Chevron posts $8.3 billion loss on write downs, job cuts

Multibillion-dollar asset writedowns have become a prominent part of second-quarter energy results, as a global oil glut emerged as the COVID-19 pandemic cut fuel demand.

Chevron Corp on Friday reported an $8.3 billion loss on asset write-downs from plummeting fuel prices, a forced exit from Venezuela and expenses tied to thousands of jobs cuts. Multibillion-dollar asset write-downs have become a prominent part of second-quarter energy results, as a global oil glut emerged as the COVID-19 pandemic cut fuel demand. Chevron rivals Total, Royal Dutch Shell, and Eni each wrote down billions of dollars in assets. BP has signaled an up to $17.5 billion hit.

Chevron wrote down its oil and gas production properties by $5.6 billion, including its entire investment in crisis-ravaged Venezuela, where it was the last major U.S. oil company still operating until ordered to wind down business by the Trump Administration. The loss also includes $1 billion to cover severance pay for up to 6,700 of its 45,000-person staff to leave their jobs in a global restructuring.

The massive write-downs reflect the global economic downturn caused by the pandemic and follow a $10 billion writedown of mostly natural gas properties in the fourth quarter of 2019. Oil companies are reducing the value of holdings as a realization grows that a deepening economic downturn could depress energy prices for years. The total value of U.S. goods and services produced last quarter fell at a 32.9% annual rate, the deepest decline in economic activity in modern history.

“The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices," said Chief Executive Michael Wirth in a statement, citing the lower demand for the writedowns.

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