Chevron cuts spending budget again

Chevron has also cut jobs, sold some facilities and pipelines to raise money

Chevron is forecasting a cut in its spending budget by nearly 40 per cent in 2017 and 2018. Chevron photo.

NEW YORK _ Chevron is cutting its spending budget by nearly 40 per cent for 2017 and 2018 as it deals with plunging oil prices, a bigger cut in spending than it previously expected.

The oil and gas company said that it expects to spend between $17 billion and $22 billion on drilling and other projects in 2017 and 2018, lower than the $20 billion to $24 billion range the company had expected in October. The company has a spending budget of $26.6 billion this year, down 24 per cent from the year before.

“Industry conditions are tough right now,” said Chevron chairman and CEO John Watson, in a statement Tuesday.

Watson also affirmed dividend growth and maintenance of a strong balance sheet as among the company’s financial priorities. The company currently pays a quarterly dividend of $1.07, which it last increased in the first quarter of 2014.

Jay Johnson, executive vice president, upstream, said “With an advantaged position in the Permian and a deep portfolio of operating assets, we’re transitioning our spending to more short-cycle, higher-return activity that utilizes existing infrastructure.”

Several energy companies have announced plans to trim spending due to lower oil prices. Chevron Corp., based in San Ramon, California, has also cut jobs and sold some of its facilities and pipelines to raise cash.

Shares of Chevron fell $2.03, or 2.2 per cent, to $88.64 in morning trading Tuesday. The stock is down about 14 per cent in the last year.

The Canadian Press