Chevron Corp halted its 2015 share repurchase program on Friday, a move designed to conserve cash amid tumbling oil prices and its latest cost-cutting step after slashing capital spending. Shares of the No. 2 U.S. oil producer extended losses after comments by executives on a conference call, falling nearly 4 percent to $99 after being down 2.6 percent before the halt of the buyback program was announced.
Chevron repurchased $5 billion worth of shares in 2014. “Given the change in market conditions, we are suspending our share repurchase program for 2015,” Chevron Chief Financial Officer Pat Yarrington said on the call. Chief Executive Officer John Watson said Chevron’s dividend, currently $1.07 a quarter, remained the “highest priority” for the company’s balance sheet.
Earlier Friday, Chevron said it would cut 2015 capital spending by 13 percent. Company officials said they are trying to control costs and taking a more measured view of its Canadian liquified natural gas (LNG) project, Kitimat. “I think people are pretty cautious right now on in the LNG market,” Watson said, adding that layoffs are possible.
Chevron said it expects its Gorgon LNG project in Australia to make its first sales this year, and that its Wheatstone LNG project, also in Australia, should start up by late 2016. Chevron said 2015 output would rise at most by 3 percent from 2014 production of 2.57 million barrels of oil equivalent per day. The San Ramon, California-based company stuck to its goal of lifting output to 3.1 million barrels of oil equivalent in 2017.