A Chevron gas station in Richmond, California, USA, Wednesday, June 19, 2024.
David Paul Morris | Bloomberg | Getty Images
US oil producer Chevron said Thursday that it will take $1.5 billion in restructuring, asset impairment and asset sale costs in the fourth quarter.
Most of the charges are due to planned job cuts and relocations over the next two years, the company said in a statement. Chevron did not say how many of its 45,000 employees would lose their jobs.
The cost cuts and asset sales come amid a full-year earnings slide that required borrowing to cover shareholder payments. The No. 2 U.S. oil producer earlier said it aimed to cut costs by $3 billion through 2026.
Oil companies have turned to acquisitions to increase reserves and production, and have demanded less spending on new fields. Chevron will cut spending on 2025 projects by $2 billion from about $19 billion this year after offering $53 billion to buy the rival. Hess.
“The 2025 capital budget together with the announced structural cost reductions demonstrates our commitment to cost and capital discipline,” CEO Michael Wirth said in a statement.
Lower project spending also reflects the end of high spending on Kazakhstan operations, recent sales of oil and gas operations in Canada, Alaska and Congo, and lower spending on US shale operations.
New spending on oil and gas production will drop by about $1 billion, while refined spending will drop by about $300 million compared to this year.
The budget excludes the costs of Chevron’s proposed deal for Hess, which has stalled challenges. Exxon Mobil and CNOOCHess’ partners in an oil venture in Guyana.
Severance pay and relocations will account for $900 million in after-tax charges, while asset impairments and asset sales will add $600 million, the company said.
Chevron said the asset impairments would not affect adjusted earnings. Financial firm LSEG forecast Chevron’s fourth-quarter earnings at $4.35 billion, or $2.42 per share, up from $6.45 billion, or $3.45 per share, in the year-ago quarter.
Charges have become an almost annual exercise. Chevron had an impairment charge of $3.7 billion a year ago, $1.1 billion in 2022 and $4.8 billion in 2020.
