Chevron calculated last year that it needed an average price (from all sources) of $51/barrel to break even. The current dividend is around $4.76 per share per year. The current WTI price is below $15 and will likely stay below $20 for 2 or more months. But who knows? Bottom line is that the dividend is not sustainable at these low oil prices and Chevron management is obsessed with maintaining the dividend aristocrat status. Something will have to give this year. The choice is to significantly cut Capex, the dividend or employees.
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Seems to me the whole company can run just fine (maybe better) on about 20% of its current workforce.
Then the financial situation is even worse.
The dividend is $5.16 per share annually. Check it out on CNBC, Bloomberg, Market Watch, Seeking Alpha, Google Finance, Vanguard, Fidelity or any other financial site. Shoddy research from the OP.
The break even oil price is $41.50. Nice try.
Indeed. Plenty of dead wood laying around available for the cutting.
Numerous opportunities to improve costs and overhead remain. We have only begun to optimize ourselves via the functional transformation, upstream evolution and the dozen or so initiatives which are still in flight. Plans are in motion and visibility is increasing. The playbook will be revealed and rest assured cutting the dividend is not being considered at this time. MW has made it clear several times both internally and publicly. 35 years of consecutive dividend increases is not something taken lightly. There is much work to be done and more economic pain to be weathered before serious consideration of cutting the dividend would be discussed.
@2dgj, it's the big bad boogieman MW haunting you on this site, that's what it is! You have it figured out. Just haven't figured out business fundamentals and basic mathematics is all. Keep studying, it may come to you eventually.
Yeah, yeah, yeah @2lxp. We all know you are MW. There will definitely be a lot of personnel cuts, but so will the dividend. It’s the dividend or you that gets cut before 2020 comes to an end. Decide which.
Chevron won't be cutting the dividend any time soon. No way they cut it in 2020. We will transform our way to sustainability; which means cuts, cuts and more cuts. Cut everything in sight but the dividend. Shareholders are priority #1.
Norway’s Equinox, just announced it will be cutting its dividend by 2/3. Other major oils are also considering a similar move and will make an announcement at their upcoming 1st quarter earnings call. Will it be Chevron and Exxon’s turn before long? I think so, if oil prices don’t hit $50 by the end of the 3rd quarter.
@1sak, Good point. and if that keeps the company from having to cut 50% instead of 15 or 20% then that makes it better for the employees as well. More of them get to keep their job and the ones cut or go with EOI get a generous severance.
Chevron would not hesitate to cut capex and employees before it ever thought to touch the dividend. Further, given current interest rates, maintaining its dividend aristocrat status allows Chevron to borrow money near 0% interest to increase the dividend and fund operations. - which reinforces its decision to maintain the dividend at all costs.
Short term debt