HOUSTON (Reuters) – Chevron Corp (CVX.N), the second largest U.S.-based oil producer, is budgeting $18.3 billion for capital projects next year, the company said on Wednesday, about 4 percent less than this year and lower for a fourth year in a row.
International energy company capital budgets, closely watched for indications of future oil and gas production, broadly have been shrinking after 2014’s oil-price collapse slashed earnings and left many with high debt loads.
In Chevron’s case, the sharp declines coincide with its spending winding down on several long-term and costly projects in Australia and elsewhere. Capital and exploratory spending in the first nine months of this year was about half that of three years ago, a company spokeswoman said.
The 2018 budget reflects “project completions, improved efficiencies and investment high-grading,” said Chief Executive John Watson in a statement. Spending on shale will rise to $4.3 billion overall this year, said Watson, who will retire early next year.
The San Ramon, California-based company expects expenditures this year to be less than $19 billion, down from the $19.8 billion it estimated a year ago. It has told investors that capital spending between 2018 and 2020 would range from $17 billion to $22 billion a year.
Next year, Chevron expects to spend $15.8 billion on oil and gas exploration, $2.2 billion on refining, marketing and petrochemicals, and about $300 million for its share of affiliated company spending.
Most oil producers have yet to disclose their 2018 budgets, which generally are released in December and January. Analysts expect companies to pledge to keep 2018 spending in check and focus on reducing debt and boosting cash flow.
Chevron shares were off 78 cents at $119.61 in trading on Wednesday and are up less than 2 percent this year.
Additional reporting by Shalini Nagarajan in Bengaluru; Editing by Sandra Maler and Grant McCool