SAN RAMON, Calif. - Chevron Corporation (NYSE:CVX), with a market capitalization of $287 billion and an impressive EBITDA of $38.9 billion in the last twelve months, has announced a reduction in its capital expenditure (capex) budget for 2025, with a consolidated subsidiary budget ranging from $14.5 to $15.5 billion and an affiliate capex budget between $1.7 to $2.0 billion. This adjustment marks a $2 billion decrease from the previous year, underscoring the company's focus on financial discipline and cash flow growth. According to InvestingPro analysis, Chevron operates with a moderate debt level, maintaining a healthy total debt-to-capital ratio of just 0.08.
The energy giant's 2025 capex plan allocates approximately $13 billion to upstream operations, with two-thirds directed toward the development of Chevron's U.S. portfolio. Notably, spending in the Permian Basin is set to decrease in comparison to the 2024 budget, with an estimated $4.5 to $5.0 billion earmarked for the region as Chevron prioritizes free cash flow over production growth. InvestingPro data reveals the company's strong financial health with an overall score of "GOOD" and robust cash flows that sufficiently cover interest payments. For detailed insights into Chevron's financial metrics and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. Additional U.S. investments will support the DJ Basin and Gulf of Mexico, where deepwater projects are expected to contribute to an offshore production target of 300 thousand barrels of oil equivalent per day (mboed) by 2026. International investments include around $1.0 billion for Australia, focusing on Gorgon backfill projects.
Downstream capex is projected at $1.2 billion, with the majority allocated within the U.S. The total capex for upstream and downstream includes roughly $1.5 billion dedicated to reducing carbon intensity and expanding New Energies businesses.
In the affiliate capex category, Tengizchevroil LLP represents less than half of the total budget as it approaches first oil in the first half of 2025. Remaining funds primarily support Chevron Phillips Chemical Company LLC's initiatives, including the Golden Triangle Polymers and Ras Laffan Petrochemical Projects.
Chevron also provided a 4Q24 interim update, revealing anticipated restructuring charges of $0.7 to $0.9 billion after-tax, with cash outflows expected over the next two years. Additional non-cash, after-tax charges related to impairments and other obligations are estimated between $0.4 to $0.6 billion for the fourth quarter. These charges are set to be treated as special items, excluded from adjusted earnings.
The company's strategic adjustments reflect its commitment to lower carbon operations and the growth of renewable energy sectors, aligning with broader industry trends toward sustainability and efficiency. With a current dividend yield of 4.12% and a 37-year track record of consecutive dividend increases, Chevron demonstrates strong shareholder returns while pursuing sustainable growth. Based on InvestingPro's Fair Value analysis, the stock currently appears undervalued, presenting a potential opportunity for investors. This news is based on a press release statement from Chevron Corporation.
In other recent news, Chevron Corporation has been making headlines with its Q3 2024 earnings report, showing profits of $4.5 billion or $2.48 per share, a result of a 7% increase in global production. The company's operations in the Gulf of Mexico have resumed following Hurricane Rafael, a significant development considering these platforms' contribution to the company's total output. In the realm of analyst evaluations, Chevron's stock was upgraded from Neutral to Buy by Citi, which also raised the price target to $185, driven by optimism surrounding the upcoming drilling campaign in Namibia and arbitration with Hess Corporation (NYSE:HES). Piper Sandler maintained an Overweight rating on Chevron shares amid ongoing arbitration related to its acquisition of Noble Energy (NASDAQ:NBL), citing strong portfolio momentum and a valuation that appears attractive compared to its peers. Mizuho (NYSE:MFG) Securities increased Chevron's price target from $189 to $194, maintaining an Outperform rating, following strong operational execution across the company's upstream portfolio. Chevron's exploration activities in Namibia, where the company holds a significant 80% equity stake, are also building anticipation. These are some of the recent developments surrounding Chevron Corporation.
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