AGENCE FRANCE PRESSE
NEW YORK: Plunging crude prices battered oil giants’ profits in the first quarter, another blow following credit downgrades, layoffs and drilling cutbacks in the wake of a long rout.
Chevron on Friday became the latest big oil company to land in the red due to low commodity prices, reporting a loss of $725 million in the quarter ending March 31.
The second-biggest US oil company pledged more belt-tightening after trimming capital spending nearly 25 percent in the first quarter from the year-ago period, said Chevron CEO John Watson.
“We continue to lower our cost structure with better pricing, work-flow efficiencies and matching our organizational size to expected future activity levels,” Watson said.
ExxonMobil, which was downgraded from the highest triple-A credit rating earlier this week, managed to stay in the black with $1.8 billion in profits.
But profit at the biggest oil company was 63 percent lower and included a loss of $76 million in its normally lucrative exploration and production business.
BP, ConocoPhillips and Hess all reported losses earlier in the week.
The results reflect the effects of a nearly 40 percent drop in oil prices to under $30 a barrel for much of the first quarter amid a persistent global oversupply.
Oil prices have since risen back to around $45 a barrel, raising hopes that the first quarter could be a low point.
“This quarter is probably going to be the trough in their earnings profiles,” said Nate Thooft, a senior managing director at John Hancock Asset Management.
“Later in the year, assuming oil stays at this level, or at least stays somewhat stable, this will probably be the worst quarter for energy earnings we’ll see.”