Chevron is pulling out all the stops to cope with the historic collapse in oil prices. The oil giant is slashing spending, scaling back its production ambitions and suspending its stock buyback program.
Facing $25 oil prices and a stock price that has been cut in half, America’s second-largest oil company is also considering laying off workers.
But there’s one thing Chevron (CVX) won’t touch: its coveted dividend. Even as other storied companies slash their payouts to brace for a looming recession, 140-year-old Chevron insists its dividend will survive the oil crash unscathed.
“Our financial priorities remain intact. And the dividend is at the top of that list of priorities,” Chevron CEO Michael Wirth told CNN Business on Tuesday. “Our shareholders depend on that dividend.”
Chevron, which traces its roots to 1879, hasn’t cut its dividend since 1934 during the Great Depression. In late January, Chevron boosted its dividend by 8%, marking the 33rd straight year of increases.
But the world is a very different place today. The coronavirus pandemic has shut down large parts of the global economy, setting the stage for a deep recession. Passenger planes have been grounded. Highways are empty. And factories have gone dark. All of that is causing an unprecedented decline in oil demand.
At the same time, Saudi Arabia and Russia are in the middle of an epic price war that is flooding the market with supply at the worst possible time.