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News > Companies
Chevron pumps poor 2Q
July 23, 1998: 11:36 a.m. ET

Collapse in crude prices spurs 30% profit drop; still, 13 cents over street
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NEW YORK (CNNfn) - A steep slide in crude oil prices in June cut into production and exploration earnings at Chevron Corp., spurring a 30 percent decline in second-quarter earnings, the company said Thursday.
     Despite the drop, the international oil giant posted diluted per-share earnings of 88 cents, outstripping Wall Street estimates by a whopping 13 cents.
     Investors, unfazed at the better-than-expected performance, however, staged a sell-off in the oil sector Thursday. Shares of Chevron (CHV) were down ¾ at 83-3/8 on the New York Stock Exchange. Rival Texaco (TX) was off 1-7/16 at 59-5/16.
     Net income of Chevron, an integrated company with more than 4 billion barrels of reserves at sites from Angola to Venezuela to Northern Canada, fell to $577 million, or 88 cents a diluted share, from $823 million, or $1.25 a share, a year earlier.
     Revenue declined 22.4 percent to $7.97 billion from $10.27 billion a year earlier.
     The earnings results included charges for costs associated with outsourcing the company's U.S. mainframe computer and telecommunications operations, the write-off of certain desktop computer equipment, and a provision for environmental remediation at a U.S. refinery.
     Ken Derr, Chevron's chairman and chief executive officer, blamed the poor results on a bottoming-out in crude oil prices, which fell in June to their lowest levels since 1986. Derr said the company's U.S. crude oil realizations in June trailed last year's by $5.50 per barrel, or 33 percent.
     Excluding special items, Chevron said its second-quarter operating earnings fell to $620 million from $837 million a year ago.
     Earnings in the first half slipped to $1.08 billion, or $1.64 a diluted share, from $1.65 billion, or $2.52 a share, a year earlier. The 1998 first half included benefits of $21 million from special items; the 1997 first half included similar benefits of $13 million.
     Derr said operating results from the company's chemical business were down from a year ago as lower feedstock costs and operating expenses failed to offset lower prices and sales volumes.
     Operating expenses in the first six months were $5.32 a barrel, down 6 percent from comparable operations in the year-ago period, helping to offset the effects of declining commodity and product prices.
     Chevron also continued aggressive expansion into new fields in the first half of 1998, launching production at new sites at Angola's Lomba field and Nigeria's Dibi field -- the third brought into production this year in the Niger Delta.
     In the U.S., Chevron agreed to purchase Amoco Corp.'s lubricant business in a bid to bolster its position in heavy-duty industrial oils in North America.
     Foreign currency gains of $96 million and $23 million were included in the second-quarter earnings in 1998 and 1997, respectively.Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.