US supermajor Chevron has taken a big fall in Q1 2016, reporting a loss of US$725 million, compared to earnings of $2.6 billion in the same period last year.
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Image of Jack/St. Malo, from Chevron. |
The company’s upstream earnings made up the majority of the loss at $1.5 billion, compared to earnings of $1.6 billion in Q1 2015, which Chevron’s chairman and CEO John Watson said was impacted by a decline of more than 35% in crude oil prices.
“Our efforts are focused on improving free cash flow,” Watson said. “We are controlling our spend and getting key projects under construction online, which will boost revenues.
Chevron’s global oil-equivalent production fell slightly at 2.67 MMb/d in the period, compared to 2.68 MMb/d in Q1 2015.
For its US operations, production was up by 2000 b/d to 701,000 b/d, partially due to project ramp-ups in the Gulf of Mexico, in addition to onshore projects. Natural gas production was also slightly up by 1% in the period to 1.27 Bcf/d.
Internationally, Chevron’s upstream incurred a loss of $609 million, compared to earning of $2 billion in Q1 2015.
The decrease was due several aspects, including lower crude oil and natural gas realizations, the absence of a first quarter 2015 reduction in statutory tax rates in the UK, and lower gains on asset sales, Chevron said. Additionally, foreign currency effects decreased earnings by $298 million in the 2016 quarter, compared with an increase of $522 million a year earlier.
The company’s total oil equivalent production decreased only 1% compared to last year to 1.97 MMb/d.
Capital and exploratory expenditures in Q1 2016 were $6.5 billion, compared with $8.6 billion in the corresponding 2015 period. Expenditures for upstream represented 92% of the companywide total in Q1 2016.
Earlier this month, the US supermajor carried out its workforce reduction plan by cutting 655 upstream jobs from its Houston offices. The layoffs are port of the 4000 jobs Chevron plans to cut this year.
The company also had to temporarily halted production at its Gorgon liquefied natural gas (LNG) and condensate project on Barrow Island, off the northwest coast of Western Australia due to mechanical issues.
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