The second-largest U.S. oil company, Chevron reduced its capital spending targets to a range of $17-22 billion per year in 2017 and 2018.
In December, the company had lowered the targets to $20-24 billion for the two years.
For 2016, spending plans were slashed 24% to $26.6 billion. Competitor ExxonMobil (W500/1), the largest energy company in the United States, slashed its 2016 spending budget by 25% to $23 billion.
“Industry conditions are tough right now, with low oil and natural gas prices,” said John Watson, Chevron’s chairman and chief executive.
The capital spending budget includes resources for oil and natural gas exploration.
To weather the market downturn, Chevron is planning to sell as much as $10 billion in assets by the end of 2017.
The company, which said it wants to maintain and increase its shareholder dividend, intends to sell assets in New Zealand and the Gulf of Mexico, natural gas storage units in Canada and refinery assets in South Africa.
Chevron also confirmed its plan to slash 10% of its workforce. After 3,200 jobs were cut in 2015, the company said it would eliminate 4,000 jobs this year.
The divestment program expands by 50% a previous target to sell $10 billion in assets through 2016, according to a presentation by Chevron chief executive John Watson.
In 2014, Chevron divested $6 billion in assets, including the $1.3 billion sale of a stake in a Chad oil project to the Republic of Chad. The deal also comprised Chevron’s interest in a pipeline system that transports oil from Chad to Cameroon.
We are well-positioned to manage through the recent drop in commodity prices and are taking several responsive actions, including curtailing capital spending and lowering costs.” John Watson, Chevron CEO
Watson said the company was on track to increase production from 2.57 million barrels of oil equivalent per day in 2014 to 3.1 million in 2017. Major projects ramping up include Texas shale ventures and natural gas developments in Australia and Angola.
“We are well-positioned to manage through the recent drop in commodity prices and are taking several responsive actions, including curtailing capital spending and lowering costs,” Watson said.
Shares in Dow member Chevron plummeted 3.1% to $48.46 in late-afternoon trade.
In recent months, Chevron has also withdrawn from exploration ventures in Poland, Romania, Lithuania and Ukraine.
Other large oil companies, including ExxonMobil (IW 500/1) and Royal Dutch Shell (IW 1000/2), have also trimmed spending in response to about a 50% drop in oil prices since June. Leading oil services companies, including Halliburton and Schlumberger, have announced deep job cuts.
The move follows Chevron’s January announcement of a 2015 capital budget of $35 billion, down 13% from last year. The company also halted its share buyback program, citing the big drop in oil prices.