Chevron will take on up to $1.5 Billion in charges for the fourth quarter
Chevron, the U.S. oil company, announced Thursday that it would take charges of up to $1.5billion in the fourth quarter for restructuring costs, asset impairments and sales costs.
The company stated in a press release that the majority of the charges were for job reductions and relocations scheduled for the next two-years. Chevron has not disclosed how many of its 45,000 employees will lose their jobs.
Cost cutting and asset sales are part of a yearlong profit decline that forced the company to borrow money to pay dividends. The No. The No.
Oil companies are turning to acquisitions in order to boost reserves and production, which requires less spending on new fields. Chevron is cutting 2025 project expenditures by $2 billion, from $19 billion in this year. This comes after the company offered $53 billion for rival Hess.
In a press release, CEO Michael Wirth stated that "the 2025 capital budget and our structural cost reductions demonstrated our commitment to capital discipline."
The decrease in project spending reflects the recent sale of Canadian, Alaskan, and Congolese oil-and-gas operations as well as lower spending for U.S. shale projects.
The new expenditures for oil and gas production will drop by about $1 billion. Refining costs will also fall by about $300 million.
The budget does not include any costs associated with Chevron’s proposed deal to acquire Hess, which has been delayed by Exxon Mobil's and CNOOC's challenges. Hess is Hess' partner in an oil venture in Guyana.
The company stated that severance pay and relocations could account for as much as $900 million in after-tax charges. Asset impairments and the sale of properties would add up to an additional $600 million.
Chevron stated that the impairment of assets would not affect adjusted earnings. The financial firm LSEG predicts that Chevron will earn $4.35 billion in its fourth quarter, or $2.42 a share. This compares to $6.45 billion or $3.45 a share for the previous quarter.
The practice of charging has become almost an annual event. Chevron took an impairment charge of $3.7 billion a year earlier, $1.1 billion for 2022, and $4.8 billion for 2020.
(source: Reuters)
