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Chevron, citing tough industry conditions, slashes its spending budget nearly 40%

Chevron Corp. is slashing its spending budget by nearly 40% for 2017 and 2018, a bigger cut in spending than it previously expected, as it deals with plunging oil prices.

The oil and gas company, based in San Ramon, Calif., said that it expects to spend between $17 billion and $22 billion on drilling and other projects in 2017 and 2018. In October it had said it expected to spend $20 billion to $24 billion.

The company has a spending budget of $26.6 billion this year, down 24% from the year before.

"Industry conditions are tough right now," John Watson, Chevron's chairman and chief executive, said in a statement Tuesday.

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Watson also affirmed dividend growth and maintenance of a strong balance sheet as among the company's financial priorities. Chevron pays a quarterly dividend of $1.07, which it last increased in the first quarter of 2014.

Several energy companies have announced plans to trim spending because of lower oil prices. Chevron has also cut jobs and sold some of its facilities and pipelines to raise cash.

Shares of Chevron fell $2.03, or 2.2%, to $88.64 in morning trading Tuesday. The stock is down about 14% in the last year.

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