Chevron Shares Seesaw After Second Quarter Losses

The falling stock prices are one of the casualties of lower demand of commodities since the pandemic began.

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Chevron shares have been seesawing since Friday when the Fortune 500 company reported an $8.3 billion loss during its second quarter. According to a spokesperson at the oil giant, the coronavirus has severely impacted demand for the commodity. During the pandemic, oil prices have fallen to historical levels, and Chevron oil and natural gas prices dropped by more than 60 percent in a year-to-year comparison.

Chevron lost $1.59 a share, and revenue stood at $13.49 billion. Analysts previously predicted a loss of 92 cents a share, with $22.09 billion in revenue. In a quarter-to-quarter comparison from 2019, Chevron earned $2.27 a share with $36.32 billion in revenue.

Michael Wirth, Chevron’s Chief Executive Officer, said: “The past few months have presented unique challenges. The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices. Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook.”

The company’s losses were $5.2 billion in non-cash net charges, which included a $1.8 billion depreciation in assets and a $2.6 billion impairment charge from the company’s Venezuelan interest. Chevron also had job cut-related expenses totaling $780 million.

On Friday, Chevron shares finished 2.7 percent lower by closing. Earlier on the same day, stocks had fallen by 5 percent. By mid-morning Monday, shares were slightly positive at 0.36 percent higher.

A company spokesperson said that oil demand and prices are starting to show positive signs, but they’re nowhere near pre-pandemic levels. The company said because of this, it expects that the third quarter may see depressed results as well.

Chevron’s average price of oil per barrel was $19 in the second quarter. This is down by $33 from last year when it was $52 a barrel.

Overall, shares of Chevron have fallen by 28 percent this year thus far.

Wirth said, “We’re focused on what we can control. Our actions are guided by our values and our long-standing financial priorities — to protect the dividend, invest for long-term value, and maintain a strong balance sheet.”

Last month, the Standard Oil successor announced that it planned to purchase Noble Energy, an independent oil and gas producer, for $13 billion. The deal will prominently position Chevron in the Permian Basin and Colorado’s DJ Basin, both oil-rich regions of the U.S. Noble also has oil interests in West Africa and Israel, which would expand Chevron’s international presence.

The Chevron-Noble Energy deal is the oil industry’s largest since oil prices had fallen steeply earlier this year when a Saudi and Russian price war ensued and oil demand fell due to the virus.

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