Earlier, we looked at Chevron’s (CVX) broad strategy for the near future. In this part, we’ll look at Chevron’s capex.
Chevron’s (CVX) capex focuses mostly on the upstream segment. In 2016, 90% of Chevron’s capex was in the upstream segment, 9% in the downstream segment, and 1% in other activities. Of the 90% in upstream segment, 69% was in the international arena, and 21% in the United States. With this larger upstream investment, Chevron expects upstream growth to contribute to its incremental cash flow in 2017, as discussed in the previous part. In comparison, of the 9% of its capex in the downstream segment, 7% was in the United States, and 2% was in international regions.
Decline in Chevron’s capex in 2016
In 2016, Chevron’s capex fell 34% YoY (year-over-year) to $22.4 billion. The fall was due to a decline in all segments but the international downstream segment, which saw a 3% rise YoY. Major capital-intensive projects have become operational or are in the process of becoming operational, and Chevron has aimed to cut capex.
The US and international upstream segments saw their capex fall 38% and 35%, respectively, to $4.7 billion and $15.4 billion in 2016. The US downstream segment fell 20% YoY to $1.5 billion.
In comparison, in 2016, ExxonMobil (XOM) incurred a capex of around $19.3 billion, of which around $14.5 billion (or 75%) went towards its upstream segment. BP’s (BP) organic capex for 2016 stood at $16 billion, compared with $18.7 billion in 2015. In 2016, Royal Dutch Shell (RDS.A) incurred a capex of $26.9 billion, and it plans for $25 billion in capex in 2017. For exposure to larger companies, you could consider the iShares Core S&P 500 ETF (IVV), which has a ~7% exposure to energy sector stocks. Continue to the next part for a look at Chevron’s robust upstream portfolio and pipeline.