U.S. energy giant Chevron Corporation (CVX) unveiled its 2014 capex budget of $39.8 billion. Of the total outlay, $4.8 billion will be invested by the company’s affiliates, lowering Chevron’s pocket pinch to $35 billion.

The 2014 projected capital expenditure is however approximately $2 billion less than that of the current year. The 2013 budget ballooned to $42 billion, up around $5 billion from its earlier projection of $36.7 billion to accommodate the additional expenditures associated with recent acquisitions. The inflated amount has surpassed the $38 billion budget of the largest international integrated oil and gas company, Exxon Mobil Corp. (XOM).

Almost 90% of the 2014 budget – $35.8 billion – will be spent on the company’s Upstream segment. The Downstream segment would receive only 8% or around $3.1 billion whereas the remaining $0.9 billion will be spent on corporate activities.

Chevron’s upstream spending will include investments in its Gorgon liquefied natural gas (LNG) project, in Australia, that is nearing first production. Costs inflated twice in 13 months in this $54 billion LNG export complex, where Chevron has a 47% stake and Exxon and Royal Dutch Shell (RDS.A) have a 25% stake each. However, the project demands focus as it is anticipated to be a significant contributor to the company’s cash flow in the long run.

Other important projects requiring a share in the Upstream capex are the Caspian Pipeline expansion and the Tengiz Future Growth and Wellhead Pressure Management Projects in Kazakhstan; the Usan and Agbami deepwater field development projects in Nigeria; development and advancement of the Kitimat LNG project in Canada; development of Mafumeira Sul and Moho Nord in Angola; development of the Vaca Muerta shale in Argentina as per the arrangement with YPF S.A. (YPF) and advancement of the Clair Ridge and Alder projects in the U.K.

Additionally, capital spending in its exploration and production activities would include developmental projects to improve production of its existing assets.

The Downstream spending activities would include generating cleaner transportation fuels and improving energy efficiency, in addition to expanding Oronite additives production in Singapore.

San Ramon, Calif.-based Chevron currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

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