Chevron Cuts Guidance For 2020 Organic Capital And Exploratory Spending By 20%

(RTTNews) - Energy giant Chevron Corp. (CVX) announced Tuesday several actions expected to preserve cash, support balance sheet strength, lower short-term production, and preserve long-term value amid the decline in commodity prices.

The company is reducing its guidance for 2020 organic capital and exploratory spending by 20 percent to $16 billion. These include $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 its U.S. and international assets as well as $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.

In order to support its balance sheet, the company has been suspended its $5 billion annual share repurchase program 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 also continues to execute its plans to reduce run-rate operating costs by more than $1 billion by year-end 2020.