Chevron Joins the 1Q99 Loss Crowd
Chevron announced Thursday it lost 35% of its profits compared
to the same period in 1998. The company reported a net income of
$329 million or $0.50/diluted share versus $507 million or
$0.77/diluted share in 1998's first quarter. The oil and gas
company sold oil at an average of under $10/barrel (a 20% drop form
1Q98 prices) and gas at an average of $1.63/Mcf (a 22% drop from 1Q
Although second quarter prices are improving from last quarter's
weakness, Ken Derr, Chevron's CEO, said the company will reduce
costs wherever possible.
"Although we are pleased with the recent improvement in crude
oil and natural gas prices," Derr commented, "we remain focused on
efforts across the company to significantly reduce our cost
structure for the long-term. Compared with the 1998 first quarter,
we reduced operating and exploration expenses by approximately $80
million-a positive first step in removing $500 million from our
overall cost structure."
Derr said one of the reorganizations will involve Chevron's
Permian Basin and Gulf of Mexico shelf exploration and production
(E&P) operations, but did not elaborate.
Chevron's U.S. natural gas production for the quarter was 1.7
Bcf/d, down from 1.8 Bcf/d in the same period last year. Derr said
the drop was caused by field declines and prior-year property
sales. The company's U.S. E&P net income of $47 million was
down 56% from 1998's first quarter performance.
One bright spot for Chevron was the success of its refining,
marketing and transportation operations which accrued a net income
of $82 million compared to $45 million in 1Q98.
"Our U.S. refining, marketing and transportation first quarter
operating results improved compared with last year, mainly
reflecting higher sales margins and higher refined products sales
volumes. The margins benefited from less downtime and lower
expenses from planned maintenance at our refineries than the first
quarter 1998," Derr added.
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