Although expressing optimism for the future, the oil company is expected to take several actions to cut costs.
Chevron Corp. posted its first loss in 13 years as plunging oil prices slashed profitability in all areas of its business.
The deep losses and persistently cheap gas prices are expected to force the second largest U.S. oil producer to cancel new drilling projects, lay off employees and tighten spending.
“We’re taking significant action to improve earnings and cash flow in this low price environment,’’ said Chairman and CEO John Watson in a news release.
Chevron reported a net loss of $588 million during the fourth quarter of 2015, or 31 cents a share, compared with a profit of $3.5 billion a year earlier.
The result was well off the estimates of analysts, who had forecasted slight gains. The last time Chevron posted a loss was the third quarter of 2002.
Chevron’s earnings were hurt by $1.1 billion in charges for the year as low energy prices diminished its portfolio of oil and gas holdings. About two-thirds of Chevron’s production is crude oil, the rest is natural gas and gas byproducts.
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Faced with the worst oil-price crash in years, the company said it will continue to sell assets and reduce spending on new projects. Last year, Chevron cut operating expenses and capital spending by $9 billion from 2014 and sold $6 billion in assets.
Chevron also expects a review of its credit rating, as the entire industry faces more scrutiny.
Despite the financial woes, the San Ramon, Calif.-based company still plans to pay out $2 billion in dividends — $1.07 per share — to shareholders in March.
Long term, Chevron is banking on population growth and rising standards of living in urban areas to fuel demand for petroleum-based products. Watson has repeatedly said the current slump in prices brought on by a glut of crude won’t last forever, and that prices eventually will rebound.
