CVX Chevron Corporation

By Lisa Beilfuss 

Chevron Corp. swung to an unexpected loss in the fourth quarter as the intensifying drop in the price of crude oil swallowed the energy giant's bottom line.

Shares in the company, down 21% over the past 12 months, fell 1.9% in premarket trading.

"We're taking significant action to improve earnings and cash flow in this low-price environment," said Chief Executive John Watson. The company's average sales price per barrel of crude oil and natural gas liquids about halved in the fourth quarter.

That was as the price of U.S. crude dropped 19% in the December quarter. The decline started in the summer of 2014, and some economists say the worst may be nearing its end. But the extent of the bleeding has shocked investors and caught many companies off guard, prompting job cuts, dividend reductions and deep spending cuts. Chevron, the second-largest energy company in the U.S. by revenue, said late last year that it would cut up to 10% of its workforce and slash its capital spending budget by 25% this year.

The company reduced operating expenses and capital spending by $9 billion last year, and Mr. Watson said he expects similarly large reductions again in 2016.

Chevron's upstream operations, which include exploration and drilling, were hit worst by the plunge in energy prices. In the U.S., the segment lost $1.95 billion after earning $432 million a year earlier. In its downstream operations--refining--Chevron saw its profit nearly halve to $496 million.

Like many of its rivals, Chevron ramped up production, adding to the global supply glut that is pinning down prices. In its domestic upstream business, the company produced 719,000 barrels per day in the fourth quarter--up 7% from a year earlier.

Overall, Chevron reported a loss of $588 million, or 31 cents a share, down from a profit of $3.47 billion, or $1.85 a share, a year earlier. Revenue tumbled 37% to $29.25 billion. Analysts projected 45 cents in earnings per share on $28.72 billion in revenue, according to Thomson Reuters.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

January 29, 2016 09:36 ET (14:36 GMT)

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