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Chevron Forgoes Increase in Its Dividend

THE WALL STREET JOURNAL

MAY 1, 2009

Chevron Corp. said it won’t raise its quarterly stock dividend, forgoing its usual April increase in the payment to shareholders. For the past four years, the oil company had announced in April that it would raise dividends.

The San Ramon, Calif., company didn’t offer an explanation for the change, and may yet increase the dividend later this year. Last year was the 21st consecutive year it increased its annual dividend, raising the payment to shareholders 12.1% to 65 cents a share, where it remains.

Company spokesman Kurt Glaubitz offered no reason for the decision, saying only that it would be discussed on a conference call with analysts Friday after the company reports its first-quarter financial results.

Oil companies are being squeezed by oil prices that have fallen by about two-thirds in value from last summer, raising pressure on the companies to maintain their capital budgets while still paying out their dividends. Oil prices closed Wednesday at $50.97 a barrel on the New York Mercantile Exchange, well off its record $145 high last July.

Thus far, big oil companies have been notable exceptions among blue-chip companies that have cut their payouts to shareholders in the current recession. Indeed, Exxon Mobil Corp. said on Wednesday that it raised its quarterly dividend by 5% to 42 cents. Exxon has increased its annual dividend payout every year since 1972.

But the companies have come under financial pressure to reexamine their practice of regular dividend increases. European oil giants BP PLC and Royal Dutch Shell PLC both have said they would increase their debt to avoid cutting shareholder payments.

Chevron, the second-largest U.S. oil company after Exxon, has already taken steps to conserve its cash. Earlier this year, Chevron suspended its share buyback program after spending $2 billion a quarter for more than a year.

Write to Russell Gold at [email protected]

Printed in The Wall Street Journal, page M4


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