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 bounceback 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.
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.
The Noble deal added “high-quality assets, opportunities and people to Chevron” that along with cost cuts, are “positioning the company for the future,” said Chief Executive Michael Wirth.
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.
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; Editing by Christian Schmollinger)