Chevron Profits Plunge 91 Percent on Weaker Crude-Oil Prices

SAN RAMON, Calif. (San Jose Mercury News/TNS) -

Chevron profits plunged 91 percent, a feeble financial result that was caused by falling oil prices and charges against earnings, the energy giant reported Friday in a release that came days after wide-ranging job cuts by the company.

The results missed Wall Street’s expectations, and in trading Friday, Chevron shares fell $4.55, or 4.9 percent, to $88.48.

“Second-quarter financial results were weak, reflecting a crude price decline of nearly 50 percent from a year ago,” Chevron CEO John Watson said.

Chevron earned $571 million, or 30 cents a share, on revenue of $5.67 billion during the second quarter, which ended June 30. Analysts had expected Chevron would earn $1.16 a share.

“Multiple efforts to improve future earnings and cash flows are underway,” Watson said.

Chevron is reducing costs, including job cuts and renegotiations of contracts with suppliers.

A few days ago, Chevron announced plans to eliminate 1,500 jobs, including 500 in San Ramon, 950 in Houston and 50 in other countries.

San Ramon-based Chevron said it’s vital for the company to begin generating revenue from massive projects that it’s been developing in recent years that will produce large amounts of revenue from production and sales of oil and gas.

Chief among those are Chevron’s Gorgon and Wheatstone liquefied natural gas projects in western Australia.

Chevron’s upstream business, consisting of exploration, development and production, lost $2.22 billion. The company’s downstream, or refinery and retail operations, earned $2.96 billion.

“The miss was mostly attributable to weaker upstream results,” Roger Read, a senior analyst with Wells Fargo, said in a report about Chevron’s results. “Downstream delivered better-than-expected results.”