Chevron is writing down as much as $11 billion worth of assets, and it could cost the entire market.
S&P Dow Jones Indices’ Howard Silverblatt said that depending on the final charge, it could reduce 2020’s overall S&P 500 earnings by $1.32 per share.
Currently, the median EPS estimate for next year’s S&P 500 earnings is $174.63, according to forecasts compiled by CNBC.
Chevron is the 24th largest company in the S&P 500 with a market capitalization of more than $221 billion.
On Tuesday, Chevron said that the writedown of between $10 billion and $11 billion would be for the current quarter as the company re-values some of its assets, including shale gas production sites in Appalachia and deep water projects in the Gulf of Mexico.
The country’s second largest oil company also announced a $20 billion capital spending budget for 2020, and said it was considering offloading some of its natural gas projects as prices continue to falter.
“As we do that, we also look at our assets and we evaluate which assets will deliver the highest returns on investment for our shareholders … and the assets in the Northeastern US, along with some in Canada and other parts of the world simply don’t compete as well for our investment dollar as others do,” he added.
Last month, Chevron reported a 36% drop in third-quarter profit, hit by lower oil and gas prices and refining margins. It also warned higher costs would affect fourth-quarter results.
Chevron shares have gained 8% this year, outpacing the S&P energy sector‘s 4% gain.
— Reuters and CNBC’s Jessica Bursztynsky and Michael Bloom contributed to this report.