Chevron Corp. said it is cutting about 10 percent of its workforce amid the worst oil-market slump since the 1980s even as the company posted third-quarter profit that surpassed analysts’ expectations.
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Watson said the company was “focused on improving results by changing outcomes within our control”.
Analysts on average had expected a profit of 89 cents per share, according to Thomson Reuters I/B/E/S.
The California-based energy company has already slashed 1,500 jobs this year, including 950 in the Houston area.
Forecasts for oil prices vary, but many banks and analysts predict that prices will stay lower for longer through next year. Moreover, losses on the production front were aggravated by the sharp downfall in oil prices, the net effect resulting in a 99% year-over-year decline in upstream earnings to a paltry $59 million.
Both companies managed to make a profit during the third quarter, bolstered by refining operations and chemical divisions that are helped by low oil prices. The Big Foot project, which was scheduled to be online this year, was substantially delayed due to a huge setback last summer with the sinking of at least nine giant tendons that were created to connect the platform to the sea floor. ExxonMobil generated earnings of $4.2 billion in the third quarter.
Revenue fell to $67.34 billion from $107.49 billion a year ago.
Then came this quarter’s earnings report, where Chevron significantly adjusted its capital spending. However, production volumes increased 8%, to 730,000 barrels of oil equivalent, or BOE, per day, which is definitely heartening.
Exxon’s profit from exploration and production dropped from $6.5 billion to $1.4 billion, including a loss of $442 million in the U.S. However, so-called downstream earnings from refining and selling petroleum products jumped from $1 billion to $2 billion on higher refining margins.
Exxon and Chevron are under pressure from the steep decline in oil and gas prices that began in the summer of previous year and accelerated after Opec, the producers’ cartel, decided against cutting output in November in the face of a supply glut.
Oil prices have fallen from more than $100 per barrel in June 2014 to less than $50 this month, and the price of natural gas also has dropped sharply. Management expects to generate another $5 billion to $10 billion from additional sales by the end of 2017.
The second-largest US oil company by market value after Exxon Mobil spent $7,965 million in capital expenditures during the quarter.
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USA stocks took a breather Friday morning as government data revealed that wages and consumer spending growth remain feeble.
