Chevron’s profit sinks amid oil slump

Revenue came in at $29.2 billion, beating analyst expectations of $28.7 billion. Chevron intends to continue dividend payments “whatever the ensuing price is” for crude, Chief Financial Officer Patricia Yarrington said during a July 31 conference call with analysts and investors. Chairman and CEO John Watson said earnings were down drastically as a result of pressure from lower crude oil prices.

The company reduced operating expenses and capital spending by $US9 billion previous year, and Mr Watson said he expects similarly large reductions again in 2016. In addition, CVX maintains expected asset sales of $5-10 billion by the end of 2017. Approximately 89% of the total outlays pertained to upstream projects. All of them are scheduled to report next week.

The shares closed down -0.83 points or -0.99% at $83.29 with 1,23,80,644 shares getting traded. The increase in depreciation and exploration expenses was primarily due to impairments and project cancellations. Vetr cut Chevron from a “sell” rating to a “strong sell” rating and set a $85.50 price objective for the company.in a research note on Tuesday, November 3rd. Natural gas results were also hit hard by a commodity-price slump, with prices falling from US$3.34 per thousand cubic feet to US$1.54 per thousand cubic feet.

Amongst the major upcoming projects, Chevron’s Gorgon natural gas project in Australia is progressing well, with production set to begin within the next few weeks. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.

Sales and other operating revenues decreased 33 percent to $28.01 billion from $42.11 billion in the prior-year quarter. Net liquids production was up 8% to 499,000 barrels a day.

Chevron’s move into the red comes on the heels of fourth-quarter losses over the last week or so from large oil services companies, with Baker Hughes and Schlumberger both losing about US$1 billion. Branded gasoline sales of 515,000 barrels per day were up 1 percent from the 2014 period.

The global downstream business, often a reliable assist for ailing upstream operations, was in the black, but profits fell by nearly half year/year to $496 million.

The increasingly grim results reflect the pain from plunging oil prices that has caused oil companies to cut capital budgets, prompting a chain reaction of belt-tightening among the service companies that drill wells and provide pumping tools. Worldwide net output in 4Q2015 was 2.67 million boe/d, versus 2.58 million boe/d in the year-ago period.

Quarterly losses totaled $588 million (minus 31 cents/share), a huge plunge from year-ago profits of $3.5 billion ($1.85). Excluding working capital effects, cash flow from operations in 2015 was $21.4 billion, compared with $32.0 billion in 2014. Capital and exploratory expenditures, 92% weighted to the upstream, totaled $34 billion, versus $40 billion in 2014.