Chevron Cuts Spending, Expenses
In a move similar to those of its peers, Chevron Corp. announced
it would cut expenses by $500 million next year, including some
unspecified staff reductions, and spend about $5.1 billion, 8% less
than was spent in 1998. Cuts in 1999 capital spending will be
accomplished primarily in the company's mature North American
E&P business, as well as in refining and marketing and in
The company plans to invest nearly $3.7 billion, or 73% of the
total, in worldwide exploration and production. About $2.6 billion
will be spent outside the United States, while about $1.1 billion
will be spent in the U.S.
Chairman Ken Derr said the modest expense cuts are all that are
required at this time given that the company has chopped $2 billion
in annual expenses from its budget since 1991. In addition, the
company will continue significant spending for promising long-term
growth projects in Kazakhstan, West Africa and the Gulf of Mexico.
"We have some of the best exploration and production prospects
in the industry, and we intend to continue investing in them," he
said in a statement that was delivered to securities analysts in
New York. "This is a balanced plan that will produce long-term
growth through capital investment, together with improved near-term
earnings through expense reductions.
"As I've said before, we will consider mergers or acquisitions
as one possible way to improve business results. But it is not
necessary for Chevron to merge with a competitor to continue to
provide top returns to our shareholders. We need to execute our
business plan." Two weeks ago it was rumored the Chevron and Shell
were in merger discussions, but the two companies declined to
comment on the rumors.
"We have the financial strength to deal with low oil prices,
poor economic conditions in Asia and other financial challenges
over the next few years," said Derr. "Our business is one of
cycles. I feel confident and optimistic about our company and our
industry over the long term."
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