Chevron slashes jobs and spending to weather low oil prices

Fri Oct 30, 2015 2:51pm EDT
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By Ernest Scheyder

(Reuters) - Chevron Corp (CVX.N: Quote) is slashing 10 percent of its workforce and sharply paring back its budget, with Chief Executive Officer John Watson giving a downbeat view on Friday of an industry beleaguered by low oil prices.

A more than 55 percent decline in crude oil CLc1 since last year has rippled through the global energy industry, forcing producers and their suppliers to make tough decisions.

For Chevron, that means cutting its budget by 25 percent next year by spending less in Australia, Angola and the U.S. Gulf of Mexico, where the No. 2 U.S. oil company has major growth projects.

"We need to be more efficient at what we do," Watson said on a conference call with analysts and investors. While he said prices should rise eventually, he is "sober about the current realities of lower prices" for the next few years.

The news came as Chevron also reported a sharp drop in third-quarter earnings that still beat Wall Street's expectations due to cost cuts and strong refining margins.

The company's pain was all the more stark given that larger rival Exxon Mobil Corp (XOM.N: Quote) not only posted stronger-than-expected results on Friday but also had not announced any massive layoffs.

Chevron plans to spend $25 billion to $28 billion next year and expects to further slash spending in 2017 and 2018, an acknowledgment that it does not expect oil prices to rebound soon.

The San Ramon, California-based company also said it would lay off 6,000 to 7,000 workers.   Continued...

A Chevron gas station sign is pictured at one of their retain gas stations in Cardiff, California October 9, 2013.   REUTERS/Mike Blake