Chevron (CVX) announced on Thursday that it expects to incur up to $1.5 billion in fourth-quarter charges and plans to scale back its capital expenditures (CapEx). These costs include restructuring charges, asset impairments, and property sales, as part of the oil producer’s ongoing efforts to streamline operations amid financial pressures.
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CVX’s Charges Will Cover Job Cuts and Employee Relocations
A significant portion of these charges will address job cuts and employee relocations planned over the next two years. Chevron projects up to $900 million in severance pay and relocation costs, with $600 million allocated to asset impairments and property sales.
However, Chevron did not specify how many of its 45,000 employees will be affected. The restructuring is part of the company’s broader goal to reduce costs by up to $3 billion by 2026. These cost-cutting measures have become necessary as profits have declined over the past year, forcing the company to borrow funds for shareholder payouts.
CVX Is Also Scaling Back CapEx
Chevron is also scaling back on its capital expenditures. For 2025, it plans to slash project spending by $2 billion from this year’s budget of $19 billion. CVX CEO Michael Wirth commented, “The 2025 capital budget, along with our announced structural cost reductions, demonstrates our commitment to cost and capital discipline.”
The reduced spending reflects several factors, including the completion of major projects in Kazakhstan, asset sales in Canada, Alaska, and Congo, and decreased investments in U.S. shale operations. Additionally, Chevron is cutting spending on oil and gas production by around $1 billion, with refining expenditures set to fall by $300 million.
Notably, Chevron’s budget excludes costs related to its $53 billion offer to acquire Hess (HES), a deal currently facing challenges from Hess’s partners Exxon Mobil (XOM) and CNOOC in a Guyana oil venture.
Chevron also stated that these asset impairment charges would not impact its adjusted earnings for the fourth quarter.
Is CVX a Buy, Sell, or Hold?
Analysts remain bullish about CVX stock, with a Strong Buy consensus rating based on 13 Buys and four Holds. Over the past year, CVX has increased by more than 15%, and the average CVX price target of $172.29 implies an upside potential of 8.1% from current levels.
