(Reuters) - U.S. oil major Chevron Corp
The second-largest U.S. oil company, which plans to hold its 2020 spending program flat at $20 billion, said it expects after tax impairment charges related to a deepwater Gulf of Mexico project, which needs higher oil prices to churn a profit, and shale gas in Appalachia, which has suffered from low natural gas prices. [nBwy9H2Za] It is considering selling its stake in the Kitmat LNG project in Canada.
"With capital discipline and a conservative outlook comes the responsibility to make the tough choices necessary to deliver higher cash returns to our shareholders over the long term", Chief Executive Officer Michael Wirth said.
Wirth is preparing sweeping changes at the No. 2 U.S. oil and gas company that would cut costs and streamline operations with expectations of lower-for-longer oil and gas prices, according to people familiar with the matter.
The company recently warned of massive cost overruns at a giant Tengiz oil project in Kazakhstan. Overall costs are projected to rise 25% to $45.2 billion, with Chevron's share of the overrun expected to be about $4 billion to $5 billion.
Chevron has been among the strongest performers among the big oil majors but reported a 36% drop in third-quarter profit, hit by lower oil and gas prices and refining margins, and warned higher costs would affect its current-quarter results.
It had warned that it expected additional costs in the fourth quarter from "high" refinery maintenance and from a $430 million tax payment.
Chevron plans to spend $4 billion next year in the Permian Basin, the top U.S. oil field, and another $1 billion in international unconventional fields.
(Reporting by Jennifer Hiller in Houston, Arundhati Sarkar in Bengaluru; Editing by Sriraj Kalluvila and Tom Brown)
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Updated Date: Dec 11, 2019 04:07:49 IST