Chevron Corp on Tuesday said that it would maintain its annual expenditures in check and pay up to $80 billion in total dividends to its stakeholders over the next five years.
Chevron chief executive officer Mike Wirth claims that his company is the American oil giant that is most capable of producing oil and earning profits at the lowest cost.
In a statement, Chevron disclosed that it is looking to trim down costs by around $2 billion and keep capital spending to no more than 10 percent above current levels - a consolidation that is expected to strengthen financial flow and return on investment.
The No. 2 US oil company bared its plan to cope with what is unfolding to be one of the most difficult markets in years, as coronavirus worries continue to hamper short-term orders and investor pressures cloud the longer-term forecast for the industry.
In a statement, Wirth said that the company's portfolio and capital efficiency enable the business to gain cash flows and hike returns without depending on the increasing prices of oil.
Oil prices have fallen 20 percent this year and natural gas prices also dropped to their lowest level since the 1990s. Capital returns have dragged the wider market in the last 10 years, souring investments. European oil players like BP Plc have set commitments to cut greenhouse gas emissions from their projects.
Chevron and other energy corporations have vowed to reduce spending after the slide in oil prices, earlier this year forced many to apply for loans to cushion operating expenses of long-term operations.
Chevron will cling to its recently declared capital spending program of $19 billion to $22 billion yearly through 2024, setting it apart from main competitor Exxon Mobil Corp, which is spending heavily to lift production.
The more recent oil-price retreat that followed last week's outbreak-triggered market downturn has escalated investors' doubts about energy firms like Chevron being profitable in the long haul.
While fears about the virus - which emerged in China in January last year and has spread to over 60 countries - has impacted heavily on demand, Wirth said supply chains are "functioning normally."
Meanwhile, the San Ramon-based company believes its focus to allocate capital on lower-risk endeavors including in the Permian Basin, Kazakhstan, and deepwater ventures in the Gulf of Mexico - will allow Chevron to return more dividends to its stakeholders. Shares of the company dropped 0.69 percent at $95.93 in early sessions on Tuesday.
