s Upstream Capex to Prioritize Free Cash Flow
The company plans to spend about $13 billion on upstream operations, allocating most of this to develop its U.S. portfolio, particularly the Permian Basin, DJ Basin and the Gulf of Mexico. Though the Permian Basin's budget has been reduced to $4.5-$5.0 billion, the Gulf of Mexico is all set to speed up the deepwater growth projects to deliver the offshore production of 300 mboed by 2026.
CVX’s Other Areas of Focus
Chevron’s downstream Capex for 2025 is projected to be around $1.2 billion. Of the total upstream and downstream spending, $1.5 billion has been allocated to reduce the carbon intensity of operations and expand Chevron’s New Energies business. Meanwhile, some $700 million will go toward corporate and other expenses.
Affiliate Capex Budget
With Tengizchevroil LLP’s Future Growth Project expected to achieve its first oil in 2025, CVX has provisioned almost 50% of the total affiliate Capex budget. The remaining affiliate budget will be attributed to the Golden Triangle Polymers and Ras Laffan Petrochemical Projects operating under Chevron Phillips Chemical Company LLC.
CVX’s Cost Cuts, Restructuring Charges
The company aims to cut down $2-$3 billion of its structural costs by 2026. Chevron also expects to recognize certain charges, like an after-tax restructuring charge of $700-$900 million, some non-cash, after-tax charges related to impairments and asset sales of $500-$600 million in its fourth quarter, which might impact its adjusted earnings.
CVX’s Zacks Rank and Key Picks
The U.S. energy major Chevron, one of the world’s largest publicly traded oil and gas companies, with operations that span almost every corner of the globe, is currently holding a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Mach Natural Resources LP (MNR - Free Report) , Flotek Industries, Inc. (FTK - Free Report) and Nine Energy Service, Inc. (NINE - Free Report) .While Mach currently sports a Zacks Rank #1 (Strong Buy), Flotek Industries and Nine Energy Service each carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mach Natural Resources LP is an independent upstream oil and gas company that focuses on the acquisition, development and production of oil, natural gas and natural gas liquids reserves. The Zacks Consensus Estimate for MNR’s 2024 earnings indicates 205.56% year-over-year growth.
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2024 earnings indicates 125% year-over-year growth.
Houston, TX-based Nine Energy Service, Inc. provides onshore completion and production services to unconventional oil and gas resource development. NINE’s expected EPS (earnings per share) growth rate for the current quarter is 33.33%, which aligns favorably with the industry growth rate of 9.93%.
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Chevron's 2025 Capex Focus: Where Will the Company Spend?
Chevron Corporation (CVX - Free Report) recently announced its 2025 capital expenditure (Capex) plan, representing a reduction of about $2 billion from the previous year.
CVX’s 2025 Capex plan outlines $14.5-$15.5 billion of capital spending for consolidated subsidiaries and $1.7-$2.0 billion for affiliates. The new budget positions the company to deliver free cash flow growth by investing in high-return and lower-carbon projects reflecting its commitment toward cost and capital discipline.
CVX’s Upstream Capex to Prioritize Free Cash Flow
The company plans to spend about $13 billion on upstream operations, allocating most of this to develop its U.S. portfolio, particularly the Permian Basin, DJ Basin and the Gulf of Mexico. Though the Permian Basin's budget has been reduced to $4.5-$5.0 billion, the Gulf of Mexico is all set to speed up the deepwater growth projects to deliver the offshore production of 300 mboed by 2026.
CVX’s Other Areas of Focus
Chevron’s downstream Capex for 2025 is projected to be around $1.2 billion. Of the total upstream and downstream spending, $1.5 billion has been allocated to reduce the carbon intensity of operations and expand Chevron’s New Energies business. Meanwhile, some $700 million will go toward corporate and other expenses.
Affiliate Capex Budget
With Tengizchevroil LLP’s Future Growth Project expected to achieve its first oil in 2025, CVX has provisioned almost 50% of the total affiliate Capex budget. The remaining affiliate budget will be attributed to the Golden Triangle Polymers and Ras Laffan Petrochemical Projects operating under Chevron Phillips Chemical Company LLC.
CVX’s Cost Cuts, Restructuring Charges
The company aims to cut down $2-$3 billion of its structural costs by 2026. Chevron also expects to recognize certain charges, like an after-tax restructuring charge of $700-$900 million, some non-cash, after-tax charges related to impairments and asset sales of $500-$600 million in its fourth quarter, which might impact its adjusted earnings.
CVX’s Zacks Rank and Key Picks
The U.S. energy major Chevron, one of the world’s largest publicly traded oil and gas companies, with operations that span almost every corner of the globe, is currently holding a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Mach Natural Resources LP (MNR - Free Report) , Flotek Industries, Inc. (FTK - Free Report) and Nine Energy Service, Inc. (NINE - Free Report) .While Mach currently sports a Zacks Rank #1 (Strong Buy), Flotek Industries and Nine Energy Service each carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mach Natural Resources LP is an independent upstream oil and gas company that focuses on the acquisition, development and production of oil, natural gas and natural gas liquids reserves. The Zacks Consensus Estimate for MNR’s 2024 earnings indicates 205.56% year-over-year growth.
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2024 earnings indicates 125% year-over-year growth.
Houston, TX-based Nine Energy Service, Inc. provides onshore completion and production services to unconventional oil and gas resource development. NINE’s expected EPS (earnings per share) growth rate for the current quarter is 33.33%, which aligns favorably with the industry growth rate of 9.93%.