Chevron tightens belt as $40bn makeover sweeps oil sector

Chevron Corp. halted share buybacks, slowed work on new projects and announced the biggest spending cut in more than a decade as oil explorers around the world curtail ambitions to cope with free-falling oil prices.

Chevron lowered its 2015 capital-spending target by 13 percent to $35 billion and halted stock repurchases that absorbed $5 billion in cash last year. The San Ramon, California-based company reported a 30 percent drop in earnings from the year-ago period.

Chevron’s reduction is the most by dollar amount among more than $40 billion in spending cuts announced industry-wide since Nov. 1. Still, other producers have slashed on a bigger scale, with some cutting outlays by 50 percent or more. Chevron’s accountants are hamstrung by multi-billion dollar developments that are too close to completion to postpone.

“Chevron doesn’t have quite the flexibility of some other companies to cut spending in the near term because they are still finishing some mega-projects,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis. “Beyond 2015, their flexibility will improve.”

Oil explorers and the contractors that help them drill wells, build offshore platforms, lay pipelines and feed rig crews have been whiplashed by the seven-month rout of oil markets that saw the value of a barrel of crude shrink by 57 percent.

The industry has responded by cutting more than 30,000 jobs, halting exploration projects and deferring investments in everything from gas-export terminals to petrochemical plants.

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