By Gary McWilliams
HOUSTON (Reuters) – U.S. oil producer Chevron (CVX) said on Thursday it will take up to $1.5 billion in charges in the fourth quarter for restructuring, asset writedowns and real estate sales costs.
Much of the cost will cover job cuts and relocations planned over the next two years, the company said in a statement. Chevron did not disclose how many jobs would be lost among its 45,000 employees.
The cost cuts and asset sales come amid a year-long profit slump that has required borrowing to cover shareholder payouts. The second-largest US oil producer previously said it wants to save up to $3 billion in costs by 2026.
Oil companies have turned to acquisitions to boost their reserves and production, reducing the need to spend on new fields. Chevron will cut project spending by $2 billion through 2025, from about $19 billion this year, after offering $53 billion to buy rival Hess.
“The 2025 capital budget, together with our announced structural cost savings, demonstrate our commitment to cost and capital discipline,” CEO Michael Wirth said in a statement.
The lower project spending also reflects the end of major spending on Kazakhstan operations, the recent divestment of Canadian, Alaska and Congolese oil and gas operations, and lower spending on U.S. shale gas operations.
New spending on oil and gas production will fall by about $1 billion, while refining will fall by about $300 million compared to this year.
The budget excludes all costs for Chevron’s proposed deal for Hess, which has been stalled by challenges from Exxon Mobil and CNOOC, Hess’s partners in an oil venture in Guyana.
Severance payments and relocations will account for up to $900 million of after-tax costs, and asset write-downs and property sales will reach $600 million, the company said.
Chevron said the asset impairments will not impact adjusted earnings. Financial firm LSEG expects Chevron to make a fourth-quarter profit of $4.35 billion, or $2.42 per share, compared with $6.45 billion, or $3.45 per share, in the year-ago quarter.
Costs have become an almost annual exercise. Chevron took an impairment charge of $3.7 billion a year ago, $1.1 billion in 2022 and $4.8 billion in 2020.
(Reporting by Gary McWilliams; Editing by Mark Porter)
