Chevron and Conoco Point the Way for Exxon

The critical element when ripping off a Band-Aid is speed. Chevron Corp.’s cut to its spending budget and suspension of buybacks, announced Tuesday morning, hurts of course. Looked at another way, though, it merely acknowledges the injuries inflicted already. It also leaves a certain large rival whose name rhymes with MexxonObil looking like a laggard again, so that probably helps.

No Western oil company’s economics balance at $25-ish a barrel. The market knows this; hence, energy stocks currently vie with the similarly challenged Materials sector for the title of smallest in the S&P 500. Under such circumstances, and with oil demand having dropped into a chasm of pestilence, the prudent thing is to abandon even minimal growth and conserve as much cash as possible without wrecking the business or one’s relationship with investors altogether. Chevron is cutting its capex budget by 20% and, having bought back $1.75 billion of stock in the first quarter, suspending repurchases until further notice.