Chevron plans to cut capital and exploratory spending next year by one-fourth, with further cuts in 2017 and 2018 depending on the oil industry’s condition then.
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Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) reported their third quarter of fiscal year 2015 (3QFY15) results on Friday before the opening bells.
Chevron plans to cut capital investment spending by around 25 percent in the next fiscal year, to between $25 and $28 billion.
Revenue dropped by 37% to just over $34.32 billion.
“That’s why, even with the slowdown in the latter part of the quarter, we still made US$1 billion”.
Daily production in the quarter averaged the equivalent of 386,000 barrels of oil, an increase of 26 percent from the year-earlier period.
Decades of financial discipline that honed Exxon Mobil into the leanest, most-efficient oil company in the world are paying off as it navigates the worst market slump since the 1980s.
Meanwhile, Exxon confirmed it had cut third-quarter capital spending by 22 per cent from the prior year to $US7.67 billion. Profits of the company too tumbled in the third quarter.
The company’s chemical segment earnings came in at $1.2 billion compared to Deutsche’s estimate of $719 million, while it reported global refining earnings of $1.5 billion compared to the firm’s estimate of $1.1 billion.
Chevron posted a sharp drop in quarterly profit that still beat Wall Street’s expectations due to cost cuts and strong refining margins. Its third-quarter profits, clobbered by the weakness in crude-oil prices, nonetheless cheered investors, largely on the strength of its booming refinery business.
Profit at the company’s refineries doubled to $2.03 billion, led by gains outside the US, according to the statement.
Chevron Corp. CEO Watson says, “We expect further reductions in spending for 2017 and 2018”.
It’s a crummy time to be in the oil business, with prices hovering around $45 a barrel, about half of where they were at past year.
“With the lower investment, we anticipate reducing our employee workforce by 6,000 to 7,000”, Chevron chairman and chief executive John Watson said in a statement. While workers in the oil industry lose their jobs, consumers are saving money from lower energy prices.
The company also forecast 2016 adjusted earnings of $4.90 to $5.10 per share.
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Still, its results for the recently ended quarter did not drop as much as was expected for the quarter. The company is now planning for around $60 per barrel price for Brent crude until at least 2017.
