Chevron reported a $ 8.3 billion loss in the second quarter on Friday as the corona virus "significantly reduced demand". In the midst of a historic drop in oil prices, the company's average price per barrel of oil and natural gas liquids fell more than 60% year-on-year.
The oil giant adjusted for $ 1.59 a share, while sales were $ 13.49 billion. In the same quarter a year ago, the company earned $ 2.27 per share on sales of $ 36.32 billion.
Analysts expect Refinitiv to report a loss of 92 cents per share on sales of $ 22.097 billion, according to Refinitiv.
Part of the loss of the company resulted from net non-cash costs of $ 5.2 billion, including a write-down of $ 1.8 billion, which was mainly associated with a downward correction in raw material price prospects, and an impairment change of $ 2.6 billion related to Chevron's investment in Venezuela. The company also reported $ 780 million in job-related expenses.
Chevron's shares fell nearly 4% during Friday's early trade.
"The past few months have been associated with unique challenges," said CEO Michael Wirth in a statement. "The economic impact of the response to COVID-19 has significantly reduced demand for our products and lowered commodity prices. Given the uncertainties associated with the economic recovery and sufficient oil and gas supplies, we have revised our commodity price outlook downwards."
The company said that while demand and prices show signs of recovery, they are not returning to pre-pandemic levels. Given the uncertain outlook, Chevon said earnings could continue to be depressed in the next quarter.
In the second quarter, the company's average selling price per barrel of oil and natural gas liquids in the United States was $ 19 after $ 52 the previous year. Natural gas prices rose from 68 cents in the previous year to 81 cents per thousand cubic feet.
"We focus on what we can control. Our actions are based on our values and our longstanding financial priorities: protecting dividends, investing in long-term value and maintaining a strong balance sheet," said Wirth.
In early July, Chevron announced plans to buy independent oil and gas producer Noble Energy. Wirth said this was "good business" for the shareholders of both companies. Including debt, the total value of the business was $ 13 billion.
The acquisition would improve Chevron's portfolio in the oil-rich Perm Basin and the Colorado DJ Basin. Noble Energy also has assets in Israel and West Africa, which will further improve Chevron's international presence. According to Chevron, this will also result in annual cost savings of around $ 300 million.
The deal has been the largest in the industry since the slump in oil prices in March and April, which was hit by a price war between Saudi Arabia and Russia and an unprecedented drop in demand due to the pandemic
For the first quarter, Chevron reported earnings per share of $ 1.93, which included one-time items of $ 680 million and sales of $ 31.5 billion. This was supported by downstream margins and an increase in production in the Permian basin.
Chevron's shares fell 28% this year.
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