The falling oil prices with no further signs of improvement are creating difficulties for several oil companies including Chevron Corporation (NYSE:CVX), which announced a cut back in its share repurchase program for 2015. In addition to it, the oil company has announced 13 percent lower capital spending budget for 2015.
While announcing the share repurchase program cut, the company referred to the changes in the market conditions with crude oil prices falling in excess of 60 percent since June 2014. The market was surprised with the decision leading to a 4 percent decline in the share prices of Chevron Corporation (NYSE:CVX).
John Watson, Chief Executive Officer of Chevron, said that share repurchases are possible in future and he added,
“If we get to a circumstance where we are generating cash flow and we don’t see other opportunities, we’ve got no reticence at all to repurchase shares if we think that is a better opportunity for us.”
Earlier, Chevron Corporation (NYSE:CVX) announced capital and exploratory budget of $35 billion for fiscal 2015, which is 13 percent less than its capital spending in 2014. While talking about the current market conditions, Watson added,
“We will continue to monitor and be responsive to market conditions, and to actively pursue cost reductions throughout our supply chain in order to lower overall outlays. We anticipate growing flexibility in our spend as projects under construction are completed and as supplier contracts are renewed.”
Another important thing to notice is Chevron Corporation (NYSE:CVX)’s heightened investments in the Canadian Kitimat liquefied natural gas (LNG) project and the company is likely to spend up to $8.5 billion on its LNG project in 2015. The energy company said that it is confident that its current investments in these projects would improve its production and cash generation in the upcoming years.
This article has been written by Prakash Pandey.