Chevron to Take $1.5 Billion in Q4 Charges

By Gary McWilliams
HOUSTON (Reuters) – U.S. oil producer Chevron (NYSE:CVX) announced on Thursday that it will incur up to $1.5 billion in charges for the fourth quarter, primarily related to restructuring, asset impairments, and costs from property sales.

Most of these charges are attributed to job cuts and relocations planned over the next two years, though Chevron did not specify how many of its 45,000 workers would be affected.

The company's decision to cut costs and sell assets comes in light of a year-long slide in profits, necessitating borrowing to maintain shareholder payouts. Earlier, Chevron indicated it aims to reduce costs by up to $3 billion by 2026.

As oil companies turn to acquisitions to enhance reserves and production, Chevron plans to cut its project spending for 2025 by $2 billion from the current year's budget of about $19 billion, following its $53 billion offer to acquire rival Hess (NYSE:HES).

"The 2025 capital budget, alongside our announced structural cost reductions, demonstrates our commitment to cost and capital discipline," stated CEO Michael Wirth.

The reduction in project spending reflects the conclusion of significant expenditures in Kazakhstan, recent sales of operations in Canada, Alaska, and the Congo, and decreased spending on U.S. shale operations.

New expenses for oil and gas production are expected to decrease by about $1 billion, while refining expenses will drop by around $300 million compared to this year.

The budget does not account for costs related to Chevron's proposed deal for Hess, which faces obstacles from Exxon Mobil (NYSE:XOM) and CNOOC (NYSE:CEO), Hess' partners in a Guyana oil venture.

Severance pay and relocation costs may factor up to $900 million of the after-tax charges, with asset impairments and property sales amounting to roughly $600 million, according to the company.

Chevron confirmed that the asset impairments would not impact its adjusted earnings. Financial firm LSEG forecasts Chevron's fourth-quarter profit to be approximately $4.35 billion, or $2.42 per share, down from $6.45 billion, or $3.45 per share, in the same quarter last year.

Charges have become a regular occurrence for Chevron, which recorded a $3.7 billion impairment charge last year, $1.1 billion in 2022, and $4.8 billion in 2020.