Cheap oil: Chevron slashes investments

New York - Chevron slashed $5bn from its investment budget and shut down its share buyback programme as the crude price plunge continued to savage budgets of oil industry powerhouses.

Chevron said it would spend $35bn on exploration and production projects, 13% less than last year, in response to the nearly 60% fall of the oil price since the middle of 2014 due to a global glut.

In addition, after spending $5bn on share repurchases in 2014 - a program that shores up the company's share price, benefiting stockholders - chief financial officer Patricia Yarrington said the programme would be frozen this year.

"Given the change in market conditions, we are suspending our share repurchase program for 2015," she announced as the company presented its fourth-quarter earnings.

The company turned in its poorest quarter, profits-wise, since 2009, "largely due to the sharp decline in crude oil prices," said chairperson and chief executive John Watson.

Revenues for the three months dropped 17.9% from a year earlier to $42.1bn, and net income sank 30%, to $3.5bn.

The company produced the same amount of oil as it did a year ago - an average of 2.58 million barrels a day in the quarter - but the average sales price was $66 a barrel, compared with $90 a year ago.

Watson said earnings were helped by gains in refining operations.

"Improved downstream results and higher gains on asset sales related to our divestment programme partially offset the effect of lower crude prices," he said in a statement.

"We enter 2015 with the financial strength to meet the challenges of a volatile crude price environment and with significant efforts underway to manage to a lower cost structure and capital spend rate."

And Anglo-Dutch giant Royal Dutch Shell unveiled plans to slash spending by more than $15bn over the next three years after posting lower annual profits on tumbling oil prices.