8-KRegulation FDOther EventsExhibits & Filings

CHEVRON CORP 8-K Report, Regulation FD Disclosure (Mar 24, 2020)

Filed March 24, 2020For Securities:CVX

Summary

Chevron Corporation (CVX) announced significant actions on March 23, 2020, in response to deteriorating market conditions, primarily driven by decreased commodity prices due to COVID-19 impacts and geopolitical supply pressures. The company is suspending its share repurchase program effective immediately after having bought back $1.75 billion in the first quarter of 2020. This move signals a proactive approach to capital preservation amid increasing uncertainty. Furthermore, Chevron is enacting substantial cost-saving measures by reducing its 2020 organic capital and exploratory spending plan by 20%, from $20 billion to $16 billion. The company also revised its production outlook, now expecting 2020 production to be roughly flat compared to 2019, a notable shift from previous guidance of up to 3% growth. These adjustments are expected to negatively impact future financial and operating results, with the company acknowledging significant uncertainty around the material impact of these evolving conditions.

Key Highlights

  • 1Suspension of Chevron's stock repurchase program, effective immediately.
  • 2Reduction of the 2020 organic capital and exploratory spending plan by 20%, from $20 billion to $16 billion.
  • 3Revised 2020 production outlook is now expected to be roughly flat compared to 2019.
  • 4Previous 2020 production guidance was for up to 3% growth.
  • 5The company acknowledges negative impacts on future financial and operating results due to decreased commodity prices.
  • 6Actions are in response to market conditions driven by COVID-19 and geopolitical pressures.
  • 7Further updates on the impact of these conditions are expected in the Q1 2020 earnings release and call.

Frequently Asked Questions

Chevron is suspending its stock repurchase program due to deteriorating market conditions, specifically driven by decreased commodity prices resulting from the COVID-19 pandemic's impact on demand and geopolitical factors increasing supply. This action is part of a broader strategy to conserve capital in an uncertain environment.

Chevron is reducing its 2020 organic capital and exploratory spending plan by 20%, lowering it from $20 billion to $16 billion. This represents a substantial cut aimed at adapting to the current market dynamics.

Chevron's updated production outlook for 2020 is for production to be roughly flat compared to 2019, excluding the impact of asset sales and price-related contractual effects. This is a revised guidance from their previous expectation of up to 3% production growth in 2020.

The primary drivers for these announced actions are the recent decreases in commodity prices, which are a consequence of reduced demand due to COVID-19 impacts and increased supply from geopolitical pressures. These factors are expected to negatively affect Chevron's future financial and operating results.