Chevron to Take $1.5 Billion in Charges for Restructuring and Asset Sales
Chevron, the second-largest US oil producer, announced on Thursday that it will take up to $1.5 billion in charges for restructuring, asset impairments, and property sales costs in the fourth quarter. The majority of the charges are for planned job cuts and relocations over the next two years, although the company did not disclose the number of jobs to be lost among its 45,000-strong workforce.
The cost cutting and asset sales come amid a year-long slide in profits, which has required the company to borrow to cover shareholder payouts. Chevron had previously aimed to cut up to $3 billion in costs through 2026.
The company will cut its 2025 project spending by $2 billion from $19 billion this year, following its $53 billion offer to buy rival Hess. The reduced project spending reflects the end of big outlays at its Kazakhstan operations, recent sales of Canadian, Alaskan, and Congolese oil and gas operations, and lower spending on US shale operations.
New expenditures on oil and gas output will fall by about $1 billion, while refining will see a reduction of about $300 million compared to this year. The budget excludes any costs for Chevron’s proposed deal for Hess, which has been stalled by challenges from Exxon Mobil and CNOOC, partners in a Guyana oil venture.
Severance pay and relocations will account for up to $900 million of the after-tax charges, while asset impairments and sales of properties will add up to $600 million. Chevron said the asset impairments will not affect its adjusted earnings.
Financial firm LSEG projects Chevron’s fourth-quarter profit at $4.35 billion, or $2.42 per share, down from $6.45 billion, or $3.45 per share, in the year-ago quarter. Charges have become a nearly annual exercise for Chevron, with the company taking a $3.7 billion impairment charge a year ago, $1.1 billion in 2022, and $4.8 billion in 2020.
