Chevron Corporation is planning increase in asset sales by 50 percent to $15 billion and curtail new investment for the next two years after plunging oil prices squeezed cash flow for the second-biggest U.S. energy producer.
Chevron’s divestment of oil and natural gas fields and other exploration and production assets will continue through 2017, Chairman and Chief Executive Officer John Watson said.
Capital spending will decline through the period as construction of mega-projects such as the $54 billion Gorgon gas-export development in Australia winds down, he said.
Chevron reduced its spending plan for 2015 by 13 percent to $35 billion in January.
Even with the cut, Watson reaffirmed plans to raise production 20 percent to the equivalent of 3.1 million barrels of crude a day by the end of 2017.
The adjustments are necessary to address “near-term market conditions,” Watson said.
Oil has lost about half its value since late June amid weakening international demand growth and rising supplies from U.S. shale formations.
Tens of thousands of jobs have been cut across the industry as companies curb spending.
Chevron is seeing cost cuts among equipment and oilfield-service vendors of 10 percent to 40 percent, according to Jay Johnson, senior vice president of upstream.
Chevron’s bigger U.S. rival, Exxon Mobil Corp., announced plans last month to reduce spending by 12 percent this year to $34 billion. Chairman and CEO Rex Tillerson plans to lift output by 7.5 percent through 2017 to the equivalent of 4.3 million barrels a day, led largely by drilling U.S. shale fields in the Great Plains and Southwest.
As a result of the oil-price collapse, analysts expect both companies to post their lowest sales this year in more than a decade.
A Standard & Poor’s index of 100 oil and gas companies has fallen 25 percent since international crude prices began to slide in late June.
Chevron made 35 oil and gas discoveries and added the equivalent of 1.4 billion barrels of oil to its portfolio last year, Vice Chairman George Kirkland said.
Those finds included deep-water assets in the U.S. Gulf of Mexico and off the west coast of Africa, as well as North American shale fields, he said.