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Chevron Slashes Capital Spending Plans In Lower Carbon Shift; Sets 2021 Budget at $14 Billion

Chevron, which overtook Exxon as the biggest U.S. oil company earlier this year, has slashed its near-term spending forecasts amid a lingering collapse in global crude prices.

Chevron Corp.  (CVX) - Get Chevron Corporation Report slashed its near-term capital spending forecasts Thursday as it looks to shift investment away from traditional crude oil markets and into lower carbon alternatives.

Chevron forecast a 2021 capital spend of around $14 billion including around $300 million in costs linked to the lower carbon transition. Chevron also cut its forecast for the next four years to a range of $14 billion to $16 billion in what it called a 'significant reduction' to its prior estimate of $19 billion to $22 billion for the same period.

“Chevron remains committed to capital discipline with a 2021 capital budget and longer-term capital outlook that are well below our prior guidance,” said CEO Michael Wirth. “With our major restructuring behind us and Noble Energy integration on track, we’re prepared to execute this program with discipline.” 

“Chevron is in a different place than others in our industry. We’ve maintained consistent financial priorities starting with our firm commitment to the dividend," Wirth added. "We took early and swift action at the beginning of the pandemic to prudently allocate capital, reduce costs and protect our industry-leading balance sheet. And we’ve completed a major acquisition and restructuring that positions our company to deliver higher returns and grow long-term value.”

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Chevron shares were marked 0.4% lower in early trading immediately following the update to change hands at $89.53 each, a move that extends the stock's six-month decline to around 8%.

Earlier this fall, Chevron said it would cut around 25% of the workforce at Noble Energy, which it acquired in a $4.1 billion takeover in October, adding to its aim of reducing it global workforce by as much as 15%.

U.S. rival ExxonMobil Corp.  (XOM) - Get Exxon Mobil Corporation Report is also planning to cut 1,900 jobs at home, while reducing its global headcount by around 15% over the next two years, noting the impact of COVID-19, which has slashed energy demand in key economies around the world, has increased the need for urgent changes in the company's efficiency.