The United States has experienced…
Attacks on Red Sea shipping…
Chevron Corporation (NYSE: CVX) reported on Friday a net loss of US$8.3 billion for the second quarter on the back of impairment charges due to lower commodity price outlook and write-off its Venezuela operations due to the U.S. sanctions.
Chevron’s US$8.3-billion net loss for Q2 compares with earnings of US$4.3 billion for the second quarter of 2019, and was the worst loss for the U.S. supermajor since at least 1989, according to Bloomberg’s estimates.
The net loss includes impairments and other net charges of US$1.8 billion, mostly associated with downward revisions to Chevron’s commodity price outlook, which the company made in view of the demand collapse and uncertainties over the economic recovery. Chevron follows the European majors in booking impairment charges after revising down its outlook for oil and gas prices.
“Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook which resulted in asset impairments and other charges,” said Michael Wirth, Chevron’s chairman of the board and CEO.
Apart from the impairments due to revised price assumptions, Chevron also fully impaired its US$2.6 billion investment in Venezuela because of uncertainties over the current operating environment and overall outlook. Another US$780 million charge came from several accruals as Chevron plans to cut 13 percent, or around 6,000 jobs, of its workforce.
Without the impairment charges, Chevron posted an adjusted loss of US$3.0 billion, or a loss of US$1.59 per share, for Q2 2020, compared to adjusted earnings of US$3.4 billion for Q2 2019.
Chevron’s adjusted US$1.59 loss per share for this past quarter was worse than analyst estimates of a loss of US$0.93 per share of The Wall Street Journal.
The U.S. supermajor also warned that the bad financial results could drag on into this quarter.
“While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed into the third quarter 2020,” the company said.
All supermajors reported dismal results for the second quarter, but some of them, like Shell and Total, managed to avoid adjusted losses thanks to their strong oil trading businesses that cushioned the blow from the low oil prices.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.