Big Shale Cutbacks By Chevron
By Mike Brezonick11 December 2019
Chevron Corp. announced a $20 billion capital and exploratory spending plan for 2020, but it wasn’t especially good news for the company’s natural gas businesses.
The company said it will reduce funding to various gas-related opportunities including its Appalachian shale holdings, the Kitimat LNG project and other international projects. Chevron said it is evaluating its strategic alternatives for those assets, including divestment. The company is reported to hold approximately 750,000 acres of production leases in the Marcellus and Utica shale plays.
In addition, the revised oil price outlook resulted in an impairment at the company’s Big Foot oil platform in the Gulf of Mexico. Combined, these actions are estimated to result in non-cash, after tax impairment charges of $10 billion to $11 billion in its fourth quarter 2019 results, more than half of which is related to the Appalachian shale business, Chevron said.
“We believe the best use of our capital is investing in our most advantaged assets,” said Chevron Chairman and CEO Michael Wirth. “With capital discipline and a conservative outlook comes the responsibility to make the tough choices necessary to deliver higher cash returns to our shareholders over the long term.”