Chevron cuts 2016 spending by 24%

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Chevron projected capital spending plans for 2016 of $US26.6 billion, which the oil giant said is 24 per cent below expected capital and exploratory spending this year.

Chevron, the second-largest energy company in the US by revenue, and other major oil companies have been cutting costs and capital spending plans in response to an extended downturn in prices for crude.

In October, Chevron said it would cut up to 10 per cent of its workforce and, as Exxon Mobil did, it cut its future capital spending further. At the time, Chevron was trying to dial back its capital spending next year to between $US25bn and $US28bn.

Chairman and chief executive John Watson said in prepared remarks on Wednesday that the 2016 capital spending plan will allow the company to complete and step up projects that are under construction and “fund high return, short-cycle investments” while preserving options for long-cycle programs.

“Given the near-term price outlook, we are exercising discretion in pacing projects that have not reached final investment decision,” he said.

The 2016 capital spending budget includes $US24bn for exploration-and-production projects, with the bulk targeted for its international upstream business. The company said about $9 billion of the spending plan is targeted for existing base producing assets, which includes shale investments. An additional $US11bn is earmarked for major projects currently underway while global exploration represents roughly $US1bn of the spending plan.

The capital program also includes $US4.5bn of spending by affiliated companies, with about 80 per cent related to investments by Tengizchevroil in Kazakhstan and Chevron’s chemical joint-venture with Phillips 66 in the US.

[dow jones newswires]

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