Chevron, Phillips 66 hit by low demand
Fourth-quarter revenue is down for both as pandemic crushes market for oil products
Oil major Chevron and Phillips 66, the Houston-based refiner, said Friday they continued to lose money in the fourth quarter, as weak demand for oil products appears likely to continue into 2021.
California-based Chevron, which employs some 10,000 workers in the Houston area, lost $665 million in the last three months of the year, compared with a $6.6 billion loss during the same period in 2019.
Quarterly revenue declined by 31 percent to $25.2 billion from $36.4 billion in the same period a year earlier. For the year, Chevron
lost $5.54 billion compared with a $2.92 billion profit in 2019. Annual revenue declined by 35 percent to $94.7 billion from $146.5 billion in 2019.
Low crude prices and $338 million in losses from Chevron’s global network of refineries wiped out most of the gains from harvesting oil and gas during the quarter. Crude input at its U.S. refineries dropped by 17 percent in response to fewer orders for jet fuel, diesel and gasoline. Its U.S. upstream operations earned $101 million in the quarter after losing $7.47 billion a year earlier.
“We’ll see a recovery in the upstream that’s going to happen a little bit before the downstream,” Chief Financial Officer Pierre Breber said during a Bloomberg TV interview.
The persistent weak market for motor fuels also took a toll on refiner Phillips 66, which lost $539 million in the last three months of the year, compared with a profit of $736 million during the same period in 2019. For the year, the company said it lost nearly $4 billion, compared with a profit of $3.1 billion in 2019.
Phillips 66’s fourth-quarter revenue plummeted by more than 40 percent to $16.8 billion from $29.6 billion in the same quarter of 2019. For the year, revenue also fell 40 percent, to $65.5 billion from $109.6 billion in 2019.
“Looking ahead, we are opti
mistic about the impact of the COVID-19 vaccines on the economic recovery,” Phillips 66 CEO Greg Garland said in a release.
Chevron CEO Mike Wirth said the industry still faces challenges related to the coronavirus.
“We are still in the middle of a pandemic, demand is still off, and in total the global economy is functioning below its capacity,” Wirth said.
Wirth and Garland said their respective companies are committed to a future with reduced carbon emissions. Wirth, however, said Chevron would continue to rely, at least for now, on its core products.
“Energy is the lifeblood of the local economy and reliable, affordable energy will be fundamental to the recovery from the pandemic. In the short term and the longer term it will be fundamental to lifting people out of poverty around the world,” Wirth said. “Today’s energy system is not the enemy. Lower emissions are what we should be focused on. That is what we are committed to doing.”
Chevron shares tumbled by $3.81, more than 4 percent, to $85.20 in Friday trading. The company disappointed investors who had hoped for a higher quarterly dividend. Instead, the company kept its payout at $1.29 per share.
Shares of Phillips 66 fell by more than 5 percent, or $3.69, to $67.80 on Friday.