This year has been a transformational one for Chevron (CVX +0.69%). The oil giant has completed several major growth capital projects and closed its acquisition of Hess. That sets the stage for a big 2026.
Here's a look at the oil company's big plans for the coming year.
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Drilling down into Chevron's capital spending plans for 2026
Chevron recently unveiled its 2026 capital spending outlook. The oil giant anticipates an organic capital expenditure range of $18 billion to $19 billion. Additionally, it expects affiliate capex to be between $1.3 billion and $1.7 billion next year. That compares to the $15 billion organic capex budget Chevron initially set for 2025 (and $2 billion affiliated capex budget).
The increase in capital spending is entirely due to its acquisition of Hess. Chevron's 2026 capital budget range is actually toward the low end of its updated long-term outlook following the deal ($18 billion to $21 billion).
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Key Data Points
Chevron's "2026 capital program focuses on the highest-return opportunities while maintaining discipline and improving efficiency," commented CEO Mike Wirth in the press release unveiling its budget. The company plans to spend the bulk of its capital ($17 billion) on its upstream operations (oil and gas production). It plans to invest nearly $6 billion into developing its U.S. shale assets in the Permian, DJ, and Bakken regions, supporting its ability to produce over 2 million barrels of oil equivalent per day from these assets. Additionally, the company plans to spend $7 billion on global offshore projects to support its growth in Guyana, the Eastern Mediterranean, and the Gulf of Mexico (also known as the Gulf of America in the U.S.). Also of note, the global energy giant plans to invest $1 billion in reducing the carbon intensity of its operations and expanding its lower-carbon energy businesses.
The coming surge in free cash flow
Chevron's investments to expand its operations, combined with its capital discipline, position it to produce significantly more free cash flow. Over the past year, Chevron and its partners have completed major growth capital projects in Kazakhstan, the Gulf, and Guyana. It also closed its needle-moving acquisition of Hess, expanded its U.S. shale output, and undertook a major cost-saving initiative. These moves will pay big dividends in the coming year.
Chevron expects that its legacy operations will generate an additional $10 billion in free cash flow next year. Meanwhile, the Hess acquisition will add another $2.5 billion to the total. This outlook assumes Brent oil (the global benchmark price) averages $70 a barrel next year. While Brent is currently in the low to mid-$60s, Chevron can still produce significantly more free cash flow in 2026 at that price point.
The company's capital investments also set the stage for continued production and free cash flow growth beyond 2026. Chevron expects to deliver a more than 10% compound annual growth rate in its adjusted free cash flow through 2030 (assuming crude averages $70 a barrel).
As a result, Chevron will have more money to return to shareholders in the coming years. The oil company will undoubtedly continue to increase its high-yielding dividend (currently 4.5%), which it has done for 38 straight years. The company has been growing its payout at a peer-leading mid-single-digit rate over the past decade. It will also continue repurchasing shares within its $10 billion-$20 billion annual target range. That's enough to retire 3% to 6% of its outstanding shares each year at the current share price.
The potential to produce high-octane total returns in 2026
Chevron expects 2026 will be a big year. Thanks to investments made over the past year and its capital discipline in 2026, it expects to produce a massive amount of incremental free cash flow in the coming year. That will give it more money to pay dividends and repurchase shares. This combination of surging free cash flow and increased capital returns could give Chevron the fuel to produce a high-octane total return in 2026 if oil prices cooperate.
