Chevron swings to deep $8.3bn loss after $5.2bn in charges

Chevron swung to a deep $8.3bn loss in the second quarter as the collapse in oil prices triggered by the pandemic and the Saudi-Russian price war ripped through the supermajor’s balance sheet. 

The result compared with earnings of $4bn reported for the same period a year earlier, and followed non-cash net charges of $5.2bn as it wrote off all its Venezuelan assets and took an $1.8bn impairment charge associated with the lower oil prices.

The adjusted loss, after accounting for the charges, came in at $3bn, or a loss of $1.59 per share.

“The past few months have presented unique challenges,” said Mike Wirth, Chevron chief executive. “The economic impact of the response to Covid-19 significantly reduced demand for our products and lowered commodity prices.”

Revenue for the second quarter halved to $16bn from $32bn in the first quarter, or 55 per cent lower than a year earlier.

The upstream segment of the business was hit hard, with Chevron reporting a loss of $6bn compared with a $3.4bn gain last year. It received just $19 a barrel for its oil, compared with $52 a year earlier. 

The loss exceeded investor expectations for an adjusted loss of $1.6bn and revenue was well below analysts’ forecasts of $22bn. Shares slipped 2 per cent in pre-market trading. 

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Chevron announced this month that it was buying Noble Energy, an independent oil and gas producer, in a transaction worth $13bn, including debt — the biggest merger since the crude market crashed. The deal is expected to close later this year.

“Noble’s high-quality assets provide Chevron with low-cost, proved reserves and attractive undeveloped resources that will enhance an already advantaged upstream portfolio,” said Mr Wirth. “We believe this transaction will unlock significant value for shareholders of both companies.”