Oil and natural gas producer, Chevron Corp. has reported a 43 percent drop in quarterly profit, even as the results beat analysts’ expectations as cost cuts and robust refining margins helped offset the impact of tumbling crude prices, Reuters has reported.
The report said the help from refining operations mirrored results at large, integrated peers such as Exxon Mobil Corp and Royal Dutch Shell, which tended to lean on their refining divisions for profit during times of cheap oil.
It said oil prices
had slumped more than 40 percent since last June amid a glut of global supply, harming Chevron’s division that produces oil and gas, its largest, but helping profit more than double to $1.42 billion at its refining arm.
A Reuters’ analysis of industry data, though, shows that this “refining boom” for the sector isn’t likely to last long, and that producers’ best chance for improving profit is higher oil prices.
It quoted an oil analyst at Oppenheimer in New York, Fadel Gheit, as saying the good thing about the quarter is that it is over, adding that going forward, cost will continue to go down and oil prices are slowly going up, so margins will improve.
Also quoting Chief Financial Officer, Pat Yarrington, it said Chevron had sold $4 billion in assets so far this year, part of a broader divestment plan to help fund its dividend from cash flow, further saying they will continue to sell assets when we can generate good value.
Chevron posted a loss in its United States oil production division, a key indicator that the country is one of its highest cost areas.
Production grew 4 percent to 2.68 million barrels of oil equivalent per day, boosted largely by operations in the United States, Bangladesh and Argentina.
Chevron continued slashing costs during the first quarter, reducing operating expenses by nine percent.
The company is renegotiating contracts with nearly 3,000 vendors and expects to wring about $900 million in cost savings out of them this year.
