Chevron (NYSE:CVX) announced plans to reduce next year’s spending, signaling a strategic shift toward boosting profitability rather than expanding production volumes, especially as crude prices hover near their lowest levels since 2021.
The company now expects capital expenditures of about $18.5 billion in 2026 — the bottom end of the guidance outlined last month and below the $19 billion to $22 billion it had projected following its July acquisition of Hess.
Roughly one-third of the total capex will be directed toward U.S. shale operations, spanning Texas, New Mexico, Colorado, and North Dakota.
Upstream investment dominates the plan
Chevron projects upstream spending of $16.7 billion to $17.3 billion. Of that, $8.9 billion to $9.2 billion will go toward U.S. upstream operations — with approximately $6 billion earmarked for shale and tight oil basins such as the Permian, DJ, and Bakken. International upstream spending is estimated at $7.8 billion to $8.1 billion, including about $0.4 billion in capitalized interest tied mostly to Guyana.
Exploration spending is also set to rise significantly, increasing about 50% from recent levels — moving from around $1 billion annually to $1.5 billion.
Downstream investments are forecast at $0.9 billion to $1.1 billion, split between $0.7 billion to $0.8 billion in the U.S. and $0.2 billion to $0.3 billion internationally. Approximately $1 billion of the company’s divisional budgets is allocated to low-carbon initiatives, down from $1.5 billion in the 2025 program.
Affiliate spending is expected to range from $1.3 billion to $1.7 billion. Upstream will account for $0.5 billion to $0.7 billion, and downstream for $0.8 billion to $1.0 billion. Chevron noted that CPChem will represent around half of this total, with Tengiz (TCO) contributing roughly a quarter — helped by a lower capex outlook that supports higher distributions.
Cash flow takes center stage
CEO Mike Wirth has previously emphasized that several major growth projects are now completed, giving Chevron more flexibility to maintain dividends and buybacks even in a softer price environment. By trimming spending on new developments, the company anticipates free cash flow will grow by 14% annually and exceed $30 billion by 2030.
RBC Capital Markets analysts led by Biraj Borkhataria said the revised capex outlook “looks broadly in line with market expectations, with a step down in capital intensity across CVX’s Permian and TCO assets, helping support FCF generation into 2026.”
Growth focus remains on key basins
Most of Chevron’s growth-oriented capital will target the U.S. Gulf, the Eastern Mediterranean, and Guyana — where the Hess acquisition delivered a 30% stake in what is viewed as the largest oil find of the past decade.
Wirth said, “Our 2026 capital program focuses on the highest-return opportunities while maintaining discipline and improving efficiency, enabling us to grow cash flow.”