Chevron tempers $5.1 billion US spending program with expense cuts

SAN FRANCISCO — Chevron Corp. announced a $5.1 billion US capital and exploratory spending program for 1999 and a plan to reduce expenses in 1999 by $500 million. The planned actions will fund the company’s economic long-term growth plan and address the need to improve near-term results, given slumping oil prices.

The refiner’s ’99 capital budget is about 8% less than projected spending for 1998, but significant spending will continue for promising long-term growth projects in Kazakhstan, West Africa, and the Gulf of Mexico.

Cuts will be made to the company’s North American exploration and production business, as well as in refining and marketing and in chemicals.

“We have some of the best exploration and production prospects in the industry, and we intend to continue investing in them,” Chevron Chairman Ken Derr said at a meeting with security 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.”

The company plans to invest nearly $3.7 billion in worldwide exploration and production. About $2.6 billion will be outside the United States, while about $1.1 billion will be in the U.S.

Derr said mergers or acquisitions could be used to improve business results, but that it is not necessary for Chevron to merge with a competitor to continue to provide top returns to our shareholders.

“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,” he added. “Our business is one of cycles.”

Some of the cutbacks call for employee reductions, but net reductions will be modest because of growth in overseas projects, the company said. Chevron has 34,000 employees worldwide.

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