Chevron Swung to Second-Quarter Loss as Oil Demand Slumped
By Dave Sebastian
Chevron Corp. posted steep losses in the second quarter as lower
oil and gas prices sapped production gains and the decimation in
global travel amid the Covid-19 pandemic crimped fuel demand.
The oil giant, based in San Ramon, Calif., on Friday posted a
second-quarter loss of $8.27 billion, or $4.44 a share, compared
with a profit of $4.31 billion, or $2.27 a share, in the comparable
quarter last year.
Adjusted losses were $1.59 a share. Analysts polled by FactSet
were expecting adjusted losses of 93 cents a share.
The company said it booked impairments and other charges of $1.8
billion for the quarter to account for downward revisions in its
commodity-price outlook, severance charges of $780 million and a
gain of $310 million on the sale of Azerbaijan assets. Chevron also
impaired its $2.6 billion in investment in Venezuela due to the
operating environment's uncertainty, it said. Chevron's peers, such
as BP PLC, Hess Corp. and Occidental Petroleum Corp., have taken
multibillion-dollar impairments amid the pandemic-induced economic
Revenue fell 65.3% to $13.49 billion from the year-ago period.
Analysts were looking for $21.87 billion.
"The past few months have presented unique challenges," said
Michael Wirth, Chevron's chairman and chief executive. "The
economic impact of the response to Covid-19 significantly reduced
demand for our products and lowered commodity prices."
Production was 2.99 million barrels of oil-equivalent a day,
down from 3.08 million a day a year earlier, the company said.
Although demand and commodity prices have shown signs of
recovery, Chevron said they aren't back to pre-Covid levels. The
company warned its results could continue to be depressed through
the third quarter.
The company earlier in July agreed to buy Noble Energy Inc. for
about $5 billion, injecting the first signs of life in
energy-sector deal-making in what would be the largest oil-path
tie-up since the pandemic delivered a shock to the industry. Buying
the company would expand Chevron's presence in the DJ Basin of
Colorado and Permian Basin, which spans West Texas and New Mexico.
Chevron also said the acquisition would yield it potential annual
cost savings of $300 million.
Write to Dave Sebastian at email@example.com
(END) Dow Jones Newswires
July 31, 2020 07:45 ET (11:45 GMT)
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