In the first week of December, Chevron (CVX) announced that it will spend almost $37 billion in 2013 across the world. The increased capital budget spending will be used for oil exploration and building huge capital projects. The figure is a 12% increase from 2012 spending budget and an astonishing 70% increase since 2010. Based on my research, Chevron is taking the right steps to increase its profitability in the coming years. The increased capital spending will help Chevron to consolidate its existing assets and to discover profitable avenues which will increase the company’s revenue in the long run.
Of the $36.7 billion that is slated to be spent in 2013, $33 billion will be spent in exploration and production of oil and gas. Of the $33 billion, $7.5 billion will be spent in the U.S., $3.4 billion in West Africa and shale regions across the world, $2.7 billion for refining and other downstream operations and another $3.3 billion for expenditures of Chevron’s affiliates. Chevron will concentrate on Gulf of Mexico projects, operations in West Africa and the Gorgon LNG project in Australia, all of which are located in stable countries that do not have major risks.
The money that Chevron has decided to spend in 2013 will likely be used to build infrastructure and facilities that will help the company to transport what it drills. It is also important to note that Chevron wants to increase its worldwide oil and gas production to 3.3 million barrels per day by 2017. If Chevron wants to grow further, it will have to discover newer oil fields and consolidate existing oil fields, infrastructure and drilling facilities. To continue reading, click here.