New York (AFP) - Chevron announced Tuesday it will slash the value of its assets by $10 billion to $11 billion due to weaker oil and natural gas prices that prompted the company to consider abandoning some projects.
The move hit a number of areas, including gas-related projects in the Appalachian region in the United States, a Canadian liquefied natural gas project and an oil-rich project in the Gulf of Mexico.
The company also said it is weighing "strategic alternatives," including divestment, for some of the assets.
The downgrade reflects a weakening commodity price outlook that last week prompted the Organization of the Petroleum Exporting Countries to deepen output cuts to defend oil prices amid sluggish global economic growth.
Natural gas prices also look vulnerable, due in part to a glut of supply following heavy investment in shale-rich projects like the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia where Chevron operates.
Chevron said it plans a $20 billion capital budget for 2020, flat with the level in both 2018 and 2019.
"We are positioning Chevron to win in any environment by ratably investing in the highest-return, lowest-risk projects in our portfolio," Chevron Chief Executive Michael Wirth said in a news release.
"This will be the third consecutive year with organic capital spending held flat at $20 billion, continuing our capital discipline through the cycle. Our emphasis on short cycle investments is expected to deliver improved returns on capital and stronger free cash flow over the long-term."
Key spending priorities in 2020 include continued investment in the Permian Basin in Texas, an expansion at its Tengiz project in Kazakhstan and various sites in the Gulf of Mexico.
Shares of Chevron fell 0.4 percent to $117.46 in after-hours trade.