CVX Chevron Corporation

By Christopher M. Matthews 

Chevron Corp. is cutting $4 billion from its capital budget as it confronts plummeting petroleum demand and an oil-price rout, the latest major energy company to axe its spending to shore up its balance sheet.

The oil giant said Tuesday it would reduce its 2020 spending by 20% to about $16 billion, with the biggest cut to come in the largest U.S. oil field, the Permian Basin in West Texas and New Mexico. Chevron will also suspend stock buybacks but promised to protect its dividend and said oil production would be flat.

Chief Executive Mike Wirth said the dual shock of the oil demand-sapping coronavirus pandemic and an increase in supply due to the oil-price war between Saudi Arabia and Russia necessitated drastic measures.

"To see these two things happen simultaneously is really unprecedented," Mr. Wirth said in an interview. "We can't control that, but we're focused on making the moves that will preserve the strength of our company."

Chevron's announcement follows similar austerity measures by its peers and other large industrial companies.

On Monday, Royal Dutch Shell PLC halted its $25 billion share buyback program and cut its capital expenditures by 20% in 2020 to $20 billion from $25 billion. Total SA said Monday it planned to trim spending by $3 billion, halt $2 billion in buybacks and borrow $4 billion to make up for a $9 billion shortfall created by low oil prices. ExxonMobil Corp. said last week it planned to make significant cuts to its spending.

(END) Dow Jones Newswires

March 24, 2020 07:19 ET (11:19 GMT)

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