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Chevron’s shares fell on Friday after the company warned that results will remain depressed as oil prices remain low, and said it was further reducing its 2020 capital spending plan.
For the first quarter, Chevron reported earnings per share of $ 1.93, which included $ 680 million in one-time favorable items, and $ 31.5 billion in revenue, helped by subsequent margins and increased production in the Permian basin. . In the same quarter of the previous year, the oil giant earned $ 1.39 a share with $ 35.20 billion in revenue.
Production at the country’s second largest oil company increased 6% year-over-year to reach a record 3.24 million barrels per day of net oil equivalent production. Chevron said production in the Permian increased 48% year-over-year.
Looking ahead, Chevron said it will cut between 200,000 and 300,000 barrels of oil equivalent production in May, and between 200,000 and 400,000 barrels of oil equivalent production in June.
Chevron said lower oil prices will continue to have a significant impact. “Financial results in future periods are expected to depress as long as current market conditions persist,” the company said. Chevron said that in the first quarter, the average price per barrel of crude oil and natural gas liquids was $ 37, approximately 23% lower than the previous year, while the sale price of natural gas fell from $ 1.64 to 60 cents.
Chevron shares fell more than 4% on Friday.
Energy companies have been forced to cut expenses and cut costs after a historic downturn at West Texas Intermediate, the US oil benchmark. USA, whose price dropped 70% this year. Much of the decline is due to a drop in demand due to the coronavirus.
“We have really seen demand in places we’ve never seen before, and the market reflects that, and supply has been slower to respond to that, so prices reflect the real dramatic impact of the slowdown and, in fact, the shutdown in economies around the world as we fight the virus, “CEO Michael Wirth said Friday on CNBC’s” Squawk Box “.
But he said demand probably bottomed out in the second quarter, and that in the last week or so, prospects began to improve.
“I think as we start to see things move forward, and the economies start to recover again, demand will gradually come back,” he said, adding that it will be a “very, very difficult quarter.”
Chevron said Friday it will reduce its 2020 capital spending plans by an additional $ 2 billion, to $ 14 billion, and said it expects operating expenses to decrease by $ 1 billion. In March, the company had previously announced a 20% cut in its capital spending plan, from $ 20 billion to $ 16 billion, and said it was suspending its share buyback program in an effort to cut costs. .
The company reiterated that its dividend is a priority and that it is taking steps to maintain it in the long term.
Together, these actions are consistent with our long-standing financial priorities: protecting the dividend; prioritizing capital that generates long-term value; and maintaining a strong balance sheet, “Wirth said in a statement about the cuts in capital spending.
Chevron’s shares have dropped 27% this year.
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