- Reduces 2020 capital spending plan by $4 billion, or
20%
- Permian production guidance reduced by 20%
- Suspends share repurchases
- Actions protect the dividend, prioritize long-term value,
and support industry leading balance sheet
Chevron Corporation today announced several steps it is taking
in response to market conditions.
“With an industry leading balance sheet and a flexible capital
program, we believe Chevron is resilient and positioned to
withstand this challenging environment,” said Chevron Chairman and
CEO Michael Wirth. “Given the decline in commodity prices, we are
taking actions expected to preserve cash, support our balance sheet
strength, lower short-term production, and preserve long-term
value.”
The company is reducing its guidance for 2020 organic capital
and exploratory spending by 20% to $16 billion. Reductions are
expected to occur across the portfolio and are estimated as
follows:
- $2 billion in upstream unconventionals, primarily in the
Permian Basin
- $700 million in upstream projects and exploration
- $500 million in upstream base business spread broadly across
our U.S. and international assets
- $800 million in downstream & chemicals and other
Cash capital and exploratory expenditures are expected to
decrease by $3.3 billion to $10.5 billion in 2020. Total capital
and exploratory spending in the second half of 2020 is expected to
be about $7 billion, an annual run rate 30% lower than the approved
budget announced in December 2019.
Excluding 2020 asset sales and price related contractual
effects, the company expects 2020 production to be roughly flat
relative to 2019. Note that Chevron’s net production increases
about 20,000 barrels of oil equivalent per day for each $10
movement lower in Brent oil prices due to contractual effects.
Permian production by the end of the year is expected to be about
125,000 barrels of oil equivalent per day, or 20%, below prior
guidance.
“The flexibility of our capital program allows us to respond to
these unexpected market conditions by deferring short-cycle
investments and pacing projects not yet under construction,” said
Jay Johnson, Executive Vice President of Upstream. “At the same
time, we are focused on completing projects already under
construction that will start-up in future years while preserving
our capability to increase short-cycle activity in the Permian and
other areas when prices recover.”
In addition to reducing capital expenditures, the company is
taking other actions to support its industry leading balance sheet
including:
- The $5 billion annual share repurchase program has been
suspended after repurchasing $1.75 billion of shares during the
first quarter.
- The company completed the sale of its interest in the Malampaya
field in the Philippines with proceeds over $500 million received
in the first quarter. In April, the company expects to close the
sale of its upstream interests in Azerbaijan and its interest in a
related pipeline.
- The company continues to execute its plans to reduce run-rate
operating costs by more than $1 billion by year-end 2020.
“Chevron’s financial priorities remain unchanged,” said Chevron
Chief Financial Officer Pierre Breber. “Our focus is on protecting
the dividend, prioritizing capital that drives long-term value, and
supporting the balance sheet.”
Future Financial and Operating Results
Recent decreases in commodity prices, as a result of COVID-19
impacts on reduced demand and geopolitical pressures increasing
supply, are expected to negatively impact the company’s future
financial and operating results. Due to the rapidly changing
environment, there continues to be uncertainty and unpredictability
around the impact on our results, which could be material. We
expect to provide further updates in the company's first quarter
2020 earnings press release, earnings call, and Form 10-Q.
About Chevron
Chevron Corporation is one of the world's leading integrated
energy companies. Through its subsidiaries that conduct business
worldwide, the company is involved in virtually every facet of the
energy industry. Chevron explores for, produces and transports
crude oil and natural gas; refines, markets and distributes
transportation fuels and lubricants; manufactures and sells
petrochemicals and additives; generates power; and develops and
deploys technologies that enhance business value in every aspect of
the company's operations. Chevron is based in San Ramon, Calif.
More information about Chevron is available at www.chevron.com.
As used in this news release, the term “Chevron” and such terms
as “the company,” “the corporation,” “our,” “we,” “us” and “its”
may refer to Chevron Corporation, one or more of its consolidated
subsidiaries, or to all of them taken as a whole. All of these
terms are used for convenience only and are not intended as a
precise description of any of the separate companies, each of which
manages its own affairs.
CAUTIONARY STATEMENTS RELEVANT TO
FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR”
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This news release contains forward-looking statements relating
to Chevron's operations that are based on management's current
expectations, estimates and projections about the petroleum,
chemicals and other energy-related industries. Words or phrases
such as "anticipates," "expects," "intends," "plans," "targets,"
"forecasts," "projects," "believes," "seeks," "schedules,"
"estimates," "positions," "pursues," "may," "could," "should,"
"will," "budgets," "outlook," "trends," "guidance," "focus," "on
schedule," "on track," "is slated," "goals," "objectives,"
"strategies," "opportunities," "poised," "potential" and similar
expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
other factors, many of which are beyond the company's control and
are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements. The reader should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this news release. Unless legally required, Chevron
undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Among the important factors that could cause actual results to
differ materially from those in the forward-looking statements are:
changing crude oil and natural gas prices; crude oil production
quotas or other actions that might be imposed by the Organization
of Petroleum Exporting Countries and other producing countries;
public health crises, such as pandemics (including coronavirus
(COVID-19)) and epidemics, and any related government policies and
actions; changing economic, regulatory and political environments
in the various countries in which the company operates; general
domestic and international economic and political conditions;
changing refining, marketing and chemicals margins; the company's
ability to realize anticipated cost savings and efficiencies
associated with enterprise transformation initiatives; actions of
competitors or regulators; timing of exploration expenses; timing
of crude oil liftings; the competitiveness of alternate-energy
sources or product substitutes; technological developments; the
results of operations and financial condition of the company's
suppliers, vendors, partners and equity affiliates, particularly
during extended periods of low prices for crude oil and natural
gas; the inability or failure of the company's joint-venture
partners to fund their share of operations and development
activities; the potential failure to achieve expected net
production from existing and future crude oil and natural gas
development projects; potential delays in the development,
construction or start-up of planned projects; the potential
disruption or interruption of the company's operations due to war,
accidents, political events, civil unrest, severe weather, cyber
threats, terrorist acts, or other natural or human causes beyond
the company's control; the potential liability for remedial actions
or assessments under existing or future environmental regulations
and litigation; significant operational, investment or product
changes required by existing or future environmental statutes and
regulations, including international agreements and national or
regional legislation and regulatory measures to limit or reduce
greenhouse gas emissions; the potential liability resulting from
pending or future litigation; the company's future acquisitions or
dispositions of assets or shares or the delay or failure of such
transactions to close based on required closing conditions; the
potential for gains and losses from asset dispositions or
impairments; government-mandated sales, divestitures,
recapitalizations, industry-specific taxes, tariffs, sanctions,
changes in fiscal terms or restrictions on scope of company
operations; foreign currency movements compared with the U.S.
dollar; material reductions in corporate liquidity and access to
debt markets; the receipt of required Board authorizations to
effect future dividends and share repurchases; the effects of
changed accounting rules under generally accepted accounting
principles promulgated by rule-setting bodies; the company's
ability to identify and mitigate the risks and hazards inherent in
operating in the global energy industry; and the factors set forth
under the heading "Risk Factors" on pages 18 through 21 of the
company's 2019 Annual Report on Form 10-K and in subsequent filings
with the U.S. Securities and Exchange Commission. Other
unpredictable or unknown factors not discussed in this news release
could also have material adverse effects on forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20200324005213/en/
Braden Reddall -- +1 925-842-2209
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