UPDATE 3-Chevron scraps 2015 share repurchases as oil prices plunge

Fri Jan 30, 2015 2:33pm EST
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(Adds commentary on possibilty of future repurchases; update stock; changes headline)

By Ernest Scheyder

WILLISTON, N.D. Jan 30 (Reuters) - Chevron Corp halted its 2015 share repurchase program on Friday, a move designed to conserve cash amid tumbling oil prices and its latest cost-cutting step after slashing capital spending.

The buyback decision took Wall Street by surprise, with shares of the No. 2 U.S. oil producer falling as much as 4 percent after the announcement on a conference call with investors.

Chevron repurchased $5 billion worth of shares in 2014, helping its float shrink nearly 2 percent from 2013 levels.

In announcing the buyback curtailment on the call, Chief Financial Officer Pat Yarrington cited "the change in market conditions," a reference to the roughly 60 percent drop in crude oil prices since last June.

Earlier Friday, Chevron said it would cut 2015 capital expenditures by 13 percent. The move echoed similar steps earlier this week by Royal Dutch Shell, Hess Corp , ConocoPhillips and others to conserve cash in an environment where the crude price drop shows little sign of abating.

Amid the cutbacks, Chief Executive Officer John Watson stressed that Chevron's dividend, currently $1.07 per quarter, remained the "highest priority" for the company's balance sheet. Many investors have long been drawn to Chevron for its high dividend.

Comparing buybacks to a "flywheel," a rotational device that can store or disperse energy as needed, Watson said future repurchases were possible.   Continued...