(Adds CFO comments, detail, pre-market share price)
By Jennifer Hiller
HOUSTON, Jan 29 (Reuters) - U.S. oil major Chevron Corp
swung to an $11 million fourth-quarter loss as low
margins on fuel, acquisition costs and foreign currency effects
overwhelmed improved drilling results.
Oil companies are expected to benefit from a bounce-back in
oil and gas prices after a one-two punch of falling demand and
prices put the industry in a tailspin last year. But as
Chevron's final quarter showed, pandemic-related travel
restrictions continue to hammer fuel demand.
Chevron was quick to respond to the downturn last year,
cutting up to 15% of its global workforce, slashing new project
outlays more than a third, and pulling back on oil production
goals. It used a relatively strong financial position to acquire
Noble Energy for $4.2 billion in stock and the assumption of $8
billion in debt.
Despite a recent rise in oil prices, Chevron will not boost
capital spending this year, Chief Financial Officer Pierre
Breber said.
"While we're optimistic about vaccines and getting on a
pathway to recovery, we're not there right now," Breber said.
"We still have an economy that's operating well below capacity.
We still have inventory levels that are high."
U.S. President Joe Biden's executive order to temporarily
suspend oil and gas leasing on federal lands will not "get in
our way anytime soon" in the Permian Basin, the top U.S. oil
field where about 10% of Chevron's Permian acreage is federal,
Breber said.
"We don't agree that it's good policy to be overly
restrictive on federal lands," Breber said. "If it continues we
think that will push energy production outside the country."
The second-largest U.S. oil producer reported an adjusted
loss of $11 million, or 1 cent per share, compared with a profit
of $2.8 billion, or $1.49 per share, a year earlier. The net
loss was $665 million including acquisition costs, the effect of
foreign exchange and pension payouts.
Improved oil and gas prices and a 6% increase in output from
the Noble purchase boosted Chevron's oil and gas earnings to
$501 million, compared with a loss of $6.7 billion a year
earlier.
The gain came as Chevron's international production business
sold oil for about $40 per barrel, up from $39 in the prior
quarter and down from $57 a year earlier.
The company's refining and chemical business reported a
fourth-quarter loss of $338 million compared with profit of $672
million the year prior. Fuel sales fell 10.55% from the year-ago
period as COVID-19 travel restrictions continued to reduce
demand.
Chevron's shares fell about 2% in premarket trading to
$87.20.
Its closely watched cash flow from operations was $2.3
billion, short of covering the $2.5 billion dividend and $3.2
billion in capital spending for the period.
Chevron has said it plans to spend $14 billion this year on
projects and about $15 billion annually through 2025, well below
the prior forecast of up to $22 billion.
It reported a full-year loss of $5.54 billion compared with
earnings of $2.92 billion in 2019.
Rivals Exxon Mobil, ConocoPhillips, Royal
Dutch Shell and BP Plc report financial results
next week.
Chevron is expected to go over the results on a call with
analysts later in the day.
(Reporting by Jennifer Hiller in Houston and Shariq Khan in
Bengaluru; editing by Christian Schmollinger and Nick Zieminski)
BP (BP.)
