Chevron CEO says the dividend is the company’s No. 1 priority and is ‘very secure’

Energy companies are coming under pressure as oil prices sink, but Chevron CEO Michael Wirth said the company has no plans to slash its dividend.

“Our dividend is our number one priority and it’s very secure,” he said Tuesday on CNBC’s “Squawk Box.” “We’re taking actions to preserve cash. It will have some impact on production in the near term, but we’ve stayed with our financial priorities, which include protecting the dividend.”

On Tuesday the oil giant said it will cut its capital spending plans for 2020 by 20% and suspend its buyback program in an effort to reduce costs.

U.S. West Texas Intermediate crude prices have been nearly cut in half over the last month as oil gets hit on both the demand and supply side. The contract is currently trading around $24.44. As recently as January it traded above $63. International benchmark Brent crude has also taken a hit. It currently trades around $27.99 per barrel.

The coronavirus outbreak has led to demand destruction for crude as travel comes to a near standstill and global economies grind to a halt. In the midst of this, a price war broke out between Saudi Arabia and Russia, with each country seeking to grow its market share. The OPEC+ production cuts that are currently in place expire at the end of this month, meaning nations will soon be allowed to produce as much oil as they want.

Saudi Arabia announced plans to increase its daily production to a record 12.3 million barrels per day in April. By comparison, the kingdom pumped roughly 9.7 million bpd in February. Russia is among the other OPEC+ nations that has said it, too, could ramp up production.

As a potential oil glut has sent prices deeper into bear market territory, President Donald Trump said last week that the U.S. could intervene “at the appropriate time.”

But Wirth said Chevron is operating under the pretense that the price war between Saudi Arabia and Russia will rage on.

“Certainly political dialogue is always helpful, but I don’t think we can count on it. We’re taking actions on the things that we can control. We’re preparing for a difficult market,” he said. “It’s an uncertain market, which is why we’ve taken actions on the things we can control.”

Chevron shares gained 6.6% during Tuesday’s premarket trading. The stock is down 55% this year.

“This is the fourth time in my career I’ve seen prices drop by more than 50% in a very short period of time. We’ve been here before, we know what to do, we’re taking action,” he said.