ExxonMobil, Chevron Boost 2023 Capital Spending

Both companies are set to increase their investment in the Permian Basin in the new year.

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Two of the largest US oil and gas companies, ExxonMobil and Chevron, announced this week their plans to increase spending in energy projects in 2023 as inflation drives up costs of labor, materials, rigs, and more.

ExxonMobil said its corporate plan through 2027 maintains annual capital expenditures (CAPEX) between $20 billion and $25 billion, with about $17 billion planned for lower-emission initiatives. The plan is expected to double earnings and cash flow potential by 2027 vs. 2019 and supports the company’s strategic priorities.

“Our 5-year plan is expected to drive leading business outcomes and is a continuation of the path that has delivered industry-leading results in 2022,” Darren Woods, CEO of ExxonMobil, said in a statement.

“We view our success as an ‘and’ equation, one in which we can produce the energy and products society needs and be a leader in reducing greenhouse gas emissions from our own operations and also those from other companies. The corporate plan we’re laying out today reflects that view, and the results we’ve seen to date demonstrate that we’re on the right course," he said.

The Irving, Texas-based supermajor said 2023 investments are expected to range between $23 billion and $25 billion to help increase supply to meet global demand.

More than 70% of capital investments are expected to be deployed in strategic developments in the US Permian Basin, Guyana, Brazil, and liquefied natural gas projects around the world. By 2027, upstream production is expected to grow by 500,000 BOE/D to 4.2 million BOE/D, with more than 50% of the total to come from these key growth areas.

Chevron said it plans next year to spend $17 billion, up from about $15 billion in 2022.

Chevron’s breakdown for its 2023 budget includes $11.5 billion dedicated to its upstream operations and another $1.9 billion allocated to its downstream business. Additionally, the company has budgeted $2.9 billion in affiliate CAPEX, with nearly half of it going toward its Tengizchevroil’s FGP/WPMP Project in Kazakhstan.

“We’re maintaining capital discipline while investing to grow both traditional and new energy supplies,” Michael Wirth, CEO of Chevron, said in a statement. “Our 2023 CAPEX budgets are consistent with our long-term plans to safely deliver higher returns and lower carbon.”

The San Ramon, California-based supermajor said its 2023 CAPEX budget assumes cost inflation that averages in the mid-single digits with certain areas higher, such as the Permian Basin that assumes low double-digit cost inflation.

“Our CAPEX budgets remain in line with prior guidance despite inflation,” Wirth continued. “We’re winning back investors with capital efficient growth, a strong balance sheet, and more cash returned to shareholders.”

Chevron said upstream CAPEX includes more than $4 billion for Permian Basin development and roughly $2 billion for other shale and tight assets. More than 20% of the upstream CAPEX is for the company’s Gulf of Mexico projects.

The budget also includes about $2 billion to projects that reduce carbon emissions, with about $500 million to projects that lower the carbon intensity of Chevron’s traditional operations and about $1.5 billion to increase renewable fuels production capacity.