MOSCOW (MRC) -- Chevron Corp reported its first quarterly loss in more than 13 years as the oil producer struggled to cope with plunging crude prices that are eroding profitability across all its divisions, as per Reuters.
It was the latest sign that the more than 70 percent drop in oil prices CLc1 since 2014 has humbled a once-strong energy sector and forced it to curtail new projects, lay off staff and shrink spending.
Chevron last month had already signaled its pain by cutting its 2016 budget by 24 percent to USD26.6 billion, part of a strategy to contend with lower oil prices and hunker down for a hoped-for price rebound.
Smaller rivals Hess Corp, Continental Resources and Noble Energy cut their own budgets early this week, ranging from 40 percent to 66 percent.
"We're taking significant action to improve earnings and cash flow in this low price environment," John Watson, Chevron's chief executive, said in a press release.
The company posted a fourth-quarter net loss of USD588 million, or 31 cents per share, compared with a net profit of USD3.47 billion, or $1.85 per share, in the year-ago period.
The last time Chevron posted a quarterly loss was the third quarter of 2002. Production rose 4 percent to 2.67 million barrels of oil equivalent per day in the quarter ended Dec. 31.
The bulk of Chevron's losses came from its divisions that explore for and produce oil and natural gas, with its U.S. division alone posting a loss of USD1.95 billion.
Surprisingly, Chevron's refining divisions also saw profit plunge. Refiners typically see profitability increase when the price of their main feedstock - oil - falls. Chevron said the drop was due to a boost in the prior year from asset sales, and also smaller margins on specialty refined products.
As MRC informed earlier, Chevron announced steep cuts in its spending on production and exploration, as it set out a plan to cut capital expenditure in 2016 by 24%. In 2017-18 the company expects capital expenditure of USD20bn-USD24bn per year, meaning that it could commit just a little more than half the USD39.8bn it spent in 2014.
Chevron is the second-largest US oil group by production and market capitalisation, after ExxonMobil. Chevron Phillips Chemical (part of Chevron), headquartered in The Woodlands, Texas (north of Houston), US,l is one of the world’s top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics. Chevron and Phillips 66 each own 50% of Chevron Phillips Chemical.
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