Oil major Chevron booked a larger profit in the first
quarter of 2020 compared to the same period last year on the back of asset
sales, favorable tax items, and forex gains, but decided to further cut its
apex guidance for the year. Chevron also set a new quarterly production record.
Chevron has reported earnings of US$3.6 billion for the
first quarter of 2020 as compared to earnings of US$2.6 billion for the first
quarter of 2019.
Included in the current quarter was a gain of US$240 million
associated with the sale of upstream assets in the Philippines and favorable
tax items aggregating to US$440 million.
Foreign currency effects increased earnings in the first
quarter of 2020 by US$514 million.
Sales and other operating revenues in the first quarter of
2020 were reported at US$30 billion, as compared to US$34
billion for the same period a year ago.
“First-quarter earnings were up from a year ago,” said Michael
K. Wirth, Chevron’s chairman of the board and chief executive officer, “driven
by downstream margins and increased Permian production. However, commodity
prices fell significantly in March and the weakness continued into the second
quarter, primarily due to reduced demand resulting from the COVID-19 pandemic.”
Wirth also added that the company’s financial results in
future periods are expected to be depressed as long as current market conditions
persist.
Chevron decided to further reduce its 2020 capital
expenditure by up to US$14 billion.
The company has already reduced its 2020 capital
spending plan by $4 billion.
In addition, the Company estimates that 2020 operating costs
will decrease by US$1 billion. This follows the previously announced suspension
of share repurchases and the completion of additional asset sales.
“Together these actions are consistent with our longstanding
financial priorities: to protect the dividend; to prioritize capital that
drives long-term value, and to maintain a strong balance sheet,“, said Wirth.
Chevron’s worldwide net oil-equivalent production was 3.24
million barrels per day in the first quarter of 2020, an increase of over 6 per
cent from a year ago, and a new quarterly record.
