Chevron reported a $ 8.3 billion loss in the second quarter as the coronavirus pandemic “significantly reduced demand.” Amid a historic drop in oil prices, the company’s average price per barrel of oil and liquefied natural gas has fallen by more than 60% year-over-year.
The oil giant lost $ 1.59 per share on an adjusted basis, while revenue came in at $ 13.49 billion. In the same quarter a year ago the company earned $ 2.27 per share on revenue of $ 36.32 billion.
Analysts expected the company to send a loss of 92 cents per share, on revenue of $ 22.097 billion, according to estimates by Refinitiv.
Part of the company’s loss came from a $ 1.8 billion paid primarily linked to a downward revision in the company’s commodity price outlook. The company also sharply reduced its $ 2.6 billion investment in Venezuela, reporting $ 780 million in costs related to job cuts.
Shares of Chevron slid more than 2% during trading from the sale on Friday.
“The last few months have presented unique challenges,” Michael Wirth, CEO of Chevron, said in a statement. “The economic impact of the response to COVID-19 has significantly reduced demand for our products and reduced commodity prices. Due to the uncertainties associated with the economic recovery, and the abundant supply of oil and gas, we have done a downward revision to our commodity price outlook, ”he added.
The company said that while demand and prices have begun to show signs of recovery, they are not back to pre-pandemic levels. Given the uncertain outlook, Chevon said the results could also be discounted in the next three months.
During the second quarter of the year, the company’s average selling price per barrel of oil and liquefied natural gas in the United States was $ 19, down from $ 52 a year earlier. Natural gas prices rose to $ 0.81 per thousand cubic feet, up from $ 0.68 in the same quarter last year.
“We are focused on what we can control. Our actions are guided by our values and our long-term financial priorities: we protect the dividend, invest for long-term value and maintain a strong balance,” Wirth added.
Earlier in July, Chevron announced it would buy an independent oil and gas producer from Noble Energy, in a move that Chevron CEO Michael Wirth said would be a “good deal” for shareholders in both companies. Including debt, the total value of the deal was $ 13 billion.
The acquisition enhances Chevron’s portfolio in the oil-rich Permian Basin, as well as in the Colorado DJ Basin. Noble Energy also has assets in Israel and West Africa, which will further enhance Chevron’s international footprint. This will also lead to about $ 300 million in annual cost savings, Chevron said in a statement.
The deal was the biggest in the industry as oil prices fell in March and April, hit by a price war between Saudi Arabia and Russia, as well as an unprecedented drop in demand due to the pandemic
For the first quarter of the year, Chevron reported earnings per share of $ 1.93, which included $ 680 million in a one-off favorable share, and $ 31.5 billion in revenue, aided by downstream margins and increased production in The Permian Basin.
Shares of Chevron are down 28% this year.
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