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Chevron Lifts 2023 Capital Spending to Top of Range on Biden Pressure

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These translations are done via Google Translate
(Bloomberg) Chevron Corp. will allocate an extra $2 billion to capital spending next year, largely focused on the Permian Basin, as it seeks to balance demands for higher investor returns with calls from US President Joe Biden to reinvest more profits in energy production.The US oil giant plans to spend $17 billion in 2023, at the top end of its $15 billion to $17 billion medium-term range, the San Ramon, California-based company said in a statement. That’s a 13% increase from this year’s target.

The Permian will receive $4 billion, nearly a quarter of the global total. Chevron is seeking to accelerate US shale production, which offers a low-risk and quick financial returns compared with the multi-year megaprojects that dominated much of the last decade. Spending in the basin assumes “low double-digit cost inflation” while globally costs are likely to rise in the mid-single digit percentages, Chevron said. Low carbon will receive $2 billion.

“We’re maintaining capital discipline while investing to grow both traditional and new energy supplies,” Chief Executive Officer Mike Wirth said in the statement. “Our capex budgets remain in line with prior guidance despite inflation.”

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Biden spent much of this year lambasting major oil explorers for reinvesting to little of windfall profits reaped in the wake of Russia’s invasion of Ukraine as surging pump prices squeezed consumers. Chevron’s spending next year will be considerably above the pandemic years of 2020 and 2021, but still roughly just half the $30 billion annual average of the 2012-2019 period.

Capital Squeeze | Chevron raised its 2023 budget but it's still well below historic levels


Chief Executive Officer Mike Wirth has said Chevron’s spending is much more efficient than in the past, meaning the company produces more oil per dollar invested. But it also comes amid intensifying focus on improving investor returns. Chevron is currently spending $6.5 billion a quarter on dividends and share buybacks, or $26 billion a year, well in excess of capital spending.

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