Chevron cuts spending by $4bn to strengthen finances

Chevron will cut capital and exploration spending by $4bn (£3.4bn) and scrap share buybacks to strengthen its finances against the effects of the coronavirus crisis.

The US oil giant said its annual spending bill would fall by 20% to $16bn to withstand plunging oil prices and reduced demand caused by the virus outbreak. It suspended its $5bn annual share purchase programme after buying back $1.75bn in the first quarter.

Chevron said it expected underlying production to be roughly flat in 2020 with production down 20% in Permian Bay, the US's main shale field. Chevron has halved spending in Permian Bay to $2bn from an expected $4bn.

The price of crude oil has plunged by more than 60% since January to less than $25 a barrel, forcing oil producers to cut costs. Shell said on Monday it would cut spending and shelve its share buyback to save $10bn.

Chevron's chief executive Michael Wirth said: “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 measures are a turnaround from earlier in March when Chevron said it would keep spending in check and return up to $80bn to shareholders over five years.