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Chevron Revitalizing with Improving Financials, Outperforms SPY

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Part 10
Chevron Revitalizing with Improving Financials, Outperforms SPY PART 10 OF 13

A Look at Chevron’s Capex in 2Q17

Chevron’s capex geographical spread

Previously in this series, we looked at Chevron’s (CVX) improving leverage and liquidity trend. In this part, we’ll look at CVX’s capex (or capital expenditure) details.

Chevron’s (CVX) capex is primarily focused on its Upstream segment. In 2Q17, Chevron incurred 88% capex in the Upstream segment, 11% in the Downstream segment, and 1% in other activities.

Of the 88% capex in its Upstream segment, 63% was in the international arena, and 25% was in the US. With such a large portion of its investments in its Upstream segment, Chevron expects that segment to be the company’s earnings growth driver. Of the 11% capex in the Downstream segment, 8% was in the US and 3% was in international regions.

A Look at Chevron’s Capex in 2Q17

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Decline in Chevron’s capex in 2Q17

In 2Q17, Chevron’s capex fell 18% YoY to $4.5 billion. This fall was due to a decline in its Upstream segment.

Respectively, the US and the International Upstream segments saw their capex levels fall 4% and 25% to $1.2 billion and $2.9 billion in 2Q17. This trend is in line with Chevron’s strategy to cut capex, which we discussed in the analyst rating analysis. Possibly due to the company’s large, capital-intensive projects becoming operational, a large capex outlay seems to be in the past. We’ll discuss Chevron’s Upstream portfolio later in this series.

However, the capex in CVX’s Downstream segments rose. The International Downstream segment rose 9% year-over-year (or YoY) to $361 million, and the Domestic Downstream segment rose 2% YoY to $118 million in 2Q17.

Peers’ capex

In 2Q17, ExxonMobil (XOM) incurred capex of $3.9 billion compared to $5.2 billion in 2Q16. Of XOM’s 2Q17 capex, $2.8 billion was incurred toward its Upstream segment. 

Also, BP’s (BP) organic capex for 2Q17 stood at $4.3 billion compared to $4.2 billion in 2Q16. In 2Q17, Royal Dutch Shell (RDS.A) incurred a total capital investment of $6.8 billion compared to $6.3 billion in 2Q16.

Move onto the next part to have a look at Chevron’s segmental earnings trend in 2Q17.

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