Chevron raises Permian capex for 2024, reduces rig plans

Oil producer Chevron on Wednesday said it plans to raise capital expenditures in the Permian basin by 25% in 2024 from its annual guidance despite a more modest rig count plan for the largest U.S. unconventional basin.

The U.S. producer has been boosting Permian investments after suffering from inflationary pressure and well productivity issues last year.

It plans record output and cash flow from the basin, the largest U.S. oilfield, while cutting costs to guarantee cash distribution to shareholders.

Chevron expects capex of around $5 billion next year in the Permian due to higher activity levels, increased water handling facilities and lower inflation, it said in a presentation during a Barclays energy conference.

That compares with a 2022 plan to invest annually about $4 billion to grow Permian production this decade. It targets 1 million barrels of oil equivalent per day (boepd) in 2025, from 772,000 boepd in the last quarter.

Yet, Chevron expects to average 13 to 14 company-operated rigs in 2024 in the basin, up from 2022 but fewer than previously anticipated.

"We are getting more out of our rig and frac fleet," said A. Nigel Hearne, executive vice president of Oil, Products & Gas. "This leads to more wells put on production, while maintaining flat unit costs in an inflationary environment."

U.S. energy firms have

cut the number of active

oil and natural gas rigs as the industry responds to the fall in prices from a year ago.

The total number of U.S. oil rigs climbed until last November, following Russia's invasion of Ukraine, but has since fallen about 18%, while the gas rig count has dropped about 30% since its last peak in March.

In May, Chevron increased its total capex annual guidance by $1 billion, to a range of $14 billion to $16 billion per year through 2027.