By Chelsey Dulaney
Chevron Corp.'s profit tumbled in the second quarter as the oil
company took over $2 billion in impairments and charges to suspend
projects amid lower crude-oil prices.
Shares of Chevron, down 17% this year, fell 1.8% to $91.35 a
share in premarket trading.
"Second-quarter financial results were weak, reflecting a
crude-price decline of nearly 50% from a year ago, said Chief
Executive John Watson in a news release. "Our upstream businesses
were particularly hard hit, as lower prices reduced revenues and
triggered impairments and other charges."
Chevron booked $1.96 billion in impairments and $670 million in
charges related to project suspensions and adverse tax effects.
Chevron said the charges stemmed from a downward revision of its
long-term crude-oil price outlook.
Those charges were partially offset by $1.8 billion in asset
sales in the quarter.
Mr. Watson said the company has multiple efforts under way to
improve its cash flow, which has been a problem lately as Chevron
has spent cash faster than it comes in.
"We're getting our cost structure down, through renegotiations
across the supply chain and by sizing our contractor and employee
workforce to reflect lower activity levels going forward," he
said.
In the latest quarter, Chevron's capital spending fell to $8.72
billion from $10.19 billion a year ago.
In all, Chevron reported earnings of $571 million, or 30 cents a
share, down from $5.67 billion, or $2.98 a share, a year
earlier.
Currency fluctuations decreased earnings by $251 million,
compared with $232 million a year ago.
Revenue fell 30% to $40.36 billion.
Analysts polled by Thomson Reuters had forecast earnings of
$1.16 a share and revenue of $30.9 billion.
Chevron's exploration and production--known as the upstream
segment--swung to a loss of $2.22 billion from a profit of $5.26
billion a year earlier.
Refining, marketing and chemical operations--or
downstream--earnings jumped to $2.96 billion from $721 million a
year earlier.
Chevron, the second-biggest U.S. oil company in market value
behind Exxon Mobil Corp., has profits that are better insulated
than most oil producers because it also makes money from refining
the fuel into gasoline and diesel. The lower-cost crude has helped
its refinery businesses improve profit margins.
Production in the latest quarter grew 2% to 2.6 million barrels
per day, owing to project ramp-ups in the U.S., Bangladesh and
Argentina.
Chevron's downbeat results came after Exxon Mobil on Friday
reported a 52% drop in profit for its second quarter, as higher
profit from its refining and chemical operations couldn't offset
plunging earnings in its exploration and production business amid
lower crude prices.
Shares of Exxon were down 2.3% to $81.08 a share in premarket
trading.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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